Tesla Inc TSLA CEO Elon Musk has commended Ford Motor Co‘s F electric vehicle strategy despite that segment posting a huge sales decline and margin hit.
What Happened: “Ford’s overall strategy with EVs is smart,” Musk said. The Tesla CEO responded to a Twitter user, who expressed shock over Ford’s huge negative net margins on electric vehicles.
“Always tough with margins for new vehicle lines, especially when there are major technology shifts,” Musk responded. “Ford’s F-150 Lightning electric truck has high demand.”
Why It Matters: Ford on Wednesday said that first-quarter revenue increased 20% year-over-year to $41.5 billion, which beat consensus estimates of $36.03 billion, according to Benzinga Pro.
The Ford Model e segment, which develops electric vehicles, saw revenue drop 27% to $700 million. On an EBIT basis, that segment had a profit margin of roughly negative 40% in 2022, as per media reports.
Ford expects to up manufacturing capabilities to a global run rate of 600,000 EV units by the end of 2023 and maintained its 2023 expectations for adjusted EBIT in a range of $9 billion to $11 billion and adjusted free cash flow of about $6 billion.
Former Ford CEO Mark Fields appreciated Tesla after its investor day in March. “Tesla right now is one generation ahead of the other automakers,” he had said.
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