Does designing, producing and selling electric vehicles involve fundamentally new skills and business models?

Although the world's largest manufacturers such as Toyota, VW and Stellantis seem to refuse to split their combustion and electric activities, others such as Geely, Ford and Renault are in the process of making this choice. To justify this, they argue that electric and combustion vehicles are not subject to the same operational treatments. This hypothesis seems very fragile in view of the practices of those who defend it.

While Renault announced in a press release that very important decisions would be announced at the 'Capital Market Day' on November 8, Autoactu tells us that Ford produces its combustion F-150 and its electric Lightning on the same site in Dearborn. AFP reports that "everything is designed to be 'flexible' so the site can be used for both combustion and electric F-150s" and the site manager explains:
"If we've got it wrong, we can build more aircraft with combustion engines. If battery-electric vehicles really take off, as we expect, we can ramp up again.

Insofar as Ford is presented - along with Geely/Volvo - as having made the choice of splitting the thermal and electric activities that Renault is about to make, this article may be surprising: both Jim Farley and Luca de Meo claim, in order to defend their reorganisations, that the businesses, technologies, vehicles, supply chains and commercial treatments are very different and that it is therefore essential to deal with them in separate organisational entities.

They produce their electric vehicles and turbines by converting existing sites rather than creating new ones. They design them with engineering that remains largely the same. They are car guys themselves and, although Ford went to great lengths in the autumn to give signs of correcting this, their teams are largely made up of men and women who look like them. It is therefore fair to ask whether, as they claim, 'operational excellence' requires these reorganisations.

We therefore do not deal here with the other question raised by these reorganisations, which is the financial and/or stock market question, and reserve it for another column, and we concentrate on the case of Ford, the examination of which may be instructive with regard to the Renault dossier.

Even if certain financial analysts see in the presentation of the constitution of the two divisions called respectively Ford Model E and Ford Blue the prefiguration of a future spin off of the electric part, Ford has, in March, very clearly arbitrated for the constitution of two divisions of the Ford Motor Company which remains the only listed company.

According to J. Farley, it is not a question of trying to raise money on the Stock Exchange by introducing a "new Ford" whose share would be appreciated by the markets and which would then allow capital increases to be carried out which would ensure the financing of the electrics. As this financing was, for Ford, assured by the current profits of the company, the basis for the constitution of the division would be solely managerial.
And, in fact, J. Farley, who, like a good part of the American business press, seems completely obsessed with Tesla, defends the thesis according to which it is imperative, in order to deal correctly with the electric dossier, to "structure oneself in start-up mode" and to throw away the old convictions, routines and skills.

He says the creation of the Ford Model E division was inspired by the success of the small teams that developed the Ford GT, Mustang Mach-E and F-150 Lightning, as well as the company's dedicated EV division in China. For him, these successes mean that success in EVs requires bringing together very new skills in leaner entities, and it is on this basis that Ford Model E's key objectives have been defined, which the release summarises as follows
- to attract and retain the best talent in software, engineering and design and to develop new technologies and concepts that can be applied across the Ford business;
- Adopt a clean-sheet approach to designing, launching and developing volumes for the personal and shared mobility of people and goods;
- developing the key technologies, skills and components - such as EV platforms, batteries, electric motors, inverters, charging and recycling - to create breakthrough electric vehicles;
- creating the software platforms and networked vehicle architectures.

It is perfectly understandable that new talents from disciplines and training far removed from those which have hitherto structured the technological life of manufacturers should be sought to make differences in elements such as batteries, electric motors or battery management systems. One also understands that all this must be applied to the "whole of the Ford company" which will continue to sell passenger and commercial vehicles, financing and maintenance, and it is therefore difficult to follow the reasoning which would have us adopt a "clean-sheet" approach to this: The Ford GT, the Mustang Mach-E and the F-150 Lightning may have involved small teams, but they drew on skills built by individuals and teams who were far from starting from scratch and who produced convincing electric vehicles not because they knew nothing about cars but for exactly the opposite reasons.

Not only would electric vehicles not see the light of day if combustion engine vehicles did not earn the money necessary to absorb the losses that, despite public aid, the EV implies in its take-off years, but their chances of earning money one day would be infinitely weaker if their design, manufacture and marketing had to be envisaged without mobilising the skills accumulated in the industry and particularly in the major manufacturers.

We can accept that, in order to please the markets, stroke the analysts and allow the share price to recover a few percent, it is necessary to pretend the opposite. The problem would become serious if one believed in it and if the organisations actually dealt with the electrical dossier as J. Farley claims to do. The risk is limited at Ford because the financial autonomy of the divisions is not, for the moment, considered desirable. It is more important at Geely which has started to structure in 2021, in order to relieve Volvo of its thermal assets, a sort of hive-off structure called Aurobay of which Volvo will be a client as long as the company sells thermal or hybrid vehicles and which will then have to find other clients or die. Renault seems to be looking at things more in Geely mode than in Ford mode and that is not reassuring.

3/10/2022