The business will bring with its some new-age innovations enhancing both product and customer experience.
Ford has shown a strong dedication to electrification over the last few years with products such as the Mustang Mach-E and F-150 Lightning. These have been in high demand, which is a good sign considering how much it has been investing into the development and marketing of the technology.
Ford Motor Company CEO Jim Farley previously hinted that the company should officiate a designation between the two product lines. And the company has now officially announced that it has made this desire a reality with its new Ford Model e and Ford Blue divisions.
Model e will be focused on the future growth and innovation of EVs while Ford Blue will retain its dedication to fossil fuel power. This strategy forms a major part of its Ford+ plan that will ensure the company's growth in the ever-competitive global market.
Speaking on the rollout of this strategy, Ford Executive Chair Bill Ford said: "We have made tremendous progress in a short period. 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.
"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," he says.
Ford acknowledges that it decided to split these model lines into two separate businesses because EVs and ICEs require different leadership and direction. Motivating the creation of Model e was the success of niche products such as the Ford GT, Mustang Mach-E SUV and F-150 Lightning. The brand's EV division in China was also instrumental in its development.
Company CEO Jim Farley explains, "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."
He adds, "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."
Together with Ford Pro commercial, Model e and Blue will operate parallel to one another. Model e will focus on uplifting the quality of software, engineering, design and UX, push high-volume electric production, advance the development of EV platforms, batteries, e-motors, and other crucial components, and embrace connectivity through architectures that support full network software.
Speaking of connectivity, we can also expect an all-new online shopping experience with the arrival of the Model e business. This will benefit the consumer because pricing will be more transparent and the digital dealer experience more intimate. A sample of this will be issued to the Ford Blue structure sometime after.
Ford Blue will retain a lot of the current Ford values with the Bronco and Explorer SUVs, Mustang, and F-Series, Ranger and Maverick trucks set to be the front-runners of the division. To keep things clean, Ford promises that it will continue to innovate its production lines, costs, and production components so that the carbon footprint of these cars can be brought to a minimum.
What does this mean in terms of the financials? Ford states that with this decision, it expects to increase profits from its initial claim of $11.5 billion to $12.5 billion in company adjusted earnings before interest and taxes (EBIT) for 2022. By 2026, it expects to increase this margin by 10%. This is motivated by proposed higher production volumes and low development costs. It also anticipates that its ICE structural costs will decrease by up to $3 billion.
At this same time, it hopes to have built more than two million EVs which consist of a third of the company's global volume. By 2030, EVs are expected to take up half of its volume. This year alone, Ford will be spending $5 billion on EV developments which is twice as much as what it dedicated last year.
With this being an all-new business model, Ford has appointed key members to take on leadership positions in the two business lines. Farley will now act as the president of Ford Model e while maintaining his position of CEO for the entire company. Doug Field will step on as chief EV and digital systems officer and will cover the software development sector. Marin Gjaja has been selected to act as Model e's chief customer officer and will oversee customer experience and new business initiatives.
Kumar Galhotra, the current head of Lincoln, will take up the position of Ford Blue's president. He will be joined by Stuart Rowley and Hau Thai-Tang who will cover the newly created global roles of chief transformation and quality officer and chief industrial platform officer, respectively.