Here’s how many billions Ford expects its EV ‘startup’ to lose in 2023
Before introducing its new financial reporting format Thursday, Ford Motor (F) revealed it expects its EV startup unit, Model E, to lose $3 billion this year as it scales production.
Ford had a solid year selling over 61,000 EVs in the US in 2022 and climbing to become the second-largest EV maker behind only Tesla in the states.
After revealing the Mustang Mach-e in 2019 as one of the most highly anticipated EV releases, the American automaker expanded its lineup by converting another iconic name to electric with the Ford F-150 Lightning pickup.
The electric pickup generated an overwhelmingly positive response, racking up over 200,000 reservations (roughly three years of backlog) by December 2021.
Despite the surging demand, Ford’s CEO Jim Farley has acknowledged the automaker needs to cut costs and streamline production to remain competitive. The company revealed last March it would report in three distinct business divisions to maximize growth and visibility, including Ford Model e (EVs), Ford Pro (commercial and software), and Ford Blue (ICE).
Ford expects its EV unit to lose billions
Ford announced Thursday its Model e electric vehicle business lost $2.1 billion in 2022 and $6 billion from 2021 to 2023 as it ramped production.
Despite this, Ford expects the contribution margin of its first-generation EVs (revenue minus certain variable costs) to approach break even this year but will be more than offset with new investments.
The automaker expects the losses to expand this year with another full-year loss of around $3 billion. Meanwhile, by late 2026, Ford expects its EV business to turn a pre-tax profit restating its 8% EBIT margin goal.
Ford looks to achieve a global run rate of 600,000 by the end of this year, which increases to 2 million by the end of 2026 as the division looks to become profitable.
Although Ford had a setback earlier this year, pausing F-150 Lightning production, it has since fixed the issue and says it’s on track to triple production this year.
We’ll keep you updated as Ford walks investors and analysts through a “teach-in” about the company’s new financial reporting format.
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