Ford’s Capital Markets Day seeks to convince Wall Street of electric vehicle plans

DETROIT — Ford engine Monday will try to turn skeptics of its electric vehicle growth plans, which some Wall Street analysts have called “ambitious” and “crazy crazy,” into believers.

The Detroit automaker will hold its capital markets day, where it promised to provide details on how Ford plans to meet previously stated targets for an 8% EBIT margin on its vehicles unit. vehicles and a production rate of 2 million electric vehicles by 2026, against a forecast of 600,000 by the end of the year.

“We’ll walk you through why we think an 8% margin is totally realistic despite all the pricing pressure that we’re absolutely going to be under because everyone wants to grow,” CEO Jim Farley said on the call on the company’s first quarter results earlier this month.

The event is called “Deliver Ford+”, a reference to Farley’s turnaround and restructuring efforts that some have criticized for not being executed quickly enough. Farley announced the plan seven months into his term, in May 2021.

The automaker’s CEO described the financial markets day as an opportunity to demonstrate how strategy “comes to life”. The company is expected to complete its profit walks for its traditional “Ford Blue” and “Ford Pro” business businesses in addition to its “Model e” electric vehicle unit.

Ford is also expected to preview its second-generation battery products and technologies, which the company says will be crucial to achieving that 8% EBIT margin. The EV business is expected to lose about $3 billion this year.

Ford has previously said it plans to achieve that profit margin largely through scale, EV battery improvements, and design and engineering efficiency.

“There are certainly analysts who are skeptical,” Morningstar analyst David Whiston told CNBC. “I think Monday is an opportunity to try to convince some of those skeptics that it can happen. I’m personally prepared to give them the benefit of the doubt on this…you have to convince people.”

Whiston described the goal schedule as “tight”. Others were more critical.

Morgan Stanley analyst Adam Jonas on Ford’s first quarter earnings call described the increase in electric vehicle production as “crazy high.” Barclays analyst Dan Levy in a note to investors this week called it “ambitious”.

“Currently, we are skeptical of Ford’s ability to achieve both goals, as we expect it to balance volumes with profit opportunities,” Levy said.

Analysts don’t expect much movement in stock from the event unless Ford surprises with a new product or a change in previously announced plans.

“Overall, we believe Ford’s key objectives are unlikely to differ from its recent learning session, but management will attempt to reassure investors about them,” the Deutsche Bank analyst said Wednesday. Emmanuel Rosner in a note to investors, reiterating the sale of the company. stock note.

Ford stock is rated “hold” with an average target price of $13.63 per share, according to analyst ratings and estimates compiled by FactSet.

Ford shares are up about 75% since Farley became CEO in October 2020. The stock closed Friday at $11.65 per share.

– CNBC Michael Bloom contributed to this report.


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