Wednesday, May 29, 2024
NewsFord expects losses from its Model e entity in 2023

Ford expects losses from its Model e entity in 2023

  • Ford Pro and Ford Blue are profitable.

  • Ford’s Model e must deal with the same reality as a startup.

  • Ford plans on reaching a 600,000 production capacity by the end of the year.


 

The American giant expects to record losses of around three billion US dollars in 2023. It should be noted that this is the Model e division, as Ford separated its company into three entities last year.

Indeed, the other two companies, Ford Pro and Ford Blue, are profitable, with the manufacturer even forecasting profits (before interest and taxes) of nearly seven billion dollars for Ford Blue. Ford Pro, for its part, should in principle record profits of nearly six billion dollars in 2023.

This announcement is not surprising, as the Ford Model e entity must deal with the reality of a new company – or startup, if you prefer the popular expression – that must constantly invest large sums of money to build battery plants and assembly plants, among other things. In the case of factories that are converted to produce electric vehicles, there are also investments to be made. And that’s not all, the development of all these new EVs is very expensive and as the industry goes through this important electric shift, this phenomenon of massive financial losses is not likely to fade quickly.

The good news for Ford is that its other two divisions are doing well these days. The Ford Pro division caters to those customers interested in commercial vehicles, while for Ford Blue, the current lineup of vehicles with internal combustion engines continues to bring money for Ford.

2022 Ford E-Transit electric van
2022 Ford E-Transit electric van | Ford

Ford’s CFO John Lawler was reassuring, however, that the automaker should be approaching break-even contribution margins for its electric vehicles in 2023. With enhanced production capacity – Ford plans to assemble 600,000 electric vehicles annually by the end of the year -, while by 2026, the goal is still to produce two million vehicles per year.

With increased capacity, Ford’s electric entity should get there. And with the other two profitable divisions, including Ford Pro, which wants to ramp up production of its commercial van, the Ford E-Transit, and the arrival of a new generation of the Super Duty truck, profits should follow.

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