Delphi Gets Its Own Spinoff, Core Focus Now on Autonomy and EVs
Automotive supplier Delphi announced plans on Wednesday to spin off all operations tied to internal combustion engines and focus solely on electric propulsion and autonomous vehicles.
The move boosted share prices while underscoring the problems facing the industry’s old guard. That’s not to suggest that internal combustion engines are going to vanish anytime soon, but the investors who fund their development seem progressively less interested in backing them. An interesting choice, considering EV-maker Tesla is valued well above a traditional manufacturer like Ford — despite not being nearly as profitable.
Delphi says it will spin off its $4.5 billion powertrain division into a separate publicly traded company by early 2018 and is considering a new name.
“I do like the Delphi name. We have created a lot of value for customers, a lot of value for shareholders so there is value in that name,” Delphi CEO Kevin Clark told the Detroit Free Press. “We just think as a management team that given what we are going through, someone is going to have to have a new name…I quite frankly don’t have a preference one way or the other.”
Creating a distinction between the two companies will be important, however. Investors will want to be clear about which entity they funnel money into. The “new” company will employ roughly 20,000 employees globally and 5,000 engineers and, according to Clark, maintain its current presence in metro Detroit.
Since the announcement, Delphi’s shares surged $9.43, or 12 percent, to $87.88 on the New York Stock Exchange.
[Image: Delphi]
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delphiDelphi is a dolphin. Bosch, Lucas, Magnetelli, what is that all about?
Re-brand ACDelco as the electric division. AC. Get it? LOL!
"EV-maker Tesla is valued well above a traditional manufacturer like Ford — despite not being nearly as profitable." Tesla just reported a quarterly loss of $397 million, up (down?) from the $282 million it lost in the same quarter last year. Ford reported a first quarter profit of $2.2 billion, down from $2.5 billion in Q1 2016. Yeah, I'd say that a company that lost hundreds of millions of dollars in a quarter is not nearly as profitable as a company that made billions in the same period.
I become misty-eyed when I think of Delco and Delphi. I was hired by the Delco Oak Creek plant back in the mid 1980’s. I just graduated with a degree in Electrical Engineering, and became a manufacturing engineer for the avionics branch of Delco. The plant was amazing. We built navigational systems for commercial and military aircraft using mechanical gyroscopes, we assembled missile guidance systems and light armored vehicle assemblies. We even manufactured our own circuit boards for our products. In the same complex we manufactured automotive engine controllers and body computers. In the AC site, we punched out catalytic converters…at one time, we were the world’s largest consumer of stainless steel.* In the early 1990’s, I transferred to the Kokomo, IN site to work on engine controllers. We did it all – fabricated the FR4 circuit boards for the computers, grew wafers for the integrated circuits, punched out sheet metal for the computer case, wound coils for speakers and manufactured radios. Now we are just a shell of what we were. Delphi does little manufacturing here in Kokomo; the GMCH site north of the old Delphi’s headquarters (which was bought back from Delphi during the bankruptcies) is about to close after model year 2018. I am not close to the autonomous car engineering, but I am certain that Delphi is doing well with this. As I wind down my career here I am thankful for all the experience I had with (at the time) the cutting-edge technology that Delphi had. __________________ * https://history.gmheritagecenter.com/wiki/index.php/The_Milwaukee_Plants_-_End_of_an_Era