Ford announced plans to create two distinct businesses for fossil-fuel and electric vehicles, firmly shutting down talk of a potential EV or ICE spinoff as the auto giant executes a turnaround strategy. Ford stock rose.
The move will give Ford "startup speed" in the EV race against both established automakers and new competitors, CEO Jim Farley said in Wednesday's news release. It comes about a week after Farley named China startup Nio and Tesla — the American icon that went from startup to world leader in electric vehicles in about two decades — as the EV rivals to beat.
The two businesses will be called Ford Blue and Ford Model e. They will remain under the Ford umbrella, along with the Ford Pro business that was unveiled last May. The Ford Pro unit focuses primarily on commercial products and services.
Ford Model e will exclusively develop and scale electric vehicles. Those EVs include the new Mustang Mach-E and the upcoming F-150 Lightning, the electric version of its top-selling line of pickup trucks.
Ford Blue will focus on internal combustion engine, or ICE, vehicles. Those include the F-Series, Ranger and new Maverick trucks, as well as the Bronco and Explorer SUVs, and Mustang cars.
The separation of ICE vehicles and EVs recognizes that those businesses require "different approaches, talents and, ultimately, organizations," the release said.
Model e gives Ford start-up speed, Farley said. With Blue, Ford has iconic brands and expertise in mass production "that start-ups can only dream about," he added.
Just a week ago, Farley dismissed a Bloomberg report that Ford plans to spin off its EV or ICE businesses. The rise of Tesla stock to create the largest automaker by market capitalization led to a push for Ford and GM to separate their emerging EV businesses, in order to unlock pure-play value.
Last year, EV-only startups Lucid and Rivian briefly overtook Ford in market value.
Ford Stock Rises On EV Moves, Earnings Guidance
The news sent shares of Ford more than 8% higher, to 18.10, on the stock market today. Ford stock rebounded above the 200-day moving average Tuesday but remains well below the 50-day line. Nio lost 0.4%. Tesla rose 1.8%. GM and Stellantis advanced more than 4% and 2%, respectively.
Also on Wednesday, Ford backed 2022 adjusted EBIT guidance of $11.5 billion-$12.5 billion, up 15%-25% from 2021.
This year, the Dearborn, Mich.-based company plans to double EV spending to $5 billion, it said. By 2026, Ford expects EVs to make up a third of Ford's global volumes, rising to half by 2030.
That's a step up from Ford's earlier goal of 40% of its global sales to be electric by 2030, given last May. At that time, the auto giant pledged to spend more than $30 billion on electrification by 2025, up from an earlier, upgraded target of $22 billion.
Ford stock had soared on the EV acceleration, hitting a record high in January this year. It has since retreated amid broad market volatility and as the auto chip shortage drags on.
Detroit rivals General Motors and Stellantis are also spending billions to develop and deliver electric vehicles, shifting away from gas and diesel vehicles.
On Tuesday, Stellantis revealed plans for all-electric Jeep and Ram vehicles.
Separately on Wednesday, Ford reported that its U.S. sales fell 21% in February vs. a year ago, with broad declines across trucks, SUVs and EVs. Sales of the new electric Mustang Mach-E, a Tesla Model 3 or Y rival, almost halved to just over 2,000 units, amid a production halt due to the chip crisis.
