Ford announced a major restructuring to better focus on the different challenges and opportunities with electric vehicles (EVs) and internal combustion engine vehicles (ICEs). The two units will operate under Ford's existing corporate umbrella, and at this time the company is not producing either unit as rumors previously suggested. The two units are called Ford Blue and Ford Model E. Ford Blue will oversee existing and future ICE vehicles such as the Mustang, F-150 and Bronco. The Ford Model E will focus on connectivity and electric vehicles.
Head of Electric Vehicles and Digital Systems Officer, Ford Model E Doug Field said: "This is going to be a really big change in modernizing the way we're going to do business."
Under this change, the company raised its projections for profitability and operating profit margins. Ford expects, thanks in part to this restructuring, that electric vehicles will account for 50% of its global sales by 2030, up from 40% under the previous performance model. Operating profit margin is expected to increase to 10% by 2026, up from 8%.
Ford says this new structure is designed to give the 118-year-old Michigan automaker the speed of a startup, with the depth of experience of a high-volume production company.
The Model E business unit is designed to develop and produce electric vehicles faster while having access to Ford's vast engineering and manufacturing resources. The unit is also tasked with developing connected services for all parts of the Ford family, including Ford Pro, Ford Blue and Lincoln.
Ford sees Ford Blue leading the company as Ford Model E develops.
"Ford Blue will be Ford's profit engine," said Stuart Rowley, Director of Transformation and Quality. "Delivering the lifeblood to finance that future."
Ford Blue is perhaps the more interesting of the two new units. Its existence shows that Ford is trying to squeeze the most profitability out of its fossil fuel unit. And for good reason. Currently, the automaker has one of the most dynamic and representative offerings of any automaker.
The Ford Bronco is a blockbuster, and the low-cost Ford Maverick pickup is a surprise hit with production in line with the high volume of orders. Similarly, two of America's oldest nameplates, Mustang and F-150, are market segment leaders and have shown no signs of giving way to competitors.
Ford CEO Jim Farley made it clear that Ford is not giving up on internal combustion engines. "I want to emphasize that," Farley said. “We are going to invest in internal combustion engines.”
This news sent Ford shares moving lower, trading down nearly 5% in premarket stock. Shares of the company had been falling from record levels in January, but were still up 33% in aggregate over the past 52 weeks.
