Ford's Farley Tells Investors Proof of Profitably Is Coming

By Staff Writer May 23, 2023
Ford Blue is expected to hit low double-digits in terms of EBIT margin percentage by 2026; Ford Pro is targeting mid-teens and Ford’s EV unit, Model e - is targeting 8% EBIT margins by 2026. Ford Blue is expected to hit low double-digits in terms of EBIT margin percentage by 2026; Ford Pro is targeting mid-teens and Ford’s EV unit, Model e - is targeting 8% EBIT margins by 2026.

“Delivering Ford+” is a two-day investor event that was live-streamed Monday and Tuesday, unveiling CEO Jim Farley’s plan to profitably ramp up electric vehicle sales and meet previously stated targets. The Detroit automaker is targeting an 8% EBIT margin on its EV unit and around 2 million EVs built yearly by 2026. Ford expects to roll 600,000 off the production line by the end of year.  

“We're so far behind on waste and cost,” chief executive Jim Farley told investors. The auto giant faces challenges paring down its EV total costs that are $7 billion higher than its competitors. "You're not going to believe us until we start delivering it," Ford CFO John Lawler said at the capital market presentation. "Because we've told you this before. That's the truth. We have and we haven't delivered. So we have to prove it. We can talk about it, but we have to prove it."  

Ford also unveiled new supply deals for battery-grade lithium and plans for an affordable 3- row EV with up to a 350-mile driving range to debut in 2025. A well priced bread and butter EV model and a reliable, affordable supply of lithium are necessary components to meet its target of 2 million electric vehicles by 2026, and for the U.S automaker to close the gap on market leader Tesla and stay ahead of GM. 

The U.S automaker expects auto prices to fall by more than 5% this year and next as dealer inventories grow, putting more pressure on competitors. Farley said the company plans to boost advertising on gas-powered models this year. Ford said it is maintaining its 2023 guidance of between $9 billion to $11 billion in adjusted EBIT and about $6 billion in adjusted free cash flow. The company expects strong profits with its gas powered and hybrid units well into the next decade. 

Wall Street analysts who have called the automaker's EV targets “ambitious” and “crazy high” have yet to be convinced. Ford shares fell 1% in trading on Monday.

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Last modified on Tuesday, 23 May 2023 15:44