Ford boosts investment plan for EVs and self driving vehicles

business
Ford Boosts Investment Plan For Evs And Self Driving Vehicles
Ford previously committed to invest $11.5 billion in electrification
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By Ben Klayman and Paul Lienert

Ford Motor Co more than doubled the amount of money it plans to invest on electric and autonomous vehicles, to $29 billion (€24 billion), even as it posted a fourth-quarter net loss of $2.8 billion.

The No. 2 US automaker also said the global semiconductor chip shortage could lead to a 10% to 20% loss in first-quarter production.

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For the year, Ford reported a net loss of $1.3 billion, or 32 cents a share, compared with a modest profit the previous year of 1 cent a share.

Ford previously said it expected a 2020 profit of between $600 million and $1.1 billion.

Ford had a loss in the fourth quarter of $2.8 billion, or 70 cents a share, compared with a loss of $1.7 billion, or 42 cents a share, a year earlier.

Chip shortages

The company projected operating earnings would climb to $8 billion to $9 billion in 2021, compared with $2.8 billion last year. The 2021 figure includes a $900 million non-cash gain on Rivian, the electric vehicle startup in which Ford has invested, but does not include the effect of the ongoing global semiconductor shortage.

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Vehicle production lost because of the chip shortages could lower Ford's 2021 operating earnings by $1.0 billion to $2.5 billion, according to Chief Financial Officer John Lawler.

In pandemic-ravaged 2020, Ford's total revenue fell to $127 billion, from $156 billion in 2019.

Ford ended the quarter with nearly $31 billion in cash and $47 billion of liquidity, compared with almost $30 billion and more than $45 billion respectively in the prior quarter.

The company's operating margin in the fourth quarter was 4.8%, compared with a full-year target of 8%. Ford said it is targeting an 8% operating margin this year, including 10% in North America and 6% in Europe.

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Doubling down

Ford said it was "doubling down" on connected electric vehicles, saying it will invest $22 billion in electrification through 2025, nearly twice what it had previously committed to EVs.

Ford also said it will invest $7 billion in self-driving, or autonomous, technology development over 10 years through 2025 –$5 billion of that from 2021 forward.

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"We are accelerating all our plans," Chief Executive Jim Farley said in a statement, including increasing battery capacity and adding more electric vehicles in its future portfolio.

CFO Lawler told reporters: "If EVs continue to quickly gain favour, especially with commercial customers, we want to be clear that we will not cede ground to anyone."

Ford previously committed to invest $11.5 billion in electrification, including gasoline-electric hybrid vehicles, through 2022. That included the launch of the Mustang Mach-E EV crossover, and electric versions of the F-150 pickup and Transit van.

U.S. rival General Motors Co has said it will spend $27 billion by 2023 on electric and autonomous vehicles. It said it plans to offer 30 EVs globally by 2025 and is targeting topping annual sales of 1 million EVs in the United States and China by 2025. -Reuters

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