Ford CFO: We’re ‘refounding’ the company, cutting costs to make EV business profitable
Pitting an EV business for competing category heavyweight Tesla (TSLA) is coming at a heavy price for iconic automaker Ford (F), which it looks set to address with aggressive cost cuts.
Ford revealed Thursday that it lost $2.1 billion on an operating basis in its Model E (electric) division last year. The automaker guided for 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] There’s about $7 billion to $8 billion that we can take out and improve our competitiveness, and you’ll see us start to get that over the course of the rest of the year, into 2024, and beyond.”
“It’s about ‘refounding’ Ford,” Lawler said of the company’s cost-cutting and operational structure.
Ford Motor Company unveils its new electric F-150 Lightning outside its headquarters on May 19, 2021 in Dearborn, Michigan. (Photo by Jeff Kowalski/AFP via Getty Images)
As Lawler pointed out, Ford could take $7 billion in costs out of its legacy auto business to help fund its EV ambitions and boost overall profit margins.
Ford provided the information as part of a “teach-in” for analysts on the New York Stock Exchange as it moves toward an electrified future.
The program aims to help Wall Street better understand the inner workings of Ford by breaking it down into three new segments: Model E, Ford Blue (gas-powered vehicles), and Ford Pro (commercial vehicles and other services).
Ford reaffirmed its full-year adjusted operating profit guidance of $9 billion to $11 billion. Lawler said the outlook factors in the recent economic turmoil driven by the rolling banking crisis.
Ford stock climbed 1.8% in early trading on Thursday.
Brian Sozzi is the executive editor of Yahoo Finance. Follow Sozy on Twitter @BrianSozzi and on LinkedIn, Tips on banking crisis? Email [email protected]
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