Car makers can’t pull off the same trick as Tesla

You may soon be able to buy shares in Renault Electric. Or, come to think of it, in Ford Green, or Toyota Amp, Mercedes Plug or, to resurrect a slightly lame April Fool’s joke from last year, in Volts-Wagen. 

The car industry, one of the largest in the world, is awash with speculation about the break-up of some of the major legacy manufacturers into their electric and petrol units.

You can see what they are getting at. The stunning success of Tesla has terrified the industry, convincing it that it has to make a rapid transition to battery-powered vehicles. And hedge funds and other activist investors have worked out that the EV units would be rated far more highly by the market. 

And yet, in reality, it would be a catastrophic mistake. It would mean abandoning the future of the industry; it would sacrifice all the shared technology; and it would trash some of the most valuable brands in the world. In truth, splitting up the auto giants would be stock market-driven short-termism at its very worst – and they would all do much better by remaining intact.

This week, Renault became the latest car manufacturing giant to speculate about splitting out its fast-growing electric vehicle unit. 

Its chief executive, Luca de Meo, is reported to be putting together plans for the creation of two separate legal structures followed by floating them off. In part, that is designed to help the company recover from the cost of writing down its Russian manufacturing business. Just as importantly, it may help the electric unit, led by the successful Zoe model, to grow much faster.

It is far from alone. There has been speculation for weeks that Ford, the company that, let’s remember, invented the mass production automobile industry a century ago, is also planning to split itself in two. It has already put its EV business into a separate unit, called Ford Model E in a nod to the legendary Model T on which the company was built, and that may in due course lead to a separate listing. 

It can’t be long before we hear of similar plans from the other major manufacturers, from GM, to Toyota, to Volkswagen, Mercedes and BMW. If it catches on, all the main global players will soon have split in two – in this country we might even be able to buy shares in E-Rover or, if it wanted to reflect past glories, Jaguar E-Type.

In fairness, we can understand what they are getting at. The market is shifting decisively towards EVs. Last month alone, more electric cars were sold than in the whole of 2019. The two top selling models were both electric and, in total, EV sales are expected to overtake petrol models by 2025. 

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