Ford Motor Company (NYSE:F) jumped around 2% in pre trading session on Tuesday as the firm recently declared that it has plan for electric vehicle sales to account for between 40% and 50% of its U.S. sales by 2030. To get there, the company will spend about $50 billion by 2026.
Ford is attempting to eliminate around $3 billion in expenses over the next four years in the areas it believes will have the least impact on the company’s EV future in order to achieve this objective. Investors can anticipate more significant adjustments from the firm in the future even though the most recent layoffs are simply one step in that approach.
Ford is simultaneously seeking to increase profitability while rising spending to achieve its EV targets. Similar to trying to rebuild a busy manufacturing line without having to stop production, Ford is undertaking this shift.
CEO of Ford, Jim Farley showed his cards a bit in July when he said on the firm’s earnings call: “We absolutely have too many people in certain places, no doubt about it. And we have skills that don’t work anymore … and we have jobs that need to change.”
That was a crude way of expressing that the knowledge and skills Ford’s employees had might not be necessary in a few decades. The business is attempting to find the appropriate footing as it embarks on a whole new course so that it can develop more EVs while still boosting its profit margin.
By 2026, Ford wants to achieve a 10% pre-tax profit margin. The automakers could be able to increase their profitability with EVs as opposed to regular automobiles. For instance, Tesla now has a profit margin of 14% compared to Ford’s margin of 7.8%. Ford Motor Company (F) just announced that it will be cutting off 3,000 employees as the venerable manufacturer switches from producing automobiles with traditional internal combustion engines to those with electric motors. White-collar employees and some of the company’s contractors will be affected by the job losses, which are intended to reduce expenses and refocus the business on electric vehicles (EVs).