Ford had previously announced plans to spend $22 billion on electrification efforts and had recently revealed plans to build two new battery factories in a joint venture with Korean battery maker SK innovation.
Ford said it is committed to catching and passing its rivals as the industry shifts to EVs.
“Our ambition is to lead the electric revolution. I really mean that,” said CEO Jim Farley, speaking to investors and analysts Wednesday.
Farley predicted that Ford will be able to capture equal or improved market share as it shifts to EVs. So far 70% of buyers of the Mustang Mach-E have come to Ford from other automakers, according to Lisa Drake, the chief operating officer of Ford’s North American unit.
Farley admitted that the company’s financial performance has not been as good as it should have been in recent years. Ford lost an average of $2 billion a year outside of North America in each of the last three years. But he pointed to the profit Ford posted overseas in the first quarter this year and said the company should now be able to achieve an 8% profit margin, excluding interest, taxes and special items, by 2023.
Farley forecast that costs of building EVs will fall as production increases, especially of EV batteries, a significant part of the price of building an electric vehicle. Farley predicted that battery costs will decline by 40% by the middle of this decade. So the shift to EVs will be able to “deliver higher profitability … compared to today’s ICE [internal combustion engine] offerings,” Farley said.
Investors are more interested in backing automakers with ambitious EV plans rather than traditional automakers. Tesla is by far the most valuable car company, despite having a fraction of the sales and profits of traditional automakers. Tesla’s market value is roughly equal to that of the value of the five largest global automakers combined.