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Ford spends another 20 billion dollars to switch to electric cars

Ford Motor Co. is planning a major reorganization to prepare for the future of electricity, using Tesla The success of Inc. as a roadmap and drive electric vehicle spending to $20 billion.

An effort led by a former Apple Inc executive. and Tesla led the way, calling on Ford to spend an additional $10 billion to $20 billion over the next five to 10 years to convert factories worldwide to make electric vehicles from making gasoline-powered cars, according to people familiar with the matter. familiar with the plan. That would be more than the $30 billion Ford has committed to electric vehicles by 2025.

The move is part of CEO Jim Farley’s initiative to challenge Tesla’s dominance in the electric vehicle space even as he takes pages from the electric vehicle pioneer’s book, now The most valuable car manufacturer in the world. Investors bought into Farley’s vision for Ford, rapidly lifting the company’s market value above $100 billion in January.

Ford shares were up in afternoon trading, up 2.7%. They have traded up 1.3% to $20.56 since first: 48 pm in New York.

The new plan also envisions a reworked Ford org chart, including hiring an unspecified number of engineers to specialize in areas relatively new to the company, such as the battery chemistry, artificial intelligence, and EV software.

As part of the reorganization, the company has evaluated turning around a small portion of its electric vehicle business to capture some of the tremendous value investors are bringing to the companies. electric start-up, said one person who asked to remain anonymous for non-public considerations. The person said the potential move would involve lower-volume models, allowing the company to focus its efforts on mass-market electric vehicles.

Ford declined to comment on reorganization plans and potential extensions.

“We are working on our Ford Plus plan to transform the company and thrive in the new era of electric and connected vehicles. We will not comment on speculation,” Mark Truby, the company’s chief communications officer, said in an emailed statement.

Doug Field, Apple’s former car project manager, is leading the Ford overhaul, these people said. Field is also the top executive at Tesla, where he designed Model 3.

Ford’s electric vehicle plans have accelerated since Farley, 59, became CEO 16 months ago. It has tripled the power output Mustang Mach-E model and doubled the output of F-150 Lightning plug-in pickups will launch this spring. The company is also spending $11.4 billion with South Korea’s SK Innovation to build three factories to make batteries and electric vehicles. vans grown in Tennessee and Kentucky.

Stolen from Apple

Ford acquired Field from Apple in September to break up the 118-year-old company. He is working closely with Farley to make legacy automakers more agile, like Tesla, by tweaking Ford’s operations and production structure, the people said.

These people said the restructuring is a work in progress and some elements could be changed or removed, including the idea of ​​electric vehicle accessories. The Ford family, which controls the automaker through a special class of preferred stock, would have to believe that a subversion is worthwhile.

Farley has expressed admiration for the CEO of Tesla Elon Musk and admits Ford is rethinking its mission as the company prepares to produce 600,000 EVs a year by 2024. The Dearborn, Michigan-based automaker wants to generate half of its global sales are from tram at the end of the decade.

To fuel his desire to compete with Tesla at home, Farley shared articles about the electric-car maker with others internally, according to one person.

Farley, who did not comment for this story, said he learned “a lot” from watching Musk transform his company from a struggling startup into a global EV leader, has high returns that investors value more than 1 trillion dollars.

“Honestly, I really admire the difficulties they face and the way they manage those difficulties to achieve the success they have,” the Ford CEO said in an interview last week. with Bloomberg TV’s Emily Chang. “They are making over $10,000 a car, because of their size. I like that kind of business.”

It’s not clear what approach Tesla plans to take as Ford builds up its own electric vehicle manufacturing capacity and accelerates the shift from a workforce led by mechanical engineers to one that increasingly includes engineers. software engineer.

Keeping ICE Business

Unlike Tesla, Ford also has to manage a slow decline in internal combustion-powered vehicles, which are currently generating all the profits needed to fund the company’s EV aspirations. It’s an area that Ford is also focusing heavily on as it reinvents itself.

Farley sees gasoline-powered vehicles as a core part of the company for years to come and still intends to invest enough to keep it competitive with rivals, he said in a separate interview last week. One way is to enhance the services Ford sells to car owners — a business that can generate $20 billion in revenue a year.

That could include selling driver software to upgrade their cars’ performance or improve the touchscreen display on the dashboard. Or it might involve more business in the service bays at Ford’s agency90% of owners go elsewhere for maintenance after insurance Farley said.

Ultimately, Farley wants more Ford customers to drive electric — and that’s the future he and Field are preparing for. Ford hopes to eventually overtake Tesla, but is currently trying to cement America’s number one spot. 2 electric car seller.

Last week, Farley said: “What is needed to succeed in this digital, connected, electronic product is talent, know-how, and a different way of managing the business than we did in 118. five. “It’s like skateboarding and skiing. We both shared the gain, but as soon as you got off the elevator, both businesses’ intuitions were wrong. You have to really relearn how to go downhill. ”

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