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Ford Earns $8.2 Billion In The Fourth Quarter As A Result Of Its Rivian Investment

Ford Earns $8.2 Billion In The Fourth Quarter As A Result Of Its Rivian Investment
The blockbuster market debut in November last year of the electric vehicle maker Rivian Automotive Inc has helped Ford Motor Co to a $8.2 billion gain on its investment in the startup which the company said will get reflected in its fourth quarter results.  
Rivian's stock had climbed by as much as 53 per cent in the best initial public offering of 2021, helping the company’s valuation cross $100 billion. However the share price of the company has since dropped by more than 27 per cent.
The stocks of the company dropped further by 8.5 per cent on Tuesday to reach its lowest level since its IPO amod a wider sell off at the stock market.
Ford was among the early investors in Rivian and it currently owns about 12 per cent of the electric vehicle startup which is based in Cliafornia. Ford itself has been pursuing an aggressive strategy of electrification of its models as it implements its strategy of shifting away from the traditional fossil fuel powered automobiles as there is an increase in demand for green transportation globally.
Ford has pledged to make investment of more than $30 billion for development of its fleet of electric vehicles by 2030.
The 118-year-old Detroit based auto company had invested $500 million in Rivian in 2019 with the aim of making use of the platform of the electric vehicle maker for construction of new Ford-branded electric vehicles. However the company has shunted that plan in 2021.
Ford would reclassify its $900 million non-cash gain on the Rivian investment as a special item in the first quarter of 2021, when it would be reporting on February 3, its performance for the fourth quarter of last year, the company said.
The reclassification will affect the automaker's full-year adjusted earnings before interest and taxes (EBIT) outlook, which was previously expected to range from $10.5 billion to $11.5 billion, including the gain.
Ford also said it will incur $1.7 billion in charges in the fourth quarter as a result of buying back and redeeming more than $7.6 billion in high-cost debt.
The remeasurement of its global pension and other post-retirement employee benefits will result in a non-cash gain of around $3.5 billion in the fourth quarter and $3.9 billion for the whole year.
Ford also said that it would report a non-cash benefit of $3.6 billion, owing to changes in its global tax structure.

Christopher J. Mitchell

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