Ford Expects a Big Loss of Several Billions on Electric Cars

Ford expects to lose $3 billion in electric vehicle business this year

by Sededin Dedovic
Ford Expects a Big Loss of Several Billions on Electric Cars
© Nathan Howard / Getty Images

Ford is anticipating a substantial $3 billion loss in its electric vehicle (EV) business this year, marking an approximate 50% increase from the $2.1 billion deficit incurred in the preceding year. Despite these projected losses, the American automaker envisions a strategic pivot towards profitability through its Sustainable Urban Solutions (SUS) models and commercial vehicles.

The losses are primarily attributed to ongoing investments in the expansion of production capacities and the development of cutting-edge EV models on a dedicated platform. The electric vehicle unit, named Model e, remains a focal point for Ford's forward-looking initiatives, despite the current financial setbacks.

In contrast to the EV segment, Ford is optimistic about its other business units. Ford Blue, responsible for the SUS engine business, is expected to contribute around $7 billion in earnings before interest and taxes in the current fiscal year.

Simultaneously, Ford Pro, the commercial unit, is projected to generate approximately $6 billion. These units collectively earned $6.8 billion in 2022, showcasing a significant improvement from the $3.2 billion reported in the previous year.

A notable shift in Ford's financial reporting methodology accompanies these developments. For the first time, the company publicly discloses results for its three distinct business units, a structural change stemming from a comprehensive company-wide reorganization in 2022.

This altered financial reporting approach abandons regional breakdowns, such as North America, Europe, and China, in favor of a more granular focus on the individual business units. John Lawler, Ford's Chief Financial Officer, emphasized the significance of this organizational overhaul in enhancing focus, speed, and accountability.

The company's leadership believes that this strategic shift will enable them to navigate the challenges of the rapidly evolving automotive landscape more effectively. Looking ahead, Ford aims to achieve an 8% margin for its electric models and a 10% company-wide margin by the close of 2026.

This ambitious target underscores the company's commitment to transforming its electric vehicle business into a financially robust and sustainable venture over the next few years.