What happened
Shares of Ford Motor Company (F 0.08%) were moving higher on Friday morning, after Bloomberg reported that the company is looking at ways to split its new (and booming) electric-vehicle (EV) business from its legacy internal-combustion engine (ICE) product line.
As of 11:30 a.m. ET today, Ford's shares were up about 3.2% from Thursday's closing price.
So what
Bloomberg reported that CEO Jim Farley and other senior executives are looking at ways to separate Ford's EV operation from its legacy business. Such a separation could take the form of a "wall" between the two businesses or possibly a spinoff of one or the other.
According to the report, one motivation is to try to "earn the sort of investor respect enjoyed by Tesla" and other highly valued pure-play EV makers.
I think a full-blown spinoff is unlikely. Simply put, Ford needs the cash flow from its legacy ICE business to help fund the build-out of its EV lineup and supply chain. I won't be surprised if Farley does try to separate the businesses for internal purposes, but I think that will stop short of a full-blown spinoff.
Strong demand for the Mustang Mach-E (shown above) and the upcoming F-150 Lightning -- and the huge valuations sported by Tesla and other EV makers -- have Ford thinking about ways to capture that value for its own shareholders. Image source: Ford Motor Company.
That said, no matter what happens, the report tells us that Farley and team are looking at ways to boost Ford's valuation. That's why the stock is up today.
Now what
Auto investors holding Ford stock should mark their calendars: Farley is scheduled to discuss Ford's transformation plans with veteran auto analyst Rod Lache next week, at a conference hosted by Wolfe Research. It's a safe bet he'll have something to say about today's Bloomberg report.
Farley's chat with Lache will happen at 2 p.m. ET next Wednesday, Feb. 23. Ford plans to provide a live webcast via its investor-relations website.
