Ford predicted a $3 billion loss on its consumer sales of electric vehicles this year, but it still anticipates meeting its profit goals of $9 to $11 billion. According to Ford, the overall profit and those EV losses both occur before interest and tax-related costs. It lost on EVs on that basis over the last two years combined, which is roughly equivalent to the $3 billion loss. It claimed that in 2021 it lost about $900 million and in 2022 it lost $2.1 billion. It did so for the first time, breaking down the outcomes of its EV operations.
Although it sold about 96,000 EVs last year, generating $5.3 billion in revenue, it said it still expects EVs to start turning a profit soon, moving from a 40% operating loss margin to about an 8% profit margin by the end of 2026. By the end of that year, it anticipates that increased EV production will have increased the number of EVs produced worldwide to 2 million annually.
Even if Ford meets its profit margin targets for the EV business, it will still be far less profitable than EV leader Tesla
It reported a 22% profit margin in the fourth quarter, excluding interest, taxes, and depreciation and amortisation. While this is not an exact comparison to the profit margins reported by Ford and other long-standing automakers, it does show that Tesla has a significant lead in making a profit selling EVs, while legacy automakers struggle to make a profit on electric vehicles.
When Ford increased the production of its EVs earlier this year, the price of one of them, the Mustang Mach E, was reduced. Tesla has also reduced the price of its more affordable models in a number of international markets.
Although there is a long waiting list for both the Mach E and the F-150 Lightning EV pickup, Ford CEO Jim Farley stated during an earnings call earlier this year that Ford encountered many production issues, making the ramp up of EVs much more expensive than it had anticipated.
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