Is this gonna be like when oil companies were saying they should be regulated, knowing full well the government isn’t going to do anything about their record profits? Like, the government is saving face for businesses and they’re taking an opportunity for free PR.
“No! Don’t do that! Don’t let us make so much profit!”
No, I think this is genuine (from the perspective of self-motivation). Designing and building vehicles is a long and expensive process, and up until now companies like Ford have been told that they don’t need any ICE vehicles for sale in the UK market for 2030. Now they’re told that they can either hurriedly reverse course and spin up new ICE vehicle lines for that period, or they can lose out to those companies (like, say, Toyota) who have not managed to make as much progress on the BEV lines and are still likely to have an oversupply of ICEVs.
What they want more than anything else is to know the rules of the game that they’re expected to be playing. Being told at what is, in corporate terms, basically the last minute that the rules have changed is going to be very frustrating.
And it’s not like they can even start making plans based on the new deadline. Why plan for 2035 when there’s a possibility that the Tories will get booted out at the next general election, and the incoming Labour government may move it back to 2030 (you know, assuming Starmer doesn’t go along with Sunak’s U-turn out of fear of losing votes).
This is the real problem with the UK’s stagnating economy and low productivity: it is impossible for businesses to make any plans for the future (which is necessary to commit to investment) when an unstable and incompetent government insists on changing the goalposts every couple of years.
The hard part is the supply chain. It doesn’t cost Ford money to keep an old ICE assembly line going. However they need to tell their suppliers years in advance how much material they will be buying. Those suppliers then use those plans to buy land for mines, buy equipment for the mines, build ore processing plants - all of this financed at good rates because the bank sees they have a contract to deliver.
I’m not an insider at Ford, but I’m confident they have agreements with suppliers to deliver the materials for the electric cars they expect to sell in 2030. They have to because the world today cannot build enough batteries for what they need. If Ford decides to sell 0 electric cars in 2030, they are still under contract to buy enough batteries for most of their cars and trucks to be electric - which is then batteries they will dump for whatever they can sell them for. (I don’t know what most is - they likely have complex contracts and probably have not secured supply for everything they need yet)
Until recently, I worked for an auto parts supplier. I’m not sure it works this way. The orders we would get would be for a few days later. We would get long term forecasts but demand could unexpectedly drop and we wouldn’t make the parts. I don’t think an auto maker was ever contractually obligated to buy our parts.
Different suppliers get different deals. And what deals you get can change from time to time. Today I expect if Ford wants to have batteries they will have to sign long term contracts - there are no enough batteries in the world and so someone needs to make a factory and that in turns means they want assurance they will sell enough batteries to make the factory worth the cost. I expect in 2040 plenty of battery capacity will exist in the world and so Ford will change to just ordering batteries from whoever can make them. For now though they need to sign long term contracts of some sort to ensure they get enough batteries.
I hate to be that guy, but do you have a source on this type of activity in the auto industry? I worked in new program launches. In my experience, the auto maker would require us to have certain production capacity. If there was a long-term change in demand, we would re-negotiate deals and take back some of that capacity for future programs or spread production from over-loaded lines. If a whole plant is being built just to supply one automaker, I would expect them to provide some capital. Granted, my experience is only in a few types of automotive components. It might be a radically different structure for other types of components.
Is this gonna be like when oil companies were saying they should be regulated, knowing full well the government isn’t going to do anything about their record profits? Like, the government is saving face for businesses and they’re taking an opportunity for free PR.
“No! Don’t do that! Don’t let us make so much profit!”
No, I think this is genuine (from the perspective of self-motivation). Designing and building vehicles is a long and expensive process, and up until now companies like Ford have been told that they don’t need any ICE vehicles for sale in the UK market for 2030. Now they’re told that they can either hurriedly reverse course and spin up new ICE vehicle lines for that period, or they can lose out to those companies (like, say, Toyota) who have not managed to make as much progress on the BEV lines and are still likely to have an oversupply of ICEVs.
What they want more than anything else is to know the rules of the game that they’re expected to be playing. Being told at what is, in corporate terms, basically the last minute that the rules have changed is going to be very frustrating.
And it’s not like they can even start making plans based on the new deadline. Why plan for 2035 when there’s a possibility that the Tories will get booted out at the next general election, and the incoming Labour government may move it back to 2030 (you know, assuming Starmer doesn’t go along with Sunak’s U-turn out of fear of losing votes).
This is the real problem with the UK’s stagnating economy and low productivity: it is impossible for businesses to make any plans for the future (which is necessary to commit to investment) when an unstable and incompetent government insists on changing the goalposts every couple of years.
The hard part is the supply chain. It doesn’t cost Ford money to keep an old ICE assembly line going. However they need to tell their suppliers years in advance how much material they will be buying. Those suppliers then use those plans to buy land for mines, buy equipment for the mines, build ore processing plants - all of this financed at good rates because the bank sees they have a contract to deliver.
I’m not an insider at Ford, but I’m confident they have agreements with suppliers to deliver the materials for the electric cars they expect to sell in 2030. They have to because the world today cannot build enough batteries for what they need. If Ford decides to sell 0 electric cars in 2030, they are still under contract to buy enough batteries for most of their cars and trucks to be electric - which is then batteries they will dump for whatever they can sell them for. (I don’t know what most is - they likely have complex contracts and probably have not secured supply for everything they need yet)
Until recently, I worked for an auto parts supplier. I’m not sure it works this way. The orders we would get would be for a few days later. We would get long term forecasts but demand could unexpectedly drop and we wouldn’t make the parts. I don’t think an auto maker was ever contractually obligated to buy our parts.
Different suppliers get different deals. And what deals you get can change from time to time. Today I expect if Ford wants to have batteries they will have to sign long term contracts - there are no enough batteries in the world and so someone needs to make a factory and that in turns means they want assurance they will sell enough batteries to make the factory worth the cost. I expect in 2040 plenty of battery capacity will exist in the world and so Ford will change to just ordering batteries from whoever can make them. For now though they need to sign long term contracts of some sort to ensure they get enough batteries.
I hate to be that guy, but do you have a source on this type of activity in the auto industry? I worked in new program launches. In my experience, the auto maker would require us to have certain production capacity. If there was a long-term change in demand, we would re-negotiate deals and take back some of that capacity for future programs or spread production from over-loaded lines. If a whole plant is being built just to supply one automaker, I would expect them to provide some capital. Granted, my experience is only in a few types of automotive components. It might be a radically different structure for other types of components.
No source that I can talk about publicly.