As Ford Motor Co. (NYSE: F) is set for its Investor Day today, the automotive giant made some key announcements regarding its push into EVs. Early last year, the company’s CEO James D. Farley announced the company’s reorganization into Ford Blue, one dedicated to traditional cars, Ford Pro, a business that would be devoted to commercial vehicles, and Model e, a business that would look into electric vehicles.
In the first quarter, while Ford’s traditional and Pro businesses were profitable, generating an operating profit margin of more than 10%, Ford’s Model e-business lost $700 million.
For FY23, Ford reiterated its outlook and still expects to generate between $9 billion and $11 billion in operating profits. This includes a loss of $3 billion when it comes to the Model e division. Wall Street analysts have estimated an operating profit of $10.3 billion in FY23.
The company is targeting an operating profit margin of 8% for its EV business by 2026.
With an aim to strengthen its supply chain when it comes to securing battery materials to boost its EV output and take advantage of tax credits, Ford also announced some key agreements with lithium hydroxide producers, Albemarle Corp (ALB) and Nemaska Lithium. Lithium hydroxide is a primary ingredient when it comes to lithium-ion batteries.
According to the terms of the agreement, while Albemarle will supply lithium hydroxide to Ford for a period of five years, Nemaska Lithium will supply it for 11 years. Albemarle will supply more than 100,000 metric tons of lithium hydroxide for an estimated 3 million Ford EV batteries.
Analysts remain sidelined about Ford stock with a Hold consensus rating based on five Buys and five Holds.