Like any other publicly held business, automakers routinely report their quarterly financial performance to shareholders, regulators and the media. Normally, these reports are barely noticed by people who don’t have some kind of direct financial stake in the company’s operations. The earnings report disclosed by Ford last week goes a little deeper. Dearborn just had an enormously important reveal in the form of its Mustang Mach-E, joined by the newest-generation F-150 and the E-Transit electric van. Ford posted $36.0 billion in revenue during the fourth quarter of 2020. What’s arguably more important is that at the end of quarter, Ford had cash reserves of almost $31 billion and total liquidity of some $47 billion, both representing improvements over the previous quarter’s totals.
All those ready greenbacks are a godsend to any automotive executive who’s endeavoring to do some long-term product planning. In the quarterly report, Ford declared plans to set aside $29 billion for the development of future EVs and autonomous-driving technologies. Ford’s global EBIT – that’s earnings before interest and taxes, a key barometer of real-world business performance – leaped to $1.7 billion, a vast increase from the previous quarter’s total of $485 million. One Dearborn goal is increasing that EBIT ratio for North American operations to 10 percent, which provides a very attractive cushion of capital for creating future vehicles.
Jim Donnelly On Wheels 