Ford invests 22 billion dollars to develop electric vehicles and makes its first annual loss in 12 years.

Published: Feb 05, 2021 10:06 (GMT+8)

On Feb. 4, Ford reported better-than-expected results for the fourth quarter of 2020 and said it would invest $29 billion in electric and self-driving cars by 2025.

Wall Street has been waiting for Ford to inject more money into these emerging technologies since GM announced last year that it would increase its investment in all-electric and self-driving vehicles to $27 billion between 2020 and 2025.

Ford said the plan includes $7 billion for self-driving cars and $22 billion for electric cars. After Ford announced a $11.5 billion investment in electric vehicles in 2022 (about $7 billion since 2016), Ford now plans to increase its investment by 2025 to $10.5 billion, a total of $22 billion.

Ford says most of the planned cars will be pure electric cars, but it also has hybrid and plug-in hybrid models that still carry traditional internal combustion engines. "Ford is in transition and our leadership in electric vehicle innovation and self-driving research and development is changing," Ford CEO Jim Farley said in a statement.

Fourth quarter results

Ford's results for the fourth quarter of 2020 were mixed. Here's a comparison between the final results and the Wall Street average forecast compiled by Refinitiv.

Adjusted earnings per share: 34 cents vs projected loss of 7 cents

Revenue: $33.2 billion vs forecasts $33.89 billion

Unadjusted, Ford lost $2.79 billion, or 70 cents a share, in the fourth quarter of 2020, compared with a loss of $1.67 billion, or 42 cents a share, in the same period in 2019.

Ford excluded $5 billion in special expenses from its adjusted quarterly profit. This includes $2.4 billion for suspension of production in Brazil as part of the restructuring of its South American operations, and $610 million for the recall of 3 million older cars because of possible problems with airbag inflating equipment; other costs include pension obligations and other restructuring measures.

Ford's fourth-quarter results were dominated by its North American operations, which contributed $1.1 billion of its $22 billion in revenue. With the exception of Europe's profit of $414 million, other markets reported losses, including a loss of $105 million in South America and a loss of $66 million in China.

For the whole of 2020, Ford lost $1.28 billion as a result of its global restructuring plan and the epidemic, and made a profit of $84 million in 2019. Revenue last year was $127.1 billion, down 18% from a year earlier.

John Lawler, Ford's chief financial officer, said he expected adjusted pre-tax profit of $8 billion to $9 billion and adjusted net cash flow of $3.5 billion to $4.5 billion in 2021. But this does not take into account the global shortage of semiconductor chips. The lack of cores could reduce Ford's adjusted net cash flow by $1 billion to $2.5 billion this year, Lawler said.

"the problems of semiconductors are constantly changing, so it is too early to try to measure their impact on full-year results," Lawler said in a statement. Now, according to suppliers' estimates, we may lose 10% to 20% of our production in the first quarter. "

Earlier on Feb. 4, Ford said it would slash production of Fmuri 150 pickup trucks at factories in Michigan and Missouri next week because of chip shortages.

Carmakers and parts suppliers began warning of semiconductor shortages at the end of last year. Earlier, the rebound in car demand was stronger than expected due to the factory shutdown for two months as a result of the epidemic.

Ford shares rose as much as 4% in after-hours trading on Feb. 4 before falling back to about $11.4, up less than 1%.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or for more information, please contact: lemonzhao@smm.cn
For more information on how to access our research reports, please contact:service.en@smm.cn
Related News
NEV Highway Charging Surges 48.41% During National Day Holiday, Reaching 2.97M Sessions
1 hour ago
NEV Highway Charging Surges 48.41% During National Day Holiday, Reaching 2.97M Sessions
Read More
NEV Highway Charging Surges 48.41% During National Day Holiday, Reaching 2.97M Sessions
NEV Highway Charging Surges 48.41% During National Day Holiday, Reaching 2.97M Sessions
[NEV Charging on Highways Nears 3 Million Times in First 3 Days of National Day Holiday, with Charging Volume Exceeding 71 Million kWh] NEV charging demand was robust in the first three days of the National Day holiday, and highway charging infrastructure operated smoothly. From 00:00 on October 1 to 24:00 on October 3, statistical analysis of 62,700 highway charging facilities (connectors) included in the national charging facility monitoring service platform shows that the total number of NEV charging sessions on highways nationwide in the first three days of this year's National Day holiday reached 2.9686 million, with a daily average of 989,500, up 48.41% YoY over the same period of last year's National Day holiday. Charging volume reached 71.6193 million kWh, with a daily average of 23.8731 million kWh, up 49.39% YoY over the same period of last year's National Day holiday. The penetration rate of green travel during holidays continued to rise, and the trend of people using NEVs for long-distance travel became increasingly evident.
1 hour ago
[SMM Flash] Middle East October Sulfur Contract Prices Announced
1 hour ago
[SMM Flash] Middle East October Sulfur Contract Prices Announced
Read More
[SMM Flash] Middle East October Sulfur Contract Prices Announced
[SMM Flash] Middle East October Sulfur Contract Prices Announced
Qatar's October 2026 sulfur contract price is $835/mt (FOB), down $45/mt MoM; Kuwait Petroleum Corporation set it at $820/mt (FOB), down $45 MoM; Abu Dhabi National Oil Company set it at $890/mt (Ruwais FOB), down $70 MoM.
1 hour ago
[SMM Flash] Indonesia's Sulphur and Sulphuric Acid Import and Export Data for August
1 hour ago
[SMM Flash] Indonesia's Sulphur and Sulphuric Acid Import and Export Data for August
Read More
[SMM Flash] Indonesia's Sulphur and Sulphuric Acid Import and Export Data for August
[SMM Flash] Indonesia's Sulphur and Sulphuric Acid Import and Export Data for August
In August 2026, Indonesia's total monthly sulphur imports were 275,300 mt, down 62.1% MoM and down 27.7% YoY. The main import sources were Canada (76,100 mt), Kuwait (50,900 mt), Qatar (36,700 mt), the UAE (31,600 mt), India (26,400 mt), the US (24,600 mt), South Korea (6,900 mt), Japan (5,200 mt), Singapore (5,000 mt), China, Saudi Arabia, Taiwan, China, the UK, Oman, Vietnam, and Malaysia. Indonesia's total monthly sulphur exports were 139 mt, down 50.1% MoM and up 139 mt YoY. The main export destinations were Malaysia (115 mt), Hong Kong, China (24 mt), and the US. Indonesia's total monthly sulphuric acid imports were 72,600 mt, up 72,600 mt MoM and up 35.3% YoY. The main import sources were India (44,100 mt) and South Korea (28,500 mt). In August, Indonesia had no sulphuric acid export records. For details, please refer to the SMM analysis.
1 hour ago