Ford’s electric vehicle business lost $2 billion in 2022, offset by fleet and legacy

Ford Motor said on Thursday its electric vehicle business lost $2.1 billion last year on an operating basis, more than offset by $10 billion in operating profit between its internal combustion engine divisions and fleet.

The Detroit automaker expects 2023 to play out similarly, forecasting an adjusted loss of $3 billion for its electric vehicle division, an adjusted profit of about $7 billion for its internal combustion engine, and an adjusted profit of approximately $6 billion for its fleet. .

The financials are the first detailed look at the division’s profitability as Ford releases the report. new financial statements a framework that aims to give Wall Street a better understanding of how its electric vehicle business is evolving and how profits from its combustion engine businesses are funding its electric transformation.

The reformatted reports follow a sweeping reorganization announced in March 2022 that split Ford’s global business into five business units: “Ford Blue”, its traditional combustion engine business; the new Ford Model e electric car; “Ford Pro”, which houses a commercial and government fleet; “Ford Next”, which includes solutions for non-automobile mobility and other technologies of the future; and its existing financial services subsidiary, Ford Credit.

“We have essentially rebuilt Ford with business segments that provide new levels of strategic clarity, understanding and accountability for the growth and value of Ford+,” Chief Financial Officer John Lawler said in a press release. Lawler said the new reporting structure is a reflection of how he, CEO Jim Farley and other senior Ford executives now think about and manage Ford’s business.

Ford on Thursday shared versions of its 2021 and 2022 financial results that have been restated according to the new format to give analysts and investors a basis for comparison going forward. These revised results show that while Ford Model e, the electric vehicle division of the company, lost $2.1 billion last year, Ford Blue and Ford Pro posted adjusted operating income of $6.8 billion and $3.2 billion. billion dollars, respectively.

Those 2022 Model e losses have more than doubled the unit losses compared to 2021 as the company continues to ramp up electric vehicle production.

Ford confirmed on Thursday that it plans to produce electric vehicles at a rate of 2 million a year by the end of 2026. He hopes to achieve a 10 percent EBIT margin by then, with an 8 percent adjusted EBIT margin for Ford. Model e.

Before the restructuring was announced, some Wall Street analysts urged Ford to spin off its electric vehicle business. But Farley and other executives have argued that keeping the electric vehicle division in-house allows it to leverage existing manufacturing expertise and other strengths now found in the Ford Blue and Ford Pro. This, they say, gives it a significant advantage over so-called “clean” electric vehicle start-up companies that have had to build production bases from scratch.

The company hopes the new financial reporting structure will help analysts and investors understand how profitable its core combustion engine business is, as well as make it easier to track the progress of Ford’s overhaul over time.

Ford will host a “training session” to explain the new reporting structure to investors and analysts at 10:00 am ET Thursday. A live webcast of the event will be available on the Ford website. investor relations website.

The automaker will report its first-quarter results on May 2 and elaborate on its strategy and the progress of its restructuring efforts at the annual Capital Markets Day on May 22.