Design Escrow

[svmaven]

New owner. Recent reports delaying the Fusilier, Grenadier inventories and possible cash crunches for Ineos got me thinking. Also Fisker's bankruptcy filing.

It would be great if Ineos put all the design, assembly and support information for the Grenadier, including all software source code and tooling, in escrow. It would only get released on some triggers. Financial milestones like capitalization problems, discontinuing the model or shutting down the division. When I picked up my IG I asked if I could get a service manual, and was told there's nothing released yet outside of authorized depots. That's not good!

I wish Ineos Automobiles nothing but the best and hope they succeed. They've built an amazing first product. As owners I think we'd like some assurance third party support is possible even if Ineos loses interest for any reason.

There's not much we can do about proprietary parts like body panels (except hope someone buys the inventory) but most of the powertrain is reported to be commercial off the shelf. As an example if a replacement powerplant is not available as a "crate engine" then detailed assembly drawings with part numbers should be available, as should ECU tuning and mapping.

I think an escrow would be a great good-faith gesture and make a serious point these vehicles are meant to be serviceable for the long term no matter what happens to the Company.

 

[landmannnn]

I really wouldn't be concerned about the chat on here about Ineos' future.
The Fusilier on hold is because the EV market is over-supplied, the inventory isn't unusual and Fisker was always a disaster waiting to happen.

 

[Andrew Kilby]

My bet is that BMW or similar with no competing product will buy IA.

 

[landmannnn]

I didn't know IA was up for sale.

 

[ecohen2]

Ineos and Fisker could not be more different so I am not sure why you are concerned about the status of the company. Delaying the Fusilier production makes sense from a business perspective since the market for EVs is soft for a number of reasons. Fisker was betting on the public market for funding, while Ineos is pretty much self funded. Fisker had no inventory to sell along with some serious manufacturing / production issues while Ineos has inventory but very little market awareness. A good analogy for what Ineos Automotive is doing as a business would be Amazon/Rivian. Amazon and Ineos are both mega companies getting into the automotive space. Both have incredibly deep pockets and could go for years without selling a single vehicle before deciding to shut down.

Historically automotive companies that have best in class products do far better than those who try to behave like a high-tech startup. People are far more forgiving of "issues" when it comes to home electronics compared to their vehicles. If you look at the severity and number of actual issues compared to any of the new startup companies you quickly realize how good of a job Ineos is doing. Could they do better? Yes. Of course we all want a perfect vehicle on day one. Is that a realistic expectation for the first vehicle this company has produced, probably not. Does any of this mean the company is in big trouble, no.

My personal opinion is they have a market awareness issue. How many of you have run into someone with a 4x4 that had never seen or heard of the Grenadier?

 

[parb]

EV market, especially in the US is tanking. I don't think the delay or the fusilier is a sign of anything more than that. Ford dealers have lots full of unsold f150 lightning.

 

[ecohen2]

I didn't know IA was up for sale.

To the best of my knowledge it isn't... I can't find anything that would indicate it is...

 

[svmaven]

No one’s suggesting IA is in trouble, for sale or in a liquidity crunch. It's a going concern as long as Ratcliffe wants it to be.

Let's make a few financial guesses. IA has sold how many: 10,000 units so far? At an average price to the factory of let's say $70K (assuming some dealer margin) and a burdened cost of $55K (excluding R&D). 20% gross margin is quite high for automotive, but this is a unique product. That's give-or-take $150M of gross margin contribution to date. If anyone has better guesses please feel free to share. Ineos is too small for anyone to have done a teardown and published an analysis and IA doesn't report separately.

Development costs must be more than $1,000M including design, factory and specialized stamping and tooling. Additional costs to build a dealer channel and some marketing and promotion. My back-of-the-envelope is 75,000 to 100,000 units to amortize all the costs. Ratcliffe is still personally worth more than $15B. He can keep this going as long as he wants as a vanity project, but I'm sure he also wants it to self-sustain. Bloomberg reports that Fitch, a bond rating agency, downgraded Ineos Group’s credit outlook in January. Very different debt market than 2018.

I can't think of any easy comps for spinning IA out as a standalone public company. Ferrari is a fashion brand more than a carmaker. Would IA fit in the LVMH portfolio alongside their wristwatches? Other exits: what about BMW? VW Group? Geeley or Tata/JLR? I don't see Stellantis, Ford, GM or MB showing interest.

I very much want IA to succeed and contribute positive cash flow to the overall Ineos Group and I think a Design Escrow is an easy way to knock down one possible sales objection: "what if they go away?"

 

[ECrider]

Thank goodness Fiskar not gone bankrupt.

 

[drinkmorejava]

Putting service info into escrow is a non-starter on the business side. If they don't want to make it public now, then there will be no change in bankruptcy. It's simply worth too much money to give away at that point. Bankruptcy court would probably put an injunction in place anyway...you can't just give away assets to avoid assignment.

 

[Offroad]

The BMW Grenadier. Interesting.

 

[outono]

Putting service info into escrow is a non-starter on the business side. If they don't want to make it public now, then there will be no change in bankruptcy. It's simply worth too much money to give away at that point. Bankruptcy court would probably put an injunction in place anyway...you can't just give away assets to avoid assignment.

Exactly. My business is regularly asked to open source our discontinued products and we regularly decline. If someone wants to buy the IP, great! Otherwise, it'll never see the public light of day.

 

[Bruce]

Exactly. My business is regularly asked to open source our discontinued products and we regularly decline. If someone wants to buy the IP, great! Otherwise, it'll never see the public light of day.

Sort of how the Grenadier was born. Well, Jim wanted it not for open source but for continued commercial use, but LR refused to sell. I'm glad it worked out this way because if the Grenadier happened "the easy way" it might have not been nearly as well suited for my needs.

 

[Jeremy996]

Ineos Automotive has publicly committed to release the workshop manual 'eventually', but the hows and whens are not clear, (Q4 2024 last stated, but don't hold your breath). There is a lot of detail, (and growing every day) on this forum and probably a critical mass of owners who will look to keep their vehicles for the long term, (I'm one; til death).

Sir Jim Radcliffe has as much money as any other Billionaire, so just running out of money is unlikely. Him dropping dead and the family wanting to cash out is a reasonable end game, so a trade sale is a real possibility eventually. Would anyone buy it? Who knows, but BMW don't have a real 4x4, (the X5 can drown in a glass of water, every other BMW has no more than a "All Wheel Drive" capability).

 

[Shopkeep]

Ineos Automotive has publicly committed to release the workshop manual 'eventually', but the hows and whens are not clear, (Q4 2024 last stated, but don't hold your breath). There is a lot of detail, (and growing every day) on this forum and probably a critical mass of owners who will look to keep their vehicles for the long term, (I'm one; til death).

Sir Jim Radcliffe has as much money as any other Billionaire, so just running out of money is unlikely. Him dropping dead and the family wanting to cash out is a reasonable end game, so a trade sale is a real possibility eventually. Would anyone buy it? Who knows, but BMW don't have a real 4x4, (the X5 can drown in a glass of water, every other BMW has no more than a "All Wheel Drive" capability).

BMW owned Land Rover during the 90s when they purchased the Rover Group and then offloaded it in 2000. Why would they buy a brand that aspires to be the new Land Rover (and another car plant with its associated liabilities) when they already had the real thing and found it not to their liking?

 

[Jeremy996]

BMW bought Rover Group for the FWD DNA in the Mini and the 4WD knowledge that got built into the X5. They anticpated that the market would warm to a luxury road-going 4WD, so the X5 was born. They dumped the car division, except MINI, as it was bleeding them dry, (after sabotaging the K Series and the Rover 75), and Land Rover for cash to sort their balance sheet out.

I'm really not sure that Ineos Automotive wants to be a new Land Rover; JLRs trajectory is high cost, high luxury BEVs. Whatever Arcane wants, the Grenadier is a bit too basic/small to directly compete, but there are niches within niches. So long as their sums are right there should be profit at modest volumes compared to more mass manufacturers.

 

[CountyV8]

The BMW Grenadier. Interesting.

Didn’t BMW own Land Rover???? We know what happened there.