Ford Motor expects electric vehicles to make up almost half of its global sales by the end of this decade under the company’s latest turnaround plan that includes increasing its investment in EVs to more than $30 billion through 2025, the company said Wednesday.
Ford announced the plans ahead of its first investor day under CEO Jim Farley, who took over the helm of the automaker on Oct. 1. The highly anticipated event is scheduled to begin at 9:30 a.m. EDT and is expected to include detailed presentations from Farley and his management team on the company’s new “Ford+” plan to turnaround its operations and expand into new emerging markets.
“Presentations will detail where, why and how the company is headed with fully electric vehicles, commercial solutions and connected services – and how customers will benefit,” the company said in a release Wednesday.
The increased investment in EVs is up from $22 billion that the company announced in February. Of which, about $7 billion had already been invested since 2016.
With the new investment and plan, Ford said it expects 40% of its sales volume globally to be EVs by 2030. That compares earlier this year to General Motors announcing a goal, which it called an “aspiration,” to exclusively sell EVs by 2035.
Under Farley’s Ford+ plan, the company said it plans to achieve an 8% adjusted profit margin before interest and taxes in 2023. Farley’s predecessor, Jim Hackett, and Mark Fields before him both promised the same, but it never materialized.
Hackett and Fields were criticized by Wall Street for failing to detail their plans to Wall Street after former CEO Alan Mulally, a former Boeing executive, saved the company from bankruptcy during the Great Recession.
Farley’s overarching plan sounds reminiscent of a highly touted restructuring plan and rallying call under Mulally called “One Ford.”
“I’m excited about what Ford+ means for our customers, who will get new and better experiences by pairing our iconic, world-class vehicles with connected technology that constantly gets better over time,” Farley said in a statement. “We will deliver lower costs, stronger loyalty and greater returns across all our customers.
“This is our biggest opportunity for growth and value creation since Henry Ford started to scale the Model T, and we’re grabbing it with both hands.”
Before the coronavirus pandemic, Ford’s adjusted profit margin was 4.1% in 2019, followed by 2.2% in 2020. Due to an imbalance of supply and demand in new vehicles due to an ongoing global semiconductor chip shortage, it was inflated to 13.3% during the first quarter of this year.
Ford on Wednesday also said it expects to increase revenue from its commercial business to $45 billion by 2025, up from $27 billion in 2019. That includes “hardware and adjacent and new services that’s
addressable by Ford,” according to the company.
The automaker will create “Ford Pro,” a new vehicle services and distribution business within the automaker “devoted to commercial and government customers.”
Expanding Ford’s commercial business as well as its connected vehicle fleet have been priorities for the automaker under Farley.
The company plans to exceed Tesla in vehicles capable of significant remote, or over-the-air, updates by July 2022, and scale to 33 million OTA-enabled Ford and Lincoln vehicles by 2028.
Such a connected fleet could be competitive with its largest American rival, GM. The Detroit automaker has said it expects more than 7 million of its vehicles globally to be capable of such OTA updates by 2023.
More to come?
Following the successful debuts of the Ford Mustang Mach-E crossover and F-150 Lightning pickup, investors want to know what’s next for Ford’s electric vehicles.
Farley has said the company plans to electrify its most iconic nameplates, leading some analysts to question whether the company will offer an electric version of its upcoming Bronco SUV.
Ford on Wednesday said it has 70,000 reservations for the F-150 Lightning, up from 44,500 as of Friday morning.
Wall Street analysts are also hoping for updates on Ford’s self-driving vehicle plans, including Argo AI, a jointly owned autonomous vehicle unit with Volkswagen.
Argo is testing its self-driving technology in six U.S. cities using Ford vehicles. The company earlier this month unveiled its own lidar, which many believe is the key technology to commercializing autonomous vehicles.