Ford has announced today it plans to spend as much as $20 billion to accelerate its shift to electric vehicles.
The company's newest reorganization efforts are being spearheaded by Chief Executive Officer Jim Farley and Doug Field, the former head of Apple’s car project.
Under the plane, Ford will spend $10 billion to $20 billion over the next 5 to 10 years to convert factories from traditional ICE production infrastructure to buildings with EV production capabilities, Bloomberg reported on Tuesday.
The report said that Farley wants to "challenge Tesla’s dominance in EVs". Already, investors have rewarded Ford's initiative, with its stock touching multi-decade highs near $25 per share and a $100 billion market cap earlier this month.
The reorganization is also going to result in a hiring binge, according to the Bloomberg report, which said that the company will sport "a reworked Ford organizational chart, including the hiring of an unspecified number of engineers specializing in disciplines relatively new to the company, such as battery chemistry, artificial intelligence and EV software."
Ford has also considered spinning off some of its EV business in order to capture some of the valuations that the market is assigning to EV companies. The spin-off would involve lower-volume EVs while the legacy company would continue its focus on mass market EVs.
A Ford spokesman said Tuesday: “We are executing our Ford Plus plan to transform the company and thrive in this new era of electric and connected vehicles. We would not comment on speculation.”
The shift doesn't necessarily portend a quick exit from ICE vehicles, however. Bloomberg wrote:
Farley sees gasoline-fueled vehicles as a core part of the company for many years to come and still intends to invest enough to keep it competitive with rivals, he said in a seperate
interview last week. One way is to boost the services Ford sells to car owners -- a business that could generate $20 billion a year in revenue. That could include selling drivers software to upgrade their car’s performance or enhance dashboard touchscreens. Or it may involve getting more business in the service bays at Ford’s dealers, which see 90% of owners go elsewhere for maintenance after their warranties expire, Farley said.
In addition to Apple, Field was also a former executive at Tesla. Farley has overseen Ford tripling its output of its electric Mustang Mach-E and doubling production of its coming F-150 Lightning.
“I really admire, frankly, the difficulties they had and the way they managed those difficulties into the success they had,” Farley has previously said of Tesla. "They are now making more than $10,000 a vehicle, because of their scale. I like that kind of business.”
The CEO commented last week: “What it takes to succeed in this digital, connected, electric product are talents and know-how and a way of managing the business that’s different than what we’ve done in 118 years. It’s kinda like snowboarding and skiing. We both share the lift, but as soon as you get off the lift the intuitions are wrong between both businesses. You have to really relearn to how to get down the slope.”