Although Ford Motor Company is profitable as a whole, its electric vehicle division is still in its infancy and needs to invest a lot of money in building new factories and purchasing raw materials. Ford released the company’s financial forecast today, showing that its electric vehicle division will lose $3 billion this year.
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Ford is the first company in the U.S. market to launch an electric pickup, along with a mid-size electric crossover and an electric cargo van for business users. But to launch these products, Ford had to spin off its passenger car business. The electric vehicle division will be named Ford Model e, while the internal combustion engine vehicle division will be named Ford Blue, a move designed to let investors and analysts see that Ford is embracing electrification.
John Lawler, Ford’s chief financial officer, said the Ford Model e should be considered a startup. Just like making a profit.
In fact, the Model e division is already losing money: $900 million in 2021, $2.1 billion in 2022, and a projected $3 billion loss in 2023. The reason is obvious: It has doubled Mustang Mach-E production to 210,000 a year and tripled F-150 Lightning production to 150,000 a year. In addition, Ford is building a battery development center in Michigan, building battery factories in Kentucky, Tennessee and Michigan, and has signed contracts for minerals needed for 600,000 electric vehicles per year.
But the other two divisions — Ford Blue and Ford Pro (commercial vehicles and services) — are expected to bring in enough cash to generate between $9 billion and $11 billion in pre-tax profit and $10 billion in free cash flow. $6 billion. So at this stage, Ford is unlikely to scale back its EV ambitions and instead absorb losses in the Model e division for now.
Ford said it expects to achieve an 8 percent EBIT margin on the Model e by the end of 2026, and overall, Ford will have a 10 percent EBIT margin by then.