Ford to lose $3 billion in consumer electric vehicle sales this year
Ford (F) said it will lose $3 billion on its consumer electric vehicle sales this year, but it still expects to hit the profit targets it has set for this year of between 9 and $11 billion.
Ford said these EV losses and overall profit both predate interest and tax expenses. The $3 billion loss is roughly equal to what it has lost on electric vehicles on this basis over the past two years combined. It said it lost about $900 million in 2021 and $2.1 billion in 2022. This is the first time it has given a breakdown of the results of its electric vehicle operations.
But he said he still expects EVs to start making money soon, growing from a 40% operating loss margin last year, when he sold around 96,000 electric vehicles, generating $5.3 billion in revenue, at a profit margin of around 8% by the end of 2026. It expects increased production of electric vehicles to drive global product by these vehicles at an annual rate of 2 million by the end of this year.
Ford slashed the price of one of its electric vehicles, the Mustang Mach E, earlier this year, and Tesla has also slashed the price of its cheaper models in various markets around the world.
While the Mach E and F-150 Lightning EV pickup have a long list of pending customers, Ford CEO Jim Farley said on an earnings call earlier this year that Ford had encountered many problems with their production, making the rise of electric vehicles much more. expensive than expected.
“We didn’t realize that our wiring harness for Mach-E was 1.6 miles longer than needed. We didn’t know it was 70 pounds more and it was (cost extra) $300 per battery,” he said on a call with investors. “Little did we realize we underinvested in braking technology to save on battery size.”
Farley said these and other cost issues meant Ford was “leaving about $2 billion in profit on the table.”
Ford, which will meet with investors later Thursday, released EV financial data early Thursday that will be featured as part of the presentation.
The presentation will detail how Ford will present its results going forward, no longer breaking down profits and losses by geographic region, but rather by product line.
“Ford Blue” is the segment for consumer vehicles equipped with internal combustion engines (ICE) and hybrid vehicles, “Ford Model e” is the segment for electric vehicles and Ford Pro for commercial vehicles, including ICEs and vehicles electrical.
Last year, he made $6.8 billion in earnings before interest and taxes from Ford Blue, $3.2 billion from Ford Pro, in addition to $2.7 billion from Ford Credit, which has covered last year’s losses. He expects to earn about $7 billion from Ford Blue and $6 billion from Ford Pro this year, though Ford Credit’s profits are expected to drop about 50% to $1.3 billion.