Ford Splits EVs From Legacy Cars to ‘Generate Industry-Leading Growth’
Ford announced it is spinning off its electric vehicles (EV) unit, in an effort to “compete and win against both new EV competitors and established automakers,” the company said in an announcement.
“We’re making great progress executing our Ford+ plan to grow and create value. Today we’re taking the next step. We’re creating two distinct, but strategically interdependent business units we’re calling Ford Blue & Ford Model e,” CEO Jim Farley tweeted on Wednesday, March 2.
The stock was up 3.95% in pre-market trading.
Ford Model e and Ford Blue will be run as distinct businesses, but also support each other, the company said. With the creation of Ford Blue and Ford Model e, Ford also announced several leadership appointments. Farley will serve as president of Ford Model e, in addition to his role as president and CEO of Ford Motor Company, while Kumar Galhotra will serve as president of Ford Blue.
The company also reaffirmed its guidance for 2022 of $11.5 billion to $12.5 billion in company-adjusted EBIT and raised its longer-term operating and financial targets. It said it expects more than 2 million EVs to be produced annually by 2026. In addition, Ford expects to spend $5 billion on EVs in 2022, including capital expenditures, expenses and direct investments, a two-fold increase over 2021.
Ford reiterated its commitment to achieve carbon neutrality by 2050 and to use 100% local, renewable electricity in all of its manufacturing operations by 2035.
“This new structure will enhance our capacity to generate industry-leading growth, profitability and liquidity in this new era of transportation,” John Lawler, Ford’s CFO said in the announcement. “It will sharpen our effectiveness in allocating capital to both the ICE and EV businesses and the returns we expect from them – by making the most of existing capabilities, adding new skills wherever they’re needed, simplifying processes and lowering costs. Most importantly, we believe it will deliver growth and significant value for our stakeholders.”