Ford’s EV Business Operating Loss Signals Hard Road Startups Face to Achieving Profitability

On May 2, Ford Motor Company (NYSE: F) reported 1Q 2023 earnings results which included a fairly detailed breakdown of the revenue and profitability of its three business segments — the electric vehicle manufacturing business (Ford Model e), the legacy internal combustion engine (Ford Blue) operations, and the commercial vehicle (Ford Pro) business.

Most interestingly, Ford’s electric vehicle (EV) business wholesaled about 12,000 units to its dealers in 1Q 2023, down 32% from the year-ago period. The segment recorded about US$700 million of revenue and incurred a US$722 million operating loss in the quarter. Both measures were markedly worse than in 1Q 2022. Production interruptions in the company’s popular Mustang Mach-E SUV and the F-150 Lightning pickup truck were the key reasons for the down quarter.

For the full year 2023, the company continues to expect the Ford Model e segment to post an operating loss of about US$3 billion. However, by the end of 2026, Ford management anticipates quite a turn toward profitability, as it expects the operating unit to realize an 8% operating margin at that time based on an annualized production rate of 600,000 vehicles, roughly ten times its 2022 volume.

Ford’s 1Q 2023 results, by business segment

While none of the EV figures Ford discussed in its 1Q 2023 earnings release were especially surprising, they provide a sobering reminder to investors of just how long it may be until EV startups like Lucid Group, Inc. (NASDAQ: LCID) and Rivian Automotive, Inc. (NASDAQ: RIVN) reach operating profitability. Ford’s EV business sold 61,575 EVs in 2022, about 20% more than Rivian expects to sell in 2023, and still generated US$2.1 billion in operating losses.

Based on Ford’s EV financial track record, Lucid may be even further away from profitability. Lucid incurred a US$2.6 billion operating loss in 2022 when it produced 4,369 vehicles. The company plans to manufacture only 10,000 to 14,000 Lucid Air models this year.


(millions of US dollars, except vehicle deliveries)202120221Q 20232023E2026E
Vehicle Deliveries:
Ford Motor EV Business27,14061,57512,000600,000 (A)
Ford Motor EV Business$700
Operating Income:
Ford Motor EV Business($900)($2,100)($722)($3,000)8% EBIT margin by late 2026 (A)
Adjusted Operating Income (B):
Rivian($2,987)($5,869)($5,100) (C)
(A) Ford Motor expects this run rate by end of 2026. (B) Adjusted EBITDA minus Depreciation & Amortization. (C) Assumes US$800 million of Depreciation & Amortization in 2023.

Separately, on May 2, Ford announced a US$1,000 to US$4,000 price reduction on its Mach-E SUV, bringing its starting price to between US$43,000 and US$60,000. This adjustment follows a similar downward adjustment implemented in January 2023 of US$600 to US$5,900.

Ford’s action traces to aggressive price cuts by Tesla, Inc. (NASDAQ: TSLA) throughout 2023 as Tesla CEO Elon Musk continues to prioritize volume growth ahead of profits in a weak economy. Of course, none of this makes the path toward profitability at the Ford Model e unit — or at Lucid or Rivian, for that matter — any easier.

Ford Motor Company last traded at US$11.54 on the NYSE.

Information for this story was found via Edgar and the sources and companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Leave a Reply