Daily Management Review

Ford’s Investment In EVs And Self Driving Cars To Double


Ford’s Investment In EVs And Self Driving Cars To Double
Even while reporting a net loss of $2.8 billion for the fourth quarter of last year, the United States based auto giant Ford Motor Co has announced its plans to more than doubled the investment that it will make ion development and manufacturing of electric and autonomous vehicles at $29 billion.
A possible loss of between 10 per cent and 20 per cent for the production in the first quarter of the current year could also happen because of the global semiconductor chip shortage warned the second largest auto maker of the US. The company said that loss of production could also hit its operating earnings by between $1 billion and $2.5 billion.
But the Wall Street estimate beating fourth-quarter operating results and 2021 profit forecast of the company propped up its shares by 1.5 per cent in after-hours trading on Thursday.
"If EVs continue to quickly gain favor, especially with commercial customers, we want to be clear that we will not cede ground to anyone," Chief Financial Officer John Lawler told reporters on a conference call.
Ford will make an investment of $22 billion in electrification through 2025 which would be almost twice the amount that it had committed to EVs previously and would essentially "doubling down" on connected electric vehicles, Ford said. Additionally, over a period 10 years through 2025, Ford will also invest $7 billion in self-driving, or autonomous technology development and $5 billion of that will be made invest $7 billion in self-driving, or autonomous, technology development, the company said.
"We are accelerating all our plans," Chief Executive Jim Farley said which would include enhancement of battery capacity and addition of a larger range of electric vehicles in its portfolio going forward.
Any potential investment in battery production, be it be the company itself or through a joint venture, is not included in the $22 billion investment amount, he said on a conference call with analysts. The company will soon make more announcements about its EV partnerships, he added.
With the steady rise of electric vehicles globally, Ford was contemplating to start its own manufacturing of battery cells for its electric vehicles, Farley had said in an interview last fall.
An investment of $11.5 billion in electrification, including gasoline-electric hybrid vehicles, through 2022 had been previously committed by Ford. That included the launch of the Mustang Mach-E EV crossover, and electric versions of the F-150 pickup and Transit van.
Hybrid vehicles is a part of the $22 billion committed investment but the focus of the investment will "overwhelmingly" be on EVs, said a Ford spokesman.
For now the focus of Ford is to sell high-volume EVs, when asked to comment whether the company would try and match GM's announced targets for EC manufacturing and sale.
A net loss of $1.3 billion was reported by Ford for the entire of 2020. The company had however previously predicted of making a profit of between $600 million and $1.1 billion for the full year.