Ford increases electrification spend to $50B in attempt to catch up to Tesla

Ford Motor Company is increasing its electric vehicle investment to $50 billion through 2026, up from the previous $30 billion by 2025. CEO Jim Farley announced the news on Wednesday after the automaker confirmed that it would run its EV unit separately from its combustion engine business, something Ford touched on during its 2021 fourth quarter earnings call in early February.

This is the third time in less than a year that Ford has upped its electrification spend; Ford announced in May 2021 that it would be investing $22 billion in EVs, and the continued financial ramping signals the automaker hopes to catch up to industry leader Tesla.

Through its new EV business, named Ford Model e, Ford plans to build more than 2 million EVs in 2026, which is a third of its annual global production, with 50% of its total volume being electric by 2030, said Farley. However, the company doesn’t expect to make a profit until the next-gen models begin production in 2025, according to chief financial officer John Lawler. Ford Model e and Ford Blue, the company’s more traditional ICE unit, will report separate financial results by 2023.

Ford expects to spend $5 billion on EVs this year, which is double what the automaker spent last year.

While many industry analysts expect Ford to spin out its EV business, Farley gave no indication that this would be happening any time soon. That doesn’t mean it won’t happen down the road.

“We need the ICE business to generate cash and the EV business to focus on innovation,” Farley said.

Ford took in 72,000 vehicle orders in February, up from 54,000 over a year ago. While the majority of those sales are trucks and SUVs, Ford sales of EVs increased 55.3% through February, and it’s growing at a faster rate than the overall segment, according to Ford.