Ford Motor Company (NYSE: F) is splitting its monetary capacity and expecting to identify winners in both the gas and electric car categories, but General Electric (NYSE: GM) is pouring all of its money into electric vehicles. At first sight, GM’s wager appears to be the stronger one, but Ford isn’t quite as far behind.
GM goes Fossil fuels free :
With nearly $26 billion in cash on hand, GM is spending even more significantly on electric vehicles than its crosstown competitor. GM has committed to investing $35 billion in its electrification initiatives by the middle of the decade, with $7 billion already invested on EV manufacturing facilities in Michigan. By 2035, the company has said that it would solely produce zero-emission automobiles.
Given a six-year industry lead time for all-new automobiles, that’s only two manufacturing cycles. Some GM divisions will make the switch to electric vehicles even sooner. On June 1, Buick revealed a new electric concept car called the Wildcat EV and stated that by 2030, it will solely be producing electric vehicles.
GM CEO Mary Barra stated in January that the company will have the battery cell and car assembly capability to be the EV leader by 2025. To put it another way, GM intends to pass Tesla in in three years. That’s audacious – and, more crucially, it appears to be within GM’s grasp.
Any automaker’s best road ahead appears to be investing in electric vehicles. To achieve upcoming fuel economy rules, automakers will need to sell a large number of electric cars, which have nothing in common with typical ICE vehicles. Making two unique sorts of vehicles is expensive; when you use few common parts and do various forms of research and testing, you lose a lot of the cost-cutting benefits of mass-producing automobiles. To remain cost-effective, automakers must go all-in on electric vehicles.
In the future, industry analysts should evaluate the pricing of Ford and GM’s electric vehicle batteries, as well as how many products each company can produce on a single EV platform. Automakers will need to be as efficient as possible to thrive in this developing market.
Fords strategy of 2-Division
Ford split its company into two different and arguably unequal divisions earlier this year: Model e, which is responsible for electric vehicles, and Ford Blue, which is responsible for making legacy internal combustion engine (ICE) vehicles. On June 2, Ford announced a $2.3 billion investment in manufacturing facilities in Ohio, Michigan, and Missouri to support the manufacture of electric cars such as the groundbreaking F-150 Lightning truck, the E-Transit electric van, and a new EV commercial vehicle.
Ford will invest $1.4 billion on historic combustion-engine-powered vehicles, including a new Mustang coupe and Ranger truck, as part of the two-division restructure.
If other aspects aren’t taken into account, Ford’s divided investment appears to be a bit deceiving. It may appear like Ford is investing a lot of money on outmoded technology, but consider that it already committed an extra $11.4 billion in electric car production and batteries, tipping the scales heavily in favour of electric vehicles.
Ford has over $41 billion in cash and marketable securities in its piggy bank as of March, so the investment doesn’t appear to be exorbitant.
Despite this, opinions on the advantages of Ford’s two-division system are split. Some analysts believe it’s simply a strategy to reduce ICE production over time by decreasing the Blue division while expanding the Model e division.
Once most passenger cars are electrified, the business might either close the Blue division or strive to stay competitive in the heavy-duty diesel and gas-powered category while focusing on the growing electric passenger-vehicle market.
Keeping both divisions might prove to be a mistake. Ford’s heavy-duty semi business was sold to Freightliner, and the company doesn’t have a clear leading position in the heavy-duty truck category. GM has revealed intentions to produce electric versions of its 3/4- and 1-ton trucks, but Ford is determined to continuing to offer ICE versions of these workhorses.
Ford may decide to stop producing combustion-engine vehicles in the future, but in the meanwhile, the corporation risks squandering resources on fossil-fueled products with a short shelf life.