IRA credits for commercial EV super important, says Ford

Yusin Hu, DIGITIMES Asia, Taipei 0

Ford Motor Company announced at the latest earnings call on Oct 26 that it will shift investments in developing L4 autonomous driving technology to enhancing L2 and L3 ADAS technologies. CEO Jim Farley also added that the IRA tax credits for commercial vehicles will be "super important" for Ford.

For the third quarter this year, the US carmaker sold over one million vehicles in wholesale, about 7% higher than 3Q21, and generated US$39.4 billion in total revenue.

Net income margin declined from 1.7% in 2Q22 to -2.1%, bringing quarterly net loss to US$800 million.

For the same quarter, Ford posted a loss of US$200 million in China, which was driven by the investments in electric vehicles (EV). Sales in China declined by 11% on-year in 3Q22.

Farley noted that sales performance in China and Europe were "not nearly as healthy as we'd like it to be". He added that Ford needs to "continue to improve competitiveness, not just on quality, but on cost and supply chain management," as the carmaker has disclosed in September that it expected to have about 40,000 to 50,000 vehicles in inventory at the end of 3Q22 due to the short supply of certain parts.

Ford's EV push in Europe

For EV, the company is on track to reach its annual production rate of 600,000 EVs by the end of 2023, and over two million EVs by 2026 globally.

Farley said there will be no change to Ford's production target, and that "Ford's all-new EV manufacturing center in Cologne, Germany will be complete in turning out vehicles midway through 2023."

The company has committed in going electric in Europe. It is investing a planned total of US$2 billion building the Cologne Electrification Centre and has chosen its plant in Valencia, Spain as the preferred site to assemble vehicles based on a next-generation electric vehicle architecture.

The Cologne facility is expected to produce 1.2 million EVs over six years, the company said earlier this year. Target sales of EV in Europe will be at least 600,000 units by 2026. In comparison, the carmaker has sold in the US 18,257 EVs in the third-quarter 2022, remaining as the second-largest EV brand in the US, said the company.

Inflation Reduction Act vital for Ford

On home soil, Ford has started construction of Blue Oval City in Tennessee, where it will build a new generation of EV truck and batteries.

The company has already broken ground as well on the new BlueOval SK battery plants in Kentucky. The company's partnership with SK On also extended to Turkey, where it plans to build one of Europe's largest commercial vehicle battery production sites with the South Korean battery maker and a Turkish company Koç Holding.

Farley said the Ford team is "making great progress in securing raw materials, importantly the processing of those raw materials and the battery capacity that we need".

The joint venture with SK On will most likely bring benefits to Ford and its customers following the passage of the IRA. Farley pointed out that the IRA will lay "a range of positive impacts" on its battery production, commercial EV sales, retail sales, and green energy development.

Notably, Ford said it is the largest commercial vehicle brand in the US. Starting in next year, an estimated 55% to 65% of Ford's commercial customers will be qualified to claim US$7,500 per commercial EV they buy with no restrictions on battery sourcing or manufacturing.

As battery production ramps up on the US soil, Ford estimated that it and its battery partners could receive a total of more than US$7 billion in tax credits by 2027.

Ford total revenue and net income margin 2021-2022


Source: Ford; Compiled by DIGITIMES Asia November 2022