Ford says it will burn $3 billion on EVs this year, in a bleak signal for the cars that underpin its future
Ford says its EV business will keep losing money until at least 2026.
Ford's CFO said investors should look at Ford's EV business as a startup within the company.
Ford is aiming to build 2 million EVs annually by 2026.
Ford said Thursday it's still losing billions of dollars on electric vehicles and it won't turn a profit on those cars for at least another three years.
Ford gave a peek into the financials for its electric vehicle business, known as Model e, for the first time Thursday. The Model e segment expects to report a full-year loss of $3 billion in 2023 alone, a stark sign that the company still has a long way to go before it makes money on the cars it says will lead its future.
Ford Chief Financial Officer John Lawler rationalized the expected losses on a call with reporters by explaining that Ford Model e exists as an "EV startup within Ford."
"As everyone knows, EV startups lose money while they invest in capability, develop knowledge, build volume, and gain share," Lawler said on the call.
By 2026, Ford is expecting Model e to start delivering operating profit margins around 8%, which is close to the 10% the company is targeting overall in the same time frame. The profitability goal depends heavily on Ford's plans to ramp up production to build 2 million EVs annually by the end of 2026.
That's a big jump from the company's 2023 target EV production of 600,000 units.
Ford's restructuring gets underway
The details Ford provided Thursday on its Model e segment are part of a larger change in financial reporting that the 119-year-old car company will present to investors Thursday. It's a first look at the strategic implementation of a restructuring announced a year ago by Ford CEO Jim Farley.
Ford last year began the process of splitting its company into three distinct segments, with the goal of putting more separation between its electric and gas-powered vehicle divisions. As part of this restructuring, Ford created Model e, the EV division, Ford Blue, the gas-powered vehicle division, and Ford Pro, the commercial vehicle division.
For now, Ford says, its Blue and Pro divisions will be driving profits while Model e loses money. These segments will report financial results separately going forward, the company said. Ford releases first-quarter results on May 2.
While Model e is slated to lose money this year, Ford provided profitable projections for its Blue and Pro divisions this year. For 2023, Ford Blue is expected to earn about $7 billion for the company, while Ford Pro's earnings before taxes are expected to near $6 billion, the company said Thursday.
More details about this new reporting structure and how Ford will move forward with its restructuring will be covered at a Thursday conference with investors.
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