Ford Motor Co. expects to take a $1.5 billion to $2 billion hit in 2023, as the automaker leaves certain unprofitable locations, the company said in its first quarter filing on Wednesday.
The company said the costs incurred this year will stem primarily from employee separation actions and supplier settlements and noted that it might take even further restructuring measures, according to Reuters.
“We continue to review our global businesses and may take additional restructuring actions where a path to sustained profitability is not feasible when considering the capital allocation required for those businesses,” the company said in the filing.
As Ford refocuses its business on developing its electric vehicle (EV) lineup and its domestic business, many of its foreign markets will take a backseat.
In February, the company announced its plans to eliminate one in nine jobs in Europe in a move to lower costs, according to a report from Reuters.
In Wednesday’s filing, Ford announced it would cut back operations in Brazil, India, Spain, and China.
The disclosure comes one day after Ford reported its first quarter earnings, posting profits of $1.8 billion, according to Automotive News.
On the first quarter earnings call, Ford CEO Jim Farley spoke about the company’s plans in China, stating, “Our strategy going forward in China will change. We’re going to go to a much lower investment, leaner, more focused business in China with higher returns.”
Ford’s restructuring likely comes as a result of its hyper-focus on creating a profitable electric vehicle segment.
“We want a profitable EV business, and we’re pulling every lever we can in the first-gen products. The second-gen is where we can really make hay,” Farley said.
In the first quarter, Ford said it lost over $700 million on its Model E, with its margins currently at -40%.
Ford CFO John Lawler said he expects it to improve to -20% in the second half of the year and approach profitability next year.
Tesla CEO Elon Musk spoke about Ford’s margins on Wednesday, tweeting, “Always tough with margins for new vehicle lines, especially when there are major technology shifts. I think Ford’s overall strategy with EVs is smart. The electric F-150 (Lightning) has high demand.”
