Ford is a legacy carmaker that is amidst transitioning from manufacturing ICE-powered vehicles to EVs. This phase is bound to incur some losses as suggested by its latest report.
Ford has revealed its financial report for Q1 2023. Interestingly, the losses incurred on the EVs are huge. But that is a part of the transition from ICE-powered cars to EVs. In fact, that is true for almost all the legacy carmakers where the investment in the infrastructure to manufacture electric cars is huge and the revenues generated by EVs are still comparitively tiny. As a result, carmakers have announced their timelines when they think they will break even in terms of profits from the EV business.
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Ford Financial Report for Q1 2023
As per this report, Ford expects to lose $3 billion this year on EVs. That is because it plans to double the production of Mach-E and triple the production of the F-150 Lightning pickup truck. In fact, it lost a staggering $2.1 billion in 2022 taking the total to a jaw-dropping $6 billion since 2021. However, the report says that Ford expects to break even in its EV business sometime this year. It aims to hit an 8% EBIT figure by the end of 2026 which is quite ambitious. But with the rate of EV adoption globally, it is certainly possible.
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In the first quarter of 2023, Ford generated $700 million in revenue from the EV segment which is a decrease of 27% from last year. Specifically, the sales of Mach-E dropped by 20% to just over 5,400 units compared to last year. This can be attributed to the retooling of Ford’s Mexico factory in order to boost sales for the second half of the year. Now, Ford has reopened the orders for Mach-E.
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In total, the net income of Ford Model e in 2023 is $1.8 billion compared to the net loss of $3.4 billion in 2022. The prime reason for that loss was the depreciation in the value of its Rivian investment. Ford ended the quarter with almost $29 billion in cash and over $46 billion in liquidity. The overall revenue reached $41.5 billion, which is 20% more than a year ago. Its commercial and software business unit, Ford Pro observed the income triple to $1.4 billion. With the rise in EV adoption globally, it’s just a matter of time before companies break even on EV investments and start generating healthy profits.