Ford expects 40% of its global sales to be battery-electric vehicles by 2030 as it adds billions to what it’s spending to develop them.
The automaker says in a presentation for investors Wednesday that it will add about $8 billion to its EV development spending from this year to 2025. That would bring the total to nearly $20 billion as Ford begins to develop and build batteries in a joint venture with SK Innovation of Korea.
“Today is show, not tell time, for the Ford team,” CEO Jim Farley said at the start of the presentation.
Wall Street liked what it heard and shares surged more than 8% to levels not seen in about five years.
Farley said the company’s financial performance hasn’t been acceptable in recent years, but it has accelerated its turnaround plan and made progress in the past few quarters. The company is now generating cash flow so it can grow the scale of its electric and commercial vehicle businesses, he said. Ford predicted it would post an 8% pretax profit margin in 2023.
The company also announced it would create a separate business called Ford Pro that will focus on commercial and government fleet buyers. It also expects to have about 1 million vehicles capable of getting over-the-internet software updates by the end of this year. Ford says it will have more vehicles capable of this than Tesla by July of 2022.
In the U.S., Ford’s largest market, electric vehicles are only 1.2% of Ford’s sales through April. Ford currently offers only one all-electric vehicle, the Mustang Mach-E SUV, but by next spring it will have an all-electric F-150 pickup and a battery powered Transit big commercial van on the roads. The company said 70,000 customers have put down $100 deposits to reserve an electric F-150 in the week since it was unveiled. Ford’s F-Series pickup is the top-selling vehicle in the U.S.
Ford said it plans a new rear-drive, all-wheel-drive electric vehicle architecture to bring a new generation of high-sales vehicles, including an electric Ford Explorer SUV and other larger SUVs with two and three rows of seats.
The company also plans additional cargo vans and pickup trucks from the new architecture, and it expects one third of pickup truck sales to be fully electric by 2030, said Hau Thai-Tang, the company’s product development chief.
Ford also will use small-vehicle modular architecture from partner Volkswagen to bring small and midsize electric vehicles to Europe, where demand for smaller vehicles is higher, Thai-Tang said.
Chief Operating Officer Lisa Drake said that by making electric versions of its top-selling brands, the Mustang, F-150 and Transit van, Ford can bring bulk purchasing power to EVs that smaller startups can’t.
She said 70% of Mustang Mach-E electric SUV sales came from other auto brands, proving that EVs will help Ford increase its sales.
Last week Ford announced that it’s forming a joint venture that will build two North American factories to make batteries for roughly 600,000 electric vehicles per year by the middle of this decade. The deal with SK Innovation is the start of Ford’s plan to vertically integrate key parts of the electric vehicle supply chain. The companies say they have signed a memorandum of understanding, but details on the ownership structure and factory locations have yet to be worked out.