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Your angry denials that traditional automakers are losing money on EVs doesn't agree with statements that they themselves make. How do you explain that discrepancy? Ford for example, says that they have the ambition that their *next* generation of EVs will be profitable. Perhaps you can show a reputable source that describes the profits that Ford is making on EVs?
ICE vehicles and hybrids also require R&D expenditures, manufacturing and marketing expenditures, etc. The traditional automakers are showing big profits there, in sharp contrast to their EV programs. Why are they saying these things if it's not really happening as you insist?
I think with the ICE and hybrid vehicles, a lot of the capital costs have been spent. Even though there are refreshes from generation to generation, it's likely that a very large number of components of those vehicles as well as the production equipment and sourcing from suppliers hold over from generation to generation with limited or sometimes no changes at all. EVs in contrast will have a large amount of new components, production equipment and sourcing that is going to be new for the near future and in the recent past, so they haven't really gotten the full run out of them. There is a question of how long of a period should count for that amortization, and it's certainly going to be tough since it gives the established automakers a lesser advantage than it would with ICE and hybrid vehicles they've been iterating on for a long time. I do think it's possible that an established automaker would fail or need to merge.
Not for these reasons primarily, but we did already see Chrysler go through some fairly tumultuous times and the latest of that was becoming part of the Stellantis octopus.
Ultimately though, I think this is a technological shift towards vehicles that are overall better for most use cases and if these automakers do not put in the large investments to shift to electric vehicles, then they will be in pretty big trouble in the somewhat near future. I think this likely starts with automakers who have successfully and almost fully committed to EVs first going after markets that do not have large domestic automakers and thus don't have the protectionist policies to shield this and you're starting to see this with Latin America, Southeast Asia, and Oceania. That latter policy can be a double edged sword though because this isolation from competition means that they become increasingly less competitive. Making the investment now though is at least some acknowledgment that US established automakers are aware that they may be at risk of having a Kodak moment in the wry, negative sense of the phrase.
A pickup with a towing range of less than 100 miles is pretty worthless. Plus, naming that debacle "Lightning" is an insult to SVT Lightnings of the past. Similarly, the Mach-E is an insult to the Mustang nameplate. What were they thinking?
On the bright side, the E-Transit seems to be doing well.
Jesus... You cannot amortize all R&D and development costs, factory construction and the like, over a small run of vehicles made so far, and say that loss is due to those vehicles (or that you add that cost to the cost of each vehicle). Yeah, they're going to report a massive loss for tax purposes, but the factories' cost has to be amortized over not only the ENTIRE production run of any individual model made in that plant, but every vehicle made in that plant moving forward. For battery plants (which some of this is for) that amortization is across ALL EV models made now and in the future.
Honestly the Devil IS in the details. I don't know if it's all or a portion of R&D and/or related amortized costs allowable.
I do know just taking the bottom line at face value isn't really valuable. At all.
A pickup with a towing range of less than 100 miles is pretty worthless. Plus, naming that debacle "Lightning" is an insult to SVT Lightnings of the past. Similarly, the Mach-E is an insult to the Mustang nameplate. What were they thinking?
On the bright side, the E-Transit seems to be doing well.
Yea, pickups towing large loads over long distances is currently a weak point for consumer EVs, and I think that will be a comparatively weak point for another several years. That being said, given the proportion of light-duty vehicle sales in the US that are pickups, it's quite likely a large chunk of pickup trucks sold are not ever used for towing large loads over more than 100 miles. This doesn't mean there aren't people who never tow large loads over more than 100 miles who at least want to feel like they can, but I think it's important to think that through before committing to the purchase of a new vehicle. I think the Lightning is a somewhat apt name though even without the pun on electricity as the Lightning *is* a good niche vehicle in that its power output is pretty nuts.
I just always refer to the Mustang as the Mach-E and it's fine. Ford has rapidly, for Ford, done iterative improvements on the Mach-E and MY2024 does have some solid technical specs and its top spec is now faster than the Model Y Performance with 0-60 mph in 3.3 seconds and quarter mile in 11.8 seconds at 114 mph and has gotten past its overheating issues at peak performance while improving power, charging and efficiency. Should they have perhaps waited to launch with these kinds of specs? Maybe though I think part of the improvements was to get a lot of real world data back, and it's likely a lot easier for them to do iterative improvements. Still though, the Hyundai Ioniq 5 and its upcoming N variant is going to be hard to top.
E-Transit is doing pretty well and about to have a refresh where it gets significantly better, so that's nice.
I do think this will be an overall modest year for Ford EVs though. I don't expect sales to start looking much better until the switch over natively to NACS.
Last edited by OyCrumbler; 04-29-2024 at 11:36 AM..
I think with the ICE and hybrid vehicles, a lot of the capital costs have been spent. Even though there are refreshes from generation to generation, it's likely that a very large number of components of those vehicles as well as the production equipment and sourcing from suppliers hold over from generation to generation with limited or sometimes no changes at all. EVs in contrast will have a large amount of new components, production equipment and sourcing that is going to be new for the near future and in the recent past, so they haven't really gotten the full run out of them. There is a question of how long of a period should count for that amortization, and it's certainly going to be tough since it gives the established automakers a lesser advantage than it would with ICE and hybrid vehicles they've been iterating on for a long time. I do think it's possible that an established automaker would fail or need to merge.
Not for these reasons primarily, but we did already see Chrysler go through some fairly tumultuous times and the latest of that was becoming part of the Stellantis octopus.
Ultimately though, I think this is a technological shift towards vehicles that are overall better for most use cases and if these automakers do not put in the large investments to shift to electric vehicles, then they will be in pretty big trouble in the somewhat near future. I think this likely starts with automakers who have successfully and almost fully committed to EVs first going after markets that do not have large domestic automakers and thus don't have the protectionist policies to shield this and you're starting to see this with Latin America, Southeast Asia, and Oceania. That latter policy can be a double edged sword though because this isolation from competition means that they become increasingly less competitive. Making the investment now though is at least some acknowledgment that US established automakers are aware that they may be at risk of having a Kodak moment in the wry, negative sense of the phrase.
I have no idea what the breakdown is, but I can see that there are higher costs for new EV programs than for new ICE programs, both in terms of one-time costs as well as running costs.
I agree completely that it's a mistake for companies to throttle back on their EV programs - you've got to establish your brand in the EV marketplace and your technical teams need to gain experience working in this space... and that this protectionism is also a double-edged sword - if you don't have to compete, you can fall even further behind.
I have no idea what the breakdown is, but I can see that there are higher costs for new EV programs than for new ICE programs, both in terms of one-time costs as well as running costs.
I agree completely that it's a mistake for companies to throttle back on their EV programs - you've got to establish your brand in the EV marketplace and your technical teams need to gain experience working in this space... and that this protectionism is also a double-edged sword - if you don't have to compete, you can fall even further behind.
Yea, I think the rationale for why the new EV programs cost more is because for the most part they aren't iterating on something they have set up. I would think a new ICE program from an established automaker who has been making ICE vehicles for decades is going to be using a lot more established base of knowledge and have more existing parts and production facilities shared with previous iterations. I would be curious to know what the average holdover of shared parts are from one vehicle generation to another as well as the production equipment used. I also assume that having that established scale also means having a lot of parts shared between previous vehicle generations and the current one that can go into either production of new vehicles or servicing already sold ones that are still under warranty which would benefit in some way to economies of scale.
Jesus... You cannot amortize all R&D and development costs, factory construction and the like, over a small run of vehicles made so far, and say that loss is due to those vehicles (or that you add that cost to the cost of each vehicle). Yeah, they're going to report a massive loss for tax purposes, but the factories' cost has to be amortized over not only the ENTIRE production run of any individual model made in that plant, but every vehicle made in that plant moving forward. For battery plants (which some of this is for) that amortization is across ALL EV models made now and in the future.
Correct but my local Ford store has 25 leftover F150 EVs with discounts from $8500-18000!
Same dealer has 97 Mach E's with discounts to $16750
Clearly with massive discounts on leftover 2023s the losses are adding up.
Correct but my local Ford store has 25 leftover F150 EVs with discounts from $8500-18000!
Same dealer has 97 Mach E's with discounts to $16750
Clearly with massive discounts on leftover 2023s the losses are adding up.
There's probably a pretty decent amount of regional variation. What part of the country are you in?
Ford does seem to have planned on these selling better than they actually did given that they've changed their guidance on the ramp on these. I think the pre MY2024 Mach E's have some issues that needed to work out, though it was the second best selling electric crossover last year, and meanwhile the full-sized truck form factor isn't a particularly great fit for EVs at the moment though it's fine if you don't tow large loads over long distances. I think people waiting on the switch to NACS will also be challenging for sales this year.
The big thing with the Ford Lightning is that they announced it with a much, much lower base price (~$40k!) than what it has now, and the difference between the base price now (~$63K) compared to its initial announcement is massive even if trying to account for inflation. Even if you get a discount of $18K it's still well above the initially announced MSRP. It makes you wonder what was going through Ford at the time that made them think announcing a $40K base price was a good idea if they weren't able to deliver anything even close to it. Did they really ramp up their production capabilities in line with what projected sales would be had they been able to hit that price point or was that price point a bald-faced lie in the first place?
Last edited by OyCrumbler; 04-29-2024 at 01:29 PM..
Correct but my local Ford store has 25 leftover F150 EVs with discounts from $8500-18000!
Same dealer has 97 Mach E's with discounts to $16750
Clearly with massive discounts on leftover 2023s the losses are adding up.
And how many GAS F150s are sitting around? ALL vehicles, now that the tail end of Covid supply chain disruptions are over, have gone back to pre-pandemic inventory levels and pricing.
I mean, I went by my local Honda dealer and they have a pile of new Hondas out front these days, and cars stacked up in racks to the side and behind the dealership. Does that mean no one wants ICE vehicles? Or that everybody who wants an ICE vehicle already has one? NO? Then why do we say that about EVs?
BTW, the losses on cars on the lot, generally do not transfer to the manufacturer, who has generally already been paid for them when the dealer orders/receives them. Retail pricing has zero to do with what the manufacturer receives.
Quote:
Car dealers often use financing to make their car purchases, much like individuals do. They purchase the cars from the manufacturers via an instrument called floorplan financing. "Generally, all new vehicles are financed through the manufacturer, and dealers pay interest monthly on that loan," explained Wayne Phillips, a former dealer who now works for the NADA. "Dealers have to pay off the [original equipment manufacturers] immediately on new vehicles, but many turn around and finance them through the OEM's finance arm.
And how many GAS F150s are sitting around? ALL vehicles, now that the tail end of Covid supply chain disruptions are over, have gone back to pre-pandemic inventory levels and pricing.
I mean, I went by my local Honda dealer and they have a pile of new Hondas out front these days, and cars stacked up in racks to the side and behind the dealership. Does that mean no one wants ICE vehicles? Or that everybody who wants an ICE vehicle already has one? NO? Then why do we say that about EVs?
BTW, the losses on cars on the lot, generally do not transfer to the manufacturer, who has generally already been paid for them when the dealer orders/receives them. Retail pricing has zero to do with what the manufacturer receives.
Ummm if the manfacturer offers a $5000 rebate on new unsold inventory that certainly does go right back to them.
Same dealer has 154 gas F150s sitting on the lot as leftover 2023s. So yes over 6X as many gas ones over EV 150s but the biggest discounts are on the EV
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