Ford Is Doing Whatever It Takes To Overthrown Tesla

The legendary Blue Oval has its eyes set to become the biggest US-based EV manufacturer. To pull that off, Ford Motor F needs to greatly ramp up its production so it doesn't come as a surprise that the company is now expecting to produce 600,000 EVs per year globally by end of 2023, which is double compared to the the the the original plan. According to Automotive News, this figure will be made by Mustang Mach-E, F-150 Lightning, and E-Transit. Moreover, Jim Farley Tweeted this will happen before Blue Oval City and other EV sites come online.

Ford is Now Feeling Much More Confident

Ford is enjoying a much stronger EV demand than expected. The Mustang Mach-E is being sold on three continents. Since it was unveiled, the Ford F-150 Lightning has been as popular as it gets by receiving 100,000 reservations within the first three weeks, after which they increased to 160,000. Due to the high demand for America's bestselling vehicle, the F-150 pickup, Ford previously decided to invest $250 million to boost its production, creating 450 new jobs to help it make 80,000 trucks a year but it remains to be seen how will that change considering it doubled its manufacturing goal.

Bonus Points for Dropping Joint Vehicle with Rivian

A large, legacy manufacturer tying up with a new startup that has the right technology and specs to make an electric version of an American favorite — the SUV, sounded like a match made in heaven. Although the companies remain linked as Ford still holds a 12% stake in Rivian Automotive RIVN with shares now worth billions of dollars,  the two companies canceled their plans to jointly develop an electric vehicle publicly on November 19^th.

Rivian's Successful Public Debut

Since its IPO on November 10^th,  Rivian's market capitalization skyrocketed to a mind-blowing $110 billion, leaving Ford behind at $78.2 billion. The start-up became the third most valuable automaker behind Tesla Inc TSLA and Toyota Motor TM, pushing Volkswagen VWAGY to fourth place with only two models in its portfolio- the R1T being produced and its R1S production postponed with earliest deliveries pushed back from January 2022 to March-April 2022 due to supply chain disruptions no carmaker is immune to. But, the interest for its vehicles is there.

Ford Doesn't Need Rivian Anymore

Several points indicate Farley may be right about Ford not needing Rivian any longer. Reservations for Ford's electric pickup truck, the F-150 Lightning, surpassed 150,000 units in September as the model appears designed to benefit from immense and lasting popularity of US' best selling pickup – the Ford F-150, emulating much of its utility. The Lightning is also more of a "workhorse truck" than the Rivian R1T that is being marketed mainly for recreation.

Ford also announced an $11.4 billion joint investment with a South Korean battery maker, SK Innovation, so it clearly has a bigger picture in mind. Rivian helped the legacy automaker gain courage and ground while it was making its first EV steps.

Ford Potentially Gained a Major Boost for Its EV Plans by Separating From the EV Startup

According to CNBC, Ford accumulated approximately 102 million shares in all, spending a total of $820 million in the process for its current 12% stake that is now worth approximately $13 billion. By selling these shares, which is now no longer needs since it is not partnering with Rivian on any future projects, Ford has cash at its disposal to boost and accelerate its EV plans.

There is the risk of Rivian's shares dropping after the initial IPO euphoria, resulting in a greatly reduced cash windfall for Ford who would still make immense gains above the initial average $8.04 it paid. Whatever the case, Ford has the near-future option to enhance its liquidity with billions of additional dollars if it sells its Rivian shares. These gains would be taxed, but they wouldn't be burdening the company's balance sheet with debt.

However, Ford hasn't given any indications of doing that and it will presumably have to wait for the lockup post-IPO period to expire.

Competitors Aren't Standing Still

Before it achieves its ultimate goal as the US-based leader, Ford first needs to become the second-largest behind Tesla. It remains to be seen whether it can achieve that with a 600,000-a-year production target. Meanwhile, its long-time Detroit rival General Motors GM is expecting to sell 1 million electric vehicles by 2025 across the globe so it is also ramping up production. Then there are many other start-ups such as Atlis Motor Vehicles and Hercules Electric Vehicles whose electric pickups are scheduled to hit the roads next year, with both of their models being equipped with ground-breaking solar technology by Worksport Ltd's WKSP subsidiary TerraVis Energy.

Ford's Strategy

In Farley's words, the legacy automakers' approach was reflected when it built ventilators and personal protective equipment to contribute to the battle against COVID-19. Whatever it takes, Ford finds a way- and its strategy seems to be working.

With its aggressive investments such as its massive Blue Oval City EV, fast-moving construction of cutting-edge facilities such as battery factories, and strong progress on the Lightning, Ford seems to be on track with its electrifications plans. Along with the addition of a reserve of cash accessible by liquidating its Rivian shares, Ford now has more flexibility and greater resources to support the production of its EV lineup.

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