Ford Expects to Incur a $3 Billion Loss on EVs in 2021, Despite Increasing Sales
According to recent projections from Ford, their electric vehicle department, Model e, is expected to accrue greater losses than ever before. Last year, the losses amounted to $2.1 billion, but they are anticipated to rise to an alarming $3 billion by 2023. It's worth noting that this increase in losses will occur concurrently with the growth in sales of the Mustang Mach-E electric crossover and F-150 Lightning full-size electric pickup truck. Alongside these sales, Ford is investing in greater production, which further highlights the adverse impact of the predicted losses.
On a Thursday morning, Ford spoke to reporters regarding a new financial-reporting framework. The company declared a revamped structure, consisting of three sub-divisions: Ford Blue (vehicles utilizing gas/hybrid technologies), Ford Model e (emerging EVs), and Ford Pro (commercial vehicles).
According to CFO John Lawler, Ford has undergone a massive transformation that is equivalent to starting the company again from scratch. They have introduced new business segments that offer increased strategic clarity, understanding, and responsibility towards the Ford+ plan that aims for growth and worth. The changes are not merely cosmetic and extend beyond financial results, with Ford completely changing their mindset, decision-making process, and operations, including how they invest their capital to achieve the highest possible returns.
The money lost by the part of Ford that deals with electric vehicles will be compensated for by an anticipated rise in revenues for the other two divisions of the company. Lawler has predicted around $7 billion in profit before interest and taxes for Ford Blue and approximately $6 billion for Ford Pro this year. When talking to members of the press, Lawler clarified why the EV segment is expected to experience financial deficits.
According to him, Ford Model e is a new electric vehicle venture under the Ford brand. It is common knowledge that electric vehicle startups tend to operate at a financial loss as they invest in improving their abilities, acquiring expertise, increasing production, and expanding market share.
As Ford puts more effort into increasing electric vehicle production, the losses will also grow. To achieve this goal, the company has announced the creation of two extra battery-cell factories in Kentucky and another one in Tennessee. Additionally, Ford also intends to invest in constructing a new lithium-iron-phosphate battery plant in Marshall, Michigan, which will cost $3.5 billion.
Jack Fitzgerald has a deep passion for cars that began with his unwavering love for Formula 1. During his time in college, he briefly worked as a detailer for a local dealership group. However, he soon realized he needed a more permanent solution to fulfill his desire to drive all the new cars he could not afford. Therefore, he decided to pursue a career in auto writing. Jack relentlessly pursued his dream by hounding his college professors at the University of Wisconsin-Milwaukee, enabling him to explore the auto world throughout Wisconsin. Eventually, he landed his ideal job at Car and Driver. Currently, Jack aims to prolong the life of his 2010 Volkswagen Golf despite its inevitable end.
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