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Ford to Split into Separate EV and Internal-Combustion Units

March 2, 2022
Ford Model E will run Ford's electric-vehicle operations, while Ford Blue will take over the company's gas-powered vehicle manufacturing.

Ford Motor Co. announced Wednesday it would split into two new internal business units, Ford Model E and Ford Blue. The first will take over all of Ford’s existing electric vehicle operations, while Ford Blue will become the home of Ford’s new and old gasoline-powered vehicles. According to company executives, the move is meant to make both new branches of Ford operate “with the focus and speed of a startup.”

Both independent units will operate like different companies under the Ford Motor Co. umbrella. Ford Model E will be led by Ford Motor Co. president Jim Farley, while Ford Blue will be lead by Kumar Galhotra, currently president of Ford’s Americas and International Markets Group. Both companies will be served by other Ford groups like the company’s financing service.

According to Farley, the creation of the independent electric vehicle division was inspired by the smaller teams behind several of the company’s recent electric vehicles, including the Mustang Mach E and electric F-150.

“Ford Model E will be Ford’s center of innovation and growth, a team of the world’s best software, electrical and automotive talent turned loose to create truly incredible electric vehicles,” said Farley, in a statement.

Ford Blue, meanwhile, will focus on well-known Ford brands like the F-series and other pickup trucks, SUVs, and Mustang.

The internal split may also introduce some changes to how Ford sells vehicles. According to a company statement, Ford’s EV division will “lead on creating an exciting new shopping, buying and ownership experience” based on “simple, intuitive e-commerce platforms, transparent pricing and personalized customer support from Ford ambassadors.” Ford also said its ICE vehicle business will adapt its own selling model from what works at Ford Model E.

Farley foreshadowed the move to split Ford internally in last month’s Ford earnings call. In his responses to analyst questions, Farley repeatedly mused on the significant differences between the business of manufacturing battery-electric vehicles, or BEVs, and vehicles powered by an internal combustion engine, or ICE.

“Running a successful ICE business and a successful BEV business are not the same,” Farley said.  “The customers are different. We think the go-to-market is going to have to be different. The product development process and the kinds of products we develop are different. The procurement supply chain are all different. The talent is different. The level of in-sourcing is different,” he noted. Without revealing details, he added Ford would run both processes in a way that “acknowledges those differences.”

Farley’s comments on the earnings call also suggested the direction Ford intends to take Ford Blue in an industry where the focus has recently been mainly on expanding electric-vehicle offerings: a near-term profitable brand to help fuel vertical integration in the battery-electric division, and a long-term specialty brand for Ford loyalists.

“The profitability of ICE is very important because it gives us optionality, not only of scaling BEV, but also vertically integrating BEV which is increasingly becoming important for a profit lever,” Farley said. “We see our ICE business increasingly in kind of specialty groupings of passion brands like Bronco and Mustang.”

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