2022 Ford F-150 Lightning Lariat.
Courtesy Ford
Ford Motor shares are trading near their daily highs on Tuesday after Bloomberg reported the company would spend more on vehicle electrification and consider a partial spinoff of its EV business.
Ford (ticker: F) shares are up 1.8% at $20.66 in late trading. The S&P 500 and Dow Jones Industrial Average are up 0.8% and 0.7%, respectively.
The Bloomberg story outlines a plan to spend an incremental $10 billion to $20 billion on vehicle electrification. Ford has committed roughly $30 billion for EVs. That period for that spending runs from roughly 2020 to 2025.
Ford, it appears, might also spin off part of its EV business. That amounts to a tracking stock for Ford’s electric business. Tracking stocks give investors the financial performance of a unit inside a company even as the company stays intact and maintains control over operations. The tracking stock is something Data Trek’s Nicholas Colas, a former Wall Street auto analyst, suggested back in November, shortly after the Rivian Automotive (RIVN) initial public offering went so well.
At one point last year, Rivian was worth roughly as much as General Motors (GM) and Ford combined.
“The EV/AV spinoff idea is one that every automaker has to at least entertain,” Colas tells Barron’s. Colas adds that GM has done tracking stocks in the past. “Ford always just stuck to one stock. How much the family would want to control of a spinoff might also be an issue. ”
Ford didn’t immediately respond to a request for comment about higher EV spending or spinning off portions of the business.
Analysts and investors will get a chance to question Ford management on Thursday afternoon, when the company reports fourth-quarter numbers. Something as big as an EV spinoff will surely come up during the earnings conference call.
Write to Al Root at [email protected]
