Ford Motor Co. will separate its fast-growing electric vehicle operations from its legacy combustion engine business in a historic reorganization of the 118-year-old company.
The newly formed Ford Model e unit will scale up the automaker’s EV offerings and develop software and connected-vehicle technology and services for all of the company. Ford Blue will focus on combustion vehicles, cutting costs and simplifying operations.
Ford’s ambition will be “to become a truly great, world-changing company again, and that requires focus,” Chief Executive Officer Jim Farley said in a statement. “We are going all in, creating separate but complementary businesses that give us start-up speed and unbridled innovation.”
Ford said it plans to be able to make 2 million electric vehicles annually by 2026, a big step up from the 600,000 it’s aiming for in 2024. The automaker also is now targeting adjusted earnings before interest and taxes of 10% by 2026, up from as much as 8% expected for this year.
Accelerating Ford’s transition to a battery-electric future has been a major focal point for Farley. He raised the automaker’s wager on EVs months after taking over as CEO. Bloomberg News first reported last month that the company was contemplating a further increase in expenditures toward EVs, and that Farley had wanted to wall off electric operations from Ford’s internal combustion engine business.
Implementing major structural change at Ford requires the backing of the company’s founding family, which controls the automaker through a special class of stock. While Farley has considered spinning off either its EV or combustion engine businesses to raise funds and possibly earn higher market valuations, according to people familiar with the deliberations, he and Ford have said there are no plans for such a move.
Farley has been working closely with Doug Field, the former head of Apple Inc.’s car project, on reviewing Ford’s operational and manufacturing structure to prepare for the company ramping up its EV offerings. It’s boosted output of the electric Mustang Mach-E and prepared more production capacity for the F-150 Lightning pickup going on sale this spring.
Ford shares have soared 151% since Farley became CEO in October 2020. While the stock has pulled back since mid-January, its $66.9 billion market capitalization was slightly ahead of General Motors Co.’s at the close of trading Tuesday.