Delphi Gets Its Own Spinoff, Core Focus Now on Autonomy and EVs

Matt Posky
by Matt Posky

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]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

More by Matt Posky

Comments
Join the conversation
 5 comments
  • Johnnyz Johnnyz on May 03, 2017

    delphiDelphi is a dolphin. Bosch, Lucas, Magnetelli, what is that all about?

  • Superdessucke Superdessucke on May 03, 2017

    Re-brand ACDelco as the electric division. AC. Get it? LOL!

  • Ronnie Schreiber Ronnie Schreiber on May 04, 2017

    "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.

    • BuzzDog BuzzDog on May 04, 2017

      I was thinking the same thing. In its entire history, Tesla has only posted a profit in two quarters: First in 2013, and again in 2016.

  • Star_gazer Star_gazer on May 04, 2017

    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

Next