Ford announced its financial results for 2023, and while the traditional car business made significant profits, the electric vehicle (EV) division, Ford e, performed poorly. Unlike other car manufacturers, Ford provides a breakdown of its EV business, revealing that the Model e incurred a loss of $4.7 billion in 2023, with $1.6 billion lost in Q4 alone. In other words, Ford lost $47,000 per unit sold in Q4, contributing to a net loss of $526 million for the fourth quarter of last year.
These results prompted CEO Jim Farley to focus more on the EV strategy and the path to profitability. Farley disclosed that a dedicated team has spent the past two years developing a new flexible EV platform aimed at turning things around for the Ford Model e division. He expressed optimism that this new platform would enable Ford to achieve profitability within 12 months of production, essentially admitting that the current EV lineup will not be profitable by 2026, as previously announced.
An interesting aspect of Farley’s presentation was the assignment of the new EV platform development to a highly skilled and independent team known as the “super-talented skunkworks team.” Comprised of some of the industry’s best EV engineers, this team operated separately from the main Ford organization, functioning more like a startup. The new architecture has been designed as a cost-effective EV platform capable of competing with Tesla and Chinese carmakers in terms of both cost and performance. It will serve as a solid foundation for Ford’s next-generation electric vehicles.
Ford is revamping its EV strategy and placing a significant emphasis on smaller cars, particularly two-row crossovers, which are currently the most popular segment. The company plans to reduce investment in large EVs, focusing only on segments where Ford holds a dominant advantage, such as trucks and vans. The new platform will deliver breakthrough efficiency compared to previous-generation EVs and introduce innovative features that customers will be eager to pay for.
Moving forward, Ford’s attention will shift to smaller EVs, and the new flexible platform will enable the company to scale across various vehicle types, leveraging its extensive customer base. This scalability will also allow Ford to offer software and services, similar to what it currently provides to its Ford Pro customers. Farley pledged that Ford’s EV teams would prioritize cost and efficiency as they compete with affordable Tesla EVs and Chinese OEMs.
To achieve its cost and efficiency targets, Ford will reassess its battery production capacity and vertical integration, two factors that have contributed to Tesla’s success. The company will explore new chemistries and capacities to deliver the performance and efficiency demanded by the market. With these measures in place, Farley is confident that the second-generation electric vehicles will become profitable within the first 12 months of their launch.