Ford Splits EV Business From Internal Combustion Operations To Boost Profitability

Ford is reorganizing to improve its bottom line and "strengthen operations"

Ford splits EV business from ICE operations — news
From this point, Ford plans to split its operations into “Ford Blue” and “Ford Model e”. (Images: Ford Motor Company)

Ford aims to reorganize into two units that largely operate on their own.

On Wednesday, the automaker announced its plan to separate its operations along the line of its internal combustion and electric vehicle development, with the goal to bring in talent and keep teams working toward the unique needs for each market. Notably, this revelation comes a week after CEO Jim Farley participated in a Wolfe Research call, as reported by Reuters, during which he denied rumors Ford was moving in this direction.

Now, Ford made its official statement laying out not just that it will separate these entities, but exactly where the lines will be drawn. “Our legacy organization has been holding us back,” Farley said on a conference call. To that end, his aim, then, is to split the business in half, where the two units will operate independently but collaborate when needed. As part of the rollout of the “Ford+” plan announced last year, the internal combustion side of the company will be known as Ford Blue. The EV entity, for its part, will be known as Ford Model e. If you’re also counting the commercial Ford Pro operation, you’ll see three facets of the automaker’s business, with the specific aim of driving market growth and profitability in each.

Executive Chair Bill Ford said in an official statement, “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. As far as areas of collaboration are concerned, the teams will come together to create Ford’s “Blue Oval City” plant in Tennessee, as one example. Farley noted Ford Blue will handle manufacturing operations and body engineering, while Ford Model e will source electrical architectures, and work on the overall plant design.

The “Ford+” plan was unveiled last year as the latest effort to transform the company’s output toward electric vehicles over the coming years.

Leadership structure will also split

With the change from a more monolithic arrangement, Ford’s planning to separate the leadership structures for each unit. In ostensibly making each side more agile in handling its own needs, the automaker says it can drive innovation, growth and “create value for Ford’s shareholders”.

Farley will serve as president of Ford Model e, in addition to his current capacity as President and CEO of Ford Motor Company as a whole. Kumar Galhotra will serve as president of Ford Blue. Doug Field, who came from Apple’s automotive team last year and previously served as Tesla’s senior vice president of engineering, will now head up Ford Model E’s product creation as the Chief EV and Digital Systems Officer.

Today’s move accelerates Ford’s financial plans, in which they aim to see an adjusted profit margin before interest and taxes of 10%. The automaker plans to build more than 2 million electric vehicles annually by 2026, with those models comprising half its global volume by 2030.