The badge of a Ford Motor Co. E-Transit electric vehicle during a presentation in Washington, DC, U.S., on Wednesday, July 28, 2021.
Al Drago | Bloomberg | Getty Images
Ford Motor said Thursday its electric vehicle business lost $2.1 billion on an operating basis last year, a loss more than offset by a $10 billion operating profit between its internal combustion engine and fleet businesses.
The Detroit-based automaker expects 2023 to be a similar year, forecasting an adjusted loss of $3 billion for its EV unit, an adjusted profit of about $7 billion for its internal combustion engine unit and an adjusted profit of about $6 billion for its fleet business.
The financials are the first detailed look at unit profitability as Ford unveils a new financial reporting structure aimed at giving Wall Street a better understanding of how its electric vehicle business is performing — and how the profits from its internal combustion engine business to finance its electric transformation.
The reformatted reports follow a major restructuring announced in March 2022 that split Ford’s global business into five divisions: ‘Ford Blue’, its traditional internal combustion engine business; a new electric vehicle unit “Ford Model e”; “Ford Pro”, which includes its commercial and government fleet business; “Ford Next”, which includes non-automobile mobility solutions and other future technologies; and its existing financial services subsidiary Ford Credit.
“We have essentially ‘refounded’ Ford with business segments that bring a new level of strategic clarity, insight and accountability to the Ford+ plan for growth and value,” said CFO John Lawler in a press release. Lawler said the new reporting structure reflects how he, CEO Jim Farley and other senior Ford executives now think about and operate Ford’s businesses.
Ford released versions of its 2021 and 2022 financial results on Thursday, adjusted under the new format to provide analysts and investors with a basis for comparison going forward. These revised results show that Ford Model e, the company’s EV unit, lost $2.1 billion last year, while Ford Blue and Ford Pro lost $6.8 billion and $3.2 billion, respectively. dollars in adjusted operating income.
Those e 2022 model losses have more than doubled unit losses from 2021 as the company continues to ramp up EV production.
Ford reiterated Thursday that it expects to build EVs at a rate of 2 million per year by the end of 2026. It hopes to achieve a 10% profit margin on an EBIT basis by then, with an 8% adjusted EBIT margin for Ford Model Z.
Before the restructuring was announced, some Wall Street analysts had urged Ford to spin off its EV business. But Farley and other executives argued that keeping the EV unit in-house allows it to draw on existing manufacturing expertise and other strengths now housed in Ford Blue and Ford Pro. This gives it a significant advantage over so-called “pure” EV startup companies that have had to build production facilities from scratch, they said.
The company hopes the new financial reporting structure will help analysts and investors understand how profitable its core internal combustion engine business is, while also making it easier to track the progress of Ford’s overhaul over time.
Ford will hold a “teach-in” Thursday at 10 a.m. ET to explain the new reporting structure to investors and analysts. A live webcast of the event will be made available on Ford’s Investor Relations website.
The automaker will report its first-quarter results on May 2 and will provide a deeper look into its strategy and the progress of its restructuring efforts at its annual Capital Markets Day on May 22.