Earnings projections from Ford released Wednesday found that the company’s profits could soar by 50% if it stopped production of electric vehicles.
Ford is expected to have an adjusted operating profit of $11 billion in 2024 after analysts expected only $9.6 billion, according to the Wall Street Journal. Last year, the company made $10.4 billion. The increase in profits comes after investors were worried about falling vehicle prices due to the ease in pandemic shortages, higher labor costs following the United Auto Workers strike, and the challenge of making EVs a profitable investment.
Ford leaders noted that resilient U.S. sales, the absence of the strike costs, and a full year of profit from the company’s new Super Duty F-Series truck could lead to profit growth. The company found that pickup trucks and big sport-utility vehicles are too heavy to become efficient electric vehicles, which could prove to be a blessing for Ford’s profit numbers.
Ford’s “Pro” business was the driving force behind its high operating profit of $7.2 billion in 2023, with Ford expecting it to rise to at least $8 billion in 2024 due to the Super Duty truck.
On the other hand, electric vehicles lost $4.7 billion last year, with the company anticipating the losses to deepen to between $5 billion and $5.5 billion in 2024. If Ford was not selling its Mustang Mach-E and F-150 Lightning models, the company’s adjusting operating profit would likely be 50% higher.
CEO Jim Farley said during Ford’s earnings call on Tuesday via the Wall Street Journal that he only plans to launch next-generation EVs that will be profitable within a year, meaning some planned products will be pushed back. The company still plans to devote 40% of its capital expenditures to EV technology in 2024, which is the same share as last year. Farley said he still has his eye on capitalizing on the EV growth opportunity.
“The ultimate competition is going to be the affordable Tesla and the Chinese OEMs,” the chief executive said.
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Last year, Ford took actions to rethink its near-term spending in the EV space, joining several other U.S. automakers that looked to scale down production targets following slower-than-expected consumer demand. Ford scaled back a $3.5 billion investment in an EV battery plant in Michigan in November, stating it would still plan to open in 2026 but after “re-timing and resizing some investments.” It also announced in October it would cut nearly $12 billion in EV costs, as well as postpone a planned battery factory in Kentucky.
In January, Ford slashed the number of workers at its Rouge EV factory in Michigan to reduce the production of its F-150 to better reflect consumer demand. Though the company expects further growth for EVs in 2024, sales are expected to fall short of earlier projections.
