Ford’s EV business lost $2 billion in 2022, offset by big profits in fleet and legacy units
The Detroit automaker expects 2023 to unfold along similar lines, forecasting an adjusted loss of $3 billion for its EV unit, adjusted earnings of about $7 billion for its internal combustion unit, and adjusted earnings of roughly $6 billion for its fleet business.
The financials are the first detailed look at unit profitability as Ford unveils a new financial reporting structure that aims to give Wall Street a better understanding of how its electric vehicle business is evolving — and how profits from its internal combustion businesses are funding its electric transformation.
The reformatted reports follow a sweeping reorganization, announced in March 2022, that divided Ford’s global business into five business units: “Ford Blue,” its traditional internal combustion engine business; a new “Ford Model e” electric vehicle unit; “Ford Pro,” containing its commercial and government fleet business; “Ford Next,” which includes nonautomotive mobility solutions and other future tech; and its existing Ford Credit financial services subsidiary.
“We’ve essentially ‘refounded’ Ford, with business segments that provide new degrees of strategic clarity, insight and accountability to the Ford+ plan for growth and value,” CFO John Lawler said in a news release. Lawler said the new reporting structure is a reflection of how he, CEO Jim Farley, and other senior Ford executives are now thinking about and operating Ford’s businesses.
Ford on Thursday shared versions of its 2021 and 2022 financial results that had been restated according to the new format to give analysts and investors a basis for comparison going forward. Those revised results show that while Ford Model e, the company’s EV unit, lost $2.1 billion last year, Ford Blue and Ford Pro generated $6.8 billion and $3.2 billion of adjusted operating income, respectively.
Those 2022 Model e losses more than doubled unit losses from 2021, as the company continues to ramp up EV production.
Ford reiterated Thursday that it expects to be building EVs at a rate of 2 million per year by the end of 2026. It hopes to achieve a 10% profit margin on an EBIT basis by that time, with an 8% adjusted EBIT margin for Ford Model e.
Before the restructuring was announced, some Wall Street analysts had urged Ford to spin off its EV business. But Farley and other executives argued that keeping the EV unit in house allows it to draw on the existing manufacturing expertise and other strengths now housed in Ford Blue and Ford Pro. This gives it a significant advantage over so-called “pure play” EV startup companies that have had to create manufacturing bases from scratch, they said.
The company hopes that the new financial reporting structure will help analysts and investors understand how profitable its core internal combustion businesses are, while making it easier to track the progress of Ford’s overhaul over time.
Ford will hold a “teach-in” to explain the new reporting structure to investors and analysts at 10 a.m. ET on Thursday. A live webcast of the event will be made available at Ford’s investor relations site.
The automaker will report its first-quarter results May 2 and will provide a deeper dive into its strategy and the progress of its restructuring efforts at its annual Capital Markets Day on May 22.