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Why Ford Stock Is Surging Today

By John Rosevear - May 26, 2021 at 1:54PM

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Ford shared more of its electric-vehicle plans, and investors like where it's going.

What happened

Shares of Ford Motor Company (F 1.41%) were trading sharply higher on Wednesday, after the company shared details of its electric vehicle and profit growth plans at a morning-long event for investors and analysts. 

As of 1:30 p.m. EDT, Ford's shares were up about 7.4% from Tuesday's closing price.

So what

In a live-streamed event on Wednesday morning, CEO Jim Farley and other Ford executives outlined the company's plan to transition to electric vehicles with advanced connectivity that deliver ongoing revenue streams via a series of subscription software applications. 

A black 2022 Ford F-150 Lightning Pro, an electric work pickup, on a construction site.

Ford's F-150 Lightning Pro, an electric pickup with special features intended for commercial- and government-fleet customers, is just one part of a new effort to boost revenue from Ford's market-leading commercial vehicles business. Image source: Ford Motor Company.

The plan, called "Ford+", has a lot of moving parts, but here are the key points for auto investors. 

  • Ford is accelerating its electric-vehicle efforts. It now says it will spend at least $30 billion on EVs by 2025, up from $22 billion in its most recent forecast. 
  • Ford is boosting its commercial-vehicle business under a new sub-brand ("Ford Pro") and working to bring new products and services (including software) to its commercial and government-fleet customers. Commercial vehicles and related products accounted for $27 billion of revenue in 2019; Ford expects that to grow to $45 billion per year by 2025.
  • Ford has already begun rolling out a sophisticated new electrical architecture for its vehicles that incorporates much greater computing power than in the past. Vehicles with that architecture can receive over-the-air (OTA) updates; Ford expects to have 1 million of them on the road by the end of 2021, and 33 million by 2028.
  • Ford will use that connectivity to offer upgrades and new features to customers, maintaining a stronger connection with customers and generating additional revenue over the vehicle's life.

Last but not least: Ford now says that it will hit its longtime targets for operating margin -- 10% in North America, 6% in Europe, 8% overall -- by 2023.

Now what

While Ford had a lot of bullish news to share, executives were careful not to discuss the company's near-term prospects. Ford lowered its full-year guidance in April on concerns around the ongoing global shortage of semiconductors; CFO John Lawler declined to change that guidance on Wednesday. 

John Rosevear owns shares of Ford. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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