Own division for electric cars: Jim Cramer thinks Ford could destroy Tesla’s plans

Ford separates EV business from combustion engines – Ford Model e and Ford Blue are created
Goal: Production of more than two million electric vehicles per year by 2026
Jim Cramer: “That Just Destroyed Tesla’s Plan”

Ford’s new business will be called Ford Model e, while the traditional core business will continue as Ford Blue. Ford’s plan is clear: “The formation of two distinct but strategically dependent car companies – Ford Blue and Ford Model e – along with the new Ford Pro business will help unlock the full potential of the Ford+ plan to drive growth and value creation and to position Ford to outperform both older automakers and new EV competitors,” the company said in its press release announcing its new EV business. So the US automaker aims to overtake both traditional automakers and competitors focused on the EV market, such as Tesla.

Five billion for the EV sector in 2022 alone

As Ford writes in its press release, Ford Model e and Ford Blue will be run as independent companies, but will also support each other. This year alone, Ford intends to invest around five billion US dollars in its electric car division, which corresponds to a doubling compared to the previous year. The company also reiterated its 2022 guidance of $11.5 billion to $12.5 billion in adjusted EBIT. The upper end of the range corresponds to a margin of 8 percent, which, if achieved, would be a year ahead of the company’s previous target, according to Ford. From 2023, the two business areas should then also report their own profit and loss accounts.

In addition, Ford raised its longer-term operational and financial goals. The company’s adjusted EBIT margin is expected to be 10 percent by 2026 – an increase of 270 basis points compared to 2021. This is to be driven by “higher volumes, improved costs for electric vehicles and a significant reduction in ICE structural costs of up to 3 billion U.S. dollar”.

By 2026, the US automaker plans to produce more than two million electric vehicles annually, which corresponds to about a third of Ford’s global volume – this share is even expected to increase to half by 2030. And so Ford has set itself the goal of using electric vehicles to capture the same or even greater market share in vehicle segments in which the company already leads.

“We’ve made tremendous strides in a short period of time. We’ve launched a number of successful products worldwide, and demand for our new electric vehicles like the F-150 Lightning and Mustang Mach-E is off the charts,” said Ford CEO Jim Farley quoted in the press release. “But our goal with Ford+ is to be a really great, world-changing company again, and that takes focus. We’re going all out and creating separate but complementary businesses that will give us start-up speed and unbridled innovation in the Ford Model e together with Ford Blue’s industrial know-how, volume and iconic brands like Bronco that start-ups can only dream of.”

Jim Cramer: “That Just Destroyed Tesla’s Plan”

After traditional car manufacturers such as Ford and General Motors initially came under pressure to concentrate more on their electric car business due to the success of US electric car manufacturer Tesla, Jim Cramer believes that Ford’s electric car offensive could now put pressure on Tesla.

“That just ruined Tesla’s plan,” according to Jim Cramer in The Street’s “Squawk.” “He wants 2 million [Autos jhrlich] do. I think Farley’s ambitions are remarkable,” Cramer said. In his “No Huddle Offense” section, Cramer said that as much as he loves Elon Musk and Tesla, momentum in the stock market is now tilting in favor of legacy automakers like Ford and upstarts The stock market analyst also added that it’s good that Ford’s CEO didn’t spin off the EV business like hedge funds wanted, “because the golden money is being generated by ICE and EV needed money.”

Cramer prefers Farley Musk

Cramer also commented on the two managing directors and explained – probably much to the displeasure of Tesla boss Elon Musk: “I really think when I listen to Farley Yeah, I would prefer Farley Musk in 2026.” Musk likes to remind his critics of the days when they preferred other automakers over him or Tesla, The Street reports. And now Cramer said, “I choose Farley,” and went on, “I like it. I choose Farley.” Cramer justifies his choice: “He makes money with everything. Farley won’t do anything that he doesn’t make money from, which I find unbelievable.”

Ford as a role model for other car manufacturers?

Cramer also agreed with Morgan Stanley’s auto industry analyst Adam Jonas that Ford’s strategy could become a model for other traditional automakers. “We applaud Ford’s decision to take the first important step in optimizing the competing missions of EV/ICE companies,” The Street quoted the analyst as saying in a note to investors last week. “We think other older auto OEMs are planning [Original Equipment Manufacturers] possibly something similar. Ford is the world leader in actual announcement.”

Newcomers – also from Tesla

As The Street reports, Ford has also poached top talent from Tesla in recent months. As early as September last year, the US car manufacturer hired Doug Field, a former tech manager at Apple and Tesla, who will work as Chief EV and Digital Systems Officer in the Model e division. Ford CEO Jim Farley will serve as President of Ford Model e in addition to his roles as President and CEO of Ford. According to The Street, he will be working with Alan Clarke, who most recently served as Director of New Programs Engineering at Tesla and joined Ford in January in EV development.

“Designing truly incredible electric and software-driven vehicles – with experiences customers can’t even imagine – requires a clean approach,” said Ford CEO Jim Farley in his press release. “We are creating an organization that benefits from all of Ford’s know-how and capabilities, but can move with speed and unrestrained ambition to create revolutionary new products.”

It remains to be seen whether Ford will achieve its goals as planned and possibly challenge Tesla for the top spot in the next few years.

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