Ford is separating its electric vehicle (EV) and traditional auto units into separate businesses in an effort to accelerate its transition to EVs, the company said today (March 2).
Under the re-organization, the businesses will operate under the same Ford umbrella but report different financial results. While Ford Blue will focus on gasoline-powered vehicles, a unit called Ford Model e will be dedicated to EVs.
“We are going all in, creating separate but complementary businesses that give us startup speed and unbridled innovation,” said Ford CEO Jim Farley, who had previously denied reports of a spinoff.
Building Ford into a major EV player has been a central focus for Farley since he became CEO in October 2020. Ford announced in November that it plans to increase its EV production capacity to 600,000 by 2023, which Farley said would make the company the second largest US EV maker behind Tesla. Ford now believes it will be able to produce 2 million EVs by 2026.
Ford shares have risen by 150% since Farley became CEO, and rose by more than 5% on news of the re-organization today.
Under the new structure, Ford plans to spend $50 billion on its EV strategy, up from a previous target of $30 billion. Farley said he expects legacy vehicles to remain Ford’s “profit and cash engine.”
The Ford CEO didn’t hide the fact that the re-organization is in part about beating out its competitors in the ever-crowded EV space. General Motors is also looking to lead US EV sales, and rolled out a new electric SUV that’s $10,000 cheaper than Tesla’s Model 3 in October. Ford’s Mach-E was the third best-selling EV in the US last year, behind Tesla’s Model Y and Model 3.
“Is this about winning? 100%,” Farley said. “We want to beat the old players. We want to beat the new players.”
Ford notched at least one advantage over a main competitor today. As it was announcing its acceleration in EV investment, GM said it was selling its stake in EV startup Lordstown, following disappointing sales.