Ford expects ICE profits, sales to rise through 2025 despite EV growth
Detroit — ford motor. The company expects internal combustion engine sales and margins to grow for at least the next two years, until the industry-wide shift to electric vehicles begins to shrink business in internal combustion engine vehicles.
Executives on Monday released outlooks for the company’s gasoline-engine business, known as Ford Blue, its Model eEV division and its Ford Pro commercial division. capital market day Events for investors and media. Ford also reaffirmed its full-year 2023 guidance of $9 billion to $11 billion in pre-interest and tax adjusted earnings.
Kumar Galhotra, head of Ford Blue, said profit margins for internal combustion engines will rise to at least 10% by 2026 from the current 7.2%. These growth plans are driven by the company’s focus on the profitable automotive segment. High profit, low cost derivatives.
“We have long runways in the truck, off-road and performance segments,” Galhotra said.
Still, he said Ford Blue’s sales volumes and margins are likely to shrink after 2025 as EVs become more popular. Galhotra said Ford expects “US ICE and hybrid sales to remain strong over the next decade,” despite the eventual contraction of the business.
Galhotra said the company has identified $500 million in savings this year by reducing the complexity of parts and increasing manufacturing efficiencies as part of Ford Blue’s efforts to boost profits. For example, the latest F-150 full-size pickup, which debuts this year, has 2,400 fewer parts than the current model, he said.
Over the past two years, Ford has reduced the total orderable combinations for the Explorer from 1,900 to 23, and for the Expedition from 800 to 32, Galhotra said.
Executives said Ford had about a $7 billion cost gap with its competitors, mostly within Ford Blue.
CEO Jim Farley said Monday that his management team now convenes on Tuesdays once a month to focus specifically on cost-cutting opportunities for materials and suppliers.
“We’re starting to see the excitement about eliminating waste. It’s not like we’re assigned tasks,” Farley said.
CFO John Lawler said it’s the responsibility of company leaders to deliver results.
“Honestly, we know this is our biggest problem,” Lawler said. “We’ve said this before, but it hasn’t happened yet. We have to prove it.”
https://www.autonews.com/manufacturing/ford-sees-ice-profits-sales-rising-through-2025-despite-ev-growth Ford expects ICE profits, sales to rise through 2025 despite EV growth