Ford emancipates its electric activities to give them the "start-up culture"

"Our traditional mode of organization nwous slowed down. We had to change", justified Wednesday the CEO of the American manufacturer Jim Farley, during a press conference.

"Model e will cultivate the talent, culture and intensity of a start-up," he said, making no secret of his goal of overtaking 100% electric manufacturers.

The new entity must develop the group's electrical platforms and models, as well as its connected software and services.

It will have to attract talents in the fields of software, engineering and design, by offering them, for example, more flexibility in working remotely.

Internal combustion engine vehicles will be grouped together under the Ford Blue label.

Building on the success of Mustangs, Broncos or the F-150 pickup, "Blue will be a cash machine" for the entire company, Mr. Farley assured.

Shaken by start-ups like Tesla or Nio, traditional car manufacturers have accelerated the electrification of their ranges and are seeking to regain investor confidence.

An assembly line of the American manufacturer Ford in Dearborn, Michigan, January 26, 2022 JEFF KOWALSKY AFP

Mercedes has spun off its heavyweight business.

Volkswagen will launch its Porsche brand on the stock market to finance the electrification of the group.

Renault also announced that it would present a similar separation in the fall, with an electrical organization in France and another abroad devoted to thermals, the volumes of which are likely to drop sharply in the coming years.

"The speed of a start-up"

“We have made tremendous progress in a short time,” Jim Farley said on Wednesday, citing Ford's successful launches of the F-150 electric pickup and SUV and Mustang Mach-E.

"But our ambition is to become a big company that changes the world again, and that takes focus," he said.

“We are going all out, creating separate but complementary businesses, which give us the speed of a start-up and the sense of unbridled innovation with Model e, while Ford Blue will have the industrial know-how, sales volumes and iconic brands like Bronco, which start-ups can only dream of," he said.

At the beginning of February, Jim Farley explained how different the electrical and thermal activities were to manage, and the rumor of a split into two companies listed separately on the stock exchange had been running for weeks.

Ford CEO Jim Farley poses next to the new F-150 electric model on May 19, 2021 in Dearborn, Michigan JEFF KOWALSKY AFP/Archives

This could have helped attract investors who have been racing for electric vehicles in recent years, sometimes giving start-ups producing just a few cars a higher valuation than Ford.

If Tesla remains a star on Wall Street, the initial enthusiasm for several start-ups has however fallen in the face of their difficulties in increasing their production volumes.

And Ford has enough capital, Mr. Farley assured.

"We don't need to appeal to the market."

Ford's decision is both "radical and rational," said Jessica Caldwell of specialist firm Edmunds.

"It's complicated for a company to focus, and dominate, on several products and objectives at the same time," she recalls.

Tesla took a long time to become profitable, but now has the advantage of only having to focus on one product line.

Ford's new strategy will be all the more scrutinized as the group has decided that each entity will report its results separately, said Karl Brauer of the specialized site iseecars.

In the meantime, the announcement was well received on Wall Street where Ford took 7% at mid-session.

The group also raised some targets on Wednesday.

It plans to manufacture two million electric vehicles per year by 2026, i.e. a third of its global production, to reach half in 2030.

The company is targeting an operating margin of 10% by 2026, with better sales, an "improvement" in the cost of electricity, and a drop in expenditure in the thermal sector of up to 3 billion dollars.

Asked about possible job cuts, the head of the new Ford Blue entity, Kumar Galhotra, stressed that "everything was on the table".

Jim Farley remains at the head of the company and will lead Model e, accompanied by Doug Field, formerly of Apple and Tesla.

A third entity, Ford Pro, is to bring together the productivity services offered to businesses.

© 2022 AFP