Ford Blue and Model-E: why it's splitting its business in half | CAR Magazine

Ford Blue and Model-E: why it's splitting its business in half

Published: 17 March 2023 Updated: 17 March 2023

► Ford’s Blue and Model E split explained
► Rethinking the business means a big shake-up
► And Renault is at it, too

Car makers are embracing the idea of a split personality. Ford is partitioning of its car-making business into Ford Blue and Ford Model E. Blue’s responsibility will be to maintain and further develop combustion-engined cars, and must also be the main revenue driver, while Model E is positioned as the EV and software dynamo.

‘Model E is all about electric vehicles and their development,’ says Ford’s UK MD Lisa Brankin, ‘while Ford Blue is about industrial infrastructure and plants, logistics and so on – all the stuff you need to have a successful business, and that we do really well, that a start-up business doesn’t have.’

The move is designed to help Ford reach its goal of half its global sales volume being EVs by 2030. Ford president and CEO Jim Farley has called it ‘one of the largest automotive transformations in history.’ Ford predicts the new structure will bring a $3bn saving in organisation costs by 2026.

Ford’s electric car plans explained

Renault, meanwhile, has announced that it is to make EV and software development the responsibility of a division called Ampere. It aims to employ around 10,000 people in France.

‘If the market values pure players like Rivian, which has more value than Renault, let’s be a pure player,’ says a source inside Renault. ‘At the same time, we can raise money to finance our own development. EV and software R&D costs a lot, and they’re less profitable than combustion cars.’

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Like Ford, Renault sees continuing to make combustion cars as financially essential, at least in the short term. Producing a range that spans full electric, hybrids and efficient combustion engines enables the manufacturer to tailor its line-up to local conditions; some markets are much more ready to go full electric than others.
Renault, says our source, ‘is more international than it looks, serving markets like Africa, Asia, Korea and Latin America, meaning we’ll still sell combustion cars for a while.’

JATO analyst Felipe Munoz agrees that big manufacturers ‘can’t simply stop producing combustion cars now, not least because they need them to finance their electrification plans.’ Tesla, he argues, is at the root of it all, by changing the game in terms of technology and innovation. ‘Competing against it with the same models is not the way. Traditional car makers need to reinvent themselves – splitting the business is one way to do it.’

Organising in a split way could mean a more complicated business structure, and could mean having an entire division staring down the barrel of obsolescence. So much so that Ford has already announced job cuts as of March 2023, including 1,100 jobs at its Valencia plant as well as 3,800 roles in development and administration in the UK and Germany, as it reshuffles its production requirements ahead of producing more EVs.

‘But that’s the risk of having modern guys and an “old fashioned” unit,’ says our Renault insider.

JATO’s Munoz adds: ‘It won’t feel appealing to be in the part that’ll disappear. I also doubt it’ll help businesses react faster to trends. But the combustion-to-EV shift is still at an early stage; splits like this will be temporary.

‘Car makers need to position EVs differently from what they’ve been doing for 100 years – the benefit is consumers will associate them as something more modern.’

But this structural change isn’t attractive to all car makers. ‘The car is one of the most complicated products in the world – I think you need one highly motivated and unified team that works hand in hand,’ Markus Schäfer, chief technology officer of Mercedes, tells CAR. ‘There are no losers and winners here, no old and new technology – everyone is part of the future.’

By Jake Groves

CAR's deputy news editor, gamer, serial Lego-ist, lover of hot hatches