Ford to cut costs $14 bln, invest in trucks, electric cars -CEO
- Author: Zachary Reyes Oct 05, 2017,
Oct 05, 2017, 15:56
Last week it announced a partnership with ride-hailing app Lyft to look at how it could connect customers with self-driving cars.
Jim Hackett laid out an ambitious plan to Wall Street today aimed at refocusing Ford as the automaker tries to stay relevant in a changing automotive and technological landscape that pits it against both traditional foes like GM and Toyota and upstarts like Tesla and Google.
After Hackett took over in hours there were changes in the shares not reportable but some. "Part of the $7 billion capital reallocation includes reintroducing the Ranger pickup truck and Bronco SUV in North America and moving production of the next-generation Focus small auto to China, plans that were previously disclosed", writes Mike Colias for the Wall Street Journal. Ford now projects that by 2030 the global market will be split evenly three ways between vehicles with internal combustion engines, hybrids and pure electrics.
Putting more emphasis on introducing new trucks and SUVs while also managing the transition to vehicles that lack an internal-combustion engine, or even a driver, will require a dual focus.
Finally, Hackett said Ford will begin to put wi-fi connectivity in all of its vehicles. The company targets $10 billion in material cost reductions, and $4 billion in engineering costs by increasing the use of common parts across its lineup.
In the four-and-a-half months since Hackett's ascent, Ford has elevated its share price by 14 per cent, including 2 per cent in Tuesday's trading session.
Hackett said Ford had been slow to shift to electrification because of the costs. A presentation to investors indicates that'll account for about $500 million, which Fords says will be added on top an already-announced $4.5 billion electrification investment. The company needs to do everything it can to optimize profits now from its top-selling models, while also catching up with General Motors and others in electric vehicles.
Hackett also mentioned in his presentation that another way of cutting costs would be to offer fewer modifications in Ford's vehicle models. The future models would only offer 96 variations meaning less investment on the designing, making and storing of parts.
He also declared that Ford will focus increasingly on trucks and SUVs and less so on passenger cars and will back that up with the reallocation of $7 billion in expenditures.