Ford Motor Co (NYSE: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 (NYSE:GM) and Volkswagen AG (OTC: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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