Ford Motor Co.'s electric vehicle business has recorded losses of $3 billion before taxes in the past two years, as the automaker taps into new technologies, as per a report from AP on Thursday, March 23.
The company announced these figures on Thursday, following the introduction of a new system for reporting financial results. The new structure creates three operating units, separating profitable internal combustion and commercial vehicle operations from electric vehicles.
According to the new system, the electric vehicle unit, dubbed "Ford Model e," incurred pretax losses of $900 million in 2021 and $2.1 billion in 2022.
Ford Motor Company' logo is seen on the side of the building at the unveiling of their new electric F-150 Lightning outside of their headquarters in Dearborn, Michigan on May 19, 2021.
Ford's EV Unit
The unit is expected to lose $3 billion this year, as Ford invests heavily in building four new battery factories, a new vehicle assembly plant, and raw materials acquisition for electric vehicles.
Chief Financial Officer John Lawler likened Model e to a startup company within Ford, stating that "EV startups lose money while they invest in capability, develop knowledge, build (sales) volume and gain (market) share."
He added that Model e is working on second- and even third-generation electric vehicles, and currently offers three EVs for sale in the US, which are the Mustang Mach E SUV, the F-150 Lightning pickup, and an electric Transit commercial van.
Ford's new corporate reporting system aims to provide investors with more transparency than the previous system of reporting results by geographic regions.
The automaker reported earnings for each of its three units during the past two years.
While the electric vehicle unit Model e suffered losses of $900 million in 2021 and $2.1 billion in 2020, Ford Blue, which sells internal combustion and gas-electric hybrid vehicles, earned just over $10 billion before taxes during the same period. Ford Pro, the commercial vehicle unit, made $5.9 billion in earnings in those years.
600,000 EVs Per Year
Looking ahead, Ford expects to be producing electric vehicles at a rate of 600,000 per year by the end of the year, and 2 million per year by the end of 2026.
Lawler anticipates that Ford Blue will post a $7 billion pretax profit in 2022, slightly better than last year, while Ford Pro is expected to earn $6 billion before taxes, almost double its earnings from last year.
Ford recently unveiled a new Explorer model for Europe, but this time, it will be entirely electric. The new Explorer is one of the first of numerous electric vehicles that the company will launch as part of its EV rebranding.
This new electric vehicle, according to the US automaker, combines German engineering and American design.
The flexible MEB design from Volkswagen will be used by Ford to build this car, which will be assembled in Cologne, Germany. It will be the first of the automaker's two vehicles in 2019 to make use of the electric platform as per the agreement between the two businesses.
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