Ford Motor Co. on Wednesday said it would invest $1 billion to convert its Cologne, Germany, plant into an electric-vehicle manufacturing center — a major commitment to Europe and to a future defined by electric vehicles.
In a news release, the automaker said the facility will be "spearheading" the company's "advance into an all-electric future."
Meanwhile, Ford pledged that its entire European passenger-vehicle lineup will be "zero-emissions capable, all-electric or plug-in hybrid" by mid-2026 and all-electric by 2030. On the commercial vehicle side — the driving force behind Ford's profitability in Europe — the automaker said that its lineup will be "100% zero-emissions capable, all-electric or plug-in hybrid" by 2024. It expects two-thirds of commercial vehicle sales to be all-electric or plug-in hybrid by 2030.
The announcement comes on the heel of Ford reporting its highest quarterly profit in Europe in more than four years, amid an ongoing restructuring that has netted a $1.1 billion reduction in annual structural costs, according to the company's latest earnings report.
In reporting companywide financial results for the fourth quarter and 2020, the automaker also announced a doubling of its global investment in electrification, to $22 billion by 2025 — just days after crosstown rival General Motors Co. pledged to exit gas- and diesel-powered engines by 2035 and be carbon neutral by 2040. GM in November said it would increase its spending on EVs and AVs by 35% to $27 billion through 2025, and would in the same time frame have 30 new EVs globally.
"We successfully restructured Ford of Europe and returned to profitability in the fourth quarter of 2020," Stuart Rowley, Ford of Europe president, said in a statement. "Now we are charging into an all-electric future in Europe with expressive new vehicles and a world-class connected customer experience."
Rowley added that Ford Europe remains "on track" to deliver a 6% EBIT — or, profit before interest and taxes — margin.
The announcement comes amid a company-wide assessment of where to most effectively allocate capital, as part of a plan detailed by CEO Jim Farley to turn around the Blue Oval's automotive operations and hit profit goals. Ford has announced major shakeups and investments in other regions in recent months, including a restructuring of its South America operations that includes ending manufacturing in Brazil and a $1.05 billion investment in its South Africa manufacturing operations.
The investment in Cologne — home to one of Ford's largest manufacturing centers in the region as well as its European headquarters — will be used to "modernize" the site and convert it into what will be dubbed the Ford Cologne Electrification Center. Ford said it would be the company's first such facility in the region. Currently, the Cologne plant employs more than 4,000 people and builds the Ford Fiesta.
The automaker said its first European-built, all-electric passenger vehicle, which will be sold to customers in Europe, will begin production at the facility in 2023, "with the potential for a second all-electric vehicle built there under consideration."
Rowley characterized the announcement as "one of the most significant Ford has made in over a generation."
"It underlines our commitment to Europe and a modern future with electric vehicles at the heart of our strategy for growth," he said.
In a statement, Martin Hennig, who heads up Ford of Europe's workers' council, called the move "an important signal to the entire workforce. It offers a long-term perspective for our employees and at the same time encourages them to help shape this electric future."
Also key to its plans for the regions, the Blue Oval signaled, is the incorporation of digitally connected offerings into its commercial vehicle lineup, which leads the segment in Europe. The automaker also highlighted its strategic alliance with Volkswagen and Ford Otosan, a joint-venture operation in Turkey that builds the Ford's popular Transit cargo van.
Ford executives have said that they see potential for lucrative new revenue streams generated by data-driven services — a direction underscored by a new strategic partnership the Blue Oval recently inked with Google. Among other areas, the two companies plan to work together on developing new tech- and data-driven offerings for customers.
Ford said it would have additional details on the Cologne site and its electrification plans to share in "the coming months."
