Ford Is Shifting Gears: Ambitious Plans For EV Production

Ford Motor Co F CEO Jim Farley outlined the company’s future strategy at its investor day Monday, which includes a focus on cutting costs, raising product quality, and shifting towards software, services, and new vehicle offerings.

What Happened: One significant aspect of Ford’s strategy is to reduce its focus on hypercompetitive market segments, like small two-row SUVs, and instead emphasize software, services, and vehicles like pickup trucks, large SUVs, commercial vehicles, and second-generation electric vehicles, according to The Washington Post.

The company also plans to reduce the number of parts in its vehicles, cutting warranty and recall expenses.

Ford said it has a target of a 10% pretax profit margin by 2026 and reaffirmed its 2023 guidance of $9 billion to $11 billion in adjusted pretax profits, according to The Post, with Farley noting he wants Ford to shift from competing for slivers of market share to offering tailored ownership experiences, even suggesting non-negotiated vehicle prices.

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The company also announced a series of deals to supply lithium products for its electric vehicle division, Reuters noted, including agreements with Albemarle Corporation ALB, Nemaska Lithium, Compass Minerals International, Inc CMP and EnergySource Minerals. Ford said the partnerships ensure its EVs qualify for new federal tax credits, making them more competitive.

The automaker is targeting a two million EV production run rate by 2026, up from an expected 600,000 in 2023.

Ford also reiterated its division into three units: Ford Blue, Ford Model e for EVs and digital products, and Ford Pro, its commercial vehicle business.

Each unit will contribute to the company’s overall profitability, with the Model e unit expected to report a loss this year, offset by profits in the traditional Blue and Pro fleet businesses.

Price action: Shares of Ford traded 0.17% lower to $11.63 on Monday, according to data from Benzinga Pro.

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Photo: Ford