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Ford to Boost its Electric Vehicle Investments to $50 Billion, Sets Up a New ‘Model e' Division for its EV Business

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【Summary】​Ford Motor Co is setting up a new division that focuses solely on electric vehicles called "Model e". The dedicated EV unit of Ford will not be a spinoff, dispelling rumors that the automaker would be spinning off its electric vehicle business entirely to better compete with Tesla. Ford's plans include running its Model e EV business separate from its legacy combustion engine business and commercial business.

Eric Walz    Mar 02, 2022 10:00 AM PT
Ford to Boost its Electric Vehicle Investments to $50 Billion, Sets Up a New ‘Model e' Division for its EV Business

Ford Motor Co is setting up a new division that focuses solely on electric vehicles called' Model e". The dedicated EV unit of Ford will not be a spinoff, dispelling rumors that the automaker would be spinning off its electric vehicle business entirely to better compete with Tesla, which is now the world's most valuable car company.

Ford said it will boost spending on electric vehicles to $50 billion through 2026 which is up from the previous $30 billion. The plans include running Ford's EV business separate from its legacy combustion engine business and commercial business.

Ford's plans for its new unit Model e include accelerating the development of electric and connected vehicles, while leveraging its iconic nameplates to strengthen operating performance and take full advantage of the company's well established engineering and industrial capabilities, the company wrote in a press release.

The move is part of the automaker's "Ford+'' initiative announced in May 2021. Ford President and CEO Jim Farley called the plan the biggest opportunity for growth and value creation since Henry Ford scaled production of the Model T over 100 years ago. 

Ford is forming two new distinct, but strategically interdependent, auto businesses, Ford Blue for its combustion engine business and Model e for its electric vehicle business. The two units will join Ford's newly established commercial business "Ford Pro". 

The three separate units will help Ford maximize the full potential of its Ford+ plan, driving growth and positioning the company to outperform both legacy automakers and new EV competitors like Hyundai, along with its Kia and IONIQ brands.

"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."

Ford said the creation of its new Model e unit was informed by the success of mission-driven 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.

Model e will operate more as a technology company, which is what segment leader Tesla describes itself as. In addition to EVs, the unit will develop Ford's digitally connected vehicles and services.

Model e will help Ford attract and and retain the best software, engineering, design and UX talent. The teams will develop new technologies and concepts that can be applied across the entire company in the future. It will also design and scale high-volume electric and connected products and services for retail, commercial and shared mobility.

With a sole focus on EVs, Model e will be tasked with developing Ford's EV platforms, batteries, e-motors, inverters, charging and recycling in order to create new breakthrough electric vehicles from the ground up. And. This work includes developing new software platforms and fully networked vehicle architectures that support over-the-air software updates so Ford's vehicle will always offer the latest vehicle features and digital services as they are developed.

"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.

Following Tesla's business model and that of other electric vehicle brands including Polestar, Rivian and Ford will revamp shopping, buying and ownership experience for its future electric vehicle customers to make purchasing a Ford EV a more seamless and stress-free experience. This includes simple, transparent pricing and personalized customer support from a dedicated team of "Ford ambassadors" that will assist customers in configuring their new Ford EVs. 

Ford Blue will adapt these same best practices to enhance the experience of its combustion engine vehicle customers.

Jim Farley will serve as president of Ford Model e, in addition to his role as president and CEO of Ford, while Doug Field will lead Ford Model e's product creation as chief EV and digital systems officer and lead the development of software and embedded systems for all of Ford models. 

Field joined Ford in Sept 2021 from computer giant Apple Inc., where he served as VP, Special Projects. Before joining Apple, Field was Senior Vice President of Engineering at Tesla. 

Ford also announced that Marin Gjaja will be Model e's chief customer officer effective March 2, 2022. He will report directly to Jim Farley.

Gjaja roles will include marketing, sales, distribution, service and charging. As part of the founding tesaam at Model e, Gjaja and his team will work with Ford's dealers globally to develop and deploy all aspects of the new customer experience for Ford's electric vehicle portfolio. 

Much of Gjaja's focus will be on eCommerce to make Ford EVs easier to purchase and maintain. This includes remote test drives, paperwork simplification, and personalized delivery and service. These consumer-focused initiatives will eventually be applied across the entire Ford business.

The auto industry's rapid switch to EVs is putting legacy automakers like Ford and General Motors  in a position where they are scrambling to catch up to Tesla, which sold 936,000 vehicles in 2021, or risk losing sales over the next decade as the rest of the world's automakers electrify their model lineups.

Ford's rival General Motors is also investing billions to develop new EVs. In June 2021, The automaker announced that its increasing its investments in electrification and autonomous driving technologies to $35 billion through 2025 as it plans for an all-electric future with dozens of new battery-powered models in the works 

In January, GM announced its investing more than $7 billion in four Michigan manufacturing sites to build electric vehicles and batteries, which will create 4,000 new jobs as the company begins its transition to becoming an electric automaker. 

The massive $7 billion investment will significantly increase GM's production capacity for electric vehicles and is the single largest investment announcement in GM's 100+ year history. 

Not to be outdone, In November, Farley said Ford plans to increase the production capacity of its EVs to 600,000 units globally by 2023, which would make the company the second-largest U.S.-based producer of electric cars behind Tesla.

Now with its dedicated EV unit Model e, Ford has the pieces in place to lead what could be the biggest transition in the company's history.

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