What Ford’s EV Business Split Means For The Automaker

Ford (F) announced on Wednesday a shakeup of its auto business that will effectively split its electric vehicles and internal combustion engine-powered vehicles into two separate operating units under the Ford umbrella.

The automaker’s EVs will now fall under the Ford Model e business unit, and the internal combustion engine-powered vehicles will live under the Ford Blue unit.

The move is part of Jim Farley’s Ford+ turnaround plan, which the CEO said in a statement, “requires focus.”

He said, “We are going all in, creating separate but complementary businesses that give us start-up speed and unbridled innovation in Ford Model e together with Ford Blue’s industrial know-how, volume and iconic brands like Bronco, that start-ups can only dream about.”

Through the separation of the operations, Ford plans to run each unit as distinct businesses while also offering each other support.

“Ford Model e will be Ford’s center of innovation and growth, a team of the world’s best software, electrical and automotive talent turned loose to create truly incredible electric vehicles and digital experiences for new generations of Ford customers,” Farley said.

The Ford Model e unit will have responsibility for Ford electric vehicle operations, including the design and development of EV technologies for EV platforms, batteries, e-motors, inverters, charging and battery recycling, in addition to software platform creation and vehicle architecture.

Farley continued: “Ford Blue’s mission is to deliver a more profitable and vibrant ICE business, strengthen our successful and iconic vehicle families and earn greater loyalty by delivering incredible service and experiences. It’s about harnessing a century of hardware mastery to help build the future. This team will be hellbent on delivering leading quality, attacking waste in every corner of the business, maximizing cash flow and optimizing our industrial footprint.”

Ford said it is committed to producing more than 2 million EVs annually by 2026 or about one-third of its global volume, increasing that number to half by 2030. The automaker also aims to spend $5 billion on electric vehicles in 2022 – a twofold increase over 2021.

Farley will serve as president of Ford Model e, in addition to his role as president and CEO of Ford, and Kumar Galhotra will hold the role of president at Ford Blue.

“Ford Blue’s mission is extremely ambitious,” Galhotra said. “We are going to be hyper-competitive on costs and make quality a reason to choose Ford. And by doing all that, Ford Blue will be an engine of cash and profitability for the whole company.”

As of Wednesday at 1:34 p.m. EST, shares of Ford were trading at $18.00, up $1.30, or 7.81%.