Ford Forecasts $3 Billion Loss in EV Division for 2025 but Eyes Profitability by 2026
Ford anticipates a $3 billion deficit in its electric vehicle segment this year, highlighting the ongoing challenges traditional automakers face in achieving EV profitability. The company aims to turn the tide by 2026 with ambitious production goals.
Ford aims to produce 2 million electric vehicles annually by 2026, targeting profitability in its EV division.
In 2024, Ford Motor Company is preparing for a significant $3 billion loss within its electric vehicle (EV) sector, emphasizing the hurdles legacy automakers encounter in making their EV operations profitable.
In a recent report released on Thursday, Ford revealed a revamped financial reporting framework centered on three primary business units rather than geographic segments. This restructuring is designed to foster a more customer-focused approach that drives value and growth. The divisions include Ford Blue, which covers gasoline and hybrid vehicles; Ford Model e, dedicated to innovative electric vehicles; and Ford Pro, which manages commercial product offerings and services.
Chief Financial Officer John Lawler stated, "We have effectively 'refounded' Ford, establishing business segments that provide strategic clarity, deeper insight, and accountability aligned with our Ford+ growth and value plan."
Ford has broadened its electric vehicle lineup in recent years, introducing models such as the F-150 Lightning pickup and Mustang Mach-E SUV. Last year, CEO Jim Farley separated the EV business from the traditional combustion engine division to better leverage the rising global demand for electric vehicles and to narrow the competitive gap with market leader Tesla.
Despite these efforts, the EV segment remains unprofitable. The projected $3 billion loss for 2024 follows a $2.1 billion loss in 2023 and a $900 million loss in 2021.
Nevertheless, Ford expects an overall profit ranging from $9 billion to $11 billion before interest and taxes this year. The automaker is optimistic about its EV division turning profitable by 2026, aiming to move from a 40% operating loss margin last year to an 8% profit margin. The goal is to manufacture two million electric vehicles annually by the end of 2026.
To stimulate sales, Ford and other automakers have recently reduced EV prices. Earlier this year, Ford lowered the price of its Mustang Mach-E, a direct competitor to Tesla’s Model Y. Similarly, Tesla has cut prices on multiple models globally, including up to a 9% reduction for the Model S and Model X, the highest-priced vehicles in the U.S., to boost worldwide demand.
Ford's shares have seen a modest increase, trading nearly 1% higher as of 2 p.m. Eastern Time, remaining relatively steady for the year. In contrast, Tesla's stock has surged over 50% year-to-date.
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