Ford finances steep EV loss with US$10 billion in legacy ICE vehicle profits
Ford gave one of the first indications how legacy automakers will finance the transition to electric cars as it started to reporting the financials of its ICE vehicle and EV businesses separately. The Ford Blue department which is in charge of making and distributing cars with internal combustion engines, as well as the Ford Pro fleet business, made US$10 billion in profit last year.
The recently established Model E division that deals solely with the development and sales of Ford's electric vehicles like the F-150 Lightning and Mustang Mach-E, however, lost it US$2.1 billion. Ford is treating Model E as a startup with a lot of money poured into powertrain and battery R&D, financing it not only by its EV sales, but also from its legacy car operations.
Ford expects the EV business model to gradually become profitable with the scaling of operations and introduction of more vehicles, but also recently launched a cost-cutting campaign to streamline assembly and ensure cheaper LFP batteries, including making its own cells.
By 2027, Ford expects to be making more than 2 million electric vehicles per year, earning an 8% adjusted margin from them. For 2023, however, it forecasts a $3 billion loss from its electric car efforts which would again be offset by up to $13 billion in profits from its other businesses.