The financial health of Ford’s various business sectors has recently been in the spotlight. The automaker’s EV and digital services business, Model e, has recorded losses of approximately $3 billion over the past two years, and is not expected to turn a profit until late 2026, according to the company. However, the profitability of Ford’s traditional internal combustion engine business and commercial vehicle units has helped offset these losses, thanks to their respective success in selling cars and trucks.
Ford has recently restructured its company to focus on three global segments, covering EV and digital services, traditional internal combustion engines, and commercial vehicles. Financial reports will now no longer be broken out by region, but instead will provide details on these three areas. The company’s financing arm and longer-term pre-revenue businesses will also be separated.
While the restructuring of the company and its accompanying financial reports are not purely an accounting exercise, they do offer insights into the company’s financial standing, according to Jim Farley, the CEO of Ford. This decision was made to increase focus, speed, and accountability, with a view to ensuring that the company doesn’t become stagnant.
Ford Pro, the commercial vehicle unit, saw profits rise from $2.7 billion in 2021 to $3.2 billion in 2022, while Ford Blue, which covers internal combustion and hybrid vehicles, saw profits jump from $3.3 billion in 2021 to $6.8 billion in 2022. The Model e unit, however, recorded losses of $900 million in 2021 and $2.1 billion in 2022, and is forecast to lose $3 billion in 2023.
Ford’s future plans include the production of second and third-generation EVs, with the second-generation set to launch in the mid-decade. The company is working on various capital projects, such as the $5.6 billion BlueOval city complex in Tennessee, and is aiming to produce 600,000 EVs by the end of 2023 and two million by the end of 2026. Ford has confirmed that it expects full-year adjusted EBIT to be $9 billion to $11 billion, with adjusted free cash flow of about $6 billion.
Ford’s quest for profitability in the EV sector will require more than simply producing and selling EVs. The company will need to work on keeping its costs under control and improving operating efficiencies, which has been an issue for the automaker in the past.