With the electric platform progressing quickly, many traditional automakers have also finally decided to make the shift to this segment.
Ford’s Present EV Models
Ford is one such giant who entered the market recently and is presently relying on two electric vehicles:
Heavy Investment Into EV Platform
The company in its recent announcement has declared that it intends to spend around €45.6 billion on its electric vehicle platform. These extra finances will be put in by 2026.
Previously, the company had set aside €27.40 billion for this purpose and that money had to be expended by 2025.
More About The Split
According to reports, the company has decided to split its automotive business into two discrete entities which will be:
- Electric vehicles under the Ford Model e branding;
- Internal Combustion Engine (ICE) Vehicles under the Ford Blue branding.
CEO Jim Farley will be in charge of the Ford Model e division. Meanwhile, Ford’s main bread earner, the Ford Blue, will be run by Kumar Galhorta. Kumar is the current President of Ford’s Americas & international markets.
While Farley aims to augment the EV segment, Kumar will be focused on cutting down the waste and extra expenses from the ICE business.
Purpose Behind The Split
According to the company, there are two major reasons behind the split, which are:
- It will help in making the EV business profitable;
- Will provide transparency of how the two entities are operating, financially;
- It will help in streamlining the business of Ford as a whole.
The company’s CEO recently commented:
“We need the ICE business to generate cash and the EV business to focus on innovation”.
Company’s Expectations From Ford Model e
Here is what the company expects from the Ford Model e division:
– To meet a target of 2 million electric vehicles by 2026;
– 50% of all global sales have to be electric by the year 2030.
At present Ford isn’t doing particularly well in the EV domain. In 2021, the company sold only 27,140 electric vehicles.
It ranked at number three in terms of all EVs sold in the USA last year. The company-wise ranking with the percentage of market share is as follows:
– Tesla: 76.6%;
– VW: 8.8%;
– Ford: 5.9%.
It is worth mentioning that GM is also catching up fast and it currently has a US EV market share of 5.4%.
Ford Blue Is Pivotal For The Success Of Ford Model e
For now Ford Blue will act as the main earner for the company. During last year alone, Ford sold 3.94 million ICE vehicles globally.
The Ford F-150 has been the country’s best selling vehicle for the past four decades and will continue to make money for Ford.
What Is Ford Expecting?
Ford recently announced that for the present year, the company is expecting an Earnings Before Interest & Taxes (EBIT) of €10.5 to 11.4 billion.
Author’s Take
While the main discussion about the split has been to reduce waste and increase profits, investors might indeed take this as a hint that the company may split the Ford Blue and Ford Model e altogether as two companies in the coming years.
Although we can’t comment about this, for now, we certainly can’t rule out the possibility of that.
However, this might not happen any time soon as the EV segment of Ford needs the profits from the ICE division, without which it can’t think of competing against the likes of Tesla & VW.
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