Detroit, Michigan – Increased costs and lower sales due to the COVID-19 pandemic pushed Ford to its first annual loss since the Great Recession, though the company’s U.S. and credit businesses were profitable. And, the automaker announced plans to double spending on electric vehicles (EVs) and autonomous vehicles (AVs) to $29 billion by 2025.
“The transformation of Ford is happening and so is our leadership of the EV revolution and development of autonomous driving,” said Ford President and CEO Jim Farley. “We’re now allocating a combined $29 billion in capital and tremendous talent to these two areas, and bringing customers high-volume, connected electric SUVs, commercial vans and pickup trucks.”
While no company has been spared by the pandemic, the timing was especially bad for Ford as it was launching a redesigned F-150 in 2020, the company’s best-selling vehicle and the source of the bulk of its profits. Manufacturing and supply base disruptions limited the company’s ability to make the pickup and kept some potential customers out of dealer showrooms. Those factors combined to a $1.3 billion loss for the year.
United Auto Workers (UAW) members will receive $3,625 in profit-sharing checks based on Ford’s performance in North America.
Farley said Ford will now invest at least $22 billion in electrification through 2025 and $7 billion on autonomous technologies, nearly twice what the company had previously committed to EVs. He said the company is “all in and will not cede ground to anyone” in developing and delivering connected electric vehicles and services in mainstream areas of strength for Ford: pickups, commercial vans and SUVs.
“We are accelerating all our plans – breaking constraints, increasing battery capacity, improving costs and getting more electric vehicles into our product cycle plan,” Farley said. “People are responding to what Ford is doing today, not someday.”
The Mustang Mach-E went on sale in late 2020, and will be followed by the first E-Transit commercial van (late 2021) and an all-electric F-150 pickup (mid-2022). He added that EVs will be fundamental to the Lincoln luxury brand and the Transit commercial lineup, the latter across a variety of body styles and customized interiors.
Ford’s development and delivery of connected vehicles will be enhanced by a new, six-year partnership with Google announced earlier this week.
As EVs become primary in Ford’s lineup, Farley said dedicated manufacturing capacity for them will expand around the world. To date, the company is producing electric vehicles or plans to in Michigan (F-150); Missouri (E-Transit); two plants in Canada (SUVs); and Mexico and China (Mach-E), with others to follow.
Ford CFO John Lawler said the company was on course to earn $8 billion to $9 billion in adjusted earnings before taxes in 2021. However, the global semiconductor shortage is creating uncertainty across multiple industries and will influence Ford’s 2021 operating results.
“The semiconductor situation is changing constantly, so it’s premature to try to size what availability will mean for our full-year performance,” he said. “Right now, estimates from suppliers could suggest losing 10% to 20% of our planned first-quarter production.”