Ford: Capital Markets Day Brings Details to the 2026 Plan

The May 22 Delivering Ford+ F capital markets day showed detail for the company’s 2026 goals of low-double-digit adjusted EBIT margin for the Ford Blue combustion segment, midteens for Ford Pro commercial vehicles, total company adjusted EBIT margin of 10%, and by late 2026, 8% for the Model e electric vehicle segment.

We are lowering our fair value estimate by $1 to $19 based on CFO John Lawler’s 2024 capital expenditure projection of $10 billion-$11 billion, up from as much as $9 billion this year. We were modeling $8 billion-$9 billion in capital expenditure annually for 2024-27, but we now model $11 billion in 2024 and $10 billion in each of 2025-27. This 20.6% increase assumes capital expenditure after 2024 will remain close to 2024 levels to capture incremental spending needed in EVs and software as Ford transforms itself from a traditional automaker.

The presentations focused on Ford not being “all things to all people” anymore which we like because Ford, in our view, correctly notes that certain vehicle segments, such as two row crossovers, are highly commodified which makes strong profit generation nearly impossible. We like how over the years Ford has exited sedans and replaced that product spending with new vehicles or variants of existing vehicles such as Bronco, Maverick, F-150 Lightning, and Mustang Mach-E. CEO Jim Farley talked about a 7-seat SUV EV because that segment has little competition and the vehicle will be like having a personal bullet train. The BlueOval City plant under construction in Tennessee will build a new generation EV pickup, currently called T3, in 2025. As shown with Lightning and Mach-E, these vehicles bring new owners to segments (60% of Lightning owners are new to full-size pickups). This product lineup combined with details on cost savings such as warranty, making suppliers more efficient, and reducing parts complexity is projected to bring 400 basis point of total company EBIT margin improvement by 2026 versus 2022′s 6.6%.