Essentially, it's a cost game.

　　In the long traditional fuel era, automakers spent more than a century researching and upgrading engines, but entering a once-in-a-century industry transition period, these companies collectively faced a strategic decision of "breaking up" --

　　The acceleration of electrification and the sharp depreciation of former fuel vehicle assets threaten not only the short-term profits of car companies, but also their long-term survival.

　　This is a collective conundrum that plagues most manufacturers, and we can also see that in recent months there have been moves by companies to create separate divisions for electric vehicles and emerging businesses to separate them from the traditional combustion engine business. dismantled, and even launched a separate electric vehicle brand suitable for the new era.

　　Only by doing so can manufacturers hope to embrace a more imaginative future and unlock more capital and energy within the company. The soaring stock prices and valuations of Tesla and other electric-vehicle startups that have sprung up in the past few years have made traditional manufacturers with decades or even centuries of history anxious.

　　"From an operational standpoint, the retirement plan for legacy fuel products is currently the top focus for many manufacturers," analysts at data consultancy IHS Markit said in a report last year. "In other words, it's time to consider how elegant A ground or orderly exit from the traditional fuel vehicle market and minimize the negative impact of legacy assets such as declining profit margins, layoffs, changes in product sequence and manufacturing assets that have to be abandoned.”

　　How to deal with the relationship between old and new assets?

　　One, it is listed separately. Polestar, the electric vehicle brand spun off from Volvo Cars, is now scheduled to go public this quarter through a special purpose acquisition company (SPAC).

　　One is to separate them separately. Renault's electric car spinoff plan is a certainty, and Ford has announced a new corporate structure, with two different business units, Model e and Model Blue, and the new business is personally in charge of the new business.

　　Another way is to share risk. Daimler has chosen to reposition its Smart brand as a new joint venture with China's Geely, and future European electric vehicles will also be partially designed and eventually produced in China. BMW is moving production of its internal combustion engine to Austria and the UK and is starting to restructure the global distribution of its production capacity, with the German stronghold 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 truck divisions over the past two years, providing better ground for the group to focus on electric passenger vehicles, as they have recently focused on Volkswagen ID lineup and Mercedes' EQ brand.

　　"At this special point in time of transition, we have also seen different business models, but most companies have reached the same goal, focusing their limited resources on new businesses such as electric vehicles." Andreas, head of McKinsey Europe's automotive practice Tschiesner so analyzed.

　　"The logic behind it is completely different."

　　Ford CEO Jim Farley admitted to investors in a conference call in January that running an electric vehicle business in the new era is different from running a traditional fuel vehicle business in the past. With this in mind, Ford chose to spin off the electric vehicle business under the leadership of the new leadership team, and took this opportunity to make drastic changes to the company structure.

　　"The market demand and product matrix will be overturned and even the procurement, supply chain and key components will be completely different." Farley added that the rhythm of the new business will also be completely different, fundamentally speaking, the internal The logic is also completely different, and management needs new thinking and new ways of coping.

　　Analysts on Wall Street believe that investors are more willing to view 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. car, and this could continue for years until the EV business is mature enough. In the words of Jim Farley, the fuel vehicle business at this time is a "profit lever", and its profitability is very important for transformation.

　　Of course, spin-offs also bring certain risks.

　　Can a new EV company attract enough investment to leapfrog the ramp-up in R&D and production? Can the shutdown of the internal combustion engine business be managed in a way that avoids mass layoffs? After all, moves such as a separate listing or internal restructuring pose a huge human resource challenge, which is one reason why most automakers are wary of radical transitions, as they need to gradually transition to electrification to protect the employment base.

　　However, as the wheels of the new four modernizations are turning, the idea of ​​"avoiding radicalism" may be outdated. With the rapid growth of the market share of electric vehicles, the power of new car manufacturers from 0 to 1 is becoming more and more mature. The call for decarbonization is becoming more and more urgent, and more and more players can only wave goodbye to the gasoline vehicle business.

　　Traditional manufacturing has entered the "second stage" of transformation.

　　In the "first stage" of the transition to electric vehicles, automakers often choose to continuously increase their investment in order to explore the transformation, such as huge expenditures in the dimension of capital; in the current "second stage", the development path has become increasingly clear, and everyone has already made bets The balance of power is completely skewed toward new things like electrification, pulling money out of old assets and technology to make up for higher spending on 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 is declining faster than the profit margin of new business. In the upcoming "third stage" of the transformation, the independence of new businesses will be the key consideration for the failure of the restructuring. It is difficult for some old assets that have been reduced or stripped to continue to "transfusion" for the transformation, and the impact on the balance sheet will also be will become increasingly prominent.

　　Essentially, it's a cost game. There are already new car manufacturers who have chosen the asset-light model. Most of the links in the value chain are manufactured by other companies to eliminate complexity and move forward lightly. For example, Magna manufactures electric vehicles for a number of start-up companies, and Sony also chooses Honda, which also belongs to the East Ying camp, for manufacturing and 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, relatively stable cash flow in the next few years is also a major consideration.