Ford CFO: We are ‘refounding’ the company, cutting costs to make EV business profitable
Ford said it expects its electric vehicle division to lose $3 billion in 2023
Standing up an EV business to rival category heavyweight Tesla (TSLA) is coming at a hefty price for storied automaker Ford (F), one it's prepared to address with aggressive cost cuts.
Ford revealed Thursday it lost $2.1 billion on an operating basis in its Model E (electric) division last year. The automaker guided to an operating loss of $3 billion for the division for 2023 as it invests in production and battery capacity. The business is expected to reach profitability in 2026.
"Our cost structure is not competitive," Ford CFO John Lawler said on Yahoo Finance Live (video above). "We know that we [have] about $7 billion to $8 billion that we could take out and improve our competitiveness, and you will see that start to take hold as we get through the rest of the year, into 2024, and beyond."
"This is about 'refounding' Ford," Lawler said about the company's cost cuts and operating structure.
As Lawler pointed out, Ford could take out $7 billion in costs from its legacy auto business to help fuel its EV ambitions and bolster overall profit margins.
Ford provided the information as part of a "teach-in" for analysts at the New York Stock Exchange as it pivots to an electrified future.
The event is aimed to help Wall Street better understand the inner workings of Ford by breaking out the business into three new segments: Model E, Ford Blue (gas-powered vehicles), and Ford Pro (commercial vehicles and other services).
Ford further reaffirmed its full-year adjusted operating profit guidance of $9 billion to $11 billion. Lawler said the outlook factors in recent economic turmoil spurred by the rolling banking crisis.
Ford stock rose 1.8% in early trading on Thursday.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on the banking crisis? Email firstname.lastname@example.org
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