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Ford to lose $3bn making electric cars

Ford Motor Company's electric F-150 Lightning on the production line at their Rouge Electric Vehicle Center in Dearborn, Michigan - JEFF KOWALSKY/AFP via Getty Images
Ford Motor Company's electric F-150 Lightning on the production line at their Rouge Electric Vehicle Center in Dearborn, Michigan - JEFF KOWALSKY/AFP via Getty Images

Ford expects its electric car business to lose $3bn (£2.4bn) this year as it ratchets up spending on new models and the factories to build them.

The automaker's electric vehicle (EV) business, known as Model e, reported a $900mn loss in 2021 which rose to $2.1bn in 2022 as it accelerated production of models such as the Mustang Mach-E.

The unit has posted a cumulative three-year loss of $6bn from 2021 to 2023.

It comes as car makers are under growing pressure to produce electric models of their vehicles as part of a global push towards net zero emissions targets.

Market leader Tesla has driven prices down in a bid to corner the market, particularly in China where it hopes to see off competition from the likes of domestic producer Geely.

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Other car makers are trying to bring down prices as quickly as possible even as higher demand for the raw materials required to make them drives up costs.

Earlier this week Carlos Tavares, chief executive of Vauxhall-owner Stellantis, warned that the middle classes cannot afford the cost of electric cars.

Motorists are losing interest too as the cost of power surges and petrol and diesel prices continue to fall, the AA has suggested.

Ford said that plans to build four new EV battery factories and a new vehicle assembly plant, as well as spending heavily on raw materials, will cost it billions.

John Lawler, the company's finance chief, told investors: “Ford Model e is an EV start-up within Ford and, as everyone knows, EV start-ups lose money while they invest in capability, develop knowledge, build volume and gain share.

Ford CEO Jim Farley - REUTERS/Rebecca Cook/File Photo
Ford CEO Jim Farley - REUTERS/Rebecca Cook/File Photo

Chief executive Jim Farley is reorganising Ford by separating it into three units: Model e, another for internal combustion engine vehicles called Ford Blue and a third for commercial trucks and vans known as Ford Pro.

Each business unit will report its own profit and loss figures and be led by a different senior executive plucked from Ford's leadership, but will share technology where needed.

The firm's finance chief John Lawler explained that the change was made because “that's how we're running the company now”.

He denied that it was not a precursor to listing separate shares in any of the units.

He reaffirmed the company’s target of a 10pc adjusted margin by late 2026. He said the firm will have the global capacity to build 600,000 electric vehicles by the end of 2023 and 2 million by late 2026 – “and we intend to fully use that capacity.”

The company expects its Ford Pro commercial vehicle business to nearly double pretax profit this year to $6bn, while the traditional Ford Blue unit should post a modest increase to $7bn.

Lawler added that Ford would provide quarterly and annual sales and market share for the company’s top five global markets, but no longer will report by region.

Last year, Ford had a pretax loss of $600m in China, broke even in Europe and posted a modest $400m profit in South America, with most of its earnings before interest and taxes – $9.2bn – coming from North America.