Ford To Focus On EVs, Trucks, SUVs; CEO Says Why Electric Push Came Late
Ford (F) CEO James Hackett will steer the nation's second largest automaker in the direction of high-margin trucks and SUVs, and away from less-profitable cars, while slashing costs by $14 billion and investing more in electric vehicles.
XAutoplay: On | OffA day after saying it would add 13 EVs with a five-year investment of $4.5 billion, Ford said Tuesday it also will trim capital spending on internal combustion engines by a third and shift that money into electrification.
In addition, Ford plans to save $10 billion in material costs over the next five years and reduce engineering expenses by $4 billion. It also sees shortening the time to develop a new vehicle by 20%, and reallocating $7 billion of capital from cars to SUVs and trucks.
Ford vowed to build 100% of its new U.S. vehicles with connectivity by 2019 and pledged a goal of having connectivity in 90% of its new vehicles globally by 2020.
During his presentation, Hackett laid out five principles:
- Preparing for disruption, noting that Ford has invested in Autonomic, a Silicon Valley self-driving startup.
- Ford will be in the vehicle business, moving people and goods.
- Smart and connected vehicles
- New smart vehicles will travel in a "new transportation operating system."
- Ford will capitalize on new opportunities in the new system.
Ford's announcements follow General Motors' (GM) promise to eventually move away from conventional engines and add 20 new battery-electric and fuel-cell vehicles to its global lineup by 2023.
Ford stock rose 0.4% late after closing up 2.1% at 12.34 on the stock market today, helped by strong September U.S. sales. GM finished 3% higher, while Fiat Chrysler (FCAU) edged up 0.1%.
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Tuesday's CEO Strategic Update was the first for Hackett, who abruptly replaced Mark Fields in May.
Since taking over as chief, Hackett has made an electric-vehicle push in China, explored an alliance with Indian automaker Mahindra & Mahindra, and partnered with ride-sharing service Lyft to take self-driving cars mainstream.
The event was highly anticipated by industry analysts, who have been seeking to learn more about the new chief's strategic vision for the 114-year-old automotive giant.
Ford Chairman Bill Ford has sought to portray Hackett as a transformational leader as well as a Silicon Valley darling. Yet Hackett is sometimes viewed as an industry outsider, having run furniture-maker Steelcase (SCS) for two decades before joining the second largest U.S. automaker. He led Ford's smart-mobility unit for a little over a year before being elevated to chief executive.
Investors had grown uneasy about Ford's ability to take on both established rivals like GM and newer players such as Tesla (TSLA) as new technologies disrupted the auto industry.