Ford Split Happening!

[RaptorWhoSaysNI]

So F-150s that are gas and diesel powered will be under one division of Ford, and electric F-150s that come off the same assembly line will be under another division? That would be inefficient, but so would having two separate assembly plants for F-150s.

The ICE and BEV assembly lines require drastically different machinery and tooling to build the two different types of vehicles. You can kind of look at the EV division as a new "startup" company. The legacy ICE business is less efficient but generates a massive amount of cash-flow that will support the BEV business until it can operate on a cash-flow positive basis and be self-sufficient. Ford will be assembling the EV F-150s at there Tennessee assembly plant, see article below. Hope this helps folks understand the "split" a little bit better.

Ford and SK Innovation to spend $11 billion, create 11,000 jobs on new U.S. EV and battery plants

The investment includes two lithium-ion battery plants in central Kentucky and a 3,600-acre campus in west Tennessee called Blue Oval City.

www.cnbc.com

 

[thatJeepguy]

Just wait until they start taxing mileage on electric cars.

 

[CoronaRaptor]

Just wait until they start taxing mileage on electric cars.

They wont need too, you'll be paying through the nose for charging it at home or at work.

 

[DFS]

Imagine removing all government incentives and subsidies from EV's, and allowing the US to be energy independent as it could be. "No Malarkey"!

 

[DFS]

They wont need too, you'll be paying through the nose for charging it at home or at work.

My guess is they will tax both, one will be direct through mileage reported to DMV's, and the electricity tax for EV's will be non-descript so indirect.

 

[melvimbe]

The ICE and BEV assembly lines require drastically different machinery and tooling to build the two different types of vehicles. You can kind of look at the EV division as a new "startup" company. The legacy ICE business is less efficient but generates a massive amount of cash-flow that will support the BEV business until it can operate on a cash-flow positive basis and be self-sufficient. Ford will be assembling the EV F-150s at there Tennessee assembly plant, see article below. Hope this helps folks understand the "split" a little bit better.

Ford and SK Innovation to spend $11 billion, create 11,000 jobs on new U.S. EV and battery plants

The investment includes two lithium-ion battery plants in central Kentucky and a 3,600-acre campus in west Tennessee called Blue Oval City.

www.cnbc.com

The ICE business is less efficient? Are you talking about profitably? I find that hard to believe. You'll get more investment money, sure but I wouldn't call that a more efficient business.

Or were you only talking about fuel/climate efficiency? I guess that's what you meant, since you stated ICE cash need to hold up BEV.

 

[melvimbe]

Ford’s ‘radical’ move to split the company won’t come easy

Ford is risking it all with a “radical” move to split the company.

www.theverge.com

The whole argument that the split is going to cause division between employees, or won't be able to recruit, is just silly? They hiring 1st graders over there or something? It's not like other companies don't have profitable products that feed the less profitable areas. And if you don't want to build EVs for a company that also builds ICE, you're an idiot.

This part is interesting though.
Ford says it is sticking with the dealer franchise model — and it really doesn’t have much of a choice. Many US states ban direct-to-consumer car sales, which is Tesla’s preferred sales model. Ford says its dealers will be encouraged to “opt in” to a revamped customer experience and transparent pricing. There will be no inventory, which shouldn’t come as a complete shock to anyone shopping for a new car today during the global chip shortage. All sales will be “order to delivery,” and pricing will be transparent — and likely non-negotiable.

Not sure if they are talking about ICE too, or EVs only. Makes sense though. If you force dealers to compete by not giving them allocations, then they have no leverage to charge ADM, nor a need to sell below MSRP to clear inventory. I can't imagine they won't want to keep some stock though, as the immediate gratification buyer will just go elsewhere.

 

[RaptorWhoSaysNI]

The ICE business is less efficient? Are you talking about profitably? I find that hard to believe. You'll get more investment money, sure but I wouldn't call that a more efficient business.

Or were you only talking about fuel/climate efficiency? I guess that's what you meant, since you stated ICE cash need to hold up BEV.

There are sooooo many factors contributing to the inefficiencies (non that I know of are fuel or climate related):

1) Union legacy costs with ICE business (not against unions here so don't go crazy, union representation at the EV plants would be decided by the workers themselves)
2) Franchise agreements between Ford and the dealerships (huge impediment)
3) ICE business has been around a long time and the red tape is ridiculous and adjusts to market conditions with the speed of an aircraft carrier (EV biz is essentially a startup starting from scratch and can be nimble so they can develop and adjust the business policies and strategies applicable to current times)
4) ICE vehicles are less profitable than EVs, the split will increase earnings before interest and taxes (EBIT) margin from 7.3% to 10% by 2026 (Ford noted the higher margin will be a result of increased EV production)

These are just some that come to mind.

 

[GordoJay]

1) Union legacy costs with ICE business (not against unions here so don't go crazy, union representation at the EV plants would be decided by the workers themselves)

The UAW isn't going to let that happen and they have the power to make it stick.

2) Franchise agreements between Ford and the dealerships (huge impediment)

That's not going away. Nor are the state laws.

3) ICE business has been around a long time and the red tape is ridiculous and adjusts to market conditions with the speed of an aircraft carrier (EV biz is essentially a startup starting from scratch and can be nimble so they can develop and adjust the business policies and strategies applicable to current times)

EV business is separate only when it comes to the financials - the business unit will be reported separately. It's not a different company. It's all make believe. Bullcrap that adds no value. If I owned Ford stock, which I don't because of the share structure, I would sell it.

4) ICE vehicles are less profitable than EVs, the split will increase earnings before interest and taxes (EBIT) margin from 7.3% to 10% by 2026 (Ford noted the higher margin will be a result of increased EV production)

We'll see if EVs stay that profitable. My guess is that when everyone and his uncle gets into the business the competition will bring margins down. It also comes down to what our government does, regulation wise. I'm not optimistic that it will be anything good. Once the environmental disaster of battery pack disposal bites them on the ass, I predict that they'll push the costs onto the manufacturers. But that's just a guess. Hopefully someone smart figures out how to recycle them.

 

[melvimbe]

We'll see if EVs stay that profitable. My guess is that when everyone and his uncle gets into the business the competition will bring margins down. It also comes down to what our government does, regulation wise. I'm not optimistic that it will be anything good. Once the environmental disaster of battery pack disposal bites them on the ass, I predict that they'll push the costs onto the manufacturers. But that's just a guess. Hopefully someone smart figures out how to recycle them.

Not sure about the math on EVs being more profitable than ICE. If we're talking about the cost of material and labor to make an individual vehicle, I could see that. Obviously, it takes more than that to develop and sell vehicles. And the volume in which you can sell them makes a difference too.

From the article I posted above...

Michael Ramsey, vice president of automotive at Gartner, noted that Ford risks creating an internal imbalance, in which the Ford Blue employees are forced to watch as the profits from their work are plowed into the less profitable, more cost-intensive Ford Model E side of the business.