Ford jumps 9% after announcing plans to split electric vehicles and gas-powered cars into separate units
Ford stockjumped as much as 9% on Wednesday after the company unveiled its "Ford+" plan.
- The automaker will separate its
electric vehiclesunit from its gas-powered cars unit to scale EVs. Fordwill retain ownership of both units rather than spinning one off into a separate company.
Ford stock jumped as much as 9% on Wednesday after the company unveiled its "Ford+" plan that will separate its electric vehicles business from its gas-powered cars business in an attempt to scale the production of EVs.
Rather than spinning off one of its units into a separate public company, Ford will retain ownership of both. The Ford Model e division will be focused on building electric vehicles, and the Ford Blue division will be focused on continuing to build gas-powered vehicles.
Ford Blue will include popular new vehicle models like the Bronco and Maverick, and will be focused on growing profits. Meanwhile, Ford Model e will be focused on accelerating innovation and breakthrough technologies in the EV space, with likely less of a focus on profits at the start.
"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," Ford said.
And along with Ford Pro, which is a separate unit focused on building commercial fleet vehicles, all three businesses are expected to have discrete financials by 2023, the company added.
Ford predicted its new plan will enable it to hit a total company adjusted EBIT margin of 10%, along with annual production of more than 2 million electric vehicles by 2026. By 2030, Ford expects EVs to make up half of its global vehicle production volume.
"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," CEO Jim Farley said.
The move by Ford comes as investors afford a higher valuation multiple to electric vehicle companies than legacy automakers. That has led some to root for a spin-off of the EV units within legacy automakers, with the idea that the move would unlock value as investors apply a higher multiple to the EV unit.
Ford's brand reorganization reaffirms its commitment to electric vehicles and the growth that can come with it, as seen by the success of Tesla and other EV startups.
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