Ford is doubling down on electric vehicles. The Detroit automaker said it plans to invest $29 billion in electric and autonomous vehicles through 2025. The announcement follows recent plans by rival General Motors. Last year, GM announced plans to increase spending on all-electric and autonomous vehicles by $27 billion between 2020 and 2025.
Ford said their investments include $7 billion in self-driving vehicles and $22 billion in EVs. Most of the vehicles produced under Ford’s new plan will be all-electric. However, the company also has a selection of hybrid models, which will continue to have traditional internal combustion engines.
“The transformation of Ford is happening and so is our leadership of the EV revolution and development of autonomous driving,” said Jim Farley, company CEO, in a news release.
It’s Not All Good News, Though…
Earlier in the week, Ford said it was significantly cutting production at plants in Michigan and Missouri that produce its profitable F-150 pick-up trucks. That decline in production is due to a global semiconductor microchip shortage.
Automakers (and parts suppliers) began warning of a semiconductor shortage late last year. Demand for new vehicles rebounded stronger than expected following a two-month shutdown due to the pandemic.
Ford also reported its latest earnings, which were mixed. On an unadjusted basis, Ford’s loss widened to $2.79 billion (or a loss of 70 cents a share) during the fourth quarter. That was a disappointing increase from a loss of $1.67 billion (42 cents a share) during the same three months of 2019. Obviously, the pandemic had a huge effect their numbers.
Looking forward to the remainder of 2021, Ford estimates it will earn between $8 billion and $9 billion in adjusted pre-tax profits. They also project to generate between $3.5 billion and $4.5 billion in adjusted free cash flow. That doesn’t factor in a microchip shortage, which could lower Ford’s earnings by $1-to-$2.5 billion this year.
Ford’s results in the fourth quarter were led by its operations in North America, which made $1.1 billion on overall revenue of $22 billion. All other segments (aside from Europe, with earnings of $414 million) lost money for the automaker. That included a $105 million loss in South America and $66 million loss in China.
In 2020, Ford lost $1.28 billion as it dealt with global restructuring and impacts from the global pandemic. That compares with an $84 million profit in 2019. Its revenue for 2020 was $127.1 billion, down 18% from the year before.