Umair Gaines
Ford Motor Company has been losing money on its electric vehicles (EVs), with a projected loss of $4.5 billion in 2023, up from the previous year's loss of $2.1 billion. Despite this, Ford CEO Jim Farley remains committed to the company's EV expansion, insisting that the next generation of Ford EVs will be profitable. The company's strategy is to gain market share by selling its electric vehicles at a loss, while making profits from its traditional, gas- and diesel-powered vehicles.
| Characteristics | Values |
|---|---|
| Projected loss in 2023 | $4.5 billion |
| Previous projected loss | $3 billion |
| Loss in the first quarter | $722 million |
| Loss in the second quarter | $1.1 billion |
| Loss in the third quarter | $1.8 billion |
| Loss in 2022 | $2.1 billion |
| Number of EVs to be produced by 2024 | 600,000 |
| Number of EVs to be produced by the end of 2023 | 400,000 |
| Loss per EV in the second quarter | $32,000 |
| Profit per vehicle sold by Ford Blue division | $3,200 |
| Target profit for EVs business by 2026 | 8% |
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What You'll Learn
- Ford's EV losses climb but overall profits rise
- Ford's plans to scale up electric vehicle production
- Ford's CFO John Lawler calls the company's losses a 'startup' phase
- Ford loses money on every Ford Lightning it sells
- Ford's electric vehicles allow it to sell more gas-powered cars and comply with emissions regulations
Ford's EV losses climb but overall profits rise
Ford Motor Company is facing significant financial losses in its electric vehicle (EV) division, with projections of a $4.5 billion loss for the year 2023, up from the initially forecasted loss of $3 billion. This loss is attributed to the company's investment in its EV business, including the development of new models such as the electric F-150 Lightning pickup truck. Despite this setback, Ford's overall profits have increased, thanks to the strong performance of its traditional internal combustion engine vehicles.
The company's second-quarter financial results revealed that its EV division, named "Ford Model e," had already lost $1.8 billion in the first half of 2023. This loss is expected to continue in the short term, with Ford anticipating a full-year EBIT loss of $4.5 billion from its Model e division. However, Ford remains committed to its EV expansion and intends to sell 400,000 EVs by the end of 2023, a fourfold increase from the previous year.
Ford's CEO, Jim Farley, has acknowledged the challenges of transitioning to electric vehicles, particularly the slower-than-expected adoption of EVs. However, he remains optimistic about Ford's future in the EV market, stating that the next generation of Ford EVs will be profitable. Farley attributes the current losses to the company's strategic decision to sell its first-generation electric vehicles at a loss to gain market share and establish leadership.
While Ford's EV business faces setbacks, its traditional internal combustion engine vehicles continue to drive overall profits. The company earned 72 cents per share in the second quarter, exceeding analyst forecasts. Additionally, automotive revenue rose 12% to $42.4 billion, outperforming expectations by $2 billion. Ford's hybrid vehicles, such as the hybrid F-150 and the Maverick, have also contributed to their overall success, selling well and providing a bridge between traditional and electric vehicles.
Despite the losses in its EV division, Ford remains dedicated to its electric vehicle expansion. The company has emphasized its commitment to being a major player in the electric revolution, even amidst fierce competition from industry leaders like Tesla. Ford's determination to forge ahead underscores its belief in the strategic importance of establishing itself in the EV market, despite the financial challenges it currently faces.
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Ford's plans to scale up electric vehicle production
Ford Motor Company has been losing money on its electric vehicles (EVs), with a projected loss of $4.5 billion in 2023, up from a $2.1 billion loss in 2022. Despite this, Ford CEO Jim Farley has stated that the company is still committed to its EV expansion and plans to scale up EV production.
Ford's initial plan was to produce 600,000 EVs per year by the end of 2023, but this has been pushed back to 2024. The company's longer-term goal of producing 2 million EVs by 2026 has been delayed indefinitely. However, Ford expects to have the capacity to build EVs at a rate of 2 million per year by the end of 2026.
To improve profitability, Ford is focusing on reducing battery costs, which are currently the most expensive part of an EV. Ford has been buying lithium-ion cells from third-party manufacturers but plans to bring battery-cell manufacturing in-house, either directly or through joint ventures with battery makers. In addition, Ford will offer lithium iron phosphate (LFP) as a lower-cost option on some of its EVs, starting in 2023 with cells purchased from CATL and from a new Michigan factory that will be operational in 2026.
Ford is also realigning its U.S. battery sourcing strategy and production plans to reduce costs, maximize capacity utilization, and support current and future EV production. This includes introducing multiple vehicle styles for both retail and commercial customers, such as an all-new commercial van that will begin production in 2026 in Ohio, followed by two new pickup trucks in 2027.
While Ford is facing challenges in the EV market, the company is committed to innovation and creating new electric and hybrid vehicles that contribute to CO2 reduction.
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Ford's CFO John Lawler calls the company's losses a 'startup' phase
Ford Motor Company is facing significant financial losses in its electric vehicle (EV) division, with projections of a $4.5 billion loss for 2023. This loss is attributed to the company's investment in its EV business, including capabilities, knowledge development, and market share acquisition. Despite the short-term losses, Ford remains committed to its EV expansion and views it as a strategic priority.
In the context of these losses, Ford's CFO, John Lawler, previously described the company's EV startup phase. Lawler, who served as CFO from October 2020 through January 2025, provided insights into Ford's approach to the EV market. He stated, "Ford Model e is an EV startup within Ford... As everyone knows, EV startups lose money while they invest in capabilities, develop knowledge, build volume and gain share." Lawler's comments acknowledge the challenges faced by EV startups, including the need for significant investments in multiple areas.
Lawler's experience within Ford has spanned various roles and international assignments. He has held positions such as vice president of Strategy, CFO for Ford Asia Pacific and Africa, and CEO of Ford China. Lawler's tenure as CFO for Ford Asia Pacific and Africa provided him with strategic insights, as he was involved in setting the company's business strategy for the region. Additionally, his time in China saw Ford achieve record growth, selling over 1 million vehicles in 2015.
Lawler's perspective on Ford's EV losses as a startup phase reflects the company's long-term vision for the EV market. By investing in capabilities and knowledge, Ford aims to establish itself as a major player in the electric vehicle revolution. Despite the current financial setbacks, Lawler and Ford remain committed to their EV expansion plans, recognizing the potential for future profitability and market leadership.
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Ford loses money on every Ford Lightning it sells
Ford Motor Company has been losing money on every Ford Lightning it sells. The company's electric vehicle (EV) division, Ford Model e, lost $1.8 billion in the first half of 2023, with a projected loss of $4.5 billion for the full year. This is more than twice the loss of $2.1 billion recorded in 2022.
Ford's CEO, Jim Farley, has acknowledged that the company is losing money on each EV it sells, but remains committed to its EV expansion. He noted that their lower target for 2023 of 400,000 EVs is still four times higher than their production in 2022. Farley also emphasized that the next generation of Ford EVs will be profitable, describing them as ""radically simplified" and utilizing different battery chemistry and more efficient manufacturing processes.
Ford's strategy of selling the electric version of its top-selling model, the F-150 Lightning, at a loss is part of its plan to gain market share in the EV market. By selling the Ford Lightning at a lower price, they can attract customers and establish themselves as a key player in the electric revolution.
Despite the losses in the EV division, Ford has reported increased overall profits. The company's second-quarter financial results showed a revenue rise of 12% to $42.4 billion, exceeding forecasts. This can be attributed to the continued success of its traditional, gas- and diesel-powered vehicles, with the Ford Blue division making a profit of $3,200 per vehicle sold.
Ford's decision to sell EVs at a loss is influenced by the need to comply with emissions regulations. For every electric F-150 Lightning sold, Ford can sell up to 12 gas-powered vehicles while still meeting these standards. This allows Ford to maintain its profitability while investing in the development and market presence of its EV division.
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Ford's electric vehicles allow it to sell more gas-powered cars and comply with emissions regulations
Ford Motor Company is projected to lose around $4.5 billion from its electric vehicle (EV) division, Ford Model e, in 2023. Despite this, Ford CEO Jim Farley has stated that the company is still committed to its EV expansion. Ford's determination to be a major player in the electric revolution is strategic. By selling electric versions of its top-selling models, Ford can gain market share and establish itself as a leader in the next generation of EVs. This strategy allows Ford to sell more gas-powered cars and comply with emissions regulations.
Ford has split its operations into two businesses: Model e, focused on electric vehicles, and Ford Blue, focused on traditional, gas- and diesel-powered vehicles. The profits from Ford Blue are intended to fund the future development of Model e. In addition to its fully electric vehicles, Ford has also been selling hybrid vehicles, such as the hybrid F-150 and the hybrid Maverick pickup, which have been selling well.
Ford's strategy of selling electric vehicles at a loss is aimed at gaining market share and establishing leadership in the EV market. The company has reduced the price of its electric F-150 Lightning pickup trucks due to cheaper raw battery materials, positioning itself ahead of the industry's next-generation EVs. Ford is also investing in capabilities, developing knowledge, building volume, and gaining share through its EV startup, Ford Model e. Despite the projected loss in its EV division, Ford has reported increased overall revenue, indicating that its gas-powered vehicles continue to sell well.
By investing in EV technology and gaining a foothold in the market, Ford can ensure that it remains competitive as the automotive industry undergoes an electric revolution. This allows Ford to future-proof its business and continue to sell gas-powered cars in the short to medium term while gradually transitioning to electric vehicles. Ford's commitment to environmental sustainability is also demonstrated by its participation in the Vehicle Emissions In-Use Verification Program (IUVP), where it collects emissions data to comply with U.S. EPA and California Air Resources Board-mandated regulations. Additionally, Ford offers performance parts that have been emission-tested and are considered "Street Legal" as they do not adversely affect vehicle emissions. These efforts help Ford maintain compliance with emissions standards and regulations.
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Frequently asked questions
Yes, Ford is losing money on electric vehicles. In 2023, the company projected a loss of $3 billion from its electric vehicle division, but that number rose to $4.5 billion. Ford is losing money on each EV it sells.
Ford's CEO, Jim Farley, has stated that the company is committed to its EV expansion. Ford is willing to sell its electric vehicles at a loss to gain market share. The company expects that the first people who buy their first-generation electrics will also be the first to buy their second-generation electrics.
Ford lost $1.8 billion from its EV division in the first half of 2023, and the company projected a loss of $4.5 billion for the full year. This is over twice as much as the $2.1 billion loss in 2022. Ford is losing about \$32,000 per EV sold.
