Ford to run EV unit separately as competition heats up

By Aishwarya Nair

(Reuters) -Ford Motor Co on Wednesday outlined plans to run its electric vehicle (EV) unit separately, in a move aimed at supercharging the business as it plays catch up with industry leader Tesla Inc.

The reorganization comes as Chief Executive Jim Farley bets aggressively on the company's electrification strategy, which helped Ford shares outperform those of rivals General Motors and Tesla in 2021.

Although the EV business, named Ford Model e, will be separated from the company's internal-combustion engine (ICE) unit, Ford Blue, the two divisions will share technology and "best practices", the automaker said.

The two businesses, along with commercial-vehicle unit Ford Pro, are expected to have separate financial results by 2023, it added.

Farley will serve as president of the EV unit, in addition to his role as president and chief executive of Ford. Doug Field will lead Ford Model e's product development as chief EV and digital systems officer.

Farley's move stops short of addressing calls from some investors, who have pushed Ford and General Motors to spin off their EV operations as a way to better tap into the full value of those businesses.

Industry analysts, however, said that with Wednesday's announcement, Ford would be setting the table for a possible spinoff of its EV unit down the road.

Reuters reported on Tuesday that although Ford was planning to run the two businesses separately, it would keep them under its corporate umbrella.

Shares of Ford, which is targeting an annual production of over 2 million EVs by 2026, were up 3.7% before the bell.

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Ford said it expects to spend $5 billion on EVs this year, a two-fold rise over 2021. It is also targeting an adjusted earnings before interest and taxes (EBIT) margin of 10% by 2026 versus 8% it hopes to achieve this year.

As part of the EBIT target, Ford said it hoped to cut structural costs of up to $3 billion in its ICE business.

Farley had previously said that his management team believed the automaker's EV and ICE businesses are underperforming on an earnings basis.

The company, which is planning to invest more than $30 billion in EVs by 2030, said it expects the business to represent half of its global production by 2030.

Brokerage Wedbush estimates the EV market to be worth $5 trillion over the next decade, as the industry goes on an overdrive with global automakers such as GM and Volkswagen Group spending billions of dollars to fight for market share with Tesla.

(Reporting by Aishwarya Nair and Abhijith Ganapavaram in Bengaluru; Editing by Anil D'Silva)