Shares of Ford Motor Company (NYSE: F) slipped to red territory during midday trade on Wednesday. The stock has gained 30% since the beginning of this year. Ford has been focusing significantly on electric and autonomous vehicles and the company outlined new plans for its European operations with regards to EVs.
Europe
Ford aims to make 100% of its passenger vehicle range in Europe zero-emissions capable, all-electric or plug-in hybrid by mid-2026. The company committed that its passenger vehicle range will be completely all-electric by 2030. Ford’s entire commercial vehicle range is expected to be zero-emissions capable, all-electric or plug-in hybrid by 2024 with two-thirds of its commercial vehicle sales expected to be all-electric or plug-in hybrid by 2030.
As part of these efforts, Ford plans to invest $1 billion in its vehicle assembly facility in Cologne, Germany which is also one of its largest manufacturing facilities in Europe. The company will transform the existing operations to facilitate the manufacture of electric vehicles. Ford will begin producing its first European-built, volume all-electric passenger vehicle for European customers at the facility from 2023 with plans for a second vehicle under consideration.
In 2020, 14% of all Ford passenger cars sold in Germany were electrified vehicles, up from 0.6% in 2019.
For the fourth quarter of 2020, Ford delivered automotive revenues of $7.1 billion in Europe, up 1% year-over-year. The company posted $414 million in EBIT, which was its highest quarterly profit in the region in over four years, and an EBIT margin of 5.8%. The company also lowered its annual structural costs by $1.1 billion.
Ford is focusing on commercial vehicles in Europe, which is more profitable, along with a small portfolio of passenger cars to maximize its returns.
EV investments
Ford plans to invest at least $22 billion in electrification through 2025 which represents twice its earlier commitments. The company is focusing on developing connected EVs in pickups, commercial vans and SUVs, which are its particular areas of strength.
Market outlook
Based on data from Precedence Research and Global Newswire, the global electric vehicle market is estimated to grow at a compound annual growth rate of 40.7% from 2020 to 2027. Factors favoring this growth are environmental concerns, favorable government policies and higher investments by EV manufacturers.
Click here to read the full transcript of Ford’s Q4 2020 earnings conference call