DETROIT — Ford Motor on Monday will try to turn skeptics of its electric vehicle growth plans, which some Wall Street analysts have called “ambitious” and “crazy high,” into believers.
The Detroit automaker will host its capital markets day, during which it has promised to supply details of how Ford expects to attain previously stated targets for 8% EBIT margin on its electric vehicle unit and a 2 million EV production runrate by 2026, up from an expected 600,000 by year-end.
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“We’ll take you thru why we consider that 8% margin is completely realistic despite all of the pricing pressure that we are going to absolutely get because everyone desires to grow,” CEO Jim Farley said through the company’s first-quarter earnings call earlier this month.
The event is named “Delivering 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 tenure, in May 2021.
The automaker’s CEO described the capital markets day as a possibility to exhibit how the strategy is “coming to life.” The corporate is predicted to run through its profit walks for its traditional “Ford Blue” and “Ford Pro” industrial businesses along with its “Model e” electric vehicle unit.
Ford also is predicted to preview its second-generation battery products and technology, which the corporate has said will likely be crucial to achieving that 8% EBIT margin. The EV business is predicted to lose about $3 billion this 12 months.
Ford previously said it expects to hit that profit margin largely through scale, EV battery improvements and efficiencies in design and engineering.
“There’s definitely some analysts which might be skeptical,” Morningstar analyst David Whiston told CNBC. “I feel Monday is a possibility to try to persuade a few of those skeptics that it might probably occur. I’m personally willing to provide them the good thing about the doubt on that … you have to win people over.”
Whiston described the timeline for the targets as “tight.” Others have been more critical.
Morgan Stanley analyst Adam Jonas during Ford’s first-quarter earnings call described the EV production increase as “crazy high.” Barclays analyst Dan Levy in a note to investors this week called it “ambitious.”
“Currently, we’re skeptical as to Ford’s ability to fulfill each targets, as we expect it to go for a balance of volumes with profit opportunities,” Levy said.
Analysts don’t expect much movement within the stock from the event, unless Ford surprises with a latest product or change in previously announced plans.
“Overall, we predict Ford’s key targets are unlikely to be different from its recent teach-in session, but management will attempt to provide investors more comfort around them,” Deutsche Bank analyst Emmanuel Rosner said Wednesday in an investor note, reiterating the firm’s sell rating on the stock.
Ford stock is rated “hold” with a mean goal price of $13.63 per share, in response to analyst rankings and estimates compiled by FactSet.
Shares of Ford are up by about 75% since Farley became CEO in October 2020. The stock closed Friday at $11.65 per share.
– CNBC’s Michael Bloom contributed to this report.