Monday is Ford’s chance to convince Wall Street skeptics of her electric plans

  • On Monday, Ford will host a “Delivery Ford+” capital markets day at which it promised to provide details on how it expects to achieve the previously mentioned goals.
  • The company will have to win over Wall Street analysts who have called its EV targets “ambitious” and “insanely lofty.”
  • The automaker is targeting an 8% EBIT margin for its electric car unit and a production rate of two million electric vehicles by 2026, up from an expected 600,000 by the end of the year.

DETROIT — Ford Motor Co. will attempt Monday to convert skeptics of its electric car growth plans, which some Wall Street analysts have called “ambitious” and “crazy lofty,” into believers.

The Detroit automaker will host its Capital Markets Day, during which it promised to detail how Ford expects to meet previously announced targets for an EBIT margin of 8% on its electric vehicle unit and a production rate of 2 million electric vehicles by 2018. 2026, up from the expected 600,000 by the end of the year.

“We’ll walk you through why we think 8% margin is quite realistic despite all the pricing pressure that we’re going to have just because everybody wants growth,” CEO Jim Farley said during the company’s first-quarter earnings call earlier this month.

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

The automaker’s CEO described the capital markets day as an opportunity to demonstrate how strategy “comes to life.” The company is expected to run through earnings streams for its traditional “Ford Blue” and “Ford Pro” businesses as well as its “Model e” electric vehicle unit.

Ford is also expected to preview its second-generation battery products and technologies, which the company said will be needed to achieve that 8% EBIT margin. The electric vehicle business is expected to lose about $3 billion this year.

Ford has previously said it expects to achieve this profit margin largely through scale, electric vehicle battery improvements and efficiencies in design and engineering.

“There are definitely some analysts who are skeptical,” Morningstar analyst David Weston told CNBC. “I think Monday is an opportunity to try to convince some of these skeptics that it can happen. I personally would be willing to give them the benefit of the doubt about that…you have to win people over.”

Weston described the goals schedule as “tight”. Others were more critical.

Morgan Stanley analyst Adam Jonas described Ford’s first-quarter earnings call as “insanely loud.” Barclays analyst Dan Levy, in a note to investors this week, called it “ambitious”.

“At the moment, we question Ford’s ability to achieve both goals, as we expect it to choose a balance of volumes with profit opportunities,” Levy said.

Analysts don’t expect a big move in inventory from the event, unless Ford surprises with a new product or change to previously announced plans.

“Overall, we think Ford’s key targets are unlikely to be different from the last teaching session, but management will try to give investors more comfort around them,” Deutsche Bank analyst Emanuel Rosner said Wednesday in a note to investors. rating on stocks.

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

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

CNBC channel Michael Blum Contribute to this report.

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