Automobiles
Ford’s Auto Business Will Split Into Two Separate Units
American automotive icon Ford Motor Company will split its auto business into two separate units. Ford Blue will handle its legacy business involving internal combustion engines.
Meanwhile, Ford Model E will oversee its electric vehicle production. In addition, another subunit, Ford Pro, will concentrate on its commercial customers.
RELATED: Ford Has A Lot Riding On The Electric F-150
‘Sometimes, Two is Better Than One’
Wall Street hailed Ford's initiative to restructure its company. Stocks ticked upwards as investors applauded as Ford will renew its focus on growing its EV business.
In fact, Bank of America said that “Sometimes, two is better than one”. Meanwhile, Jefferies called Ford’s decision a “Creative move”.
Previously, some analysts pushed for Ford to spin off its electric auto business into an independent entity. They see more potential in Ford’s EV unit if it operated completely separate from its gas-powered counterparts.
By becoming future-focused and growth-oriented, Ford’s EV unit can generate high valuations enjoyed by rivals such as Tesla and Rivian.
At the same time, an entirely separate electric vehicle can enjoy various incentives given by the government for consumer products that run on clean energy.
Ford Will Keep All Its Business Under A Single Umbrella
However, Ford CEO Jim Farley believes that spinning off the EV business doesn't make sense at this time. By keeping all units under a single corporate umbrella, Ford can share technology and capital.
Ford Model E can benefit from the cash flow and economies of scale from the company’s traditional business.
Meanwhile, Ford Blue can piggyback from technological innovations that are typical in software-driven EV companies.
According to Farley, “Model E will nurture the talent and the culture and the intensity of a high-tech start-up. Blue will be a profit and cash engine for the entire enterprise.”
Strong Demand For Electric Vehicles, While Raking in Profits From Legacy Auto Business
In fact, Ford experienced strong demand for its electric vehicles like the F-150 Lightning and Mustang Mach E. At the same time, the company continues to generate large profits from its legacy auto business.
In particular, large trucks and pickups are popular Ford moneymakers year in and year out. In its more than a century of existence, Ford made a lot of efforts to create an electric vehicle.
Prior to its latest push, Ford created numerous plug-in concepts, production models, and gas-electric hybrids. However, its serious push into EV started in 2019 when it unveiled its all-electric models.
With public interest in its EVs getting stronger, Ford commits to increase the production of its battery-powered cars and trucks. By 2026, Ford will ramp its production to 2 million electric vehicles a year.
By then, this number will now represent a third of the company’s worldwide output. This puts Ford on track with its pledge to produce zero-emission-only vehicles by 2040.
Ford Not Yet Giving Up Its Internal Combustion Auto Business
Unlike its rivals, Ford has yet to totally give up on its gas-powered vehicles. Farley said that some EV technology just doesn’t fit some trucks and SUVs.
“Although maybe the volumes go down … I think we'll see a really revitalized [internal combustion engine] business,” he said.
Meanwhile, the entire auto industry remains undecided on the timeline to phase out internal combustion vehicles entirely.
Watch the CNBC Television video reporting that Ford to split electric vehicle, internal-combustion engine businesses into separate units:
Loading ...Do you agree with Ford’s decision to split its auto business into two separate units? Also, do you agree with the advantages of doing so?
Tell us what you think. Share your thoughts in the comments section below.
10 Comments
What do you do with all the junk battery’s that don’t last as long as everyone says they do. Do you just pollute the environment with them. Doesn’t sound to me like it’s such a great green deal so you might want to just cancel that nonsense
1000 tons of ore have to be mined in order to produce enough lithium and carbon for one 2000 lb battery. This process is not very eco friendly. Also, most of all the lithium in the world comes from China. Scary thought. The bottom line is EVs are just not practical especially when one considers speed and weight limitations along with charging times. They would not even be on the road today we’re it not for do that subsidies. Ford would be better served to build a chip factory as opposed to an EV battery factory.
Totally agree with the 2 comments above ☝️ we need a chip factory in the USA 🇺🇸, NOTHING FROM CHINA 🇨🇳. THIS IS FAR FROM THE FREE NEW DEAL.
What do you do when on a road trip and there are brown and blackouts? Our electric grid can’t handle what we presently are trying to deal with. One other thing, Ford and all auto makers should be required to have a factory representative at ALL auto shows they participate in every year across the United States. People who are decision makers that can LISTEN to the consumers. NOT local sales staff members!
The entire electric vehicle push is headed for a cliff. We are dependent on China to provide batteries for all of these vehicles. Furthermore the electric charging requires electricity which is mainly provide by burning fossil fuels so the whole concept of clean energy is BS.
The technology is currently not adequate for batteries with a charge that lasts long enough for efficient and practical use. The disposal of all these batteries will become a serious waste problem. the lithium required to product all of these batteries is limited so i believe the future of these vehicles is doomed unless alternate types of batteries are developed. It is smart of Ford not to abandon it’s gas vehicle business which is currently the only sensible solution.
Good points! If I bought a battery powered truck to pull my bass boat to the lake that is 3 hours away, how far would it pull before it needed a charge? And how would I charge it up to get me back home? Nothing I’ve seen tells me it would have the power to make the round trip. Vacations to Dallas or Austin or out of state with this vehicle would be out of the question without a charging station somewhere along the way and at what cost and for how long to get a complete charge? I’d rather have my gasoline powered vehicle.
Yeah right, I could see me trying to drag heavy oak logs out of the woods to cut for firewood with a 4×4 run on batteries. WTH are people thinking? What would happen when I get stuck and run out of juice? Run a gas powered generator to charge it? What a joke!
I agree 100% with all the above comment it’s a disaster waiting to happen
Electric vehicles will happen. Everyone wont be happy about it. Everyone is not happy the way things are now. If and when gasoline reaches 10 to 20 dollars a gallon EVs are gonna be pretty attractive. Yes you should probably keep that gas or diesel truck for pulling a boat, camper or work trailer. You wouldn’t want to pull a plow with a golfcart. But really think about how many of the pickups on the highway are hauling anything but people? If you need big power stick with your gas or diesel. EVs have decent range now and it will only get better.
My guess is the ev business will be outside of the dealer network and Ford will sell their evs direct to the consumer, much the way Tesla do. This is a move to slip the dealer network noose around their neck.