Ford Announces New $1.2 Billion Investment In The U.S.

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Ford Motor Company (NYSE: F) recently announced an investment worth $1.2 billion in three of its facilities in the state of Michigan. This announcement follows the $700 million investment in Ford’s Flat Rock Assembly plant in Michigan related to expanding the production of electric and autonomous vehicles. While there is currently not a lot of new information in this announcement, there are some things worth paying attention to.

Ford plans to invest $1.2 billion in the following three areas:

    1. Ford plans to invest $850 million in its facility in Wayne, Michigan. This plant currently manufactures the sedan Focus and the compact MPV C-Max. Going forward, the company plants to start manufacturing the Ranger midsize pick-up truck from 2018, and the Bronco SUV from 2020 at the same plant. For this purpose, the company will have to retool its facility.  It was not long ago that the mid-size pick-up truck segment was struggling. Chrysler discontinued its Dodge Dakota and Ford did the same with the Ranger. General Motors also stopped selling its mid-size pick-ups, Canyon and Colorado, for a while. The highest selling vehicle in the segment, Toyota’s Tacoma, hadn’t been redesigned in a while. Now, the segment seems to be back. The Tacoma is being redesigned, while the Canyon and Colorado are back in the market. In 2016, mid-size pick-up sales grew by 23%, much faster than the overall market, which declined slightly, and the SUV/truck segment, which grew by around 8%.midsize 2017
    2. Ford will also invest around $150 million in an engine facility in Romeo, Michigan. The facility will build engine components for several vehicles, including Bronco and Ranger.
    3.  Additionally, the company will invest $200 million in a new advanced data center. The center will support Ford’s ongoing efforts to improve its technological capabilities for a smart-mobility business. Earlier, Ford had announced that it plans to launch a fully autonomous fleet service by 2021. Its recent $1 billion investment in Argo AI recently also showed its ambitions in the same terrain. The company has also partnered with Google and Uber to share self-driving research and information. This announcement is new information, as Ford hadn’t previously spoken of this interest previously.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Ford Motor

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