Less than two quarters into full deployment, the teams behind Ford Motor Co. of Dearborn’s Ford+ growth plan today announced they are making progress to redefine customer value, while at the same time reduce cyclicality, improve capital efficiency, and generate profitable growth and strong free cash flow.
The Ford+ growth plan is based on several initiatives, including how the company is overhauling its operations to improve quality and reduce costs; and the opportunities to expand capabilities and generate returns from software-enabled gas-powered and electric vehicles, along with value-added services.
That was the message of Jim Farley, CEO of Ford; John Lawler CFO of Ford; and other Ford leaders to hundreds of investors, analysts, and others attending the company’s capital markets event today in-person and virtually. The program began at 8 a.m.
“The days of being all things to all people are over at Ford,” says Farley. “We’re developing and delivering connected, digital products that give customers tailored ownership experiences —opening up diverse revenue pools and unprecedented growth for us instead of jockeying for slivers of share with complex hardware in over-served vehicle categories.”
Farley says Ford is “competing differently” and placing “big bets” through each of its three, customer-centered business segments. They are Ford Blue, Ford Model e, and Ford Pro.
Ford Blue has its portfolio of gas-powered and hybrid vehicles; including derivative versions of models like F-150, Ranger trucks, and Bronco SUVs.
Ford Model e was created to develop innovative, updatable, next-generation electric vehicles, as well as create new digital platforms and software such as the BlueCruise advanced driver-assistance technology — for adoption across all the company’s products.
Ford Pro, which Farley calls Ford’s “secret weapon,” was created to help commercial customers lower the total cost of vehicle ownership and transform their enterprises with a lineup of specialized gas, hybrid, and electric vehicles, and increasing attach rates for productivity services, like prognostics and telematics.
Farley says Ford has “fresh, in-demand products and ambitious objectives” for profitable growth for each of the businesses, which are making decisions — including about how to allocate capital — based on the specific needs of their different customers.
“We want to give customers services and experiences they can’t live without — including things we haven’t yet imagined,” says Farley.
Lawler spoke of how Ford is working to raise its effectiveness in the value-creation areas the company first laid out when the Ford+ plan was introduced two years ago. These areas include improving product mix, anchored by popular nameplates, leading in development, and delivery of high-volume electric vehicles, using Ford Pro to use the company’s existing and emerging strengths into a comprehensive commercial business with an expanded addressable market.
Finally, Ford is working to improve the experiences for all types of customers with connected vehicles, including software and services opportunities that, over time, will broaden sources of company revenue and make it more durable.
“With the customer-centered business segments fully stood up, we’re taking giant leaps forward with big implications for how we compete and create value over the long haul,” says Lawler.
Ford again reiterated its expectations for full-year 2023 adjusted EBIT of $9 billion to $11 billion and adjusted free cash flow of about $6 billion. The company continues to anticipate EBIT of about $7 billion for Ford Blue, up modestly from 2022, and approaching $6 billion for Ford Pro, nearly double last year, and a full-year loss of about $3 billion for the startup Ford Model e.
In other news, Ford entered into agreements with three companies to secure its lithium battery supply chain. Among the companies Ford signed an agreement with is Albemarle Corp., a global provider of essential elements for mobility, energy, connectivity, and health, for battery-grade lithium hydroxide to support the automaker’s ability to scale EV production.
Albemarle, a North Carolina company, will supply more than 100,000 metric tons of battery-grade lithium hydroxide for approximately 3 million future Ford EV batteries. The five-year supply agreement starts in 2026 and continues through 2030. Details of the agreement have not been revealed.
Both Albemarle and Ford are working to supplying the U.S. EV supply chain via lithium hydroxide domestically produced in the United States or originating in a country with a U.S. Free Trade Agreement.
Ford also signed an agreement with EnergySource Minerals (ESM) of California for a binding lithium supply contract. ESM operates domestically to provide sustainably produced lithium, a component used to manufacture cathodes in EV batteries.
ESM will supply Ford with lithium hydroxide produced at ESM’s Project ATLiS, located in Imperial Valley, Calif. Project ATLiS is expected to be operational in 2025. Using only a fraction of the carbon, water, and land footprint of any other operation in the world, Project ATLiS aims to set a new standard in sustainable lithium production. The project will maximize lithium output in a closed-loop environment and aims to deliver significant reduction in time, cost and environmental impact compared with alternative approaches.
Ford also has entered into a long-term agreement with Nemaska Lithium of Canada for the supply of lithium products, including lithium hydroxide, over an 11-year period. The agreement calls for the delivery of up to 13,000 tons of lithium hydroxide per year. The agreement also provides that prior to commencing delivery of lithium hydroxide produced in in the Quebec Provence of Bécancour.
