Lead
Introduction
Essentially, it's a cost game.
Author 丨 North Shore
Responsible editor 丨 Cui Liwen
Editor 丨Zhu Jinbin
In the long era of traditional fuel, automakers have spent more than a century researching and upgrading engines, but in the once-in-a-century period of industry transformation, these companies collectively face a strategic choice about "breaking away" -
The acceleration of electrification and the sharp depreciation of the assets of the former fuel vehicles not only threaten the short-term profits of car companies, but even threaten their long-term survival.
This is a collective problem that plagues most manufacturers, and we can also see that in recent months, companies have taken action to create separate new divisions for electric vehicles and emerging businesses, to spin off from the traditional internal combustion engine business, and even to launch a separate electric vehicle brand suitable for the new era.
Only by doing so can manufacturers hope to embrace a more imaginative future and free up more capital and energy within the company. The surge in stock prices and valuations of Tesla and other electric car startups in previous years has made traditional manufacturers decades, if not centuries," anxious.
"From an operational standpoint, the retirement plans of traditional fuel products that many manufacturers are most concerned about right now," analysts at data information agency IHS Markit said in a report last year, "in other words, it is time to consider how to gracefully or orderly exit the traditional fuel vehicle market and minimize the negative impact of legacy of old assets, such as declining profit margins, layoffs, changes in product sequences, and manufacturing assets that had to be abandoned." ”
How is the relationship between old and new assets handled?
One is to be listed separately. Polestar Polestar Polestar is an electric vehicle brand spun off from Volvo Cars and is currently scheduled to go public this quarter through a special purpose acquisition company (SPAC).
One is to split separately. Renault's EV divestiture plan is a foregone conclusion, and Ford has announced a new corporate structure, with two different business units, Model E and Model Blue, and the new business is personally led by a leader.
The other is to share the risk equally. Daimler chose to reposition its Smart brand as a new joint venture with Geely in China, and in the future, European electric vehicles will also complete part of the design and final production of new cars in China. BMW is moving its internal combustion engine production to Austria and the UK and is embarking on a global distribution of its production capacity, with the German base focusing on electric vehicles and other new businesses in the future.
While not directly related to electric vehicles, both Volkswagen and Daimler have spun off their trucking divisions over the past two years, providing a better ground for the group to focus on electric passenger cars, such as the Volkswagen ID lineup they have focused on recently and mercedes' EQ brands.
"At this special point in time for this transformation, we also see different business models, but most of the companies are on the same path, that is, the limited resources are focused on new businesses such as electric vehicles." Andreas Tschiesner, head of McKinsey's automotive business in Europe, analyzed it.
"The logic behind it is completely different."
Ford CEO Jim Farley admitted to investors on a January conference call that it wants to run the electric vehicle business in the new era, which is different from the traditional fuel vehicle business in the past, based on this consideration, Ford chose to spin off the electric vehicle business under the leadership of the new leadership team, and took the opportunity to carry out a drastic reform of the company's structure.
"Market demand and product matrix will be overturned, and even procurement, supply chain and key components will be completely different." Farley added that the pace of the new business will also be completely different, fundamentally, the internal logic will also be completely different, and management will need new thinking and new ways of coping.
Wall Street analysts believe that investors prefer to see the old assets represented by the internal combustion engine as a "dead weight" on the balance sheet, but at the same time, almost all manufacturers' profits at this stage come from fuel vehicles, which may continue for several years until the electric vehicle business is mature enough. In the words of Jim Farley, the fuel vehicle business at this time was a "profit lever" whose profitability was important for the transformation.
Of course, spin-offs also bring certain risks.
Will a new EV company attract enough investment to leapfrog the ramp-up period of R&D and capacity? Can the suspension of the internal combustion engine business be managed in a way that avoids large-scale layoffs? After all, initiatives such as going public alone or restructuring are huge hr resource challenges, which is one of the reasons why most automakers are wary of radicalizing the transition, which they need to gradually transition to electrification to protect the job base.
However, the wheel of the transformation of the new four modernizations to the present, the idea of "avoiding radicalism" may be outdated, with the rapid growth of the market share of electric vehicles, the new car-making forces from 0 to 1 are also becoming more and more mature, coupled with the increasingly urgent global call for decarbonization, more and more players can only wave goodbye to the fuel vehicle business.
Traditional manufacturing has entered the "second phase" of transformation.
In the "first stage" of the transition to electric vehicles, automakers often choose to continuously increase their efforts to explore the transformation, such as huge expenditures in the capital dimension; in the current "second stage", the development path has become increasingly clear, and everyone has completely biased the balance of the bet on electrification and other new things, and has withdrawn funds from old assets and technologies to make up for the higher expenditure of electric vehicles and autonomous driving.
Also avoid avoiding the "zero-sum" trap.
The so-called "zero-sum" trap of transformation, that is, the profit margin of traditional fuel vehicles declines faster than the profit margin of new business. In the upcoming "third stage" of transformation, the independence of new businesses will become the key consideration of the reorganization and failure, and some of the old assets that have been reduced or divested have been difficult to continue to "transfuse" for the transformation, and the impact on the balance sheet will become more and more prominent.
Essentially, it's a cost game. There are already new car-making forces that have chosen an asset-light model, and most of the links in the value chain are contracted by other companies, eliminating complexity and moving forward lightly. For example, Magna manufactures electric vehicles for a number of startups, and Sony has chosen Honda, which is also in the Toei camp, for a manufacturing marriage.
At least for now, fuel vehicles still bring very good profits and cash flow to manufacturers, and this irreplaceability will continue into the next 10 or 15 years. Even for new car companies that do not have the burden of old assets, if there are investment institutions that want to increase their funds, the relatively stable cash flow in the next few years is also a major consideration.
| north shore |
A sommelier who doesn't love cars is not a good editor.