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Ford (F) Expects Its EV Business to Incur $3B Loss in 2023
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Ford (F - Free Report) recently stated that it anticipates its electric vehicle (EV) business unit to witness a pre-tax loss of $3 billion this year. As we know, effective first-quarter of 2023 results to be released on May 2, the U.S. legacy automaker will report its automotive results under three business segments — Ford Model e, Ford Blue and Ford Pro. Till now, it used to report based on geographical regions.
Last year, in one of the boldest steps taken under the leadership of CEO Jim Farley, Ford unveiled its ambitious rejig plan to split its EV business into a separate unit within the company. While Ford Blue will focus on the firm’s legacy gas-powered business, Ford Model e will focus on EVs, advanced technologies and several related aspects to support electrification plans. Meanwhile, Ford Pro will deal with commercial vehicles and services.
Ford expects Model e’s cumulative three-year loss (2021-2023) to be around $6 billion, including a pro-forma loss of $900 million and $2.1 billion in 2021 and 2022, respectively. The losses are expected to widen this year amid higher spending related to production ramp-up, the establishment of manufacturing plants in Tennessee and Kentucky and development of next-gen products on a dedicated EV platform.
Nonetheless, the auto giant expects its first generation of EVs, including the F-150 e-pickup and Mustang Mach E, to become profitable on a pretax basis by the end of next year. The automaker reaffirms its target to produce 600,000 EVs by the end of 2023 and 2 million by 2026-end. It also forecasts the Model e unit to achieve a pretax profit margin of 8% by late 2026.
As for Ford Blue, the company expects pretax income from the segment to increase nominally by around 3% year over year to $7 billion. Ford Pro unit’s pretax income is expected to almost double to $6 billion in 2023. Meanwhile, Ford Credit profits are expected to decline around 50% year on year to $1.3 billion.
Zacks Rank & Key Picks
Ford currently carries a Zacks Rank #4 (Sell).
Better-ranked players in the same industry include General Motors (GM - Free Report) , Blue Bird (BLBD - Free Report) and Polaris Inc. (PII - Free Report) , each carrying a Zacks Rank #2 (Buy).
General Motors: Ford’s crosstown rival, General Motors, is one of the world’s largest automakers, which held the largest share of the U.S. auto market at 17.09% in 2022. The Zacks Consensus Estimate for GM’s 2023 EPS has moved north by 34 cents in the past 60 days. The same for 2024 EPS has gone up by 82 cents over the past 60 days. The company currently carries a VGM Score of A.
Blue Bird: It is engaged in the designing, engineering, manufacturing and sale of school buses and related parts. The Zacks Consensus Estimate for BLBD’s fiscal 2023 and 2024 sales implies year-over-year growth of 24% and 26%, respectively. The consensus mark for fiscal 2023 and 2024 EPS implies year-over-year growth of 140% and 227%, respectively. Blue Bird currently has a VGM Score of B.
Polaris: It designs, engineers and manufactures off-road and on-road vehicles. The Zacks Consensus Estimate for PII’s 2023 EPS has moved north by 8 cents in the past seven days. The same for 2024 EPS has gone up by 3 cents over the past seven days and implies year-over-year growth of 1%. Polaris currently has a VGM Score of A.
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Ford (F) Expects Its EV Business to Incur $3B Loss in 2023
Ford (F - Free Report) recently stated that it anticipates its electric vehicle (EV) business unit to witness a pre-tax loss of $3 billion this year. As we know, effective first-quarter of 2023 results to be released on May 2, the U.S. legacy automaker will report its automotive results under three business segments — Ford Model e, Ford Blue and Ford Pro. Till now, it used to report based on geographical regions.
Last year, in one of the boldest steps taken under the leadership of CEO Jim Farley, Ford unveiled its ambitious rejig plan to split its EV business into a separate unit within the company. While Ford Blue will focus on the firm’s legacy gas-powered business, Ford Model e will focus on EVs, advanced technologies and several related aspects to support electrification plans. Meanwhile, Ford Pro will deal with commercial vehicles and services.
Ford expects Model e’s cumulative three-year loss (2021-2023) to be around $6 billion, including a pro-forma loss of $900 million and $2.1 billion in 2021 and 2022, respectively. The losses are expected to widen this year amid higher spending related to production ramp-up, the establishment of manufacturing plants in Tennessee and Kentucky and development of next-gen products on a dedicated EV platform.
Nonetheless, the auto giant expects its first generation of EVs, including the F-150 e-pickup and Mustang Mach E, to become profitable on a pretax basis by the end of next year. The automaker reaffirms its target to produce 600,000 EVs by the end of 2023 and 2 million by 2026-end. It also forecasts the Model e unit to achieve a pretax profit margin of 8% by late 2026.
As for Ford Blue, the company expects pretax income from the segment to increase nominally by around 3% year over year to $7 billion. Ford Pro unit’s pretax income is expected to almost double to $6 billion in 2023. Meanwhile, Ford Credit profits are expected to decline around 50% year on year to $1.3 billion.
Zacks Rank & Key Picks
Ford currently carries a Zacks Rank #4 (Sell).
Better-ranked players in the same industry include General Motors (GM - Free Report) , Blue Bird (BLBD - Free Report) and Polaris Inc. (PII - Free Report) , each carrying a Zacks Rank #2 (Buy).
General Motors: Ford’s crosstown rival, General Motors, is one of the world’s largest automakers, which held the largest share of the U.S. auto market at 17.09% in 2022. The Zacks Consensus Estimate for GM’s 2023 EPS has moved north by 34 cents in the past 60 days. The same for 2024 EPS has gone up by 82 cents over the past 60 days. The company currently carries a VGM Score of A.
Blue Bird: It is engaged in the designing, engineering, manufacturing and sale of school buses and related parts. The Zacks Consensus Estimate for BLBD’s fiscal 2023 and 2024 sales implies year-over-year growth of 24% and 26%, respectively. The consensus mark for fiscal 2023 and 2024 EPS implies year-over-year growth of 140% and 227%, respectively. Blue Bird currently has a VGM Score of B.
Polaris: It designs, engineers and manufactures off-road and on-road vehicles. The Zacks Consensus Estimate for PII’s 2023 EPS has moved north by 8 cents in the past seven days. The same for 2024 EPS has gone up by 3 cents over the past seven days and implies year-over-year growth of 1%. Polaris currently has a VGM Score of A.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.