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Ford projects its EV division will lose $3 billion in 2023 after losing $2 billion last year: ‘Startups lose money’

Jeff Kowalsky—AFP via Getty Images

Ford’s play for the electric vehicle market could end up being a very expensive bet.

The car company said on Thursday that its electric vehicle division, called Ford Model e, was likely to lose $3 billion this year. Ford shared the updated forecast as part of a new financial reporting structure that split data into three categories: Ford Model e, for electric vehicles; Ford Blue, for its traditional cars; and Ford Pro, for its commercial vehicles. Previously, Ford reported profit and loss by region.

Yet the carmaker dismissed concerns about the multi-billion dollar loss, putting it down as a necessary cost of breaking into a new market.

“Startups lose money as they invest in capability, develop knowledge, build volume and gain share,” CFO John Lawler said at a media briefing.

“After 120 years, we’ve essentially refounded Ford,” he said.

Ford also updated its previous earnings using to its new structure, revealing that its electric vehicle division lost $2.1 billion in 2022, and $900 million in 2021.

Despite the loss in its electric vehicle division, the rest of the company is still expected to earn a profit. The company expects pretax income from Ford Blue to increase from $6.8 billion in 2022 to $7 billion this year, while pretax income from the commercial vehicle division is forecast to hit $6 billion, almost double the $3.2 billion recorded in 2022.

Shares in Ford dipped 0.5% on Thursday, even as the broader S&P 500 rose by 0.3%.

An EV price war

Earlier this year, Ford slashed the price of its Mustang Mach-E electric car as it tries to capture market share from competitors like Tesla and General Motors. At the time, Ford CEO Jim Farley said that the price cut was a bid to “make EVs more accessible.”

Tesla also slashed prices on some EV models earlier this year. The carmaker is also reporting slower sales, with vehicle deliveries in the most recent quarter coming in below Wall Street estimates.

On Thursday, Ford said it hoped to make 600,000 electric vehicles by the end of the year, and eventually make two million EVs annually by late 2026.

That would still be far below leaders in the field like Tesla and China’s BYD. Tesla, which has about two-thirds of the U.S. market for electric cars, produced 1.4 million EVs in 2022. That same year, BYD sold 1.9 million “new energy vehicles”, a category that includes both plug-in hybrids and pure-battery vehicles.

Ford will deliver its first-quarter earnings—likely using its new reporting structure—on May 2.

This story was originally featured on Fortune.com

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