Despite significant government funding, Ford Motor Co. is projected to lose $3 billion in its electric vehicle division this year.
Last week, Ford CFO John Lawler addressed this loss, suggesting that it is an expected step in the process of creating EVs. He said, “As everyone knows, EV startups lose money while they invest in capabilities, develop knowledge, build volume, and gain share.”
“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 about the company’s recent push towards EV production. “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.”
Last year, the company received $100 million to hire 3,030 workers for EV production. Just two months later, Ford laid off 3,000 white-collar workers, mainly in Michigan. That same year, Ford lost $2.1 billion in its EV division – totaling a loss of $5 billion in two years.
Ford CEO and President Jim Farley spoke to Fox News about the reality of producing EVs, insisting that the US cannot continue to import batteries and earth minerals if its lawmakers want to continue the push towards streamlining EVs.
“No one makes more full-size trucks than we do in America,” said Farley. “We have to on-shore this stuff. We have to have mines and processing to build a digital economy here in the US. We cannot continue to import batteries and rare earth from overseas. We have to move it to America.
“We’re willing to invest, but we have to have people in partnership with government that’s going to improve mines, improve processing,” Farley added. “These sites are really important. We can build all the plants, but what’s the good if we’re importing batteries?”
According to company officials, it is anticipated that Ford’s EV, the “Ford Model e,” will be profitable before taxes by late 2026 with an 8% pretax profit margin.
According to Wells Fargo analyst Colin Langan, Ford Motor will need to save an additional $15,000 per vehicle to achieve this profit margin.
In order to achieve this cost reduction, Farley said that the “key” to mass-producing EVs is “scaling and getting the manufacturing facility more efficient.”
“Every decision is about optimizing energy efficiency so that we can get the smallest battery possible to hit the range target that we have for that vehicle,” Farley said.
