Ford has started initial pre-production of its electric F-150 Lightning pickup truck at a new plant in Dearborn, Mich.
Michael Wayland | CNBC
Ford Motor plans to produce more than 2 million electric vehicles annually and generate a 10% adjusted operating profit margin by 2026, the company announced Wednesday as part of a larger restructuring of its EV and legacy businesses.
Both targets would be substantial increases from the company’s current operations. Ford reported a 7.3% adjusted operating profit in 2021. It only sold roughly 64,000 of its all-electric Mustang Mach E crossovers globally in 2021, including 27,140 in the U.S.
Ford’s restructuring plan includes reorganizing operations to separate its electric and internal combustion engine, or ICE, businesses into different units within the automaker.
The plans were lauded by investors, sending shares of the automaker up by as much as 7.7% during trading Wednesday morning to nearly $18. Ford’s stock is down about 16% this year.
“We applaud Ford’s decision to take the first important step to optimize the competing missions of the EV/ICE businesses,” Morgan Stanley analyst Adam Jonas said Wednesday in an investor note. “In our opinion, other legacy auto OEMs may be planning something similar. Ford leads the world in actually announcing it.”
Ford and other major automakers are racing to create production capacity for EVs to meet what’s expected to be rapid adoption in the emerging segment this decade. They are attempting to be ahead of the demand curve rather than playing catch-up as they have been with EV industry leader Tesla.
“We want to beat the old players, we want to beat the new players,” Ford CEO Jim Farley said during an event Wednesday morning.
To meet the 10% margin, Farley on Wednesday said Ford expects to cut $3 billion from its structural costs, largely from its traditional internal combustion engine business. It plans to do so while increasing sales volumes and lowering the costs of build materials for EVs.
Ford’s goals are similar to ones previously announced by its largest crosstown rival, General Motors. The Detroit automaker last year said it plans to double its annual revenue and expand margins to 12% to 14% by 2030. It also plans to increase plant capability to produce 2 million EVs globally in North America and China by 2025.
GM in late 2019 also largely split up its engineering of EVs and traditional vehicles, but it has not announced plans to break out their financial results. The company also has said it does not have plans to spin off its EV business.
— CNBC’s Michael Bloom contributed to this report.
Source: https://www.cnbc.com/2022/03/02/ford-plans-to-produce-2-million-evs-generate-10percent-operating-profit-by-2026.html