• News
  • Guides
  • Reviews
  • Media
  • About
  • News
  • Guides
  • Reviews
  • Media
  • About
Sign up Now (For Free)

Sign up for our newsletter and receive the latest automotive news in your inbox!

Invalid email address
We promise not to spam you. You can unsubscribe at any time.
Thanks for subscribing!
News
Read Now
  • All News
  • Automakers
  • Automobiles
  • Auto Shows
  • Business
  • EVs & Environment
  • Guides
  • Lawsuits/Legal
  • Regulatory
  • Ride-Sharing
  • Safety & Recalls
  • Technology
Recent
  • GMC Launches Production of Hummer SUV; Needs Until 2024 to Fill Outstanding Orders
  • Vehicle Sales Up for January Despite Ongoing Challenges
  • Bidding Adieu to Bugatti’s W16 Engine
  • Ford “Significantly” Raising Production of Mustang Mach-E While Reducing Prices “Across the Board”
  • Week Ahead: Numbers, Numbers and More Numbers
  • The Rearview Mirror: All That the Name Implies
  • Top Tips for Improving EV Range in Cold Weather
  • Mercedes is First Automaker to Offer True Level 3 Hands-Free Driving System in the U.S.
  • Audi Introduces Fourth “Sphere” Concept: Activesphere
  • Jaguar Land Rover Posts First Profitable Quarter in Two Years
Editor’s Choice
    Reviews
    Read Now
    • All Reviews
      • Feeder
    • Classic Cars
    • Concept Cars
    • Convertibles
    • Coupes
    • Crossovers/CUVs
    • Diesel
    • Hot hatches
    • Hybrids
    • Luxury Vehicles
    • Minivans
    • Muscle Cars
    • Pickups
    • Sedans
    • Sports Cars
    • Super Cars
    • SUVs
    Recent Reviews
    • A Week With: 2023 Ford F-150 Raptor R 4x4 Super Crew
    • A Week With: 2023 Genesis Electrified G80 AWD
    • A Week With: 2023 Land Rover Defender 110 V-8
    • First Drive: 2023 Honda Pilot TrailSport
    • A Week With: 2023 Jaguar F-Type R Coupe
    • A Week With: 2023 GMC Yukon Denali Ultimate
    • A Week With: 2023 Genesis GV60 Performance
    • A Week With: 2023 Chevrolet Suburban Z71
    • A Week With: 2023 Lexus UX 250h F Sport
    • A Week With: 2023 Mercedes-Benz EQB 300 4Matic
    Editor’s Choice
      Guides
      Car Warranty
      • Endurance Warranty Reviews
      • BMW Extended Warranty
      • Extended Warranty For Cars Over 100k Miles
      • Extended Car Warranty Cost
      • Subaru Extended Warranty
      • CarShield Reviews
      • CarShield Cost
      • Aftermarket Car Warranty
      • CARCHEX Warranty Reviews
      • Reputable Extended Car Warranty Companies
      • Used Car Warranty Companies
      • Best Car Warranty
      • Is CarShield A Scam?
      • Mercedes Extended Warranty
      • CarShield Plans
      Insurance
      • How To Identify A Car Insurance Company
      • Geico Mechanical Breakdown Insurance
      • How Far Back Does A Car Insurance Company Look
      • Mechanical Breakdown Insurance For Used Cars
      • State Farm Mechanical Breakdown Insurance
      • Mechanical Breakdown Insurance From Progressive
      • Dollar A Day Insurance
      • Auto Insurance For SSI Recipients
      • Car Insurance Rates After A Suspended License
      • Auto Insurance For Salvage Vehicles
      • Average Cost of Dodge Ram 1500 Car Insurance
      • Car Insurance Florida
      • Full Coverage Auto Insurance
      • GrubHub Insurance
      • Amazon Delivery Auto Insurance
      Shipping
      • Car Shipping Companies
      • uShip Reviews
      • Auto Shipping From California To Hawaii
      • Montway Auto Transport Reviews
      • Cheap Car Shipping
      • Easy Auto Ship Reviews
      • Auto Shipping Miami
      • Auto Shipping To Alaska
      • Car Shipping Cost
      • Auto Shipping Hawaii
      • Auto Shipping Puerto Rico
      • Sherpa Auto Transport Reviews
      • Auto Shipping Atlanta
      • Auto Shipping Boston
      • Auto Shipping. Chicago
      About
      • About Us
      • Contact Us
      • Terms of Use
      • Privacy Policy
      • Affiliate Disclosure
      • Sitemap
      TheDetroitBureau.com

      More than just “another” place to find news, reviews, spy shots, commentary, features, and guides about the auto industry. TheDetroitBureau doesn’t stop with the press releases or confuse a few lines of opinion with insightful, in-depth reporting.

      Contact Us

      Like what you see? Have some ideas for making The Detroit Bureau.com even better? Let us know, we’d love to hear your voice.

        Media
        Listen Now
        • Headlight News: All Episodes
        More from TheDetroitBureau
        • Guides
        • Latest News
        • Auto Reviews
        • Podcasts
        Headlight News

        TheDetroitBureau.com’s Headlight News offers a look at the past week’s top automotive news stories, as well as what’s coming up in the week ahead. Check out the week’s top story and our latest review…along with a dive into the past with this week in automotive history.

        home > news > Automakers > Ford Splits Electric, ICE Business in Bid to Boost Sales, Earnings

        Ford Splits Electric, ICE Business in Bid to Boost Sales, Earnings

        New Model e unit will focus on EVs, connected cars and the digital retail revolution.

        Paul A. Eisenstein
        Paul A. Eisenstein , Publisher & Editor-in-Chief
        March 02, 2022

        Ford Motor Co. announced a broad restructuring plan Wednesday that will see it divide its conventional gas and diesel vehicle operations from a new unit focusing on electric vehicles and digital technologies such as connected cars and digital marketing.

        Ford CEO Jim Farley Announces Restructuring
        Ford CEO Jim Farley says splitting the company’s EV and ICE businesses will add to the bottom line.

        But the move announced by CEO Jim Farley falls short of recent reports that the second-largest of the Detroit automakers would completely spin off its EV operations. Farley said the new approach will adapt to changing industry realities but also allow the two operations to leverage each others’ strengths. And in the process, he predicted, Ford will be able to “beat the new players” in the auto industry, such as Tesla.

        “Our legacy organization was holding us back,” Farley said during a meeting webcast from Ford headquarters in Dearborn, Michigan. “We had to change,” he added, calling the move “one of the biggest changes in our history” at Ford.

        The payoff, said Farley, will be significant. He forecast a big increase in sales, especially EVs, while Ford, as a whole, will see its adjusted EBIT margins climb from a strong 7.3% in 2021 to an estimated 10% by 2026.

        Ford Blue meets Ford Model e

        The two organizations will be among five new, semi-independent operating units within the company, a group that includes Ford Finance, the automaker’s captive lending business, tech unit Ford Drive, and recently created Ford Pro which focuses on fleet and commercial products.

        Jim Farley v2 3-2-22
        Farley laid out the company’s new structure, including Ford Blue and Ford Model e.

        Ford Model e will handle EV development while Ford Blue will take over development, production and marketing of conventional models using internal combustion engines, such as the “iconic” F-Series pickup, Ford’s best-selling and most profitable model.

        Even as some competitors — notably including crosstown rival General Motors — move to phase out sales of vehicles using ICE powertrains, Farley said he foresees a long life for the technology.

        “ICE volumes will deteriorate over time,” Farley acknowledged, but he stressed his belief that there will remain “certain segments” where gas and diesel power will continue to find a market, particularly with products like the heavy-duty versions of the F-Series.

        Powering up

        Nonetheless, it was clear from what he and other Ford executives said Wednesday Ford sees the real growth coming from its new Model e division.

        Ford Model e and Ford Blue

        The automaker was an early proponent of electrified vehicles but gained relatively little traction with original, short-range entries such as the Ford Focus EV. More recently, however, it has scored big with its first long-range model, the Mustang Mach-E. And demand for the F-150 Lightning battery-electric pickup has so exceeded initial expectations that Ford will roughly quadruple production capacity at a new EV plant near its headquarters.

        It is setting up a massive new factory complex near Memphis, Tennessee to produce the Lightning and other BEVs. Dubbed Blue Oval City it’s slated to open mid-decade. By then, Ford now expects to be selling 2 million EVs annually, Farley forecast during the Wednesday presentation.

        By splitting up EV and ICE operations, Ford believes it can change internal structures and create new corporate cultures more attuned to the specific sort of vehicles each unit produces.

        Unlocking “amazing efficiencies”

        Ford Restructuring Targets

        In the case of Model e, that will mean a lean enterprise aiming to duplicate the speed and flexibility of a Silicon Valley enterprise, explained Doug Field, the former Tesla exec who recently joined Ford and will serve as Chief EV and Digital Systems Officer for Model e.

        That, Field said, “will unlock amazing efficiencies.”

        Along with electric vehicles, Ford Model e will have oversight of connected car and other digital technologies that will become increasingly important in tomorrow’s auto industry. While Field and Farley declined to offer specific numbers, officials at General Motors and Stellantis have estimated their companies will each generate revenues north of $20 billion in the years ahead through the sale of software and services, on top of vehicle revenues.

        The emphasis on technology, said Field, will help Ford attract a new generation of tech-oriented talent. That hunt will be helped by revised pay and benefit plans, officials noted, as well as a more flexible approach as to where they can live.

        Ford Blue President Galhotra
        Ford Blue President Kumar Galhotra needs to cut $3 billion in unnecessary costs from the unit.

        Bunny slippers

        Field said he wants “to focus on building great talent. I don’t care if they come to work in bunny slippers.”

        While Model e might be positioning itself as the hipper, more nimble operation, it won’t be business-as-usual at Ford Blue, insisted Kumar Golhatra, who will serve as that unit’s president.

        Among his initial challenges will be shaving $3 billion off Blue’s structural costs. It will need to get leaner, more efficient and a lot faster.

        Specific focus

        Each of the two vehicle operations have specific areas to focus on. Model e will emphasize digital technologies and will be responsible for purchasing things like batteries and motors. Blue will handle purchasing of more conventional supplies, such as steel. Obviously, they will then cross-pollinate. And there will be clear synergies.

        2021 Ford F-150 Tremor
        Farley said that sales of these …

        In the near term, battery-electric vehicles are expected to cost an average $4,000 more than comparable gas models, according to research by Argonne National Labs. And setting up a viable EV operation will require “a huge capital commitment,” said Farley, noting Ford will invest $5 billion in EVs and high-tech operations this year alone. Right now, continuing production of ICE vehicles like the F-Series will offset that burden.

        “Ford Blue and Model e will drive the success of each other,” said Farley, adding “This is why we didn’t spin them off.”

        The times they are a changin’

        During the hourlong presentation and Q&A session, Farley echoed comments made by his CEO counterparts at General Motors and Stellantis during the past week.

        While Wall Street might place a high value on nascent companies like Tesla and Rivian, the Ford CEO said those new entries are going to face some serious challenges ramping things up as they go from niche to mainstream players.

        2022 Ford F-150 Lightning Platinum
        … helps with the development and production of these.

        “The new startups would love to have the industrial knowledge of Ford Blue,” said Farley.

        On Tuesday, Stellantis CEO Carlos Tavares pointed to the ongoing quality issues at startups, especially Tesla, an issue analysts believe will be a growing problem as it tries to broaden its appeal.

        Avoiding chaos

        But Ford could face challenges of its own in putting in place the new organizational structure outlined by Farley and his top lieutenants. During the Q&A session, the CEO was reminded of the problems other automotive manufacturers have faced implementing major reorganizations.

        Among the most notable was the disastrous shakeup at General Motors in the mid-1980s which saw it divide auto operations up into mainstream and high-line brands. According to former Wall Street analyst Maryann Keller, GM was virtually paralyzed for two years trying to make the new enterprise work.

        Jim Farley v3 3-2-22
        Farley said he is aware of the difficulties other automakers have experienced with major reorganization efforts.

        Farley said he was well aware of the challenges ahead and promised steps are being put in place to keep things moving forward.

        The CEO made it clear Ford is not just looking to the past, or just studying traditional rival brands like GM. It’s looking closely at new companies like Tesla to understand how to improve its customer experience. Ford also plans to work with dealers to shakeup its century-old retail model. But it does not plan to abandon the franchise dealer system, he emphasized.

        All about winning

        Dealers, he said, “are pumped up” about what’s coming, but he also mentioned, somewhat cryptically, that “they will have to specialize” going forward.

        What’s become increasingly clear in recent weeks as more and more legacy automakers announce new plans, is that there will be no room for business as usual in the auto industry. And that, said Farley, opens up opportunities, as much as it raises risks.

        “Is this about winning?” he said to conclude the Wednesday session. “One hundred percent. We want beat the old players. We now want beat the new players,” too.

        How to Care for Your Car

        Cheap Car Warranty

        Editor's Choice

        Best Extended Car Warranty

        Editor's Choice
        Recently Published
        GMC chief Duncan Aldred 2023

        GMC Launches Production of Hummer SUV; Needs Until 2024 to Fill Outstanding Orders

        Yesterday
        Closeup of front side of red car with other cars parking in parking area.

        Vehicle Sales Up for January Despite Ongoing Challenges

        Yesterday

        Bidding Adieu to Bugatti’s W16 Engine

        Yesterday

        Leave a Reply Cancel reply

        Your email address will not be published. Required fields are marked *

        Share this article:
        © The Detroit Bureau 2023
        • Guides
        • Privacy Policy
        • Terms of Use
        • Affiliate Disclosure
        • Contact Us
        • Sitemap
        Follow Us: