Shares of Ford Motor Company (NYSE:F) were trading sharply higher on Wednesday, after the company shared details of its electric vehicle and profit growth plans at a morning-long event for investors and analysts.
As of 1:30 p.m. EDT, Ford’s shares were up about 7.4% from Tuesday’s closing price.
In a live-streamed event on Wednesday morning, CEO Jim Farley and other Ford executives outlined the company’s plan to transition to electric vehicles with advanced connectivity that deliver ongoing revenue streams via a series of subscription software applications.
The plan, called “Ford+”, has a lot of moving parts, but here are the key points for auto investors.
- Ford is accelerating its electric-vehicle efforts. It now says it will spend at least $30 billion on EVs by 2025, up from $22 billion in its most recent forecast.
- Ford is boosting its commercial-vehicle business under a new sub-brand (“Ford Pro”) and working to bring new products and services (including software) to its commercial and government-fleet customers. Commercial vehicles and related products accounted for $27 billion of revenue in 2019; Ford expects that to grow to $45 billion per year by 2025.
- Ford has already begun rolling out a sophisticated new electrical architecture for its vehicles that incorporates much greater computing power than in the past. Vehicles with that architecture can receive over-the-air (OTA) updates; Ford expects to have 1 million of them on the road by the end of 2021, and 33 million by 2028.
- Ford will use that connectivity to offer upgrades and new features to customers, maintaining a stronger connection with customers and generating additional revenue over the vehicle’s life.
Last but not least: Ford now says that it will hit its longtime targets for operating margin — 10% in North America, 6% in Europe, 8% overall — by 2023.
While Ford had a lot of bullish news to share, executives were careful not to discuss the company’s near-term prospects. Ford lowered its full-year guidance in April on concerns around the ongoing global shortage of semiconductors; CFO John Lawler declined to change that guidance on Wednesday.
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