Ford is forecasting that its electric vehicle division will lose $4.5 billion this year, the U.S. automaker announced on Thursday. The division, called “Ford Model e,” has already shed about $1.8 billion in 2023 so far.

The company is also pushing out its production targets, now predicting it will hit an annual production rate of 600,000 units a year by 2024. It had earlier hoped to hit that milestone by the end of this year.

Still, the automaker has more than enough room to keep throwing money at electric vehicles. The company both reported a massive jump in net income and lifted its profit guidance for the whole year, thanks to strong results in its traditional and commercial vehicle segments. 

What’s happening in the EV sector?

Demand for electric vehicles is growing at a fast pace, but not quite growing fast enough to meet increased production. Over 90,000 electric cars and trucks are sitting on dealer lots, a four-times increase from a year earlier, according to the New York Times citing data from market research firm Cox Automotive. 

Ford is currently locked in a price war with other EV manufacturers, particularly the Elon Musk-led Tesla, which has slashed prices in both the U.S. and China to juice sales and capture market share. (Ford CEO Jim Farley credited Musk in late April for following a playbook established by Ford’s founder, Henry Ford).

Last week, Ford cut prices on some of its electric cars, including the F-150 Lightning electric pickup truck, by as much as 17% on some models. 

Farley tried to play off the slower-than-expected adoption of EVs as a positive for “early movers” like Ford, suggesting that the company would be ready to sell cars to consumers once they were persuaded to go electric. “While others are trying to catch up, we have clean-sheet, next-generation products in advanced development that will blow people away,” he said on Thursday.

Another of Ford’s EV initiatives is also running afoul of geopolitics. 

In February, the company announced a surprise deal with Chinese battery company Contemporary Amperex Technology, or CATL.

Ford will license CATL’s leading-edge battery technology for a new $3.5 billion plant in Michigan, scheduled to open in 2026. (CATL will also help set up the Ford-owned and operated plant, while basing some staff in Michigan permanently to help the U.S. automaker).

Yet some in Congress have criticized the deal as a way to evade U.S. rules on who gets to receive electric vehicle subsidies, alleging that government money will be funneled to CATL. Farley and executive chairman Bill Ford traveled to Congress this week to meet with Congressional leaders on the issue, reports Reuters.

Ford’s earnings

Yet Farley and Ford can afford to be patient about electric vehicles, thanks to a strong performance in the rest of the company.

Ford generated $45 billion in revenue last quarter, a 12% increase year-on-year. The company reported strong growth in its commercial vehicle segment, named “Ford Pro,” whose revenue grew by 22% to hit $15.6 billion. 

The automaker also earned $1.9 billion in quarterly net income, almost triple what it earned this time last year.

Ford also increased its guidance on earnings before interest and taxes (EBIT) to between $11 billion and $12 billion, up from an earlier range of $9 billion to $11 billion. The company forecasts $16 billion in EBIT from its traditional and commercial vehicle segments combined, more than enough to offset the projected $4.5 billion loss from electric vehicles. 

“Startups lose money as they invest in capability, develop knowledge, build volume and gain share,” chief financial officer John Lawler said in March, back when Ford was expecting just a $3 billion loss from its EV division.