Ford Motors (F) is projecting a $3 billion loss on its electric vehicle (EV) segment this year, underscoring how traditional automakers’ EV businesses are still far from profitable.
The company disclosed the figure in a report issued Thursday, where it outlined a new financial reporting structure based on the firm’s three core business segments, rather than geographic regions, to create a more customer-centric business driving value and growth. These include Ford Blue, encompassing gas-powered and hybrid vehicles, Ford Model e, focusing on breakthrough EVs, and Ford Pro, which manages commercial products and services.
"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," CFO John Lawler said.
Ford has expanded its EV offerings in recent years, including the F-150 Lightning pickup truck and Mustang Mach E SUV. Last year, CEO Jim Farley separated the firm’s electric vehicle business from its traditional gas-powered division, in an effort to capitalize on growing demand for electric vehicles globally and close the gap on market leader Tesla (TSLA).
However, the segment is still far from profitable. The forecast for a $3 billion loss this year comes after Ford reported a $2.1 billion loss in the segment last year, and a $0.9 billion loss in 2021.
Despite this, the company still projects a profit between $9 and $11 billion this year, before interest and tax expenses. Ford expects its EV segment to return a profit by 2026, transitioning from a 40% operating loss margin last year to a forecasted 8% profit margin. The company aims to produce two million EVs annually by the end of 2026.
Automakers including Ford have cut prices for electric vehicles in recent months in an effort to boost sales. Earlier this year, the company reduced the price of its Mustang Mach E electric SUV, a competitor to Tesla’s Model Y. Tesla also cut prices of several of its models worldwide and lowered prices of its Model S and Model X—the most expensive in the U.S. market—by up to 9% in an effort to shore up global demand.
Shares of Ford are up slightly, trading just under 1% higher as of 2 p.m. E.T., and are roughly flat for the year. Shares of rival Tesla have surged more than 50% year-to-date.