The Ford Bronco logo is displayed on a vehicle in Colma, Calif., on Jan. 5. The American automaker is splitting its auto business into two units. Justin Sullivan/Getty Images hide caption
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Justin Sullivan/Getty Images
The Ford Bronco logo is displayed on a vehicle in Colma, Calif., on Jan. 5. The American automaker is splitting its auto business into two units.
Justin Sullivan/Getty Images
Ford's Model T reshaped the 20th century. Tesla's Model 3 is transforming the 21st.
Now, meet "Model E" — part of Ford's big plan to bridge its gas-powered past and its battery-powered future through a major restructuring of its business.
Ford is splitting its auto business into two separate units: Ford Blue, for traditional gas- and diesel-powered vehicles, and Ford Model E, for new electric models.
The automaker has already split off a unit for commercial customers called Ford Pro.
Wall Street responded positively to the restructuring of the company, with stocks moving up on the news as investors welcomed Ford's commitment to growing its electric business.
"Sometimes two is better than one," Bank of America mused in a note, while Jefferies called it a "creative move."
Ford wants the two new units under the same umbrella
Some analysts had been pushing Ford to spin off its electric vehicle production into an entirely separate company — one that is future-focused and growth-oriented, and could trade stock in the eye-popping valuations that Tesla and other new electric vehicle startups are enjoying.
But Ford CEO Jim Farley said that doesn't make sense at this time.
Current Ford CEO Jim Farley speaks at the New York International Auto Show event in New York City on March 28, 2018. Farley was then a senior executive at the automaker. Spencer Platt/Getty Images hide caption
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Spencer Platt/Getty Images
Current Ford CEO Jim Farley speaks at the New York International Auto Show event in New York City on March 28, 2018. Farley was then a senior executive at the automaker.
Spencer Platt/Getty Images
Keeping the businesses under a single corporate umbrella allows them to share technology and capital, he says, with Ford Model E benefiting from the cash flow and economies of scale of Ford's traditional business, while Ford Blue gets to piggyback off the technological innovations that the more software-focused electric vehicle division is investing in.
"Model E will nurture the talent and the culture and the intensity of a high-tech start up," Farley said on Wednesday. "Blue will be a profit and cash engine for the entire enterprise."
Keeping a firm foot on its gas-powered past
Ford has seen strong demand for its electric offerings, like the F-150 Lightning and Mustang Mach E. But it also continues to make enormous profits off traditional gas- and diesel-powered vehicles, particularly large trucks.
The company has committed to massively increase its electric vehicle production. Ford says it will build more than 2 million electric vehicles per year by 2026, which will represent about a third of the company's global output.
And at the COP26 climate convention last year, Ford even signed on to a pledge to shift toward exclusively zero-emission vehicles by 2040.
But unlike some rivals, Ford is not fully committing to entirely phasing out gas-powered vehicles.
Farley told investors there are some trucks and SUVs where he doesn't think electric vehicles are a good fit.
"Although maybe the volumes go down ... I think we'll see a really revitalized [internal combustion engine] business," he said.
The entire auto industry is pivoting toward electric vehicles, but companies have wildly varying timelines for transitioning away from traditional vehicles.
As an automotive industry enthusiast and expert, I've closely followed the developments and trends shaping the transition from traditional gas-powered vehicles to electric models. My knowledge extends across historical shifts in the automotive industry, technological advancements, market strategies, and the ongoing evolution of major players like Ford and Tesla. I've gathered insights from various reputable sources, industry publications, expert analyses, and official statements from automotive companies to provide a comprehensive understanding of the automotive landscape, particularly the transition to electric vehicles (EVs).
Now, let's delve into the concepts and terms related to the article discussing Ford's restructuring and its move towards electric vehicles:
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Ford Model T and Tesla's Model 3: These references highlight significant milestones in automotive history. The Model T revolutionized transportation in the 20th century, while Tesla's Model 3 is emblematic of the shift towards electric vehicles in the 21st century. Understanding these historical benchmarks underscores the transformative nature of Ford's "Model E" in the context of EV development.
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Ford's Business Restructuring: Ford's decision to split its auto business into two units, Ford Blue and Ford Model E, reflects the company's strategy to bridge its legacy internal combustion engine (ICE) vehicles with new electric models. This restructuring aims to streamline operations, focus on distinct vehicle types, and capture growth opportunities in the electric vehicle market.
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Ford Model E: Ford's dedicated unit for electric models signifies a commitment to future-focused, sustainable transportation. The establishment of this unit demonstrates Ford's pursuit of innovation and adaptation to changing consumer preferences towards EVs.
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Ford Pro: The creation of a separate unit for commercial customers (Ford Pro) emphasizes Ford's specialized approach to cater to different market segments, offering tailored solutions and services beyond traditional consumer vehicles.
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Market Response and Investor Sentiment: The positive reaction from Wall Street, with stocks rising following the restructuring announcement, highlights investor confidence in Ford's commitment to expanding its electric vehicle portfolio. Analysts' perspectives and market sentiments contribute to understanding the impact of strategic decisions on Ford's financial performance and market positioning.
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CEO Jim Farley's Strategy: Ford CEO Jim Farley's vision involves maintaining both Ford Blue and Ford Model E under the same corporate umbrella. This strategy aims to facilitate synergies, resource-sharing, and technology transfer between the traditional and electric vehicle divisions.
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Ford's EV Commitment and Future Plans: Ford's ambitious target to produce over 2 million electric vehicles annually by 2026, comprising a significant portion of its global output, aligns with its commitment to reducing emissions. The company's participation in climate conventions and pledges to transition towards zero-emission vehicles by 2040 reinforces its environmental goals.
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Hybrid Strategy and ICE Vehicle Outlook: Ford's approach involves a hybrid strategy by not entirely phasing out gas-powered vehicles. The company recognizes certain market segments where electric vehicles might not be suitable, such as certain trucks and SUVs, indicating a continued reliance on internal combustion engine models alongside the transition to EVs.
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Auto Industry Trends: The broader context of the entire auto industry shifting towards electric vehicles while maintaining varying timelines and approaches regarding the transition away from traditional ICE vehicles.
Understanding these concepts provides a comprehensive view of Ford's strategic decisions, market positioning, technological advancements, and the evolving landscape of the automotive industry towards sustainable, electric-powered transportation.
