US carmaker Ford expects its newly-create electric vehicle business to record a loss of $3 billion this year as it ramps up electrification investment, Kallanish reports.
Announcing changes to its financial reporting, the company said it was “refounded” to drive value and growth. The division - now by segment, rather than regional markets - includes Ford Blue for petrol and hybrid cars; Ford Model e for all-electric vehicles; and Ford Pro for commercial products and services.
Based on the new divisions, Ford Model e posted a loss of $900 million in 2021 and $2.1 billion in 2022. Despite the growing earnings deficit, the carmaker reiterated its 8% pre-tax margin target, driven by “ambitious scaling of EV production run rates.”
By year-end, Ford plans to be producing 600,000 BEVs. This volume should increase to 2m units by the end of 2026.
Cfo John Lawler says the changes will provide “new degrees of strategic clarity, insight and accountability” to the so-called Ford+ plan targeting growth and value.
“It’s not only about changing how we report financial results; we’re transforming how we think, make decisions and run the company, and allocate capital for highest returns,” he adds.
The new strategy should deliver “solid growth and healthy profitability,” but the company notes that it remains “highly dependent” on suppliers to deliver components in accordance with its production schedule and specifications. Disruptions in the supply chain affecting availability of key components such as semiconductors and or raw materials such as lithium, cobalt, nickel, graphite and manganese can impact Ford’s production volumes.
To facilitate access to battery raw materials, Ford has entered into and expects to continue to enter into multi-year supplier commitments. Yet, its long-term competitiveness depends on the successful execution of Ford+, the company concludes.
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