Ford splitting electric vehicle, traditional operations into two individual businesses

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Ford will split its electric vehicle and internal combustion operations into two individual businesses to accelerate its adaptation of new technology and the Detroit automaker said Wednesday that its transformation into an EV company is accelerating.

Ford plans a major restructuring with two distinct but strategically interdependent auto businesses–Ford Blue focusing on traditional combustion engines and Ford Model e, which will develop electric vehicles.

Jim Farley, the CEO of Ford Motor Co., will lead the electric division. Speaking candidly last week at an investment conference, he said that Ford did not want to completely break off its electric division, but that changes were coming.

“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,” Farley said.

The transformation of the auto industry in just the past year in pursuit of EV technology has been astonishing even to advocates who have pushed for years to put gasoline-powered cars in the rearview window. A handful of start-ups have compiled billions in capital, including heavy funding from traditional automakers.

But those upstarts have neither the funding of traditional automakers, which sell millions of cars each year, nor the ability to build at scale.

Lucid Group and Lordstown Motors, newer arrivals, released disappointing production projections this week, highlighting how difficult it is to secure materials and produce vehicles in massive numbers.

Farley said that the company recognized the need to become more nimble on the technology side with so many competitors entering the market.

“Our legacy organization has been holding us back,” Farley said. “We had to change,”

But Ford is also competing with EV heavyweight Tesla, which posted record profits last year, and another traditional automaker, General Motors, which is vowing an even faster transition to electric vehicles. GM went so far as to change its logo, with the ‘m’ in the logo underlined to look more like an electrical plug.

“Is this about winning? 100%,” Farley said. “We want to beat the old players. We want to beat the new players.”

Ford has already charged into the development of electric vehicles with the Ford GT, Mustang Mach-E SUV and F-150 Lightning pickup, and demand is high.

The company has already taken orders for 150,000 electric versions of its F-150 pickup and full production of the vehicle is expected to begin early this year. It’s building three battery plants, one that will also build electric trucks.

In January, GM said it would make the largest investment in company history in its home state of Michigan, spending nearly $7 billion to convert a factory to make electric pickup trucks and to build a new battery cell plant.

On Wednesday, Ford said that it now expects that half of its vehicles will be electric by 2030. Less than a year ago, the company announced a goal of going 40% electric by then. It also said that it will produce more than 2 million electric vehicles annually by 2026, which would represent about a third of its global fleet.

Ford Blue will provide hardware engineering and manufacturing capabilities for the entire company. Ford Model e will develop software and connected vehicle technologies and services.

Both divisions will be run out of Dearborn, Michigan, the automaker’s longtime home. Each will book its profits and losses individually.

Ford anticipates spending $5 billion on electric vehicles this year, including capital expenditures, expense and direct investments.

Farley, in addition to heading Ford Model e, will continue as CEO of Ford Motor Co. The president of Ford’s Americas & International Markets Group, Kumar Galhotra, will become president of Ford Blue. Galhotra said Ford Blue would be the economic engine that would power the electric division forward.

Shares of Ford rose more than 4% before at the opening bell.

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3 thoughts on “Ford splitting electric vehicle, traditional operations into two individual businesses

  1. Can someone help me to understand where all of the lithium will come from that will be necessary for all of those batteries? Just curious.

    1. Mostly China, but it should be coming from out west.The US government should work it out with California to allow extensive mining of lithium around the Salton Sea in exchange for environmental cleanup of the disaster that is the Salton Sea, as well as ongoing environmental cleanup related to mining activity. It would take out many birds with one stone and pay for itself.

      Whoever weens of fossil fuels first between China and the US will acquire an unprecedented level of energy independence and national security, thus planting its status as the super power of the future. Our politicians need to take less $$$ from antiquated fossil fuel companies and invest our tax dollars in the development of new energy technology.

      Billions of dollars should be spent on developing lithium mines, advancing sodium ion technology for stationary uses, developing energy positive hydrogen solutions, and implementing current fossil-fuel-less technology.

  2. 100% Vincent … furthermore ALL alternate energy sources need to be from the PRIVATE sector. Taxpayer funded underwriting of this segment is critical. I have talked with many solar startups that are in it for the government paycheck.
    “Agree” with Robert but I find it amusing that when it comes to lithium mining in the U.S., environmental groups are vehemently opposed to what it takes to make batteries! What happens when the batteries run out? MASSIVE environmental issues with disposal. Solar panels have a 20 year lifespan, windmills about the same.
    It’s a viscious circle the green movement hasn’t completed the cradle to grave life cycle. Cart before the horse… I am for environmental reasoning and reality. Can NOT be underwritten by taxpayers.