Ford spends a lot of money: its electric vehicle business is expected to lose $3 billion this year
CTOnews.com, March 23 (Xinhua)-- although Ford Motor Company is generally profitable, its electric vehicle division is still in its infancy and needs to invest a lot of money to build new plants and purchase raw materials. Ford released its financial forecast today, showing that its electric car division will lose $3 billion this year.
According to CTOnews.com, Ford is the first company to launch electric pickups in the US market, as well as a medium-sized electric crossover and an electric freight vehicle for commercial users, according to CTOnews.com. But in order to launch these products, Ford had to spin off its passenger car business. The electric vehicle division is named Ford Model e and the internal combustion engine vehicle division is named Ford Blue, mainly to show investors and analysts that Ford is embracing electrification.
John Lawler, Ford's chief financial officer, said Ford Model e should be seen as a start-up. "it is well known that electric car startups lose money in investing, developing and gaining market share." 'just like Tesla didn't make a profit until 2021,'he said.
In fact, Model e has already lost money: $900 million in 2021, $2.1 billion in 2022, and is expected to lose $3 billion in 2023. The reason is obvious: it doubled the annual production of the Mustang Mach-E to 210000 vehicles and tripled the annual production of the Mustang Mach-E 150 Lightning to 150000 vehicles. In addition, Ford is building a battery development center in Michigan, building battery plants in Kentucky, Tennessee and Michigan, and signing mineral contracts for 600000 electric cars a year.
But two other divisions-Ford Blue and Ford Pro (responsible for commercial vehicles and services)-are expected to generate enough cash flow to reach $9 billion to $11 billion in pre-tax profits and $6 billion in free cash flow. As a result, at this stage, Ford is unlikely to scale back its ambitions in its electric car business, but to absorb losses from Model e temporarily.
Ford said it expected Model e to achieve an EBIT margin of 8 per cent by the end of 2026 and that overall Ford would have an EBIT margin of 10 per cent at that time.
