Ford’s electric vehicle business lost $2.1 billion in 2022 and has projected $3 billion in losses for 2023, according to a new financial reporting structure unveiled Thursday.
It was the first financial report in which the automaker broke out its electric vehicle business from its broader business. Ford has been investing in hybrid and electric vehicles, including the Mustang Mach-E and an all-electric F-150 pickup truck, and announced last year that it would boost electric vehicle spending to $50 billion through 2026.
The results show how the company’s legacy vehicles, including gas-powered options like the F-150, are seeing profits offset by the cost-intensive work of building out the electric vehicle unit, known as “Ford Model e.”
The company’s gas-powered business, which it is now calling Ford Blue, and its commercial and government fleet, Ford Pro, generated $6.8 billion and $3.2 billion in adjusted income in 2022, respectively.
“We’ve essentially ‘refounded’ Ford,” Chief Financial Officer John Lawler said in a news release.
The decision to separate the two divisions represents a major reorganization for Ford under CEO Jim Farley, who said the legacy gas-powered business was holding Ford back.
“It’s not only about changing how we report financial results,” Lawler said. “We’re transforming how we think, make decisions and run the company, and allocate capital for highest returns.”
The electric vehicle division saw losses grow to $2.1 billion from just $900 million the year before, which executives attributed to the growing cost of investment in electric vehicle production.
“As everyone knows, EV start-ups lose money while they invest in capability, develop knowledge, build [sales] volume and gain (market) share,” Lawler said, according to the Associated Press.
The company previously announced plans to release seven new electric vehicles in Europe by 2024, including a battery-powered one-ton van and electrified versions of popular offerings like the Ford Puma. It is also investing billions of dollars in electric vehicle battery-production facilities in Michigan, Kentucky and Tennessee.
Lawler, in a media briefing Thursday, justified the losses as start-up costs that will eventually bring Ford into a more profitable position.
The company is targeting an 8% profit margin for its Model e business by late 2026, according to its release Thursday, contributing to a 10% margin for the company as a whole.
The automaker is due to report its financial results for the first quarter on May 2.