By Cristian Bustos. Originally published at ValueWalk.
Ford Motor Company (NYSE:F) is betting hard on e-transport and has set sights on producing 2 million electric vehicles (EV) a year and a 10% adjusted operating profit margin in 2026. The objectives are some of the most ambitious compared to the company’s current outlook.
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New Goals
According to CNBC, Ford is launching a restructuring plan that includes the total separation of the EV and the ICE (internal combustion engine) business. For the former, the automotive giant is aiming to produce 2 million units a year and generate a 10% adjusted operating margin in 4 years.
In 2021, the company managed to sell 64,000 units of its famous Mustang Mach E crossover around the world —27,140 in the U.S.— and reported an adjusted operating profit of 7.3%.
As the announcement was made public, Ford shares jumped by 7.7% in Wednesday morning trading to almost $18, showing how warm investors are about the company’s future and current strategy.
In an investor note Wednesday, Morgan Stanley analyst Adam Jonas said: “We applaud Ford’s decision to take the first important step to optimize the competing missions of the EV/ICE businesses… In our opinion, other legacy auto OEMs may be planning something similar. Ford leads the world in actually announcing it.”
Ambitious Plan
The following 10 years are believed to be crucial for the transition towards electric mobility, and car manufacturers are at the center of the process. Ford is warming up for an absolute EV race in which they plan to be ahead of competitors and the demand curve.
Rightly so, Ford CEO Jim Farley said, “We want to beat the old players, we want to beat the new players.”
As for the 10% margin target, Farley said the company was preparing to cut $3 billion in structural costs, mainly from its ICE business, while also boosting electric car sales and lowering costs of materials.
As reported by CNBC, “Ford’s goals are similar to ones previously announced by its largest crosstown rival, General Motors. The Detroit automaker last year said it plans to double its annual revenue and expand margins to 12% to 14% by 2030.”
Ford is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders’ families.
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