Ford Motor Co. is set to lose $3 billion on its electric vehicle business this year — but it expects losses to reverse in the coming years as volumes of plug-in vehicles grow.
In the meantime, billions of dollars in profits from internal-combustion engine and commercial vehicles are bolstering the Dearborn automaker's financial results, according to new numbers released as part of an overhaul of the way the company reports financials.
Executives on Thursday will host a "teach-in" event for investors and analysts on changes to Ford's financial reporting. Instead of reporting key financial metrics by geographic region, the automaker will begin reporting results for each of its business units.
The changes in how the company reports financial results reflect a broader change: the restructuring of the nearly 120-year-old automaker, initiated by CEO Jim Farley last year, into three business segments focused, respectively, on gas and hybrid vehicles, commercial customers, and EVs and software.
Ford's accounting team went back and recast some financial metrics from 2021 and 2022 to align with the new segments. In 2021, the company's gas and hybrid business posted adjusted operating profits of $3.3 billion. The EV business lost $900 million. And the commercial business had adjusted operating profits of $2.7 billion, the automaker reported Thursday. Those results contributed to adjusted operating profits of $10 billion for the year, including other units such as Ford's financial services arm.
Then in 2022, the legacy business grew to $6.6 billion in adjusted operating profits, while losses in the EV business grew to $2.1 billion. Adjusted operating profits for Ford's commercial vehicle business grew to $3.2. In all, the automaker reported adjusted operating profits of $10.4 billion for the year.
This year, Ford expects EV losses to grow but for the other business segments to remain solidly profitable. The company is projecting $7 billion in operating profits for Ford Blue, the gas and hybrid business, up slightly from 2022. It expects earnings from Ford Pro, its commercial vehicle business, to nearly double to roughly $6 billion.
Chief Financial Officer John Lawler — who has called Ford Model e "a startup within Ford" — chalked up the uptick in EV losses to the large investments Ford is making to scale up its EV business. The automaker, for example, is investing billions of dollars in developing its second- and third-generation EVs, and to build numerous EV battery plants. Executives on Thursday are expected to provide analysts and investor greater detail on how they plan to reverse losses and hit an 8% operating profit margin for the EV business by the end of 2026.
"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," Lawler said in a statement. "It's not only about changing how we report financial results; we're transforming how we think, make decisions and run the company, and allocate capital for highest returns."
Ford on Thursday reiterated some of the key financial targets it has set as part of its $50 billion electrification plans. The automaker is still aiming to reach a 10% adjusted operating profit margin for the company as a whole by the end of 2026. It reaffirmed that it expects adjusted operating profits of between $9 billion and $11 billion this year.
The automaker is moving to scale EV production to an annual run rate of 600,000 units by the end of this year and to 2 million units by the end of 2026 as it aims to hit its 2026 target for Ford Model e.
Ford will report first-quarter financial results May 2, and then on May 22 will host a capital markets event.
