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Ford Motor plans to produce more than 2 million electric vehicles annually and generate a 10% adjusted operating profit margin by 2026, the company announced Wednesday as part of a larger restructuring of its EV and legacy businesses.
Both targets would be substantial increases from the company’s current operations. Ford reported a 7.3% adjusted operating profit in 2021. It only sold 27,140 of its all-electric Mustang Mach E crossovers in the U.S. in 2021. A global EV sales number was not immediately available.
Ford’s restructuring plan includes reorganizing operations to separate its electric and internal-combustion engine businesses into different units within the automaker.
Ford and other major automakers are racing to create production capacity for EVs to meet what’s expected to be a rapid adoption in the emerging segment this decade. They are attempting to be ahead of the demand curve rather than playing catch up as they have been with EV industry leader Tesla.
“We want to beat the old players, we want to beat the new players,” Ford CEO Jim Farley said during an event Wednesday morning.
Shares of Ford were up roughly 3% during pre-market trading. The stock closed Tuesday at $16.70 a share, down by 4.9%.
To meet the 10% margin, Farley Wednesday said Ford expects to cut $3 billion from its structural costs, largely from its traditional internal combustion engine business. It plans to do so while increasing sales volumes and lowering the costs of build materials for EVs.
Ford’s goals are similar to ones previously announced by its largest crosstown rival, General Motors. The Detroit automaker last year said it plans to double its annual revenue and expand margins to 12% to 14% by 2030. It also plans to increase plant capability to produce 2 million EVs globally in North America and China by 2025.