Wednesday, August 17, 2022

Ford Model E is Blue Oval’s new division dedicated to EVs, software

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Ford on Wednesday announced a major restructuring that will see the establishment of three distinct divisions covering most of its operations.

There will be Ford Blue to cover the automaker’s traditional internal-combustion vehicles, plus Ford Pro to specifically handle commercial customers and vehicles.

There will also be Ford Model E that will focus on electric vehicles, software development, and connectivity, and operate more like a startup to ensure Ford can keep up with the rapid changes affecting the auto industry, including the increasing competition from the tech industry.

Jim Farley

Current Ford CEO Jim Farley will also head the new Model E division, working closely with Doug Field who will oversee the division’s product development in the role of chief EV and digital systems officer. Field is a Ford veteran who returned to the automaker last fall after stints with both Apple and Tesla, two companies Model E will almost certainly try to emulate.

Kumar Galhotra, previously head of Ford’s Americas and International Markets groups, will head Ford Blue, while Ted Cannis, who headed an earlier Ford commercial vehicles group, will head Ford Pro.

As mentioned above, each division will operate like a distinct business, each with its own set of financial statements, but the divisions will share relevant technologies and best practices. It’s all part of Ford’s overarching strategy, known as Ford+, aimed at growing EBIT margins to 10% (up from 7.3% in 2021) and having 50% of sales globally be EVs by 2030. The automaker also wants to be carbon neutral by 2050.

2022 Ford F-150 Lightning Pro

2022 Ford F-150 Lightning Pro

In a statement, Ford said it was motivated to establish the new divisions following the success of smaller standalone teams that developed the GT supercar, Mustang Mach-E and F-150 Lightning EVs, as well as a dedicated EV division in China. There have also been rumors Ford may be setting up to spin off its EV operations, which could prove attractive to investors that have fueled the share price of dedicated EV businesses to record highs, Tesla included.

We’ll remind you that Ford is already experiencing higher than expected demand for its EVs. The automaker has said it plans to build as many as 600,000 EVs per year as early as 2023. The bulk of this will be the Mustang Mach-E whose annual production is being raised to 200,000 units, followed by the F-150 Lightning whose annual production is being raised to 150,000 units. And the automaker wants EV sales to grow to two million by 2026.

“We have launched a series of hit products globally and demand for our new EVs like F-150 Lightning and Mustang Mach-E is off the charts,” Farley said. “But our ambition with Ford+ is to become a truly great, world-changing company again, and that requires focus.”

Ford E-Transit

Ford E-Transit

Ford last May said its investment in EVs running through 2025 would total more than $30 billion, and only in February it was reported that Ford could invest an additional $10 billion and $20 billion to better prepare its operations for the EV transformation. Ford hasn’t said what costs the restructuring will require.

Note, Ford also has its Lincoln division, which will increasingly benefit from the developments at the Model E division. Lincoln will unveil its first EV later this year (likely to be an Aviator-like SUV) and is tipped to have five EVs in its lineup by the end of 2026. Other divisions at Ford include the Ford Drive mobility and Ford Credit consumer financing divisions.



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