In a report from Automotive News in the US, Ford CEO Jim Farley is said to look at splitting its century-old, internal-combustion engine centric business from its new-age EV path.

The report said such a spinoff could generate the kind of earnings multiples that have given Tesla a market value approaching $A1.4 trillion. It has since, like other EV players, devalued significantly.

At this stage there has been no discussion whether the Ford EV business would go direct like Tesla, sell through a newly-appointed Ford EV network or co-exist in separate showrooms at existing Ford dealers.

Automotive News said Ford faces pressure from Wall Street to spin off its nascent EV business to boost value by shedding legacy costs and to gain greater access to capital markets.

Jim Farley

While being marked down severely this month, Ford has seen how investors had awarded immense value to pure EV makers, such as Rivian Automotive, whose market value briefly topped Ford’s late 2021 despite producing relatively few vehicles. 

However Ford has tried to hose down the idea. In an email, Ford said: “We are focused on our Ford+ plan to transform the company and thrive in this new era of electric and connected vehicles.

“We have no plans to spin off our battery electric-vehicle business or our traditional ICE business.”

But early in February 2022, Automotive News said that Mr Farley – in a group investor call – did not reject the possibility of spinning off either operation when queried on the subject during the company’s earnings call.

“Running a successful ICE business and a successful BEV business are not the same,” Mr Farley said. 

“I’m really excited about the company’s commitment to operate the businesses as they should be.” 

The EV business is “fundamentally different” in the customers it attracts, the way its products are built and the engineering and design talent that must be hired.

“We are not seeking half measures,” Mr Farley was reported as saying on the call. “We’re done with incremental change. We have a clear plan, a bias for action and a whatever-it-takes mindset.”

Late in 2021 Automotive News said Ford had talks with financial advisers to explore some options for the EV operation, including a potential reorganisation and raising private capital for it, according to two people familiar with the matter.

In the Automotive News report, it said splitting Ford may be difficult. To this end, in an official statement, Ford said it wasn’t planning on separating its businesses.

However, it may reorganise its internal business to push ICE and EVs apart.

Ford Mustang Mach-E

The report also said a spinoff could be “a tough sell to the Ford family”.

“They control the automaker through a special class of stock and are leery of losing influence over the 118-year-old company, said the people, who did not want to be identified revealing internal deliberations,” the report said.

“The founding family, led by executive chair Bill Ford, has three seats on the board.”

Ford stated in February 2021 that it wants to cease cars and SUVs with petrol and diesel engines from its lineup in Europe by 2030. Three months later, in May 2021, it said it was open to making the shift even faster. 

Ford has committed $US30 billion ($A42b) to its EV strategy through 2025 and is said to be spending another $US10 billion to $US20 billion ($A14b to $A28b) by the end of the decade to convert factories to build plug-in models. 

Mr Farley has tripled production of the electric Mustang Mach-E and doubled output of its F-150 Lightning plug-in pickup, which goes on sale next quarter. Ford plans to make 600,000 EVs each year by 2024 and generate up to half its sales from EVs by 2030.

Automotive News said that in its current structure, Ford lacks access to the financing available to Tesla and other EV makers that are viewed more favourably by banks and investors. 

“Creating a pure plug-in play could provide Ford access to cheaper capital and give investors the opportunity to assign a value to its EV business,” the report said.

Ford may not be alone. Many car-makers and even suppliers are rethinking their internal-combustion engine (ICE) activities as the transition to electrification accelerates.

Renault Group CEO Luca de Meo is on record as saying his company could separate its electric and ICE activities into two “dedicated entities”. Renault is aiming for a 100 per cent full-electric lineup in Europe by 2030.

Mercedes-Benz has said it would partner with Geely Holding in China on small ICEs as it transitions to electric motor production in Europe, sourcing ICEs from a third party.

F-150 Lightning

By Neil Dowling