Ford Motor said Wednesday it expects electric vehicles to make up almost half of its global sales by 2030 under the company's latest turnaround plan.
Its plan includes increasing its investment in EVs to more than $30 billion through 2025.
Ford announced the plans during its first investor day under CEO Jim Farley, who took over the helm of the automaker on Oct. 1. The highly anticipated event is focusing on Farley's new "Ford+" plan to turn around its operations and expand into emerging markets such as connected vehicles and subscription services.
"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," Farley said.
Shares of Ford reached a new 52-week high during intraday trading Wednesday morning. The stock was up more than 8% to about $13.85 a share. Its market cap is about $54 billion.
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 with General Motors' recently announced "aspiration" to exclusively sell EVs by 2035.
Hau Thai-Tang, Ford's chief product platform and operations officer, took aim at GM during the investor event: "This is not some future aspiration at Ford," he said regarding connected EVs such as the Mustang Mach-E crossover.
Through vehicle connectivity and expected battery breakthroughs, Thai-Tang said Ford believes its EV business can be more profitable over time than its current business.
Ford+
Under Farley's Ford+ plan, the company said it hopes to achieve an 8% adjusted profit margin before interest and taxes in 2023. Farley's predecessors, Jim Hackett and Mark Fields promised the same, but it never materialized.
"We're running a much tighter ship," Farley said after discussing how the automaker failed to meet Wall Street's expectations in recent years.
Hackett and Fields were criticized by Wall Street for failing to detail their plans after then-CEO Alan Mulally 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."
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.
Commercial business
Ford also said Wednesday it expects to increase revenue from its commercial business to $45 billion by 2025, up from $27 billion in 2019, including "hardware and adjacent and new services that's
addressable by Ford."
The automaker will create "Ford Pro," a new vehicle services and distribution business within the automaker "devoted to commercial and government customers."
Farley said the new commercial business will be part of the company but operate as a stand-alone business.
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 updates by July 2022 and scale to 33 million over-the-air-enabled Ford and Lincoln vehicles by 2028.
Such a connected fleet could be competitive with its largest American rival, GM, which has said it expects more than 7 million of its vehicles globally to be capable of 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 battery 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 said Wednesday it has 70,000 reservations for the F-150 Lightning, up from 44,500 as of Friday morning.
"In the BEV era, Ford will not cede truck leadership to anyone," Lisa Drake, Ford's chief operating officer for North America, said Wednesday. "Our plan is to win in the electric revolution."
Regarding autonomous vehicles, Ford CFO John Lawler reconfirmed the company plans to launch a commercial self-driving business by 2022.
He declined to discuss further details, saying the company plans to hold a future event on the topic.
Wall Street analysts were hoping to hear more about Ford's self-driving vehicles ahead of the Wednesday event, especially 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.
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