Losses are going up on Ford’s electric vehicle business, but profit from its traditional internal combustion engine vehicles allowed it to beat Wall Street expectations.
The company earned 72 cents a share in the second quarter on an adjusted basis, up from 68 cents a share and better than the 55 cents a share forecast by analysts surveyed by Refinitiv. Automotive revenue rose 12% to $42.4 billion, $2 billion more than forecasts.
The company was able to beat the estimates despite the fact that its losses before interest and taxes (EBIT) grew to $1.1 billion from its EV business, which the company calls its Model e division, up from the $722 million EBIT losses in the first quarter.
And those losses are going to rise, at least in the short term. Ford said it expects a Model e EBIT loss of $4.5 billion for the full year, up from its earlier forecast of a $3 billion loss for all of 2023. And it pushed back when it expects to start producing EVs at a 600,000 annual pace to some time in 2024, rather than by the end of 2023. It said the pricing environment for EVs was one of the main reasons for the new loss estimate.
EV leader Tesla has been regularly cutting prices throughout this year. In response, other automakers, including Ford, have responded with EV price cuts of their own.
But the company’s Ford Blue division, which makes most of its gas-powered consumer vehicles, posted $2.3 billion in EBIT profits, while Ford Pro, which is its commercial vehicle division selling primarily traditional internal combustion vehicles, contributed $2.4 billion.
The company raised its full-year adjusted EBIT target to between $11 billion and $12 billion, up from its earlier guidance of $9 billion to $11 billion.
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