Following the announcement, Ford Motor said it would restructure operations to divide its electric vehicle and internal combustion engine divisions into independent groups inside the manufacturer.
The firm anticipates that the move would simplify its expanding electric car industry while increasing profitability to a maximum. Like how Ford operates its Ford Pro commercial vehicle division under CEO Jim Farley’s “Ford+” recovery plan, this method has worked well for the company.
“Today, we’re announcing one of the most significant changes in our history,” Farley said in a statement early Wednesday morning.
Some Wall Street analysts have been pressing legacy automakers such as Ford to spin off their electric vehicle operations to capture the value investors have awarded some EV start-ups. Separating the functions while keeping them in-house goes long toward appeasing those analysts.
EV company will “create as much excitement as any pure EV rival, but with size and resources that no start-up could ever equal,” according to Farley. “The legacy business is a profit and cash engine for the corporation,” he said of the operation.
Farley said that Ford opted not to spin off any companies because of the leverage and interconnection between the two businesses.
According to Ford, Ford does not need any extra money to support its operations.
Ford’s stock was up more than 6 percent in Wednesday’s first hour of trade. The stock of the carmaker has fallen by almost 16 percent so far this year.
Farley said at the announcement of the new companies that Ford intends to earn a 10 percent adjusted operating profit throughout the firm and build more than 2 million electric cars by 2026. By 2026, the corporation expects to have saved $3 billion in structural expenses.
Ford Model e will be the company’s name that will be in charge of electric vehicles. “Ford Blue” will be the color of choice for the typical operations. The firm announced that it would “run as different companies while sharing essential technology and best practices to harness scale and create operational efficiencies.”
Until 2023, Ford intends to break apart financial data for the new businesses and its Ford+ business to provide investors with more insight into the company’s activities. With Ford Model e’s start-up speed and unconstrained creativity combined with Ford Blue’s industrial know-how, volume, and famous brands like Bronco, we’re going all in,” Farley said in a statement.
Ford’s plans mirror GM’s late-2019 decision to separate EV and conventional car engineering. GM has no intentions to split off its EV division.
The corporate system holds us back today, Farley says. “It hinders our attention. We need ICE to generate revenue and serve those great brands. We need innovation in our energy and digital businesses.”
In addition to his responsibilities as president and CEO of Ford, Farley will lead Ford Model e.
Chief EV and digital systems officer Doug Field, formerly of Tesla and Apple, will manage product development for the Ford Model e.
Ford Model e will be in charge of all-electric car operations. To that end, we are developing future EV technologies, components, and services such as specialized vehicle platforms and battery and e-motor recycling, to compete with Tesla’s business model.
Model e will also provide future electric car owners with “simple, intuitive e-commerce platforms, clear pricing, and tailored customer support.” In addition, some dealers have drastically increased prices for popular automobiles, such as the Mustang Mach-E electric crossover.