Ford Motor Co. expects to lose $3 billion in its electric vehicle business this year as the company struggles to transition into the EV market.
In an investor conference call Thursday, Ford CFO John Lawler said the new business model should be viewed as a startup company.
"As everyone knows, EV startups lose money while they invest in capability, develop knowledge, build (sales) volume and gain (market) share,” he said.
Despite the expected losses in 2023, Ford executives predicted the EV unit of the company, called "Ford Model e," should turn an 8% profit margin by 2026 as it invests heavily in the new technology.
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Ford Model e reported losses of $3 billion over the past two years as the company began building new battery factories and assembly plants to support the business transition.
Ford's push into the EV market comes as countries around the world, including the United States, set ambitious targets for reducing carbon emissions. As part of its effort to electrify its fleet, Ford has already launched a handful of EVs, including the Mustang Mach-E and the F-150 Lightning pickup truck.
However, Ford still lags in the EV market behind Tesla, which reported a 22% profit margin in the fourth quarter of 2022.
By the end of this year, Ford expects to be producing about 600,000 EVs per year and will increase production to a rate of 2 million per year by 2026.
Ford officials said they expect the company's gas and hybrid vehicles unit to turn a $7 billion profit in 2023, a modest increase from the $10 billion it earned over the past two years.
Despite the losses in recent years, Lawler said he's hopeful about the path forward as the company fundamentally changes how it thinks and operates.
“We’ve essentially ‘refounded’ Ford with business segments that provide new degrees of strategic clarity, insight, and accountability to the Ford+ plan for growth and value,” he said in a press release. “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.”
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