Ford To Split EV Unit?

[2005Explorer]

1 hour ago, akirby said:

I think you’re overestimating BEV demand in general for reasons we’ve been through over and over.  ICE and BEV are going to co exist for quite some time.

I'm still purchasing new ICE vehicles, but I also live in a place considered "the boonies" to most people. A plug-in hybrid would really be a better solution for someone like me, but I am not sure the manufacturers want to go too far down that path when a full BEV is likely cheaper to produce.

[rmc523]

27 minutes ago, 7Mary3 said:

I think this is the first major step towards spinning the ICE business off as a separate entity.  If you look at how Daimler-Benz and VW Group recently spun off their heavy truck businesses they did it in much the same way, initially reorganizing them as separate business units and later creating IPO's.  Won't happen tomorrow but unless something changes it's on the horizon.  I also think the Ford family is behind this, seeing the potential to unlock the EV business' potential value.  

 

I find it interesting that Ford seems to be under a lot more pressure than VW, Toyota, or even GM to spin its EV business off.  I wonder if it is because of Ford's well known fiefdoms and internal power struggles Wall Street thinks that Ford may be unable to manage the growth of their EV business.  Farley seems to be acknowledging that Ford will not be able to make the transition with their current talent pool.     

 

Except heavy truck units are far more separate/unrelated than EV/ICE product relationships.

[fuzzymoomoo]

6 hours ago, akirby said:

Please tell me you’re joking.

I've heard rumors (outside of Ford walls) about it for a few weeks now.... 

 

Im telling you all, the change in plan/scope for the train station project and the new Blue Oval City in Tennessee are key indicators in all of this

Edited March 2, 2022 by fuzzymoomoo

[7Mary3]

1 hour ago, rmc523 said:

 

Except heavy truck units are far more separate/unrelated than EV/ICE product relationships.

 

Maybe they are to a point, but the specific question is can Ford in its current state efficiently make the transition to EV's, or would it be beneficial to create a separate entity to do so.  I suspect that this might be the case, but even more importantly would an eventual complete spin-off of the EV business substantially increase shareholder value.  I think the answer to that question can be answered by which way forward benefits the shareholders the most.  Specifically the Ford family, who will be the ones making the decision. 

 

Speaking of commercial trucks, it had long been the case in Ford that an executive or engineer assigned to that operation was effectively banished to Siberia.  I hope that doesn't become the case with the ICE operation...     

[jpd80]

7 hours ago, 2005Explorer said:

I don't know why GM would pay Ford $30 billion for something they already have. It's not like Ford would sell the Ford brand or dealer network, so it would be pointless.

Consider what you’ve just said, GM gets a massive chunk of highly profitable ICE business as another sales channel, complete with dealer network. That combined with existing ICE sales and profits is gravy for the next +10 years.

 

The other side of that is Ford would immediately get the Model E EV business paid for and set up exactly like Tesla with little or no dealerships….something Wall Street and investors thought might be happening?

 

It sounds far fetched I know but I bet this is exactly what Wall Street is hoping happens, a bunch of suits have probably done the analysis as a what if, the big stopper is probably the Fords and what that split would project about grandfather’s company.

 

 The telltale is Farley has made himself captain on the surviving team and one of his senior VPs in charge of the ICE business. Both share body design and assembly tech that’s still controlled by Ford Blue. Of course Farley is not committing to anything more than annexing the BEV business but these could be  the essential pre-steps to a larger exit strategy before they get stuck with stranded assets.

Edited March 2, 2022 by jpd80

[2005Explorer]

2 hours ago, jpd80 said:

Consider what you’ve just said, GM gets a massive chunk of highly profitable ICE business as another sales channel, complete with dealer network. That combined with existing ICE sales and profits is gravy for the next +10 years.

 

The other side of that is Ford would immediately get the Model E EV business paid for and set up exactly like Tesla with little or no dealerships….something Wall Street and investors thought might be happening?

 

It sounds far fetched I know but I bet this is exactly what Wall Street is hoping happens, a bunch of suits have probably done the analysis as a what if, the big stopper is probably the Fords and what that split would project about grandfather’s company.

 

 The telltale is Farley has made himself captain on the surviving team and one of his senior VPs in charge of the ICE business. Both share body design and assembly tech that’s still controlled by Ford Blue. Of course Farley is not committing to anything more than annexing the BEV business but these could be  the essential pre-steps to a larger exit strategy before they get stuck with stranded assets.

So they are going to sell away the Ford brand name and oval, trademarks like F-150, Mustang, Bronco, Ranger, Explorer, production capacity and dealer network to GM? So GM will be building and selling Fords and FoMoCo will be selling some new Brand X, building them in new factories, and come up with a new sales channel? Why would GM want Ford dealerships when they already have their own in the same markets? Why would GM want Ford's ICE technology when they already have the same thing? Why would the Ford family who still controls the company want any name but Ford on the vehicle they produce?

 

Exactly what is GM getting for $30 billion? They are going to build and park an F-150 next to a Silverado and an Explorer next to a Traverse? Ford honestly is going to sell away their brand? Because without the Ford brand, all trademarks and patents, the ICE business is worth little to nothing. The dealer network isn't worth crap to GM because they would have to shut down 80% of it anyhow because of market overlap. They could easily sell Fords and Chevys at the same dealership. I'm not a business guy, but none of this makes business sense to me.

 

Selling away a brand that ranks #15 on most recognizable brands... Great idea!

Edited March 3, 2022 by 2005Explorer

[jpd80]

I know that triggered a reaction but you have to admit that option was discussed with analysts as a way of getting rid of stranded assets before they become worthless…

 

there could be a deeper alliance with GM on the BEV side and on the ICE, it might be worth both their whiles to collaborate on EVs and BEVs do the unmentionable to transition both businesses to BEVs and have a JV company sell ICE until that no longer makes sense…

 

Equally, the latest move from Farley could be all window dressing to impress Wall Street and investors without rally achieving much behind the scenes…

Edited March 3, 2022 by jpd80

[jasonj80]

1 hour ago, jpd80 said:

I know that triggered a reaction but you have to admit that option was discussed with analysts as a way of getting rid of stranded assets before they become worthless…

 

there could be a deeper alliance with GM on the BEV side and on the ICE, it might be worth both their whiles to collaborate on EVs and BEVs do the unmentionable to transition both businesses to BEVs and have a JV company sell ICE until that no longer makes sense…

 

Equally, the latest move from Farley could be all window dressing to impress Wall Street and investors without rally achieving much behind the scenes…

Anti-trust would never let Ford and GM combine in ICE they would command to much of the share where ICE would be left in the market (Trucks)  where Ford and GM should have collaborated was early last year when they could see there was a chip shortage developing by splitting the 3 billion rehabbing the Kokomo chip plant to make modern chips as both manufactures would control their supply lines and have unlimited chips in the next few months. GM closed it back in 2017 because the cost to upgrade it was too much.

Also the Russian War with Ukraine will impact chips as well. Ukraine is a major exporter of Neon which is necessary for the production of computer chips and you will also have chips being necessary for military equipment.

I think it is to show they are doing something, only so much you can de-content out of a vehicle to lower the cost before consumers go elsewhere. They need actual structural changes to save those dollars. I know Hackett isn't well liked for some obvious reasons, but the 2021 F-150, MACH-E, Bronco Sport, Bronco, Maverick, and Global Ranger were all mostly developed during his tenure and are really good vehicles. Hopefully Farley can keep that along with getting to the root cost structure issues that plague Ford and have for years.

[jpd80]

Combined, Ford and GM’s market share barely reaches 30% of the US domestic market, I think any anti-trust is a long way from succeeding as there’s plenty of competition and choice for buyers and it’s not like motor vehicles are an essential item.

[jasonj80]

26 minutes ago, jpd80 said:

Combined, Ford and GM’s market share barely reaches 30% of the US domestic market, I think any anti-trust is a long way from succeeding as there’s plenty of competition and choice for buyers and it’s not like motor vehicles are an essential item.

Anti trust wouldn’t just look at it as a market as a whole they would look at points in the market. If they saw that Ford and GM made up 85% of heavy duty pickup sales or 90% of Van sales they would say they would have to divest those positions or the merger couldn’t happen.

 

[akirby]

7 hours ago, 2005Explorer said:

I'm still purchasing new ICE vehicles, but I also live in a place considered "the boonies" to most people. A plug-in hybrid would really be a better solution for someone like me, but I am not sure the manufacturers want to go too far down that path when a full BEV is likely cheaper to produce.

They are already developed and as long as people want them and the government doesn’t outlaw them they’ll build them but don’t expect big discounts,

[akirby]

6 hours ago, fuzzymoomoo said:

I've heard rumors (outside of Ford walls) about it for a few weeks now.... 

 

Im telling you all, the change in plan/scope for the train station project and the new Blue Oval City in Tennessee are key indicators in all of this

They may be moving South but it’s not because of the weather.

[jpd80]

20 minutes ago, jasonj80 said:

Anti trust wouldn’t just look at it as a market as a whole they would look at points in the market. If they saw that Ford and GM made up 85% of heavy duty pickup sales or 90% of Van sales they would say they would have to divest those positions or the merger couldn’t happen.

 

But they don’t, Stellantis and Toyota are there as well, there’s also Tesla cybertruck looming with massive preorders, I think a case could be made that there’s still plenty of competition.

Edited March 3, 2022 by jpd80

[rmc523]

3 hours ago, jpd80 said:

I know that triggered a reaction but you have to admit that option was discussed with analysts as a way of getting rid of stranded assets before they become worthless…

 

there could be a deeper alliance with GM on the BEV side and on the ICE, it might be worth both their whiles to collaborate on EVs and BEVs do the unmentionable to transition both businesses to BEVs and have a JV company sell ICE until that no longer makes sense…

 

Equally, the latest move from Farley could be all window dressing to impress Wall Street and investors without rally achieving much behind the scenes…

 

I just don't understand what you're selling off though...

 

The valuable aspects of the unit you're saying to sell off are the things you'd want to keep - brand, nameplates, etc.

[Footballfan]

1 hour ago, jpd80 said:

Combined, Ford and GM’s market share barely reaches 30% of the US domestic market, I think any anti-trust is a long way from succeeding as there’s plenty of competition and choice for buyers and it’s not like motor vehicles are an essential item.

Time was when the Chevrolet Division of gm alone had 30 percent of the market. What a sad commentary on American management. 

[jpd80]

3 hours ago, rmc523 said:

 

I just don't understand what you're selling off though...

 

The valuable aspects of the unit you're saying to sell off are the things you'd want to keep - brand, nameplates, etc.

I’m thinking of a situation like was done with old GM before it was wound up but selling way before that.

Ford sells GM Ford Blue as a brand and permit them to sell only ICE versions of Ford nameplates,

Ford Model E then only sells BEV versions of their storied nameplates but direct to buyers like Tesla.

(It’s basically a lifeboat situation, selling everything at Ford except Model E ops along with dealerships)

 

It’s the exact  opposite of breaking out Model E as a separate brand and selling it.

 

Edited March 3, 2022 by jpd80

[fuzzymoomoo]

5 hours ago, akirby said:

They may be moving South but it’s not because of the weather.

Its because big Gretch was asleep at the wheel without a big pile of money to hand out 

[jpd80]

15 minutes ago, fuzzymoomoo said:

Its because big Gretch was asleep at the wheel without a big pile of money to hand out 

Indeed, a big window of opportunity was missed….

[jpd80]

And I have lost all perspective today, sorry guys 

[Footballfan]

3 hours ago, fuzzymoomoo said:

Its because big Gretch was asleep at the wheel without a big pile of money to hand out 

Cheer up...at least we have the choo-choo train station in Detroit and all the wonderful coffee shops, hotel rooms, and other assorted bullshit they plan on putting there ?

 

Michigan just passed a billion dollar program to lure new factories for Michigan.  If I were her I would offer Ford a good chunk of it to redo FRAP, and/or build a new assembly and battery plant focusing on EVs. 

Edited March 3, 2022 by Footballfan

[Footballfan]

What is this, the fifth restructuring since 2003?  At the time Ford was the second largest automaker in the world-now they are number 8.  You cannot have any continuity if you are changing long term plans so often. Whose to say this plan is going to work and in another year or two another CEO will be run?

Edited March 3, 2022 by Footballfan

[jpd80]

20 minutes ago, Footballfan said:

What is this, the fifth restructuring since 2003?  At the time Ford was the second largest automaker in the world-now they are number 8.  You cannot have any continuity if you are changing long term plans so often. Whose to say this plan is going to work and in another year or two another CEO will be run?

These are insane times where manufacturers are stymied at every turn, they can’t build enough product and the future vision keeps changing with more bucks spent to accelerate the switch to BEVs. You would think that would spur Ford on to make only the best examples of its ICE range and give customers exactly what they want, superior products across the showroom and let them decide when to switch to electric.

 

This preoccupation with 10% return is driving some crazy cost cutting with vehicles that shouldn’t be happening, they’re hurting their own integrity by short sheeting buyers who notice decontenting.

Edited March 3, 2022 by jpd80

[Footballfan]

32 minutes ago, jpd80 said:

These are insane times where manufacturers are stymied at every turn, they can’t build enough product and the future vision keeps changing with more bucks spent to accelerate the switch to BEVs. You would think that would spur Ford on to make only the best examples of its ICE range and give customers exactly what they want, superior products across the showroom and let them decide when to switch to electric.

 

This preoccupation with 10% return is driving some crazy cost cutting with vehicles that shouldn’t be happening, they’re hurting their own integrity by short sheeting buyers who notice decontenting.

I remember the glory days of Ford in the 1980s and 1990s. Every vehicle they launched during that time- with the exception of the Countour and Mystique was a hit in the marketplace.  Why?  Cutting edge styling, "Quality is Job One,"  offering customers good value, and listening to customer needs. Quite simple when you think about it.  Obsession with profit margin usually means the customer is shortchanged and will look elsewhere for better value.  Meanwhile market share erodes and when we have a recession- which is all but certain now- you'll have to offer gobs of cash to move the metal.  There goes your margins and now you've lost customers to boot. 

[2005Explorer]

1 hour ago, Footballfan said:

I remember the glory days of Ford in the 1980s and 1990s. Every vehicle they launched during that time- with the exception of the Countour and Mystique was a hit in the marketplace.  Why?  Cutting edge styling, "Quality is Job One,"  offering customers good value, and listening to customer needs. Quite simple when you think about it.  Obsession with profit margin usually means the customer is shortchanged and will look elsewhere for better value.  Meanwhile market share erodes and when we have a recession- which is all but certain now- you'll have to offer gobs of cash to move the metal.  There goes your margins and now you've lost customers to boot. 

Well you have a point to a certain point. The 1986 Taurus and Sable were products that no expense was spared on and it showed. At the time they offered features and cutting edge design that no one else was doing. However they were slowly decontented until 1995 and many of the little touches that made them what they were started to disappear. When the controversial 1996 model appeared it too offered a lot of neat touches, but then they took decontenting to the next level. The same happened with the 2000 model. The original generations of Taurus could provide a whole case study on decontenting.

 

There are other quite ingenious products that came from Ford during that era and many were done with limited resources. The Tempo and Topaz was one of the best selling compact cars and all it really was is a stretched Escort. The 1983 Thunderbird and Cougar took a very unappealing car and turned it into something really stylish with better performance and quality on the same Fox platform.

 

However there were also products that suffered from cost cutting during the same period. The Yuma small truck platform brought the Ranger, Bronco II, and later Explorer, however Ford cost cutting created a dangerous vehicle on the BII and to a lesser extent in the early generations of Explorer. Sure Ford made tons of money, but do some research and the engineers knew the Ranger platform when serving in SUV duty had extremely poor stability. The management said build it anyway because they were not paying money to improve it. What happened next was a lot of lawsuits. It took Ford until 1995 to finally get rid of the archaic twin I beam front end on those products and until 2002 to actually build the Explorer chassis properly to give it better stability.

 

So even going back to the 80's and 90's you can find examples of Ford doing great things and doing some very questionable things too. The products of the era sold well, but that is more because Ford was way ahead of GM and Chrysler at that time when it came to design and quality. The imports although a large factor at the time were not a factor like they are today.

Edited March 3, 2022 by 2005Explorer

[rperez817]

17 hours ago, 7Mary3 said:

I find it interesting that Ford seems to be under a lot more pressure than VW, Toyota, or even GM to spin its EV business off.  I wonder if it is because of Ford's well known fiefdoms and internal power struggles Wall Street thinks that Ford may be unable to manage the growth of their EV business.  Farley seems to be acknowledging that Ford will not be able to make the transition with their current talent pool.     

 

Your explanation is perfect 7Mary3. Ford's dysfunctional culture is a key reason why the company is under a lot more pressure than VW, Toyota, or GM, and ultimately is why Farley took the lead among incumbent automakers to separate BEV/advanced technology operations from ICE vehicle operations.

 

Last year shortly after Ford announced its Ion Park battery R&D facility, Autoextremist came to his senses and provided a 100% accurate description of the latest "looming crisis for Ford". TIME: THE CRUELEST ENEMY. - Rants - Autoextremist.com ~ the bare-knuckled, unvarnished, high-electron truth...

 

Quote

This looming crisis for Ford – yes, yet another one (does it seem like Ford has careened from crisis to crisis throughout its history? Why yes, yes it has) – goes well beyond the current chip shortage fiasco. 

It seems that Ford decided a while ago that trusting its battery production supply to a network of suppliers would be its best bet for success in the BEV game. This decision was actually a departure for Ford, as the company is famous for doing things in-house because it truly believes that whatever it is it can do it better, faster and cheaper (even though it has been proven repeatedly that when the company gets involved things take twice as long, cost twice as much and are rarely, if ever, better).

But Ford quickly found out that the battery game is a different animal altogether. Relying on a network of suppliers for off-the-shelf advanced technology left the company ill-equipped and decidedly lacking in the battery development/technical knowledge aspect of the business. Huge mistake. Quite simply, the company has been left exposed and unprepared, and it has squandered its ability to be a leader in a space that desperately calls for in-house developed, proprietary technical leadership.

 

Edited March 3, 2022 by rperez817