Ford Motor Co F announced on Wednesday it plans to boost spending on electric vehicle development to $30 billion by 2025 under a new turnaround plan and expects 40% car sales by 2030 to be EVs.
What Happened: The news sent the company's shares near to a five-year high.
Ford had in February said it will invest $22 billion in electric vehicles and $7 billion in autonomous vehicles through 2025. The increased spending plan, announced at its investor day, follows the automaker’s electric pickup truck F-150 Lightning launch last week.
Ford also said it expects to achieve an 8% operating margin in 2023, up from 4% in recent years. The No. 2 U.S. automaker by sales had previously estimated to achieve a similar milestone but had not specified a timeline.
The latest announcement on Wednesday under CEO Jim Farley focuses on three aspects; namely — electric vehicles, Ford’s strength with commercial customers and digital services.
Electrification: Farley told investors the company plans to electrify its most iconic models and reconfirmed the plans to launch a commercial self-driving business by 2022. Ford also reiterated recently-announced plans to make electric vehicle batteries, including at two future U.S. battery-cell factories.
See also: How to Buy Ford Stock
Commercial: Ford said it expects to increase revenue from its commercial business to $45 billion by 2025, up from $27 billion in 2019. The automaker noted it is creating a new standalone business “Ford Pro” devoted to commercial and government customers.
Digital: The automaker aims to leverage its EV charging subscriptions and new digital fleet planning tools for repeat revenue.
Why It Matters: Farley’s stance on battery-making is a departure from his predecessor Jim Hackett under whom the automaker had till last July said there was “no advantage” to Ford making its own battery cells.
See Also: Ford Set To Announce EV Battery Joint Venture With SK Innovation Thursday: Report
The automaker told investors its proprietary batteries, named IonBoost, will allow it to reduce the cost of its battery packs by 40% by mid-decade. The automaker also plan’s to develop solid-state batteries, which don’t transfer ions through a liquid and would have higher energy densities and lower costs.
Rivals General Motors Co GM and Volkswagen AG VWAGY have revealed more aggressive timelines for the switchover to electric vehicle lineup and a more quick switchover to battery-cell production.
Price Action: Ford shares closed 8.55% higher at $13.90 on Wednesday and were further up 1.4% in extended hours.
See Also: JPMorgan Analyst 'Blown Away' By Ride Experience With Ford F-150 Lightning Electric Truck
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Photo Courtesy: Ford
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