(Wen/Pan Yuchen Editor/Lou Bing) Like many traditional automakers, Ford Motor, which has a history of 118 years, is facing the impact of the industry brought about by the wave of "new four modernizations" transformation. However, with the increase of product launch in the past one or two years, Ford has gradually become the second largest electric vehicle manufacturer in the United States after Tesla. After the 2021 financial data turnaround, Ford's electrification process seems to have taken a new direction.
According to Bloomberg, Ford Chief Executive Officer (CEO) Jim Farley is considering splitting its electric vehicle business with its fuel vehicle business, or even divesting one of the businesses entirely. According to two people familiar with the matter, Ford and financial advisers have met late last year to discuss specific operating options for the electric vehicle business, including possible restructuring and financing.
People familiar with the matter said that Farley has been seeking to maximize the value of Ford's electric vehicle business, so its consideration of transformation is constantly changing. However, considering the difficulty of splitting the entire company, Ford may only split the electric vehicle business as a division, allowing Ford to regain its advantage in the electrification revolution. At the same time, the new division after the split is also expected to be listed independently, and the capital market that is enthusiastic about the concept of new energy has reached a new high in recent years.
To achieve that goal, Farley is working closely with Doug Field, a former Tesla principal engineer and Apple's automotive project leader. Field joined Ford as senior technical director in September last year and is expected to take up senior roles in the new entity after the business splits.
After the news flowed out, Ford's stock price rose sharply, and by the end of last week, Ford's stock price was up 2.85% to close at $18.04.
Clear plan
However, Ford Motor Has clarified this rumor through an email. Ford said it is making changes through the established "Ford +" plan to thrive in the era of electrified and intelligent vehicles, but has no plans to divest the electric vehicle business.
The so-called "Ford Plus" plan was officially proposed in May 2021. Under the plan, Ford will invest $30 billion in electric vehicles by 2025 and another $10 billion to $20 billion by 2030. According to Ford's plan, the annual production of its electric vehicles will reach 600,000 in the next two years, and by 2030, Ford's sales of electric vehicles will reach half of its total sales.
However, according to people familiar with the matter, Farley did not completely deny the possibility of splitting the business during the earnings call in early February. He noted at the meeting that Ford has completed a "gradual" change and will be followed by a "clear plan" and "an attitude at all costs" to accelerate the transition.
At present, Ford Motor has released three pure electric vehicles in the US market. Among them, the Mustang Mach-E has sold more than 27,000 units last year, becoming the second-best-selling pure electric SUV in the United States, after the Tesla Model Y; more than 200,000 F-150 Lighting orders scheduled for delivery this spring, far exceeding production capacity expectations; and another electric truck, E-Transit, which is mainly for the logistics industry, has also recently begun to ship.
Based on this, Ford plans to triple production of the Mustang Mach-E and double the production of the F-150 Lighting this year.
However, compared with the market share of its electric vehicles, Ford's board of directors seems to be more concerned about the company's performance in the investment market.
With the acceleration of the "new four modernizations" of automobiles, compared with traditional car companies, the new forces of electric car manufacturing are more favored by investors, and their market value has risen much higher than that of traditional forces. Not to mention Tesla, which sells nearly 1 million vehicles a year and has a market value of more than $1 trillion, even if the Rivian, which was only listed in November last year and produced and sold only 1,000 vehicles, its market value once surpassed Ford at the end of last year.
Still, with the implementation of the "Ford Plus" plan, Ford's stock price has soared about 140% in the past year, outpacing Tesla, General Motors and other new American car-making forces to become one of the best-performing car stocks in 2021.
In this context, it seems logical for Ford to expand its investment in the electric vehicle business in a more independent form.
Ford's considerations are not without precedent. As early as 2017, the well-known parts supplier Delphi spun off its power business from the parent company and listed it under the name "Delphi Technology"; the rest of the business belonged to the parent company and changed its name to Aptiv, focusing on active safety and autonomous driving. In 2020, Delphi Technology was acquired by BorgWarner, and Aptiv, which was born from the original Delphi, completed the transformation from a traditional parts supplier to an Internet technology company.
Capital markets are also looking forward to these "new players" from traditional car companies: Morgan Stanley also argued in an investor report last November that traditional automakers are facing serious challenges to electrification, and that despite ford's great progress in electric vehicles, 'non-traditional' measures are still needed to address these challenges.
The test is high
However, compared with parts suppliers such as Delphi, As Ford Motor, which has a history of nearly 120 years of vehicle manufacturing, its "elephant turn" brings much more tests.
First, the Ford family, the founding family, still has a major voice in ford. Bill Ford, the current executive chairman of Ford, is a great-grandson of the company's founder, Henry Ford, and the founding family led by him controls the company through super-voting Class B shares and has three seats on the board.
Bill Ford is seen as an environmentalist and is also quite supportive of Ford-branded electric vehicles. According to Ford insiders, Bill Ford fell in love with the Mustang Mach-E prototype after borrowing it and forgot to return it for a while. But according to people familiar with the matter, the founding family remains cautious about the company's big changes, after all, they do not want to lose their influence on the century-old store.
In addition, even if the company is split within the company, the engineering and operations management of the new division is a major test for Ford's senior management. According to Farley himself, unlike a successful fuel car company and an electric vehicle company, the design of electric vehicles and the way they attract users are completely different, and it is difficult for workers in different businesses to coordinate.
At the same time, ford, which is transforming into electrification, also needs to coordinate the interests of traditional car dealers. Farley believes that the gross profit margin of Tesla bicycles is as high as 30.6%, and it is through the direct sales model to optimize costs. Ford electric vehicles to achieve Tesla's profit margins, also need to reform the traditional dealer business model, but how to coordinate the relationship with existing dealers is still a major difficulty.
In addition, Ford faces challenges from American workers and the Federation of American Auto Workers (UAW). Although Ford built a new assembly plant in Tennessee to produce the F-150 Lighting pickup, for the sake of labor costs, Ford's factory for the production of mustang Mach-E was selected in Mexico. However, just three years ago, the strike of American workers caused by foremen, GM and other giants planning to close their home factories forced the former to reach a settlement agreement with the UAW. With the lessons of previous cars, Ford may be more constrained in dealing with overseas production.
Take a look:
For Ford, with its electrification in the North American market, its stock price is currently at an all-time high and it is temporarily in a leading position in competition with traditional competitors such as GM, but it will take time to catch up with industry leaders such as Tesla.
"Elephant turnaround" is never easy, naturally because of the weight it carries. Ford's relationship with the family's shareholders, management, workers and dealers inevitably became the burden of the traditional giant. How to coordinate the contradictions of all parties and make the group transform into a centripetal force is the core of the test of Ford's high-level wisdom.
On the other hand, ford's electrification progress is still mainly concentrated in the North American market. In China, the world's largest new energy vehicle market, ford electric vehicles are still significantly behind the market average.
In 2021, Ford sold a total of 625,000 vehicles in China, an increase of 3.7% year-on-year, but the only new energy models it is really selling are the Sharp Edge PHEV and the Collar EV, and the annual sales are only about 500. Although the Mustang Mach-E rolled off the production line at Changan Ford's Chongqing plant last October, a truly large-scale delivery is still to be made.
In addition, compared with the mainstream market joint venture cars, luxury brands have a higher penetration rate in the domestic new energy market, but the recently localized Lincoln brand has no pure electric products, and only relies on the adventurer PHEV to charge a plug-in hybrid model. For Ford China, which has just crawled out of the quagmire, the top priority is to continuously expand the product line to find lost sales, and electric vehicles that are difficult to make profits in the short term can only be helplessly placed in long-term planning.
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