Ford splits empire into EV and combustion brands

Ford has revealed radical plans to split its car-making empire into two separate entities: one named Ford Model e that will be responsible for its electric cars, and the other, Ford Blue, that will sell traditional combustion-engined vehicles.

Announcing its plans overnight, Ford estimates that come 2026 one-third of all its sales will be of pure-electric vehicles.

That figure will rise rapidly to 50 per cent before the end of this decade.

Driving the rapid switch to EVs is Ford of Europe's decision that it will only sell battery-electric vehicles by 2030.

Ford executives are convinced that the shock reorganisation of the giant 118-year-old auto-maker will increase profit margins and help focus engineers, designers and developers on the unique needs and challenges of each powertrain type.

Ford Model e and Ford Blue will coexist alongside Ford Pro – the commercial unit – and will still collaborate in limited areas.

But the company says all three will operate independently.

Motivating the three-pronged structure is the desire within Ford to ramp up its pre-tax margins from 5.4 per cent in 2021 to around 10 per cent in 2026. By then, Ford hopes it will be manufacturing more than two million EVs a year.

As well as carving up the car-maker, Ford also wants to change the way it sells pure-electric vehicles.

In the future, dealers will be required to opt in to sell battery-electric cars under a new mandatory set of standards that will see the showroom carry no inventory and sell cars like the Ford Mustang Mach-E or F-150 Lightning at non-negotiable prices.

The Blue Oval says it will gauge how many dealers would be interested in participating before finalising its plans.

As part of the shake-up, current Ford CEO Jim Farley will head up Ford Model e while the president of Ford Americas and international markets, Kumar Galhotra, will run Ford Blue.

Beginning next year, Ford will separately report earnings for the Ford Model e, Ford Blue and Ford Pro divisions.

Explaining his rationale in an interview, Farley said: "We're not going to go to ICE people and say, 'Go do a deal on lithium raw material.'

"We're not going to ask our designers to design the next Lincoln EV and then the Super Duty at the same time. Most OEMs including us, until [today], have been asking our teams to do both."

Farley said the motivation behind splitting the business was cemented when those veterans of petrol-powered pick-ups projected there would only be demand for 20,000 units a year of the new Ford F-150 Lightning EV. Today, Ford is planning to build around 150,000 annually.

Even though the product development, supply chain and customer experience teams will be separated between Ford Model e and Ford Blue, collaboration will still exist.

Ford Model e, for example, will develop digital services, software and over-the-air updates for both combustion-powered vehicles and EVs.

Ford's boss was also careful to stress that splitting the car-maker into two would not create separate companies because in doing so they would require greater access to capital and make them less likely to work together.

The reorganisation would also not see separate shares issued for each division.

"We still think that more than half our customers are going to be ICE, and they're going to be ICE for a long time," Farley said.

"It's almost like our industry's kind of given up on that business. Even if the unit volume starts to fall over when mass adoption of electrification happens, in a lot of segments that's not going to happen, and we want to have a dedicated team to run that business with passion."

As part of the reshuffle, ex-Apple and Tesla exec Doug Field will take a leading role within Ford Model e.

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