Ford Going Almost Entirely Electric in Europe This Decade
(Bloomberg) -- Ford Motor Co. will drastically overhaul its business in Europe, where it didn’t sell a single fully electric vehicle last year, vowing to go almost completely electric by the end of the decade.
One of the first steps in the transformation announced Wednesday will be to plow $1 billion into a German assembly plant that will start making an all-electric model in two years. By mid-2026, Ford will offer plug-in hybrid or fully electric models across its entire lineup.
By 2030, Ford’s passenger-vehicle range will be all-electric -- one of the more demanding road maps among Europe’s major incumbent carmakers. Only its smaller but strategically important commercial-vehicle business will sell some vans and trucks that lack a plug by then.
“Consumers increasingly want us to go electric,” Ford Europe President Stuart Rowley said in an interview. “Our customers are very focused on sustainability and they want the brands and companies they work with to go on this journey with them.”
As ambitious as Ford’s plan is, it has less to lose in Europe after having substantially scaled back in the region. The company has taken more than $1 billion of structural costs out of local operations the last two years, closing five factories, selling another and eliminating more than 10,000 jobs. It fell behind Toyota Motor Corp. and Fiat Chrysler to rank ninth in passenger-vehicle sales last year, according to the European Automobile Manufacturers’ Association.
Chief Executive Officer Jim Farley is trying to turn the page on his predecessor Jim Hackett’s tenure that focused on restructuring by putting Ford more on the offensive. Farley announced plans earlier this month to almost double the automaker’s EV budget to $22 billion through the middle of this decade just after General Motors Co. said it aims to sell only zero-emission models by 2035.
“We continue to be encouraged by a higher sense of urgency and focus, especially with respect to electrification where Ford seems to be trying to catch up to other automakers’ goals,” Joe Spak, an analyst at RBC Capital Markets, said in a note to clients.
Ford shares were little changed shortly after the start of regular trading in New York. The stock has surged more than 30% this year, driven by optimism about its EV efforts.
What Bloomberg Intelligence Says:
“Ford’s all-in-on-EV call in Europe is the portal to regain a passenger-vehicle presence in the region, as idle capacity -- a backhanded strength of legacy manufacturers -- and a emissions-reduction mandate justify the fresh start.”
-- Kevin Tynan, senior autos analyst
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Ford’s investment in Cologne, Germany, will modernize a 90-year-old plant that is one of the largest manufacturing complexes in Europe. The automaker will share more details in the coming months on its plans for the facility, which currently assembles Fiesta small cars. Ford will continue production of that model in parallel with a new EV for some time before eventually going all-electric.
Europe became the epicenter of EV adoption last year, with carmakers selling more fully electric and plug-in hybrid vehicles there than in China for the first time. The surge was driven by stricter emissions standards, subsidies that helped the industry recover from pandemic-related disruptions and introductions of new models to meet more stringent rules in the coming years.
“You’re really seeing the European industry move,” Rowley said. “We intend to be at the forefront of it.”
A partnership with Volkswagen AG will help Ford electrify its fleet going forward. The companies announced in 2019 that they would expand an alliance formed the year before to also include joint work on EVs and self-driving technology. Ford said then it would build at least one mass-market battery car in Europe starting in 2023 based on VW’s modular platform, known as MEB.
Sharing technology and development costs with VW will be key to Ford keeping its earnings momentum going in Europe.
Ford came close to its long-term target for a 6% profit margin in the fourth quarter. Its $414 million of earnings before interest and taxes was the company’s best quarterly showing in more than four years.
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