Will Ford Electrify the U.S?
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Ford: Recharged!
Automaker Ford Motor Company (F) has made major progress with its EV plans. The company has provided its dealers in the US the choice to become "EV-certified" under one of two programmes; projected investments ranged between $500,000 and $1.2 million. Ford is investing billions to increase manufacturing and sales of battery-powered cars and trucks, and about 65% of its dealers have committed to selling electric vehicles as a result.
EV Journey
Giving in to investor demands, Jim Farley, CEO, separated its internal combustion engine business and the EV business into two different units. Although not technically a spin-off, Ford expected the move to streamline its EV business while maximizing profits. Farley aimed to transform the internal combustion business into a profit and cash engine for the entire company.
Since the firm spun off its all-electric vehicle business earlier this year into a distinct subsidiary known as Model e, there has been debate over Ford's ambitions to market EVs. According to Farley, the manufacturer and its dealers must reduce expenses, boost profitability, and provide better, more reliable consumer sales experiences.
Ford, in contrast to its rival General Motors, is allowing dealers to choose not to sell EVs and to continue selling the company's automobiles. Dealers of Buick and Cadillac who don't want to invest in EV sales have been offered buyouts by GM. When Ford reopens the certification process in 2027, dealers who previously decided against investing in EVs may do so.
On Monday, Farley reaffirmed that a direct-sales strategy is anticipated to cost the manufacturer thousands of dollars less than the industry's customary franchised arrangement. Direct-to-consumer sales have often been considered as advantageous for maximizing profit by Wall Street analysts. When it comes to repairing its vehicles, Tesla, which employs the sales model, has encountered some growing pains.
What have they achieved?
With 65% of dealers committing to sell EVs manufactured by Ford, it is the biggest DC fast-charging network in the US-based only on geography. The number of locations is not the greatest metric to evaluate charging networks; it is merely one of many. The number of chargers is a more suitable metric, and most charging networks install only a few chargers per station, with the exception of Tesla and some of the more recent stations in America.
Ford now offers the Ford F-150 Lightning pickup, Mustang Mach-E crossover, and e-Transit van as its only all-electric models. Under a plan to invest tens of billions of dollars in the technologies by 2026, the manufacturer is anticipated to produce a long list of more EVs globally.
The company’s total U.S. sales for the month of November 2022 decreased 7.8% to 146,364 vehicles from 158,793 vehicles in the same month last year. However, sales of EVs increased 103% for the month compared to the previous year, making Ford America's second best-selling brand and electric vehicle maker after Tesla.
Farley believes that manufacturing EV parts in-house, such as electric motors and batteries, will not only secure jobs but also provide enormous value for the manufacturer, helping it to overcome Tesla. The news of battery prices increasing this year for the first time in a decade can be seen as a thorn in Ford’s EV plans.
After Ford issued a supply-shortage and price increase warning at the beginning of October, analysts' expectations were cut. As a result of ongoing supply chain delays and inflationary pressure, the automaker lowered its Q4 projections. Ford now projects adjusted EBIT for the entire year to be about $11.5 billion. Although that represents an increase of nearly 15% from 2021, it falls short of the previous target range of $11.5 to $12.5.
Market Reaction
F ended at $13.10, down 1.36%.
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