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Vladimir Myronenko
Ford Motor said on Thursday that its electric vehicle division has generated $3 billion in losses over the past two years. What’s more, losses are expected to be around the same amount this year as the company invests heavily in the development and deployment of new technologies.
Image Source: Ford
Ford has moved to a new way of reporting and now separately reports the performance of three business units: Electric Vehicles, ICE Vehicles and Commercial Vehicles. CFO John Lawler said the electric vehicle division, called the Ford Model e, should be seen as a start-up within Ford. “As everyone knows, EV start-ups lose money by investing in capabilities, developing knowledge, increasing volume (sales) and increasing share (market).” – he said. According to Lawler, the new corporate reporting system is designed to provide greater transparency to investors than previous reporting by geographic region.
Model e lost $900 million in 2021 and $2.1 billion last year. Over the past two years, Ford has announced that it will build four battery plants and a car assembly plant, and will invest heavily in acquiring raw materials to make electric vehicles.
By the end of this year, the company plans to produce up to 600 thousand electric vehicles per year, and by the end of 2026 – 2 million electric vehicles per year. The company currently offers three electric-powered models in the US market: the Mustang Mach E crossover, the F-150 Lightning pickup truck, and the Transit commercial van. Laurel said that Model e is working on the creation of second and even third generation electric vehicles.
The company expects the Ford Model e electric vehicle division to be profitable by the end of 2026 with an 8% margin. To achieve this, $15,000 would have to be saved on the production of each electric vehicle. To save money, Ford intends to simplify the production process by using common parts in different models of next-generation electric vehicles. It also applies a completely new way of designing cars with a focus on energy efficiency, including aerodynamics. Batteries are also expected to become cheaper and other measures to reduce costs are expected.
Ford Blue, its hybrid ICE and gas-electric vehicle division, has earned just over $10 billion over the past two years. In turn, Ford Pro, its commercial vehicle division, has earned $5.9 billion over the same period. According to the company’s forecast, Ford Blue will make $7 billion in profit this year, slightly better than last year, and Ford Pro will make $6 billion in profit, almost double what it was last year.
