Ford spins off dedicated Model E electric vehicle startup, gas-guzzlers remain as Ford Blue
Ford wasn't joking when its CEO Jim Farley said it wants to become "the true EV leader" in America, with 40% of its portfolio consisting of fully electric vehicles by 2030. Not only did Ford already commit US$50 billion towards its electrification goal, but it is now splitting into two completely different business entities with one - Model E - dedicated solely to electric vehicles. Ford wants Model E to function as a startup that designs from scratch, unencumbered by the legacy gas vehicle business that will now remain as Ford Blue. The goal is to reach an annual production capacity of two million electric cars by 2026 and double-digit profits. For comparison, Tesla is expected to make about 1.2 million EVs this year. Ford calls this the Ford+ plan as there will also be a third - Ford Pro - entity to deal with its business-oriented fleet, and the plan consists of the following:
- Creates distinct electric vehicle and internal combustion businesses poised to compete and win against both new EV competitors and established automakers.
- Organizes Ford to deliver for customers with the focus and speed of a startup at the leading edge of technology, supported by deep expertise in engineering and high-volume production.
- Ford Blue will build out company’s iconic portfolio of ICE vehicles to drive growth and profitability – relentlessly attacking costs, simplifying operations and improving quality; will provide world-class hardware engineering and manufacturing capabilities for all of Ford.
- Ford Model e will accelerate innovation and delivery of breakthrough electric vehicles at scale, and develop software and connected vehicle technologies and services for all of Ford.
- Ford Blue and Ford Model e will operate as distinct businesses, but share relevant technology and best practices to leverage scale and drive operating improvements; along with Ford Pro, all three businesses are expected to have discrete P&Ls by 2023.
- Accelerates Ford+ plan to unlock growth and create value for Ford’s shareholders: total company adjusted EBIT margin of 10% and annual production of more than 2 million EVs by 2026; expect EVs to represent half of global volume by 2030.
The Model E division itself is "a clean-sheet approach to designing, launching and scaling breakthrough, high-volume electric and connected products and services for retail, commercial and shared mobility." This includes developing and launching Model E's own EV platforms, batteries, motors, chargers, everything down to the recycling strategy. Ford is already working on scaling up capacity for its two 43 GWh battery factories in Kentucky and Tennessee and has had plenty of commercial success with the Mustang Mach-E and F-150 Lightning, its first true EVs.
The Mach-E has earned the Consumer Reports accolades and is now the second most popular electric SUV in America, while for the F-150 Lightning truck preorders Ford had to reign in scalpers. With the Model E division Ford intends to start in the brave new world of electric vehicles from scratch and the naming indicates that Ford considers this the second watershed moment in its history "since Henry Ford scaled production of the Model T."