Automotive giant Ford predicts that electric vehicles will comprise 40% of global sales by the year 2030.
Ford Accelerates Electric Vehicle and Commercial Business Plans
Ford, the iconic American automaker, is gearing up for a significant shift in its future strategy, with its current CEO Jim Farley at the helm. Farley took over last October and has accelerated the company's plans for the future.
One of the key moves is the creation of a separate business called Ford Pro, which will focus on commercial and government fleet buyers. The aim is to generate $45 billion in annual revenue by 2025.
Ford also plans to introduce a new rear-drive, all-wheel-drive electric vehicle architecture. This architecture will 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.
Much of the 40% electric vehicle sales target will come from Europe, where Ford has pledged to convert its entire passenger vehicle lineup to electric power by 2030. Ford's international businesses, including Europe, China, and South America, generated a $500 million profit in the first quarter, after losing over $2 billion per year for the past two years.
Ford expects to have about 1 million vehicles capable of getting over-the-internet software updates by the end of this year, surpassing Tesla in this capability by July 2022. The company is also developing and building batteries in a joint venture with SK Innovation of South Korea.
The global auto industry and government policymakers are trying to transition from internal combustion to battery power as a means to combat climate change. In line with this, Ford plans to spend an additional $8 billion on electric vehicle (EV) development from this year to 2025, bringing the total spend to nearly $20 billion.
Ford aims to reduce battery costs from the current $140 per kilowatt-hour to under $100 by 2025, and $80 by the end of this decade. The $8 billion in additional EV spending will go toward the joint venture with SK Innovation to develop and manufacture batteries.
Ford also announced two new electric vehicle platforms to handle pickup trucks, commercial vehicles, and SUVs such as the Ford Explorer. The company plans additional cargo vans and pickup trucks from the new architecture, and expects one-third of pickup truck sales to be fully electric by 2030.
Ford's COO, Lisa Drake, stated that 70% of Mustang Mach-E electric SUV sales came from other auto brands, suggesting that EVs will help Ford increase its sales. The company's shares surged after the announcement, closing at $13.90, a level not seen in about five years.
Ford's financial performance has not been acceptable in recent years, but it has made progress in the past few quarters and is now generating cash flow to grow its electric and commercial vehicle businesses. The companies plan to build two North American factories to make batteries for roughly 600,000 electric vehicles per year by the middle of this decade. Ford collaborates with SK On through their joint venture BlueOval SK for the development and production of batteries for electric vehicles, with two North American battery manufacturing plants located in Glendale, Kentucky, designed to produce batteries for around 600,000 electric vehicles per year.
Ford predicted it would post an 8% pretax profit margin in 2023. With these ambitious plans, Ford is positioning itself to be a major player in the electric vehicle market and the future of commercial transportation.
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