Ford is co-hosting a CEO summit today along with several major US chipmakers to discuss how they can address the chip shortage holding back the EV industry.
Despite a chip shortage holding the industry back, demand for EVs is hitting a record pace. Legacy automakers are investing billions into electric models to meet the rising demand. For example, Ford expects to spend $5 billion on EVs in 2022 and $50 billion by 2026.
Ford’s EV models have been a hit so far (part of the reason why they are holding the summit). The automaker is having success converting consumer favorite models to electric.
The Ford F-150 Lighting had its best month in July, selling 2,173 after launching in May. Meanwhile, Mustang Mach-E sales rose 74%, a sign of continued strength for the EV muscle car. In fact, Ford is seeing such strong demand, that the company is selling EVs as fast as they are making them.
Furthermore, the legacy automaker is separating its business into three segments: model e, Ford Blue, and Ford Pro. The Ford model e unit will be “laser-focused on profitable EVs,” while Ford Blue expects to support it with cash flow from traditional car sales.
But, there’s been a major roadblock holding its progress back. The semiconductor shortage is limiting automakers’ ability to ramp up EV sales.
Computer chips are used in everything from smartphones to smart vehicles. Although the chip shortage also affects traditional vehicles, EVs rely on these to power the electronics and can require many (sometimes more than double) more chips.
The bipartisan Chips and Science Act intends to help solve the issue with over $50 to improve domestic manufacturing. For this reason, Ford and other industry leaders – including AMD and Applied Materials – are holding a summit to discuss how they can best use these funds to accelerate EV production with the white house.
What to expect from Ford’s EV summit
Over 35 senior executives and leaders are joining Ford’s discussions today to boost US manufacturing and R&D ability. Ford’s CEO Jim Farley says:
With his expected signing of the bipartisan CHIPS and Science ACT tommorow, President Biden is making it clear that government and industry leaders are laying the foundation for the next chapter in American innovation and manufacturing.
He also adds an improved chip supply chain will:
Keep American manufacturing lines humming, help make sure customers get the connected and electric vehicles (EVs) they want, and strengthen the American economy.
Ford has ambitious goals for the EV market, which is a major reason they are holding the summit. The company expects a 90% compound annual growth rate (CAGR) for its EV models. If the company can achieve this, it would be more than double the projected EV industry.
Today’s summit will be crucial for Ford hitting its goals going forward. We will learn more about how Ford and the auto industry plan to use the funds to boost EV production following the summit.
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