Ford is considering separating its electric vehicle business from its legacy operations, Bloomberg reported Friday.
Updated at 11:53 am EST
Bloomberg News reported that CEO Jim Farley is considering ways to separate the division, which is targeted with billions of investment over the coming years, from its combustion-engine business.
Ford, in fact, briefly surpassed rival General Motors (GM) – Get General Motors Company Report in terms of market value earlier this year as it booked an $8.2 billion can from its investment in Rivian (RIVN) – Get Rivian Automotive, Inc. Class A Report and gathered 200,000 reservations for the newly-unveiled electric pickup F-150 Lighting pickup.
Ford plans to double its current EV output by 2023, and sees earnings growth this year of between 15% and 20%, but weaker-than-expected fourth quarter profits, as well as ongoing supply-chain and production disruptions, have test investor patience for its ambitions to challenge Tesla’s (TSLA) – Get Tesla Inc Report electric car dominance.
CFO John Lawler told investors on a conference call late last month, however, that “supply constraints to remain fluid throughout the year, reflecting a variety of factors, including semiconductors and Covid”, adding that the carmaker expects commodity headwinds of around $1.5 billion, as well as “other inflationary pressures, which will impact a broad range of costs.”
Jefferies analyst Philippe Houchois, who cut his rating on Ford to ‘hold”, from ‘buy’ last month, cautioned that EV progress for OEMs such as Ford and GM, as well as their earnings potential, “remain mostly driven by cyclical shortages, returns remain within historical norms and the EV transition is largely a zero-sum-game initially.”
Ford shares were marked 2.9% higher in late morning trading Friday to change hands at $18.05 each, a move that would still leave the stock down about 28% over the past month.