Ford is speeding up its electric vehicle push despite falling profits

NEW YORK: Ford on Thursday announced a major acceleration in its investment in electric cars, and indicated deepening collaboration with tech giants on the further digitalization of driving.

The US auto giant released its fourth-quarter and annual results, and said it plans to invest $ 22 billion in electric cars through 2025, nearly double the previous plan.

The announcement is the latest big bet on electric cars by an old car maker in the wake of Tesla’s arrogant growth and an anticipation of the Biden administration’s initiatives to encourage zero-emissions vehicles.

Last week, rival Ford Motor Company General Motors set a goal of having most of its fleet emissions-free by 2035.

“It’s amazing how quickly the industry is changing,” said CEO Jim Farley, who noted the rise in electric vehicle sales in Europe.

Farley reported strong early interest in Ford’s Mustang Mach-E, the electric SUV that hit showrooms in December. The automaker is planning a lineup of all-electric vehicles, including its best-selling F-150 pickup truck.

“Costs are dropping fast, but for me and the team, the transition to electricity is not about batteries and motors,” Farley said in a conference call with analysts. “It’s about a digital vehicle and the experience of new customers.”

The revamped plan came as Ford announced a loss of $ 2.8 billion in the fourth quarter of the year, compared to a loss of $ 1.7 billion in the same period last year.

Revenue declined 9.3% to $ 36 billion.

Ford expected operating profit for 2021 to be between $ 8 to $ 9 billion, which is much more than $ 2.8 billion in 2020, when the company suffered a significant drop in auto sales amid the disruption caused by the Coronavirus.

A semiconductor crisis hit

Ford on Monday unveiled an alliance with Google to employ its cloud computing platform.

Farley said the Google project is not “exclusive” and that Ford cars will also use Amazon audio and other software from Apple and Microsoft.

“Technology partners are becoming more and more important to us to deliver the digital experience,” he said.

Farley said the auto giant intends to take steps to secure battery cell capacity, realizing that supplies could face challenges as more competitors build electric cars.

The automotive industry today faces a shortage of semiconductors following the increased demand for chips over the past year from customer electronics.

Ford’s projected annual operating profit could fall by $ 1 to $ 2.5 billion due to automobile sales losses linked to the semiconductor shortage.

Earlier on Thursday, Ford said it would cut production of the F-150 due to a supply problem, following other carmakers, including General Motors, which announced on Tuesday it would shut down production at three plants and halve production in another due to Chip supply.

“We want to shut it down,” Farley said of the battery cell capacity. “We cannot afford to be in the situation we are in with semiconductors now.”

Ford shares were up 1.2% in post-close trade to $ 11.51.

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