Ford to lose $3B on EV 'startup' in 2023, turn profit on traditional vehicles
Ford spending big money on EVs taking on Tesla, GM
Ford on Thursday said it expects to report profits of $9 billion to $11 billion in 2023 on the strength of its conventional vehicle and commercial operations, while posting a huge loss on its Model e electric vehicle division.
The automaker expects a $3 billion loss due to investments geared to rapidly boost production of electric vehicles to an annual rate of 600,000 globally by the end of 2023 and two million in 2026.
"Ford Model e is an EV startup within Ford," CFO John Lawler told reporters ahead of a 10 a.m. ET call with investors, Automotive News reported.
The automaker is also competing against aggressive EV moves by Tesla and GM.
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"As everyone knows, EV startups lose money while they invest in capabilities, develop knowledge, build volume and gain share."
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Model e lost $2.1 billion in 2022 and its cumulative 2021 through 2023 loss is projected at $6 billion.
The Ford Blue division, which is focused on internal combustion engine and hybrid vehicles, is projected to earn $7 billion this year, up from $6.8 billion in 2022, while the Ford Pro commercial services division is targeting to nearly double its growth from $3.2 billion to $6 billion.
The company said that "Ford Blue and Ford Pro are both solidly profitable and well-positioned for growth," and that its margin target for overall operations is 10% in 2026, with Model e at 8%.
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In early March, Ford said it was boosting production of six key models as supply chain issues ease up, including the Maverick compact pickup, Bronco Sport SUV and Transit vans along with the electric Mustang Mach-E and F-150 Lightning.
Ford this week unveiled an all-electric Explorer SUV that will be built in Germany for European sales starting this year using technology developed by Volkswagen.
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This was the first time Ford broke out financial results by division rather than region, which is how it will continue moving forward, Lawler said, because "that’s how we’re running the company now."
Ford shares are little changed this year, compared to a 2% gain for the S&P 500.
Reuters contributed to this report.