Ford shares rose 1.7% in pre-market trading after the company announced it was increasing spending on its Electric Vehicle program to $30 billion. This is a rise of $8 billion over its previous commitment of $22 billion.
The announcement was made during an investor day held this week. The company said it was planning to spend $30 billion by 2025 on electric vehicle and battery development. The company had previously committed to spending $22 billion on its EV program by 2023.
Ford has named the new operating plan “Ford+”.
Despite the increase in spending, Ford remains committed to achieving its long-term operating margin goal. The plan, which has been monitored closely by Wall Street analysts, seeks to achieve an adjusted operating profit margin of 8% by 2023.
Speaking in Detroit, ahead of the investor day, CEO Jim Farley said that the company will create a new division called “Ford Pro.” This division will focus on commercial vehicles and government customers.
He added that – “I’m excited about what Ford+ means for our customers, who will get new and better experiences by pairing our iconic, world-class vehicles with connected technology that constantly gets better over time. We will deliver lower costs, stronger loyalty, and greater returns across all our customers. This is our biggest opportunity for growth and value creation since Henry Ford started to scale the Model T, and we’re grabbing it with both hands.”
The auto giant has forecast that by the year 2030, at least 40% of global vehicle sales will be electric. Much of these sales are driven by the demand for the company’s new electric Mustang Mach-E and F150 Lightning truck. In one week alone the company had received 70,000 reservations for the F-150.
This week the company revealed a commercial version of the popular electric F-150 truck. Dubbed the F-150 Lightning Pro, the truck has a base price of $40,000. This price range puts it in direct competition with Tesla’s similarly priced Cybertruck.
It had already unveiled the mainstream version of its all-electric F-150 last week, when President Joe Biden had visited the company’s production facility in Dearborn, Michigan.
One of Ford’s major rivals, General Motors (GM), announced last year that it was going to spend $27 billion in electric and autonomous vehicles over the next five years. GM has said it is targeting a complete halt in the U.S. sales of gasoline-fueled passenger vehicles by 2035.
The industry as a whole is under pressure from countries such as China and regions like Europe to switch to electric vehicle production to cut emissions. President Joe Biden has called for $174 billion to be spent on EV production and infrastructure.
According to some investors, Ford is seen as lagging in the race to electrification. A view that the company vehemently denied at the investor’s day. Ford officials pointed out that the Mustang Mach-E and F-150 programs had shown how ambitious the company’s future plans are.