Ford to Pull $7B Out of Car Development to Build More Trucks and SUVs
Ford CEO Jim Hackett announced a new business strategy for the automaker Tuesday, outlining its goals to build more trucks SUVs, double down on EV development and reduce operating costs.
Hackett said Ford will cut operating costs by $14 billion over the next five years. This will entail pulling $10 billion out of materials costs and another $4 billion out of product engineering costs. It will cut engineering costs by using shared platforms and common parts across many different models – something that will be particularly easy with electric cars. It will also offer fewer options to customers on its vehicles, build fewer test prototypes and use technology to streamline its production processes. In Hackett’s words, the automaker will be “fitter” going forward.
At the same time, Ford will turn much of its focus toward trucks and SUVs. It will take $7 billion previously sidelined for the development of cars and pump it into SUV and trucks, which are not only in high demand but more profit-heavy than sedans and hatchbacks. It will also reduce its investment in internal combustion engines by a third, compounding with its existing investment of $4.5 billion in EVs and hybrids. The previous investment will cover the development costs for hybrid versions of the Mustang and F-150 and a small EV crossover, among more.
Hackett’s plan also entails moving production of the Ford Focus from North America to China to save on costs. Additionally, the company has hired on Jason Luo to lead its Chinese market push and hinted toward a potential partnership with Chinese EV maker Zotye.
Finally, Hackett said Ford will begin to put wi-fi connectivity in all of its vehicles. Crosstown Detroit rival General Motors already has 7 million vehicles on the road with wi-fi capability after introducing the technology in 2015. Ford says 90 percent of its vehicles in the U.S. will come equipped with a mobile broadband connection by 2020.
Sam McEachern holds a diploma in journalism from St. Clair College in Windsor, Ontario, and has been covering the automotive industry for over 5 years. He conducts reviews and writes AutoGuide's news content. He's a die-hard motorsports fan with a passion for performance cars of all sorts.
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