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Ford sees $3 billion pretax loss in its EV business this year

FILE PHOTO: Workers plug in an electric Ford Mustang Mach-e electric vehicle during a press event at the Ford Halewood transmissions plant in Liverpool

By Paul Lienert and Nathan Gomes

(Reuters) -Ford Motor Co expects its electric vehicle business unit to lose $3 billion this year, but remains on track to achieve a pretax margin of 8% by late 2026, the company said.

The projected loss was revealed at a briefing for investors and analysts on Thursday to discuss details of the automaker’s new financial reporting format.

Ford shares were up 1.9% at $11.70 near midday on Thursday.

Starting with first-quarter results, which will be announced on May 2, Ford will begin reporting by business unit for Model e (electric vehicles), Blue (combustion vehicles) and Pro (commercial vehicles and services).

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Ford projects Model e’s cumulative three-year loss from 2021-2023 at $6 billion, including a pro-forma loss last year of $2.1 billion. But the company expects its first generation of EVs, including the F150 Lightning and Mustang Mach E, to be profitable on a pretax basis by the end of 2024.

Chief Financial Officer John Lawler said Ford no longer will break out financial results by region, only by business unit, because “that’s how we’re running the company now.”

He said Ford will provide quarterly and annual sales and market share for the company’s top six global markets, including the United States, China and Germany, but no longer will report by region.

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

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

Lawler reaffirmed the company’s target of a 10% adjusted EBIT margin by late 2026.

He said the automaker 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.” More than half of those EV sales initially will be from new customers, he added.

Lawler said continued improvements in the cost of Ford's future EVs could be offset by pricing pressure from competitors.

Among the anticipated improvements, Ford aims to lower EV battery costs by producing more of the components itself and by introducing new chemistries in addition to iron phosphate (LFP) and nickel cobalt (NCM).

(Reporting by Paul Lienert in Detroit and Nathan Gomes in BangaloreEditing by Matthew Lewis)