Corporate strategies in an EV world

Issue #131, Feb 18th, 2022

Corporates are in the process of taking a relook at their strategy and rejigging it where required, specifically to face the onslaught of electrification of vehicles. Ford is evaluating a spin-off of its electric vehicle (EV) division for faster movement and eventually a better market valuation than the parent organization. Toyota is readying for a mass EV manufacture, contrary to its hybrid vehicle approach so far. Japan will not be a target market though due to its low appetite for EVs and will be approached with a subscription-based business model. Intel CEO sees this as the golden era of semiconductors and announced a division for automotive chips to cash in on the opportunity. Consumer electronics major Panasonic sees charging stations contributing upto 10% of its revenue as its enters this market. Here are some recent updates that give a peek into the type of board room discussions that could be going on as we see electrification of vehicles happening all around.

Ford's spinoff plans

Ford is looking at ways to separate its EV operation from its century-old legacy business, hoping to earn the sort of investor respect enjoyed by Tesla and other pure-play EV makers. CEO Jim Farley wants to wall off Ford’s electric operations from its internal combustion engine business and has even considered spinning off one or the other, people familiar with the effort said. A spinoff could generate the kind of earnings multiples that have given Tesla a market value approaching $1 trillion. - Bloomberg

Toyota's first mass-produced EV

Toyota's first all-electric mass-market model will not be sold to consumers in Japan when it rolls out later this year as the automaker focuses on bigger markets with more established demand for electrics. The new model will be available in a subscription-only model in the automaker's home country. Toyota is sending about 10% of its total production of the SUV to Japan as the larger focus is expected to be on North America and Europe. It is a step forward for Toyota, which has been slower to move into purely battery-powered EVs than its competitors, relying heavily on hybrid technology instead.- Nikkei Asia, The Guardian and other sources

Intel's automotive group

Intel announced recently that it is forming an automotive group under its foundry business to focus on car chips, as the company seeks to accelerate its chipmaking business to catch up with TSMC and Samsung. However, the race requires heavy investment and could leave Intel with negative cash flow this year. For automakers, processors in 2019 represented 4% of a car's cost, but it's going to soar to 20% by 2030, Intel predicts. - Nikkei Asia and CNET

Revenue from EV charging stations

Panasonic life solutions India is projecting a substantial growth in the nascent electric charging equipment segment, which it expects will account for almost 10% of overall revenues by the turn of this decade. Panasonic is one of the big consumer electronic companies to have ventured into this space which is otherwise dominated by pure-play firms like ABB, Schneider, Delta Power and Exicom. - Economic Times

Truckers and capex

Trucking companies plan to spend more on new trucks and trailers this year. Executives at major trucking companies said following robust 2021 earnings reports that they planned to increase capital expenditures this year from around 30% to more than double last year’s total, signaling confidence that strong shipping demand and high freight rates in the U.S. market would continue. But supply-chain problems threaten to constrain their efforts to expand freight-hauling capacity and rejuvenate their fleets. - WSJ

Maruti's partnership for subscription program

Car subscription is gaining pace as customers' ownership preference is changing across all segments. Although it is a relatively new concept for customers in India, Maruti Suzuki India Senior Executive Director, Marketing and Sales, Shashank Srivastava said, "in less than two years of its launch, we have received a phenomenal customer response for Maruti Suzuki Subscribe with nearly 1 lakh enquiries." Maruti has partnered with Quiklyz by Mahindra Finance, for its vehicle subscription program. - Economic Times