Ford To Split EV Unit?

[rperez817]

4 hours ago, rmc523 said:

Ford needs radically different human talent than it now has, Farley said in a surprisingly candid interview with analyst Rod Lache. He also said the company has too many people and too much complexity, and it doesn't have the expertise to transition to battery-electric vehicles

 

Jim Farley deserves praise for recognizing these very serious issues facing Ford Motor Company nowadays. Too many people, too little expertise with BEV, and too much complexity are all a direct result of Ford attempting to straddle the old and new worlds of the automotive industry, as Jim Hackett said a couple years ago. The longer Ford stays in the "old world" of manufacturing and marketing ICE powered vehicles, the weaker the company will get. 

 

Hopefully Farley and Ford's Board of Directors will consider spinning off the company's BEV and other advanced technology operations into a new company, and actually follow through on it sooner rather than later.

[akirby]

2 hours ago, rperez817 said:

 

Jim Farley deserves praise for recognizing these very serious issues facing Ford Motor Company nowadays. Too many people, too little expertise with BEV, and too much complexity are all a direct result of Ford attempting to straddle the old and new worlds of the automotive industry, as Jim Hackett said a couple years ago. The longer Ford stays in the "old world" of manufacturing and marketing ICE powered vehicles, the weaker the company will get. 

Abandoning ICE vehicles that are already designed and engineered - especially icons like Mustang and Bronco - would be beyond stupid.  They just have to ensure that BEVs get the right attention and focus with the right engineers and processes and you don’t have to throw away ICE to do that.

[Harley Lover]

7 hours ago, rperez817 said:

 

Jim Farley deserves praise for recognizing these very serious issues facing Ford Motor Company nowadays. Too many people, too little expertise with BEV, and too much complexity are all a direct result of Ford attempting to straddle the old and new worlds of the automotive industry, as Jim Hackett said a couple years ago. The longer Ford stays in the "old world" of manufacturing and marketing ICE powered vehicles, the weaker the company will get. 

 

Hopefully Farley and Ford's Board of Directors will consider spinning off the company's BEV and other advanced technology operations into a new company, and actually follow through on it sooner rather than later.

 

From the same article: 

Quote

Neither Ford's internal combustion business nor its electric vehicle operations earn as much profit as they could, Farley said. The company needs more talent to lower structural costs and raise quality in its ICE business, and cut the cost of materials for electric vehicles, he said.

 

I'll repeat the bolded portion again since obviously reading comprehension is not your strength: "The company needs more talent to lower structural costs and raise quality in its ICE business".

 

In any universe does that sound like Ford (and Farley) believe that Ford's problem, as only you and not they, asserted stems from "all a direct result of Ford attempting to straddle the old and new worlds of the automotive industry, as Jim Hackett said a couple years ago."

 

Please at least own comments like this as your opinion, and do not try to pass them off as statements of fact from Jim Farley or Ford.

[rperez817]

2 hours ago, Harley Lover said:

"The company needs more talent to lower structural costs and raise quality in its ICE business".

 

Yes sir, and that's another good reason for Ford to spin off its EV + advanced technology operations from its ICE vehicle operations. 

[rperez817]

8 hours ago, akirby said:

Abandoning ICE vehicles that are already designed and engineered - especially icons like Mustang and Bronco - would be beyond stupid. 

 

Splitting Ford's BEV/advanced technology business from ICE business does not mean "abandoning ICE vehicles that are already designed and engineered". It allows Ford to operate the latter business as a legacy business for the near future before eventually it is wound down longer term.

[GearheadGrrrl]

The real purpose might be to establish a separate BEV brand which can be sold direct to customers, bypassing the problems of the some of the current dealer network. Or start a whole new BEV dealer network that Ford has better control over...

[akirby]

1 hour ago, rperez817 said:

 

Splitting Ford's BEV/advanced technology business from ICE business does not mean "abandoning ICE vehicles that are already designed and engineered". It allows Ford to operate the latter business as a legacy business for the near future before eventually it is wound down longer term.

It also means duplicating all of the overhead/back office functions like hr and payroll and potentially complicates the dealer relationship which they absolutely need to sell 2M+ vehicles/yr.  It also removes economies of scale for things that are common which is a lot more than you think.  And it allows the profits from ICE to subsidize BEV development.

 

A new division/brand should allow them to develop new processes and attract new talent and might solve some of the dealer franchise issues while maintaining the other advantages.  More importantly it allows Ford to shift resources around as needed to maintain profits.

 

I know a lot about spinning off legacy businesses and this is not that scenario yet.

[GearheadGrrrl]

Good points, and why I think a new brand with the best of the current dealers is more likely.

[bzcat]

Farley is basically saying the ICE business needs to get leaner and that's not anything new particularly for Ford. Without profits from trucks, Ford can't compete in ICE and it's been obvious for many years now that Ford can't make a profit on bread and butter cars and CUVs that other companies do. This is why Ford got out those business in North America, and started culling unprofitable foreign subsidiaries.

 

 

[jpd80]

4 hours ago, bzcat said:

Farley is basically saying the ICE business needs to get leaner and that's not anything new particularly for Ford. Without profits from trucks, Ford can't compete in ICE and it's been obvious for many years now that Ford can't make a profit on bread and butter cars and CUVs that other companies do. This is why Ford got out those business in North America, and started culling unprofitable foreign subsidiaries.

Absolutely but Ford failed to look within itself and it’s processes to see why those vehicles became unprofitable. They cut cars, called it job done but kept on the same flawed process for the replacement products. The only difference is a higher sale price covers the continuing flawed internal processes.

[Trader 10]

10 hours ago, akirby said:

It also means duplicating all of the overhead/back office functions like hr and payroll and potentially complicates the dealer relationship which they absolutely need to sell 2M+ vehicles/yr.  It also removes economies of scale for things that are common which is a lot more than you think.  And it allows the profits from ICE to subsidize BEV development.

 

A new division/brand should allow them to develop new processes and attract new talent and might solve some of the dealer franchise issues while maintaining the other advantages.  More importantly it allows Ford to shift resources around as needed to maintain profits.

 

I know a lot about spinning off legacy businesses and this is not that scenario yet.

Exactly. A separate EV business would post huge losses for years to come. 

[2005Explorer]

13 hours ago, GearheadGrrrl said:

The real purpose might be to establish a separate BEV brand which can be sold direct to customers, bypassing the problems of the some of the current dealer network. Or start a whole new BEV dealer network that Ford has better control over...

Edsel? ?

[rperez817]

13 hours ago, akirby said:

I know a lot about spinning off legacy businesses and this is not that scenario yet.

 

What is your estimate on when that scenario would apply to Ford? The ICE vehicle manufacturing aspect of Ford's operations is now in terminal decline. The company already made a commitment to completely phase out that business in a staged timeline over the next 18 years, and milestones on that timeline are likely to accelerate in the years to come due to government regulations and competitive pressures in the global automotive industry. 

 

It's a zero sum game. As mentioned earlier, the longer Ford keeps straddling the old and new worlds, the weaker the company will get.

[rperez817]

9 hours ago, bzcat said:

Farley is basically saying the ICE business needs to get leaner and that's not anything new particularly for Ford.

 

5 hours ago, jpd80 said:

They cut cars, called it job done but kept on the same flawed process for the replacement products. The only difference is a higher sale price covers the continuing flawed internal processes.

 

Yes sir bzcat and jpd80. Farley may be thinking of a 2 pronged strategy.

1. Strategy for legacy ICE business units = dramatic reduction in overall headcount, other cost cuts, revamp of internal processes, reduction in complexity, and improvement in quality
2. Strategy for BEV & Mobility (advanced technology) business units = hiring outside talent to build in-house expertise, focus on innovation and growth, and improved supplier relations for critical BEV and AV components

For the ICE business, maybe Farley can recommend Ford HR bring back Jacques Nasser's program in the late 1990s to terminate the lowest performing 10% of managers every year. Maybe even extend that to the lowest performing 25%.

[akirby]

1 hour ago, rperez817 said:

 

What is your estimate on when that scenario would apply to Ford? The ICE vehicle manufacturing aspect of Ford's operations is now in terminal decline. The company already made a commitment to completely phase out that business in a staged timeline over the next 18 years, and milestones on that timeline are likely to accelerate in the years to come due to government regulations and competitive pressures in the global automotive industry. 

 

It's a zero sum game. As mentioned earlier, the longer Ford keeps straddling the old and new worlds, the weaker the company will get.

I don’t think it will ever apply to Ford.  They will simply replace existing models with new models in parallel and when sales of ICE vehicles drops to a certain point or profit level they drop them and convert some of the factories to BEVs which is already planned.

 

Just admit you know nothing about running a corporation and stop parroting everything you read.

[rmc523]

1 hour ago, rperez817 said:

 

What is your estimate on when that scenario would apply to Ford? The ICE vehicle manufacturing aspect of Ford's operations is now in terminal decline. The company already made a commitment to completely phase out that business in a staged timeline over the next 18 years, and milestones on that timeline are likely to accelerate in the years to come due to government regulations and competitive pressures in the global automotive industry. 

 

It's a zero sum game. As mentioned earlier, the longer Ford keeps straddling the old and new worlds, the weaker the company will get.

 

You're obsessed with this idea that they need to split off EVs for some reason, when they don't.

 

As akirby mentions, they just need to keep it under the same roof - hire the new people they need, replace ICE models with EV models as the market/various segments dictate, and adjust employees from there (i.e. let say ICE powertrain people go as necessary).

 

You're making it vastly more complicated for no reason.

[jpd80]

1 hour ago, rperez817 said:

 

 

Yes sir bzcat and jpd80. Farley may be thinking of a 2 pronged strategy.

1. Strategy for legacy ICE business units = dramatic reduction in overall headcount, other cost cuts, revamp of internal processes, reduction in complexity, and improvement in quality
2. Strategy for BEV & Mobility (advanced technology) business units = hiring outside talent to build in-house expertise, focus on innovation and growth, and improved supplier relations for critical BEV and AV components

For the ICE business, maybe Farley can recommend Ford HR bring back Jacques Nasser's program in the late 1990s to terminate the lowest performing 10% of managers every year. Maybe even extend that to the lowest performing 25%.

Rather than Nasser’s blunt tool approach, maybe it’s more about comparing the two business processes and seeing where built up complexity in the ICE business can be reduced or eliminated.

 

If I’m right, there’re will be nothing to spin off, be that BEV or ICE because both businesses are core to Ford until BEVs can carry the company and make profits that completely replace the ICE business. Until that happens, we’re getting way ahead of ourselves.

Edited February 26, 2022 by jpd80

[rperez817]

1 hour ago, rmc523 said:

You're making it vastly more complicated for no reason.

 

There's nothing complicated about Ford and other incumbent automakers considering some form of separation of their BEV/AV/mobility services operations from their ICE vehicle business. The former is high growth and high tech, while the latter was sometimes a past cash cow but now rapidly heading toward extinction. Management strategies and approaches are vastly different for these 2 types of businesses.

 

A separate BEV/AV/mobility services business could provide Ford these potential advantages.

• Access to capital markets
• Attracting outside talent, especially from companies outside the legacy automotive industry
• Attracting partners and dedicated supply chain solutions from suppliers
• Protecting against liability for past carbon emissions and pollution generated by ICE

Edited February 26, 2022 by rperez817

[akirby]

Ford doesn’t need new capital - they can simply shift their existing capital investment from ICE to BEV which has already happened.

 

A spin off would duplicate all of the back office costs and all of the other things that could be shared - suspension and handling, infotainment, interior design, high performance, etc etc. making it virtually impossible for it to turn a profit for several years if not longer.  And without profit there is no capital to reinvest.  
 

A new division can share all those common functions while operating under totally new processes and be funded by record profits on ICE vehicles.  And with the right plan and leadership they can easily attract outside hires.  
 

The key is not to saddle the new division with the old processes and old mindset and to give them full autonomy.  Farley seems willing to do just that.

[jpd80]

2 hours ago, akirby said:

Ford doesn’t need new capital - they can simply shift their existing capital investment from ICE to BEV which has already happened.

 

A spin off would duplicate all of the back office costs and all of the other things that could be shared - suspension and handling, infotainment, interior design, high performance, etc etc. making it virtually impossible for it to turn a profit for several years if not longer.  And without profit there is no capital to reinvest.  
 

A new division can share all those common functions while operating under totally new processes and be funded by record profits on ICE vehicles.  And with the right plan and leadership they can easily attract outside hires.  
 

The key is not to saddle the new division with the old processes and old mindset and to give them full autonomy.  Farley seems willing to do just that.

Exactly and my hope is that Ford uses the new BEV business template to reform its ICE business by eliminating a ton of inefficiency. The reason real reform has always failed is because there was never a clear example of what Ford’s business should become.

 

The current Ford business structure is just too slow and inflexible for the modern world, it can’t change or move quick enough to keep up with electric vehicle development or evolution on the fly. All of those faults have also acted against back it’s ICE business doing better than it should have but many within Ford have made a career of slowing things down, so how do you tell those people they are not needed without having a new plan in place? You can’t and that’s what a separate business model is vital to change all of Ford.

Edited February 26, 2022 by jpd80

[akirby]

24 minutes ago, jpd80 said:

Exactly and my hope is that Ford uses the new BEV business template to reform its ICE business by eliminating a ton of inefficiency. The reason real reform has always failed is because there was never a clear example of what Ford’s business should become.

Farley seeems willing to do it and that type of change doesn’t happen unless it comes from the very top down and it gets funding to match.

[jpd80]

14 minutes ago, akirby said:

Farley seeems willing to do it and that type of change doesn’t happen unless it comes from the very top down and it gets funding to match.

Absolutely correct, it’s important that the BEV side be allowed to progress unencumbered by company bureaucracy and Farley is to be praised for grasping the opportunity to do this. Once established, I think the BEV business template will give Farley the road map to reform Ford’s main business as well but first things first……

[DeluxeStang]

On 2/24/2022 at 10:35 PM, akirby said:

Abandoning ICE vehicles that are already designed and engineered - especially icons like Mustang and Bronco - would be beyond stupid.  They just have to ensure that BEVs get the right attention and focus with the right engineers and processes and you don’t have to throw away ICE to do that.

Agreed, it's really hard to form a timeline for transitioning away from ICE and towards evs. While ford obviously should, and is investing in ev tech, you can't just drop ICE completely overnight, it's something that will be phased out gradually overtime. I think we'll see ICE mostly phased out in the next decade or so. I think commerical fleets and car enthusiasts will adopt hydrogen before they adopt evs. 

[mackinaw]

1 hour ago, jpd80 said:

Absolutely correct, it’s important that the BEV side be allowed to progress unencumbered by company bureaucracy and Farley is to be praised for grasping the opportunity to do this.....

 

Of course you realize that a brand new bureaucracy will form and become established if Ford does establish a separate BEV group.  Just because a company hires new, energetic engineers doesn't mean they won't establish their own bureaucracy and jealously guard it.  It's called human nature.  

[jpd80]

32 minutes ago, mackinaw said:

 

Of course you realize that a brand new bureaucracy will form and become established if Ford does establish a separate BEV group.  Just because a company hires new, energetic engineers doesn't mean they won't establish their own bureaucracy and jealously guard it.  It's called human nature.  

I don’t doubt that and to be clear, Let’s see if Ford’s actions match Farley’s words…