On Wednesday, Ford announced plans to split its business into two units, separating the traditional internal combustion engine segment from the rising EV market. The ICE division is known as Ford Blue and the electrified side is Ford Model e. By doing so, the carmaker hopes to “compete and win against both new EV competitors and established automakers.
It’s all part of the Ford+ plan that CEO Jim Farley unveiled in May 2021, where a commitment of more than $30 billion in spending on EVs by 2025 and a separate commercial division known as Ford Pro were made. It’s largely about scaling the business effectively and increasing value. At the time, Farley called it “the biggest opportunity for growth and value creation since Henry Ford started to scale the Model T”.
While the two divisions will be distinct, synergies will allow the carmaker to share tech and operating practices. By next year, the company expects separate P&L statements for all three branches – Ford Blue, Ford Model e, and Ford Pro.
CEO Jim Farley said, “This isn’t the first time Ford has reimagined the future and taken our own path. We have an extraordinary opportunity to lead this thrilling new era of connected and electric vehicles, give our customers the very best of Ford, and help make a real difference for the health of the planet.”
He continued, “We have made tremendous progress in a short period of time. We have launched a series of hit products globally and demand for our new EVs like F-150 Lightning and Mustang Mach-E is off the charts. But our ambition with Ford+ is to become a truly great, world-changing company again, and that requires focus. 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 2030, the automaker expects to capture the same market share as they currently do – or greater – despite pivoting to 50% all-electric by the end of the decade. Seeking out efficiencies in EV manufacturing to reduce costs as well as reduced “ICE structural costs” in the vicinity of $3 billion should help the carmaker increase profitability during that time.
Electric division goals
The heart of the announcement is electrification, and the automaker’s intentions are to hire the best talent to manage, develop, and engineer their EVs. To that end, former Apple and Tesla executive Doug Field will serve as chief EV and digital systems officer. Farley will be president of Ford Model e in addition to serving as president and CEO for Ford Blue.
“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.
Separating the two divisions will keep the Model e team laser-focused on design and development for all things electrified including developing “EV platforms, batteries, e-motors, inverters, charging and recycling”.
Legacy Ford Blue division
Farley called the internal combustion engine division at a “profit and cash engine”, and the focus will be on continuing to exercise their industry expertise to the best of their ability. Trucks and SUVs like the best-selling F-Series as well as exciting models like the Bronco will be central to success. Loyalty will be sought by emphasizing build quality and “exceptional service”.
“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.”
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