Tesla CEO Elon Musk has praised Ford’s overall strategy with electric vehicles (EVs), defending its rival’s financial performance in the early years of its EV rollout.
“Always tough with margins for new vehicle lines, especially when there are major technology shifts,” said Mr Musk on Twitter.
“I think Ford’s overall strategy with EVs is smart.”
The CEOs of Ford and Tesla are known for both praising and poking each other online.
Ford CEO Jim Farley has publicly praised Mr Musk before, congratulating him on winning TIME’s 2021 Person of the Year, but he has also poked him last year by saying “Take that Elon Musk” while celebrating the early success of the F-150 Lightning.
Likewise, Mr Musk congratulated Ford in 2021 on “embracing an electric future”, but teased the Blue Oval brand with a clip from the Chris Farley comedy Tommy Boy in response to a perceived jab at Tesla’s Full Self-Driving beta system.
Ford is aiming for a global EV production goal of 600,000 units by the end of this year and two million by the end of 2026.
The company says it anticipates 40 to 50 per cent of its vehicle fleet will be electric by 2030.
By the end of that same year, it aims to have a pre-tax profit margin of eight per cent for its Model e electric vehicle division, which it says operates like a startup.
It reorganised its business last year into three units: Model e, Ford Blue (combustion and hybrid vehicles), and Ford Pro (commercial products and services).
The company expects to lose US$3 billion (A$4.49 billion) before taxes in the Model e business this year, an increase from the US$2 billion (A$3 billion) loss it experienced in 2022, which resulted in a margin of around negative 41 per cent.
The division had an EBIT (earnings before income and tax) decline of US$722 million (A$1.07bn) in the first quarter of this year.
However, it says it’s on track this year “toward a contribution margin approaching breakeven” in Model e, and for its first-generation products to have positive EBIT margins by the end of next year.
Mustang Mach-E volumes declined during the quarter as Ford reduced production at its Mexican facility for several weeks to double production capacity; F-150 Lightning volumes were also affected by a production pause after a battery fire.
Ford is building three new battery facilities with SK, and construction is underway of the new Blue Oval City EV manufacturing complex in Tennessee.
Ford’s investment in these plants is expected to cost the company around US$11.4 billion (A$15.7 billion) and create around 11,000 jobs.
Its Oakville, Ontario factory in Canada, which produces the outgoing Ford Edge and Lincoln Nautilus, is also being retooled to produce EVs and battery packs.
Mr Farley has complimented Mr Musk and Tesla in the past, but more recently has praised Chinese brands after a visit to the Shanghai motor show.
“The best new brands are offering integrated digital, retail, lifestyle, and experience that are software-defined,” he said.
“This is firmly in our sights for our second-generation EVs.
“This software as a differentiator, plus a radically different cost structure and the ability to attract — attach value-added software and services, gives us confidence we can compete and win in unit, revenue, profit, and vehicle share while delivering appropriate returns.”