Ford’s EV Division Faces Massive Losses in 2023
In a shocking turn of events, Ford has reported its 2023 financial results, revealing that its EV division, Ford e, suffered significant losses. While the ICE business raked in substantial profits, the EV sector proved to be the black sheep of the earnings call. The numbers speak for themselves, with Model e alone losing a staggering $4.7 billion throughout the year, including a whopping $1.6 billion in the fourth quarter alone. This translates to a mind-boggling loss of $47,000 per EV unit sold during that period. Unsurprisingly, these figures contributed to Ford’s net loss of $526 million in Q4 2023.
Ford’s CEO, Jim Farley, was compelled to address the dire situation and outline the company’s path to profitability. Farley revealed that a dedicated team has been toiling away for the past two years on a revolutionary flexible EV platform that aims to turn things around for the struggling Ford Model e division. Farley expressed optimism, asserting that this new platform would enable Ford to report profits within a year of production. However, this admission indirectly confirms that the current EV lineup will not be profitable by 2026, as previously announced by Ford.
During his presentation, Farley dropped an intriguing detail about the development of the new EV platform. He mentioned that the task was assigned to a “super-talented skunkworks team” consisting of some of the world’s finest EV engineers. This team operated independently from the rest of the company, akin to a startup within Ford. The new architecture they have designed is a low-cost EV platform that aims to rival Tesla and Chinese carmakers in terms of both cost and performance. This platform will serve as a solid foundation for Ford’s next-generation electric vehicles.
Ford is now undergoing a complete overhaul of its EV strategy, with a newfound focus on smaller cars, particularly two-row crossovers, which have become the most popular segment in the market. The company plans to reduce its investment in developing large EVs, except for a select few in segments where Ford holds a dominant advantage, such as trucks and vans. The new flexible platform promises breakthrough efficiency compared to its Gen-1 EVs, offering “innovations that customers are going to be excited to pay for.”
Looking ahead, Ford’s attention will shift towards smaller EVs, and the new platform will allow for scalability across multiple vehicle types, benefiting from a large install base. This opens up opportunities for Ford to sell software and services, similar to what it currently offers to its Ford Pro customers. Farley also emphasized that Ford’s EV teams will be laser-focused on cost and efficiency as they face stiff competition from affordable Tesla EVs and Chinese OEMs.
To achieve their cost and efficiency targets, Ford will also reevaluate their battery production capacity and vertical integration, two key factors that have contributed to Tesla’s success. The company plans to explore new chemistries and capacities to meet the market’s demands for performance and efficiency. With all these measures in place, Farley remains confident that the next generation of electric vehicles, known as Gen 2, will become profitable within the first year of their launch.
