Ford Announces Separate "Model e" EV Division and "Ford Blue" Internal Combustion Division

FORD ACCELERATING TRANSFORMATION: FORMING DISTINCT AUTO UNITS TO SCALE EVS, STRENGTHEN OPERATIONS, UNLOCK VALUE

• Creates distinct electric vehicle and internal combustion businesses poised to compete and win against both new EV competitors and established automakers
• Organizes Ford to deliver for customers with the focus and speed of a startup at the leading edge of technology, supported by deep expertise in engineering and high-volume production
• ·Ford Blue will build out company’s iconic portfolio of ICE vehicles to drive growth and profitability – relentlessly attacking costs, simplifying operations and improving quality; will provide world-class hardware engineering and manufacturing capabilities for all of Ford
• Ford Model e will accelerate innovation and delivery of breakthrough electric vehicles at scale, and develop software and connected vehicle technologies and services for all of Ford
• Ford Blue and Ford Model e will operate as distinct businesses, but share relevant technology and best practices to leverage scale and drive operating improvements; along with Ford Pro, all three businesses are expected to have discrete P&Ls by 2023
• Accelerates Ford+ plan to unlock growth and create value for Ford’s shareholders: total company adjusted EBIT margin of 10% and annual production of more than 2 million EVs by 2026; expect EVs to represent half of global volume by 2030

DEARBORN, Mich., March 2, 2022 – Ford is continuing to transform its global automotive business, accelerating the development and scaling of breakthrough electric, connected vehicles, while leveraging its iconic nameplates to strengthen operating performance and take full advantage of engineering and industrial capabilities.

“This isn’t the first time Ford has reimagined the future and taken our own path,” said Ford Executive Chair Bill Ford. “We have an extraordinary opportunity to lead this thrilling new era of connected and electric vehicles, give our customers the very best of Ford, and help make a real difference for the health of the planet.”

Last May, Ford President and CEO Jim Farley introduced the Ford+ plan, calling it the company’s biggest opportunity for growth and value creation since Henry Ford scaled production of the Model T. The formation of two distinct, but strategically interdependent, auto businesses – Ford Blue and Ford Model e – together with the new Ford Pro business, will help unleash the full potential of the Ford+ plan, driving growth and value creation and positioning Ford to outperform both legacy automakers and new EV competitors.

“We have made tremendous progress in a short period of time. We have launched a series of hit products globally and demand for our new EVs like F-150 Lightning and Mustang Mach-E is off the charts,” Farley said. “But our ambition with Ford+ is to become a truly great, world-changing company again, and that requires focus. We are going all in, creating separate but complementary businesses that give us start-up speed and unbridled innovation in Ford Model e together with Ford Blue’s industrial know-how, volume and iconic brands like Bronco, that start-ups can only dream about.”

Driving the change was recognition that different approaches, talents and, ultimately, organizations are required to unleash Ford’s development and delivery of electric and digitally connected vehicles and services and fully capitalize on the company’s iconic family of internal combustion vehicles.

The creation of Ford Model e was informed by the success of small, mission-driven Ford teams that developed the Ford GT, Mustang Mach-E SUV and F-150 Lightning pickup as well as Ford’s dedicated EV division in China.

“Ford Model e will be Ford’s center of innovation and growth, a team of the world’s best software, electrical and automotive talent turned loose to create truly incredible electric vehicles and digital experiences for new generations of Ford customers,” Farley said.

“Ford Blue’s mission is to deliver a more profitable and vibrant ICE business, strengthen our successful and iconic vehicle families and earn greater loyalty by delivering incredible service and experiences. It’s about harnessing a century of hardware mastery to help build the future. This team will be hellbent on delivering leading quality, attacking waste in every corner of the business, maximizing cash flow and optimizing our industrial footprint.”

Ford Model e and Ford Blue will be run as distinct businesses, but also support each other – as well as Ford Pro, which is dedicated to delivering a one-stop shop for commercial and government customers with a range of conventional and electric vehicles and a full suite of software, charging, financing, services and support on Ford and non-Ford products. Ford Model e and Ford Blue will also support Ford Drive mobility.


Ford Model e will:

• Attract and retain the best software, engineering, design and UX talent and perfect new technologies and concepts that can be applied across the Ford enterprise;
• Embrace a clean-sheet approach to designing, launching and scaling breakthrough, high-volume electric and connected products and services for retail, commercial and shared mobility;
• Develop the key technologies and capabilities – such as EV platforms, batteries, e-motors, inverters, charging and recycling – to create ground-up, breakthrough electric vehicles; and
• Create the software platforms and fully networked vehicle architectures to support delightful, always-on and ever-improving vehicles and experiences.

Ford Model e also will lead on creating an exciting new shopping, buying and ownership experience for its future electric vehicle customers that includes simple, intuitive e-commerce platforms, transparent pricing and personalized customer support from Ford ambassadors. Ford Blue will adapt these best practices to enhance the experience of its ICE customers and deliver new levels of customer connectivity and satisfaction.


Ford Blue will exercise Ford’s deep automotive expertise to:

• Strengthen the iconic Ford vehicles customers love, such as F-Series, Ranger and Maverick trucks, Bronco and Explorer SUVs, and Mustang, with investments in new models, derivatives, experiences and services;
• Help customers fulfill their passions and daily lives with tailored brand and vehicle experiences, from off-roading to performance to family activities, especially for those situations when ICE capabilities are required;
• Deliver new, connected, personalized and always-on experiences for customers powered by Ford Model e’s software and embedded systems;
• Make industry-leading quality and exceptional service a reason to choose and stay with Ford;
• Root out waste and dramatically reduce product, manufacturing and quality costs; and
• Support Ford Model e and Ford Pro through proven, global-scale engineering, purchasing, manufacturing, and vehicle test and development capabilities for world-class safety, ride and handling, quiet and comfort, and durability.

Ford reaffirms guidance for 2022 of $11.5 billion to $12.5 billion in company adjusted EBIT. The high end of the range equates to a margin of 8% which, if achieved, would be one year earlier than the company’s previous target. With these changes announced today, Ford is raising its longer-term operating and financial targets, including:

• Company adjusted EBIT margin of 10% by 2026, a 270-basis-point increase over 2021– driven by higher volumes, improvement in the cost of EVs, and a significant decline in ICE structural costs of up to $3 billion
• More than 2 million electric vehicles produced annually by 2026, representing about one-third of Ford’s global volume, rising to half by 2030, capturing with EVs the same, or even greater, market shares in vehicle segments where Ford already leads
• In addition, Ford expects to spend $5 billion on EVs in 2022, including capital expenditures, expense and direct investments, a two-fold increase over 2021

Ford reiterated its commitment to achieve carbon neutrality by 2050, and to use 100% local, renewable electricity in all of its manufacturing operations by 2035.

“This new structure will enhance our capacity to generate industry-leading growth, profitability and liquidity in this new era of transportation,” said John Lawler, Ford’s chief financial officer. “It will sharpen our effectiveness in allocating capital to both the ICE and EV businesses and the returns we expect from them – by making the most of existing capabilities, adding new skills wherever they’re needed, simplifying processes and lowering costs. Most importantly, we believe it will deliver growth and significant value for our stakeholders.”

Ford Model e and Ford Blue will work hand-in-glove with other parts of the Ford enterprise. Ford Pro will continue to deliver industry-leading products, services and support that commercial customers depend on. Served by Ford Model e and Ford Blue, Lincoln will continue to create compelling vehicles with an exceptional ownership experience to match. Ford Drive will continue to develop new digitally connected mobility businesses. And Ford Credit will continue to support the customer experience and drive loyalty with a full suite of financial products and services.


Leadership

With the creation of Ford Blue and Ford Model e, Ford is announcing several leadership appointments. Farley will serve as president of Ford Model e, in addition to his role as president and CEO of Ford Motor Company.

Doug Field will lead Ford Model e’s product creation as chief EV and digital systems officer. He will also lead the development of software and embedded systems for all of Ford. Marin Gjaja will be Model e’s chief customer officer, heading the division’s go-to-market, customer experience and new business initiatives.

“Designing truly incredible electric and software-driven vehicles – with experiences customers can’t even imagine yet – requires a clean-sheet approach,” Field said. “We are creating an organization that benefits from all of Ford’s know-how and capabilities, but that can move with speed and unconstrained ambition to create revolutionary new products.”

Kumar Galhotra will serve as president of Ford Blue.

“Ford Blue’s mission is extremely ambitious,” Galhotra said. “We are going to invest in our incredible F-Series franchise, unleash the full potential of hits like Bronco and Maverick, and launch new vehicles like global Ranger pickup, Ranger Raptor and Raptor R. We’ll pair these great products with a simple, connected and convenient customer experience that earns higher loyalty. We are going to be hyper-competitive on costs and make quality a reason to choose Ford. And by doing all that, Ford Blue will be an engine of cash and profitability for the whole company.”

Stuart Rowley and Hau Thai-Tang will take on new global roles to support Ford’s transformation.

Rowley will be chief transformation and quality officer. He will establish quality as a reason to choose a Ford and lead Ford’s drive to improved efficiency, reduced complexity and a lean, fully competitive cost structure across the enterprise.

Thai-Tang will lead Ford’s industrial platform as chief industrial platform officer. He will lead product development, supply chain and manufacturing engineering for ICE products and common systems across Ford Blue, Ford Model e, Ford Pro and Ford Drive.

Biographies:

• Ted Cannis, CEO, Ford Pro
• Anning Chen, President and CEO, Ford China
• Lisa Drake, Vice President, EV Industrialization, Ford Model e
• Joy Falotico, President, Lincoln
• Jim Farley, President and CEO, Ford
• Doug Field, Chief EV and Digital Systems Officer, Ford Model e
• Kumar Galhotra, President, Ford Blue
• Marin Gjaja, Chief Customer Officer, Ford Model e
• Marion Harris, President and CEO, Ford Motor Credit Company
• John Lawler, Chief Financial Officer
• Darren Palmer, Vice President, Electric Vehicle Programs, Ford Model e
• Stuart Rowley, Chief Transformation & Quality Officer
• Hau Thai-Tang, Chief Industrial Platform Officer

Ford News Conference – Wednesday, March 2, at 8 a.m. EST

Journalists and members of the investment community interested in asking questions should additionally dial in by phone.

Toll-Free: +1.877.930.5753

International: +1.409.983.9656

Pre-registration (not required, but will expedite login)

Conference ID: 9288331

Listen-only livestream and replay

The presentation and supporting material will be available at shareholder.ford.com.



Ford Capital Markets Call – Wednesday, March 2, at 9:15 a.m. EST

Journalists and members of the investment community interested in asking questions should additionally dial in by phone.

Toll-Free: +1.888.558.1223

International: +1.845.403.8280

Pre-registration (not required, but will expedite login)

Conference ID: 8872114

Listen-only webcast and replay

The presentation and supporting material will be available at shareholder.ford.com.

Why Ford will be here long term and GM won't. GM is talking the talk but not walking the walk. Glad we will have at least 1 US manufacturer survive this transition from ICE to EV and more importantly break from traditional dealer base sales. I would think they will follow Tesla and the e division will transition to direct sales. Also focus on software and services with high margin.

Great move Ford!

I was wondering when Ford would use that "Model e" copyright that it denied Elon from using...

I wonder which side of company will build the hybrid vehicles. For example, it would be easy to say that ford Blue should continue to build the Powerboost, since it will be a while before most F150's with internal combustion engines are hybrids. But as the same time, wouldn't the hybrid technology likely be equally integrated into the Lightning side of the house?

MJ Heat said:

I wonder which side of company will build the hybrid vehicles. For example, it would be easy to say that ford Blue should continue to build the Powerboost, since it will be a while before most F150's with internal combustion engines are hybrids. But as the same time, wouldn't the hybrid technology likely be equally integrated into the Lightning side of the house?

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At a guess, regular hybrids (like the F150 powerboost) will stay with Blue while plug in hybrids will go to Model e since they have more in common with EVs

Made me happy since it caused a nice spike in share price

I’m not sure if it mentions it in that article, but one would hope that the “Model E” side of the Ford house does away with the dealership model and goes direct sales to the customer, ala Tesla, Rivian and Lucid. I believe this would bring in even more buyers. A lot of the current dealers have no idea what they’re doing with the Lightning and Mach E…

Slick68 said:

I’m not sure if it mentions it in that article, but one would hope that the “Model E” side of the Ford house does away with the dealership model and goes direct sales to the customer, ala Tesla, Rivian and Lucid. I believe this would bring in even more buyers. A lot of the current dealers have no idea what they’re doing with the Lightning and Mach E…

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That is 1 of the many reasons they will do this. It is like GM adding Pontiac, Buick Chevy etc back in the day. It gets them around dealer agreements. Allowed them to sell the same product down the road to a different dealer without breaking franchise agreements.

One of the many reasons manufacturers can't be profitable is not being vertically integrated and their dealer networks. I will bet my paycheck that the Model e factories will vertically integrate and sell direct.

Slick68 said:

I’m not sure if it mentions it in that article, but one would hope that the “Model E” side of the Ford house does away with the dealership model and goes direct sales to the customer, ala Tesla, Rivian and Lucid. I believe this would bring in even more buyers. A lot of the current dealers have no idea what they’re doing with the Lightning and Mach E…

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If you've ever reached out to Ford's corporate phone number with an EV question, you'd see they have no idea as well. I think a general education related to the new models needs to happen across the organization. Moving away from dealers won't solve this problem.

When I bought my Tesla, there were issues with the insurance company providing Tesla exactly what they needed. It was nearly impossible to get anyone on the phone at Tesla, the delivery of my car turned into an all day event and much worse than any time I've picked up a car at a dealer. Just removing the dealer doesn't result in some car experience utopia.

FordLightningMan said:

If you've ever reached out to Ford's corporate phone number with an EV question, you'd see they have no idea as well. I think a general education related to the new models needs to happen across the organization. Moving away from dealers won't solve this problem.

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This is undoubtedly one of the reasons for separating out the "Model e" division. When you call "Model e" with an EV question, they'll have a much better idea what they're talking about because they specialize in it.

As much as I'd love to see this happen, I seriously doubt this is going to be "Ford's one neat trick that dealerships hate" clickbait. The dealerships have too much lobbying power, and Ford has to win in each of the states one at a time.

CoyoteJim said:

I was wondering when Ford would use that "Model e" copyright that it denied Elon from using...

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Yes! Forgot about that:

“To prevent Tesla from using the letter E, Jim Farley's company mentioned a 2010 agreement between the two companies according to which Tesla could not use the letter E as the name of vehicles, reported Automotive News.
Ford then explained that there was a risk of confusion between Model E and its iconic Model T vehicle, a mass marketed car introduced in 1908” https://stocks.apple.com/ALMZT87qzQDu7AgvNOJIwyQ

Now the dream is a Model e Bronco

Coolbreeze704 said:

Now the dream is a Model e Bronco

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I wonder how much additional market adjustment that will have. Bronco 5k EV 10k....bronco X EV =50k, but we will give the customers some charity and mark down our markup by half, so only 25k.

Sklith said:

As much as I'd love to see this happen, I seriously doubt this is going to be "Ford's one neat trick that dealerships hate" clickbait. The dealerships have too much lobbying power, and Ford has to win in each of the states one at a time.

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Was thinking this as well... even if it is a "separate business unit", it's still Ford, and they are still required to sell through dealers.

What this is about; is twofold.

1. Tesla's market cap (company worth) is about $900B today. They sell approx 500k cars a year, and made approx $6b last year. Ford's market cap is about $72b today, they made about $18b last year. The fact that Tesla is "worth" 10 times what Ford is, despite making 1/3 the amount of money, is obviously disconnected.

Ford wants to convince investors that "they're an EV/technology company first, with a cash-cow car business 2nd". I don't think they're expecting to be worth $2.7 trillion, but they want / need to get wall street to look at them in that fashion.

2. Ford is an OLD company. They're filled with "car people" who have grown up in the "car industry", doing things the "car way". Rather than try to change the entire way the company does business, designs its products, etc, they want an own internal-company, built around tech people, to do things technology-first, and "the technology way".

Ultimately, while I believe this approach will be neccessary to accomplish point 1, and maybe necessary to accomplish point 2; it's not without its flaws.

The MME was its "own" electric vehicle; the Lightning, eTransit, are not. There will be others to come that are likely not either. Having separate business units runs the risk that innovations one department makes are not shared with the other, or more importantly, that innovations are not designed with both vehicles in mind. They run the risk of losing focus on innovation with their ICE vehicles, and potentially, prematurely killing that market.