Ford Motor Co. has presented an ambitious plan to successfully increase electric vehicle sales, but it will be difficult to reduce expenses by $7 billion and recover Wall Street trust.
"You're not going to believe us until we start delivering it," Ford Chief Financial Officer John Lawler said at an investor day presentation. "Because we've told you this before. That's the truth. We have and we haven't delivered. So we have to prove it. We can talk about it, but we have to prove it."
Ford estimates its total expenses are $7 billion higher than its rivals, and its shares dropped 1% at noon.
In an effort to catch up to market leader Tesla Inc. and produce 2 million electric vehicles by 2026, Ford also disclosed new supply agreements for battery-grade lithium.
"We're so far behind on waste and cost," Ford CEO Jim Farley said. In February, Ford predicted a difficult 2023, blaming chip shortages and other supply chain issues and production "instabilities" that raised costs.
Due to the increase in demand for environmentally friendly vehicles and the opportunity to benefit from American tax credits, North American manufacturers are vying for battery material supply in order to increase the production of EVs.
Ford's wager on direct lithium extraction (DLE) technology, a new generation of unproven filtration technologies aimed at revolutionising the way the metal is extracted for the EV market, has increased with the transactions announced on Monday.
Lithium hydroxide, a key component of the cathode in lithium-ion batteries, will be supplied by Albemarle Corp. and Nemaska Lithium over the course of five and 11 years, respectively, per their agreements.
According to the firms, Albemarle will provide more than 100,000 metric tonnes of lithium hydroxide for about 3 million future Ford EV batteries.
The arrangements, according to Ford Vice President Lisa Drake, posed a lot less risk than depending on investments in small companies.
Lithium, a significant component in the majority of contemporary EV batteries, has a higher energy density than conventional battery inputs, allowing batteries to be smaller and more capable of storing energy—essential for ensuring extended periods between recharges.
Other agreements call for Compass Minerals to offer lithium carbonate while privately held EnergySource Minerals will supply Ford with lithium hydroxide from its Imperial Valley, California facility, which is anticipated to be operational in 2025.
On Wall Street, there are still concerns about the ability of the traditional manufacturers to meet the high production goals for EVs. By the end of 2023, Ford has stated that it would have the global capability to produce 600,000 EVs.
A full-year expectation of $9 billion to $11 billion in adjusted earnings before interest and taxes and around $6 billion in adjusted free cash flow was reiterated by the American manufacturer on Monday. It is still anticipating a $3 billion loss for its electric vehicle division this year.
According to Ford, the labour and overhead costs of its upcoming electric truck will be 30% lower than those of its existing gas-powered truck.
The lithium business Livent and Investissement Quebec, the economic development arm of the Quebec government, jointly own Nemaska Lithium. Ford will be its initial client.
SQM, a producer of lithium in Chile and the second-largest producer of the metal after Albemarle, signed a long-term supply contract with Ford on Monday, though neither firm provided a specific duration.
(Source:www.thestreet.com)
"You're not going to believe us until we start delivering it," Ford Chief Financial Officer John Lawler said at an investor day presentation. "Because we've told you this before. That's the truth. We have and we haven't delivered. So we have to prove it. We can talk about it, but we have to prove it."
Ford estimates its total expenses are $7 billion higher than its rivals, and its shares dropped 1% at noon.
In an effort to catch up to market leader Tesla Inc. and produce 2 million electric vehicles by 2026, Ford also disclosed new supply agreements for battery-grade lithium.
"We're so far behind on waste and cost," Ford CEO Jim Farley said. In February, Ford predicted a difficult 2023, blaming chip shortages and other supply chain issues and production "instabilities" that raised costs.
Due to the increase in demand for environmentally friendly vehicles and the opportunity to benefit from American tax credits, North American manufacturers are vying for battery material supply in order to increase the production of EVs.
Ford's wager on direct lithium extraction (DLE) technology, a new generation of unproven filtration technologies aimed at revolutionising the way the metal is extracted for the EV market, has increased with the transactions announced on Monday.
Lithium hydroxide, a key component of the cathode in lithium-ion batteries, will be supplied by Albemarle Corp. and Nemaska Lithium over the course of five and 11 years, respectively, per their agreements.
According to the firms, Albemarle will provide more than 100,000 metric tonnes of lithium hydroxide for about 3 million future Ford EV batteries.
The arrangements, according to Ford Vice President Lisa Drake, posed a lot less risk than depending on investments in small companies.
Lithium, a significant component in the majority of contemporary EV batteries, has a higher energy density than conventional battery inputs, allowing batteries to be smaller and more capable of storing energy—essential for ensuring extended periods between recharges.
Other agreements call for Compass Minerals to offer lithium carbonate while privately held EnergySource Minerals will supply Ford with lithium hydroxide from its Imperial Valley, California facility, which is anticipated to be operational in 2025.
On Wall Street, there are still concerns about the ability of the traditional manufacturers to meet the high production goals for EVs. By the end of 2023, Ford has stated that it would have the global capability to produce 600,000 EVs.
A full-year expectation of $9 billion to $11 billion in adjusted earnings before interest and taxes and around $6 billion in adjusted free cash flow was reiterated by the American manufacturer on Monday. It is still anticipating a $3 billion loss for its electric vehicle division this year.
According to Ford, the labour and overhead costs of its upcoming electric truck will be 30% lower than those of its existing gas-powered truck.
The lithium business Livent and Investissement Quebec, the economic development arm of the Quebec government, jointly own Nemaska Lithium. Ford will be its initial client.
SQM, a producer of lithium in Chile and the second-largest producer of the metal after Albemarle, signed a long-term supply contract with Ford on Monday, though neither firm provided a specific duration.
(Source:www.thestreet.com)