Talk From The Top with McLaren CEO Mike Flewitt: Post-COVID, focus shifts to electrified future
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December 07, 2020 12:00 AM

MIKE FLEWITT: Post-COVID, McLaren focus shifts to electrified future

Jack Walsworth
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    AUTOMOTIVE NEWS: Are McLaren customers ready for a hybrid?

    FLEWITT:Yes, they’re ready for a hybrid. There’s a few things that play in our favor here. One is that we’ve demonstrated a capability with hybrid with P1 and then Speedtail. It’s a recognized technical solution for us for driving performance.


     

    Following the two best global sales years in McLaren's history, 2020 slammed the brakes hard for the British exotic brand.

    As a result of the COVID-19 pandemic, McLaren's 2020 sales will drop to around 2,700 vehicles globally, CEO Mike Flewitt forecasts, a significant decline from last year's sales of 4,662. Flewitt, 58, anticipates that sales will rebound to around 3,500 in 2021 and reach 2019's level in 2022.

    The expected comeback could be boosted by the Artura plug-in hybrid, previously known as the P16, which is set to arrive in the spring.

    While the Artura is not McLaren's first hybrid — the limited-run P1 and Speedtail hypercars were electrified — the model is considered the key cog in the automaker's transition to a 100 percent electrified portfolio.

    The Artura will be built on an architecture that has been specifically developed to accommodate hybrid powertrains and will feature a V-6 engine, a first for McLaren.

    The Artura gives McLaren an opportunity to become a leader in electrification in the industry's rarest air, the exotic and ultraluxury realm.

    Flewitt spoke with Staff Reporter Jack Walsworth. Here are edited excerpts.

    Q: What led to the decision to go with a V-6 for the P16?

    A: We can achieve performance from this engine with a V-6. We don't need the V-8 in this car. That then brings weight savings, [a] smaller vehicle package. You start driving what's efficient, and it knocks on all the way through. One of the goals ... was when we launch our first series hybrid, we didn't want to be moving up a weight class, compared with the previous cars we've made. To that end, we've been very, very successful.

    There's a little bit of extra weight, but it's really, really small. We're going to launch a car that's still going to be a long way ahead of the competition, despite the fact that it's a hybrid, despite the fact that it's carrying a high-voltage battery for the EV system. Part of the way we've gained that is by downsizing the internal combustion engine to a 3.0-liter V-6. It's a very efficient powertrain, but it's very much an integrated powertrain of engine, electric motor, transmission as one unit. It's all about efficiency.

    How will the P16 change McLaren at a corporate level, and how will it affect retailers?

    A lot of it is around education, and I don't mean that in a patronizing way. But to get all the benefits out of the hybrid, you do need to think about the product. You can drive this product and never plug it in. The way that the powertrain is calibrated is the battery will always retain 25 percent of its charge. It does that because we actually use that charge for a number of characteristics.

    But if you actually want the full efficiency of it, then you plug it in. I've got a lifestyle that works with this because I drive from my home near Oxford to work on a Monday, and that's 80 miles. I'll unplug the car, there'll be some EV range, and then I'll drive in hybrid till I get here. But I have an apartment near work with an underground garage. I can plug it in, and the distance from my apartment to work is 12 miles. I'll be able to drive in pure EV from my apartment to work and back every day.

    That's incredible when you think in terms of the emissions of point of use. You need to think about the breadth of the capability of this transmission. It has a number of different drive modes. You can be in pure EV, you can be in hybrid where basically the powertrain decides whether you're going to be EV or hybrid, or you can go to race where you're pure hybrid, so there's no EV mode, you're just in maximum performance mode the whole time. The more you understand what it can do, the more you can actually get out of the capability of the powertrain.

    We need to make sure our retailers understand that and our customers understand that because the first reaction is you just want to get in and drive it. That's actually the first bit. But the second bit is if you understand the capability, there's a lot of breadth to a car like this. This is the way the world's going. The U.K. government has just announced ... that we're going to start phasing out pure internal combustion engines from 2030 and hybrids will live through to 2035. This is the future for the next 10 or 15 years of supercars. The sooner we learn how to get all the benefits that come with a hybrid powertrain, then the more we can enjoy them.

    How quickly does McLaren have to adjust to those government announcements?

    It is challenging. We had 2035 in our mind as the sort of pivot point for EV. Our business plan now progressively moves to hybrid. All of the significant launches going forward will be hybrid cars. I think by 2026, we'll be fully hybridized right across the range. We will probably do our first EV supercar in the latter part of the decade, so 2028, 2029.

    There's nothing in the new announcement that actually means we need to change our business plan. My challenge back to government is, why are we making these announcements right now? I'm a little cynical that it's because there's lots of bad news out there with COVID and with economic challenges, so "Let's just announce something else to distract everybody." Frankly, right now, the world needs to focus on dealing with this health concern that we have. And secondly, getting the economics of the world good again.

    We've got so many businesses closed here. We've given so much financial stimulus. That's all got be paid for. You guys are going to have similar things in the U.S. You just elected a new president. There's a lot more to do right now. I get a little frustrated when announcements are made, I think, for kind of political reasons, rather than they're really thought through.

    Because the complexity with this is, the automakers know how to make an electric car. What we don't have yet in the world is the infrastructure to support running electric cars. Right now, I think the U.K. sales are like 2, 3, 4 percent electric cars. To move that to 100 percent, we just don't have the infrastructure to charge cars, to support them. What the governments almost don't realize is the bigger challenge, for them, is to put the infrastructure in place, not for the manufacturers to make the car. There's some great electric cars in the world, even now.

    How is 2020 wrapping up?

    Better as every month goes by. We had a pretty horrible time of it through April, May. We had to do a lot of restructuring of the company to get us to a solid place. The market has started to come back to us. We're busy now. The fourth quarter will be a very strong quarter for us, which is really great. If we look at total sales this year, we'll be about 2,700 by the end of the year, which means we're at 65 percent of what we sold in 2019.

    Looking at McLaren's markets globally, what are you seeing?

    China's great. We had the best month we've ever had in China in May. China sales have continued strongly. China is one of the markets that loves the GT. That's absolutely been a real strength for us. The rest of Asia has now picked back up and performing strongly. Japan, Hong Kong, Singapore, Korea, Australia are all back strongly, so that's really positive.

    Europe had started to come back, but all of Europe has gone into a second [COVID-19] wave. Germany, Italy, France, Spain, the U.K., all the markets we sell into, have definitely taken a step back in the last month or two. The Middle East is getting back on its feet, but slowly. South America is struggling, really struggling. In North America, we set ourselves quite cautious targets. The team in North America are going to hit their targets fourth quarter. I think we're fully allocated through first quarter next year.

    It's good, but it's not great, at the minute. It could be coming back better. I'm optimistic that once we either come out of this crisis because we found a way to manage the infection rate, or we come out because we've got a vaccine, that the world will spring back pretty quickly. We're in a good, stable position. We've got a good, cautious plan for next year. But we're actually able to bounce back very quickly when the world bounces back.

    Related Article
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    McLaren went through some restructuring this year. Is there an expectation that McLaren will need another round of funding?

    We're in a lot better shape than we were in March or April, let's be clear about that. But there's a whole suite of things that we're doing to really reinforce the company. One of the realizations was that you can have things like this come along and they can really destabilize the business. We clearly went into this pandemic without the liquidity, without the headroom that we needed to survive it. We had to pretty quickly put in place some funding. We raised £150 million ($200 million) from a bank in the Middle East to give us the liquidity. But we are open and considering new equity investment in the business.

    We are looking at the structure with racing and may attract equity into racing specifically. We will continue to look at things that can strengthen the balance sheet, strengthen the business so that it can survive these changes. We had steady growth from 2011 to 2019. You look at our 2019 results, we had a great year, great profitability. We'd hit £1.1 to £1.2 billion ($1.5 billion to $1.6 billion) in revenue, but who knows what's coming next. Maybe it's just been a good reminder to us that you need to have a real depth and solidity to the financial structure of the business to weather difficult times like this.

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