Ford Motor Co. said today that it's issuing new automotive debt for the first time in almost four years as the company boosts spending on self-driving cars, mobility services and electrified vehicles.
The second-largest U.S. automaker is taking on an unspecified amount of debt in 10-year and 30-year notes, according to a regulatory filing. Ford's last automotive debt issue was for $2 billion in January 2013. The company said its auto business had $13.1 billion in debt at the end of September and net cash of $11.2 billion.
Ford has undertaken an expensive effort to transform itself into a mobility company that can take on upstarts such as Uber Technologies Inc. and Google. The cost of that conversion is causing profits to fall this year and next. The carmaker has promised to put 100,000 robot taxis — without steering wheel, gas or brake pedals — on the road in five years. It's also investing $4.5 billion to convert 40% of its lineup to electrified vehicles by 2020 and is offering bike sharing and a commuter van service in San Francisco.
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"Ford is taking advantage of favorable market conditions to issue long-term debt to raise capital for general corporate purposes," Brad Carroll, a company spokesman, said in an emailed statement. "We continue to increase our investments in emerging opportunities, primarily in the areas of electrification, autonomy and mobility."
The automaker is raising new cash as it looks at the changing landscape in transportation. Ford is working with cities around the world to come up with transportation solutions that go beyond selling cars to individual drivers and include vehicle sharing, ride hailing and other modes of mobility. The world's middle class will double over the next 15 years, as more people crowd into huge urban centers, which would create global gridlock if everyone is driving their own car.
"For us, the world is changing," Mark Fields, Ford's CEO, said in an interview Friday. "The transportation that served us well in the last hundred years is not going to serve us very well in the next hundred years. So based on that, that's really forcing, really encouraging us to think differently about the business."
Ford is a perennial issuer of debt for its Ford Motor Credit Co. lending unit, which uses the proceeds to make car loans to consumers.
Ford shares rose 1.2% to $12.39 at 11:11 a.m. in New York. The company's stock is off 12% this year.
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