Electric cars

Ford targets 2 million electric cars per year and 10% operating profit

Ford Motor Company (NYSE:F) is betting hard on e-transportation and is targeting production of 2 million electric vehicles (EVs) per year and an adjusted operating margin of 10% by 2026. The goals are among the most ambitious compared to the company’s current outlook.

Image source: Ford (screenshot) – Valuewalk

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New goals

According to CNBC, Ford is launching a restructuring plan that includes the complete separation of the EV and ICE (internal combustion engine) businesses. For the first, the automotive giant is aiming for production of 2 million units per year and an adjusted operating margin of 10% in 4 years.

In 2021, the company managed to sell 64,000 units of its acclaimed Mustang Mach E crossover globally – 27,140 in the US – and posted an adjusted operating profit of 7.3%.

When the announcement went public, Ford shares jumped 7.7% Wednesday morning to nearly $18, showing how excited investors are about the company’s future and current strategy.

In a note to investors Wednesday, Morgan Stanley analyst Adam Jonas said, “We welcome Ford’s decision to take the first important step to optimize the competing missions of the EV/ICE business… In our view, other legacy auto OEMs might be planning something similar. Ford leads the world in actually announcing it.

Ambitious project

The next 10 years are considered crucial for the transition to electric mobility, and car manufacturers are at the center of the process. Ford is gearing up for an absolute EV race in which they plan to be ahead of their competitors and ahead of the demand curve.

Fittingly, Ford CEO Jim Farley said, “We want to beat old players, we want to beat new players.”

Regarding the 10% margin target, Farley said the company is preparing to cut $3 billion in structural costs, mostly from its ICE business, while boosting electric car sales and cutting costs. material costs.

As reported by CNBC, “Ford’s goals are similar to those previously announced by its biggest Crosstown rival, General Motors. Last year, the Detroit automaker said it planned to double its revenue from annual business and increase its margins by 12 to 14% by 2030.”

Ford is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies run by their founders or the families of their founders.