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Ford has no plans to spin off EV or gasoline-powered vehicle businesses -CEO

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Stock Markets15 minutes ago (Feb 23, 2022 08:35PM ET)

Ford has no plans to spin off EV or gasoline-powered vehicle businesses -CEO © Reuters. FILE PHOTO: Ford Motor Co. CEO Jim Farley poses next to a new 2021 Ford F-150 pickup truck at the Rouge Complex in Dearborn, Michigan, U.S. September 17, 2020. REUTERS/Rebecca Cook

By Ben Klayman

DETROIT (Reuters) -Ford Motor Co has no plans to spin off its electric vehicle or gasoline-powered vehicle businesses, Chief Executive Jim Farley said on Wednesday.

“We have no plans to spin off our electric business or our ICE (NYSE:) business,” Farley said at a Wolfe Research conference appearance that was webcast, using an acronym for internal-combustion engine.

“We know our competition is Nio (NYSE:) and Tesla (NASDAQ:), and we have to beat them, not match them,” he added. “And we also have to beat the best of the ICE players.”

Some investors have pushed Ford and rival General Motors Co (NYSE:) to spin off their EV operations as a way to better tap into the full value of those businesses. EV leader Tesla Inc is the most valuable automaker in the world.

Ford previously denied reports it was considering spinning off its EV or internal-combustion engine operations. The U.S. automaker said last month it will have the annual capacity to build 600,000 EVs globally within 24 months.

Farley said on Wednesday that his management team believes the U.S. automaker’s EV and ICE businesses are underperforming on an earnings basis.

The CEO also said Ford believes it can drive a lot more cost out of its traditional ICE business through better quality, lower structural costs and reduced vehicle complexity.

“We have too many people, we have too much investment, we have too much complexity and we don’t have expertise in transitioning our assets,” Farley said of the internal-combustion business. “That’s the simple answer. There’s waste.”

“To get the margins (on electric vehicles) … that we see at a company like Tesla, we need to have real experts that can drive that scale,” he said, adding that Ford needed to hire more people who work in the areas of electrical components, advanced electrical architectures and the digital customer experience.

On the EV side of the business, Farley said Ford is working on deals to secure supply of key raw materials for batteries such as lithium, nickel, rare earths and to minimize risk.

On the vehicle distribution side, he said Ford needs to eliminate “ungodly expensive” inventory from the system and make it easier for consumers to reserve and track the assembly of a vehicle before its delivery.

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