Ford is Boosting its EV Investments to More Than $30 Billion, Stock Reaches 5-Year High
U.S. automaker Ford is boosting investments in electrification as it looks to take on Tesla, Volkswagen, General Motors and others in the electric vehicle space.
The increase in investment in EVs is part of a plan called "Ford+" in which Ford would be more like a technology company rather than an automaker in the eyes of investors, Reuters reported on Wednesday. It's the same way that Tesla bills itself, which will help make the California company the world's most valuable automaker in 2020.
As a result of Tesla's rapid rise over the past few years, automakers are following in the company's footsteps and significantly boosting their investments in EVs.
Ford said it now expects to spend more than $30 billion by 2030 on electrifying its model lineup, including EV battery development. Ford's previous commitment was $22 billion. Now Ford said it aims to have 40% of its global volume all electric by 2030. The announcement was made at Ford's Capital Markets Day meeting on Wednesday.
The announcements sent Ford shares up 8.8% in the afternoon $13.94, its highest level in 5 years. Ford also said it expects to deliver an 8% operating margin in 2023 as it reduces the cost of building electric vehicles.
"This is our biggest opportunity for growth and value creation since Henry Ford started to scale the Model T," Ford Chief Executive Jim Farley said at the company's Capital Markets Day meeting which was held online this year. "Our ambition is to lead the electric revolution."
Ford's plans mirror that of its domestic rival General Motors, which is investing up to $27 billion to develop new electric models over the next decade. That's up from GM's initial commitment of $20 billion. GM said that more than half of its capital spending and product development team will be devoted to electric and electric-autonomous vehicle programs.
GM plans to offer around 30 all-electric models globally by mid-decade and said that 40% of its U.S. models will be battery electric vehicles by the end of 2025.
Based on Ford's current sales volume, the automaker's plan to have 40% of its models fully electric by 2030 would translate to more than 1.5 million EVs sold each year. In February, Ford announced that its European lineup will be all-electric by 2030 in order to comply with EU goals to fight climate change.
Last week, Ford unveiled the fully-electric F-150 Lightning pickup. Ford's F-150 pickup has been the best selling truck in the U.S. for over 40 years. Based on F-Series sales volume of roughly 900,00 F-Series trucks a year, the battery-powered version has the potential to be one of the best selling EVs in the U.S. The electric F-150 Lightning arrives in the Spring of 2022.
Ford's new electric F-150 Lightning has the potential to become the best selling EV in the U.S.
Ford also began deliveries of its first EV, the new Mach E electric SUV, late last year. The Mach-E is a strong competitor to the Tesla Model Y, which might further help to boost Ford's EV market share in the U.S.
On Tuesday, Reuters reported that Ford is developing two new dedicated EV platforms for future models. One will be designed for trucks and SUVs, including the popular Ford Explorer SUV, and the other for smaller cars and crossovers.
To support Ford's push into the EV space, the automaker is forming a joint venture EV battery company with South Korean battery maker SK Innovation. The two companies have signed a memorandum of understanding (MoU) to create a joint venture EV battery company called "BlueOvalSK" to produce approximately 60 GWh annually in battery cells and array modules.
Production is scheduled to begin by mid-decade, with potential to expand as Ford introduces new electric models over the next several years.
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