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Ford Spins Off Electric Vehicle Business
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Ford Spins Off Electric Vehicle Business

By Boris Kamchev - Mar 11, 2022

U.S. flagship carmaker Ford will separate development and production of electric vehicles from its legacy business in a move that CEO Jim Farley says will make the 118-year-old Detroit carmaker more competitive with Tesla and other rival EV companies. 

Ford sold nearly 2 million vehicles in 2021, many of them the ever popular F-150, which the Dearborn-based company is also offering as an EV variant and has plans to product 150,000 units per year. The company is now aiming for 2 million EV sales per year and is investing $50 billion between now and 2026 to make that a reality.

The new electric division will be called Ford Model e, a nod to the company’s founder Henry Ford, whose success is thanks to the Model T, which during its production lifespan sold 15 million units. This week, the company announced it will launch seven BEVs in Europe, including a battery-electric version of the Puma small crossover, Ford’s best-selling passenger car in the region.

The three new full-electric passenger cars and four new electric vans will be launched by 2024 and will all be built in Europe, Ford said in a statement on Monday.

The internal combustion engine vehicle division will be dubbed Ford Blue. Commercial vehicle sales will be handled by Ford Pro, another new unit that will act as a distributor and service company of vehicles made by Ford Blue. 

”Model e will nurture the talent and the culture and the intensity of a high-tech start up. Blue will be a profit and cash engine for the entire enterprise,” said Ford CEO Jim Farley.

At the COP26 climate convention in Glasgow last year, Ford signed a pledge to shift to exclusively zero-emission vehicles by 2040, as did many other U.S. and European carmakers. However, it is not fully committing to entirely phasing out ICE vehicles, like some of its peers. Although it has seen strong demand for its electric offerings, like the F-150 Lightning and Mustang Mach E, it still makes substantial profits from traditional ICE vehicles, particularly large trucks. From making a loss in 2020, the company earned $17.9 billion in 2021, partly thanks to a $9.1 billion bump in the value of its stake in electric truck company Rivian.

Farley told investors there are some trucks and SUVs where he doesn’t think electric vehicles are a good fit.

“Although maybe the volumes go down … I think we’ll see a really revitalized [ICE] business,” he said.

The entire auto industry is pivoting toward EVs, but companies have wildly varying timelines for transitioning away from traditional vehicles. This bodes well for the lubricant industry, that is also facing up to a near-term future where about half of road vehicles are expected to be hybrid or fully electric.