Battery-powered cars and combustion-powered vehicles separated into two new divisions
Ford had revealed radical plans to split its car-making empire into two separate entities; one named Ford Model e that will be responsible for its electric cars the other, Ford Blue, that will sell combustion vehicles.
Announcing its plans overnight, Ford says that it estimates that come 2026 one-third of all its sales will be of pure-electric vehicles. That figure will rise rapidly to 50 per cent before the end of this decade.
Driving the rapid switch to EVs is Ford of Europe’s decision that it will only sell battery-electric powered vehicles by 2030.
The aim of the shock reorganisation of the giant 118-year-old automaker is execs believe by dividing combustion and electric vehicle businesses it will increase profit margins and help focus engineers, designers and developers on the unique needs and challenges of each powertrain.
Ford Model e and Ford Blue will coexist alongside Ford Pro – it’s commercial unit – and will still collaborate in limited areas but all three will operate independently, claim the Blue Oval bosses.
Motivating the three-pronged structure is the desire within Ford to ramp up its pre-tax margins from 5.4 per cent in 2021 to around 10 per cent in 2026. By then, Ford hopes, it will manufacture more than 2 million EVs.
As well as carving up the car-maker, Ford also wants to change the way it sells pure-electric vehicles.
In the future, dealers will be required to opt-in to sell battery-electric cars under a new mandatory set of standards that will see the showroom carry no inventory and sell cars like the Mustang Mach-E or F-150 Lightning at non-negotiable prices.
The Blue Oval says it will gauge how many dealers would be interested in participating before finalising its plans.
As part of the shake-up current Ford CEO Jim Farley will head up Ford Model e while the president of Ford Americas and international markets, Kumar Galhotra, will run Ford Blue.
In future, Ford will report earnings for its Ford Model e, Ford Blue and Ford Pro separately beginning next year.
Explaining his rationale in an interview, CEO Farley said: “We’re not going to go to ICE people and say, ‘Go do a deal on lithium raw material,’?” he said. “We’re not going to ask our designers to design the next Lincoln EV and then the Super Duty at the same time. Most OEMs including us, until [today], have been asking our teams to do both.”
Farley said the motivation behind splitting the business was cemented when those veterans of petrol-powered pick-ups projected Ford would need to produce 20,000 F-150 Lightnings a year. Today Ford is planning to build around 150,000 annually.
Even though the product development, supply chain and customer experience teams will be separated between Ford Model e and Ford Blue collaboration will still exist.
Ford Model e will, for example, develop digital services, software and over-the-air updates for both combustion and EVs.
Ford’s boss was also careful to stress that splitting the car-maker into two would not create separate companies because in doing so, they would require greater access to capital and make them less likely to work together.
The reorganisation would also not see separate shares issued for each unit.
“We still think that more than half our customers are going to be ICE, and they’re going to be ICE for a long time,” Farley said. “It’s almost like our industry’s kind of given up on that business. Even if the unit volume starts to fall over when mass adoption of electrification happens, in a lot of segments that’s not going to happen, and we want to have a dedicated team to run that business with passion.”
As part of the reshuffle ex-Apple and Tesla exec Dough Field will take a leading role within Ford Model e.
Keyword: Ford splits car-maker into EV and combustion brands