ford

Ford (NYSE: F) is reportedly looking to sell its manufacturing plant in Germany to China’s BYD. The plant was anyways set to stop production in 2025 as Ford tries to restructure the business to become a key player in the EV (electric vehicle) market.

The Wall Street Journal reported that Ford is reportedly in talks with around 15 potential buyers which include manufacturing companies as well as financial investors. It reported that next week some Ford officials would travel to China to hold discussions with BYD but a deal is not yet certain.

BYD, which is the largest seller of NEVs (new energy vehicles) globally and sold almost 1 million all-electric vehicles last year has been looking to expand beyond China.

The company might eye Ford’s Germany plant to get a foothold in the continent which is only second to China in terms of EV (electric vehicle) adoption.

LMC Automotive estimates that fully electric vehicles accounted for 19% of all the cars sold in China last year while the commensurate figure for Europe was 11%. Looking at the US market, all-electric vehicles accounted for 5.8% of sales in 2022 as compared to 3.2% in 2021.

Analysts expect US EV adoption to increase in 2023 due to the Inflation Reduction Act. Analysts believe that the Inflation Reduction Act is a positive for Tesla stock.

Many brokerages issued bullish notes on TSLA stock after the Act was passed and Wolfe Research upgraded Tesla stock to a buy and raised its earnings estimates.

Ford is Restructuring Its Business Since Farley Took Over

Ford has been restructuring its business ever since Jim Farley became the CEO in late 2020. The company exited several markets like India and Russia under Farley’s watch. Ford also stopped its manufacturing operations in Brazil.

In Europe also, Ford has restructured its business to focus on zero-emission vehicles. It said that by mid-2026, it would sell only all-electric or hybrid plug-in vehicles in the continent. By 2030, it has committed to selling only all-electric vehicles in Europe.

Almost all legacy automakers are working aggressively on zero-emission vehicles and General Motors became the first automaker to commit to a hard deadline of selling only zero-emissions vehicles in the US after 2035.

Ford has also restructured its business between the ICE (internal combustion) and electric vehicle segments.

Ford Looking to Sell Germany Plant to Focus on EVs

Starting this year, Ford would start reporting the results for Ford Blue, which is the traditional ICE business, Ford Model e, which is the electric vehicle business, and Ford Pro, which is the commercial vehicle business, separately. The company had previously restructured the business between the electric and ICE business.

It also invested in EV startup Rivian which went public in 2021. While Ford has sold some Rivian shares to monetize the investment it is still among the top 5 stockholders with a nearly 10% stake.

Rivian stock rebounded after hitting its all-time low earlier this month. Some analysts see the company as a worthy competitor to Tesla. There is a guide on buying Rivian stock.

Coming back to Ford, last year, it wrote off its investment in autonomous driving startup Argo AI and took a $2.7 billion charge. The company also announced that it would not focus on L4 autonomous systems.

F is Now the Second Largest EV Company in the US

Farley said that while companies have spent a cumulative $100 billion towards level 4 autonomous vehicles, no company has been able to define a profitable business model.

Ford has set ambitious plans for its EV business. It expects its annual EV production run rate to reach 600,000 by the end of 2023 and 2 million by 2026.

Bank of America is optimistic about the EV plans of both Ford and General Motors. It expects them to snatch market share for Tesla which is the market leader in the US by a wide margin.

Ford has already become the second-largest EV company in the US even as it trails the market leader Tesla by a wide margin. It is nonetheless streamlining its investments to become a major player in the EV market as the automotive industry moves to zero-emission cars.

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