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Aaron Turpen, billions, Chevy Volt, Ford, Ford CEO Jim Farley, Ford F-150 Lightning, joe biden, Meat Puppet Administration, Rivian R1S, Vince Bodiford
‘A billion here, a billion there, pretty soon you’re talking real money.’
Senator Everett Dirksen
We begin with this excerpt from Electric Vehicles: Fairy Dust And Unicorn Farts, 2022, back in June of 2022:
The Meat Puppet Administration is continually bragging about Ford’s commitment to become an all EV all the time manufacturer. How’s that reality working out for Ford? Not so well:
‘Major U.S. automaker Ford blamed its sizable investment in electric vehicle (EV) company Rivian for its dramatic revenue decline in the first quarter of 2022.
Ford reported revenue of $34.5 billion between January and March, a 5% decline relative to the same period in 2021, and a net loss of $3.1 billion, according to the company’s earnings report released Wednesday. The Detroit automaker said its large investment in Rivian accounted for $5.4 billion in losses during the first quarter.’
As regular readers might recall, GM lost money on every Chevy Volt–which it no longer makes—it ever made, potentially more than $100,000 dollars and more lost on each Volt. Ford is also losing money on its Mustang Mach-E, so it’s raising prices to make even pocket change on that vehicle. No company can long survive with those kinds of losses.
That would seem to be common sense, but that’s not all. Consider this from March of 2022:
Rivian, the best-funded electric vehicle startup in U.S. history, said losses during its initial year of electric truck production were nearly $5 billion and that ongoing tight supplies of computer chips, components and raw materials mean it can only build about 25,000 pickups, SUVs and delivery trucks this year.
Holy bankruptcy, Batman! That’s an awful lot of money. But consider this from CNN in August of 2022:
Rivian lost a whopping $1.7 billion in the second three months of the year, but some auto industry experts say it’s no cause for concern.
Of course not, silly Normal Americans. Let’s see how little we should be concerned:
Electric vehicle maker Rivian is laying off another six percent [emphasis mine] of its workforce. The company reduced its headcount by the same proportion of workers back in July. The automaker has around 14,000 employees, according to Reuters, so it will be letting go around 840 people this time.
As with the previous round of layoffs, Rivian says it’s focusing resources on increasing production and becoming a profitable company. ’While this doesn’t impact manufacturing jobs in Normal, teams across the company will be losing passionate collaborators — teammates who stretched themselves daily and have given their all to help us execute on our mission,’ CEO RJ Scaringe wrote in an email to employees.
That was waaaaaay back on February 1, of 2023. Can we start to be concerned now? Whoops! Lets return to February 10 of 2023:
Ford Motor Co. has cut its stake in Rivian Automotive Inc. to 1.15 percent, as part of a plan to scale down its holdings in the electric-vehicle maker.
Ford, which wrote down the value of its Rivian investment by $7.4 billion in 2022, had said last week that the monetization of its stake in Rivian was ‘nearly complete.’ Ford held an 11.4 percent stake in Rivian at the end of 2021.
Shares of Rivian fell 3.4 percent in afternoon trade. The stock had a poor run in 2022, losing about 82 percent of its value as the company reeled from supply chain disruptions and missed its full-year production target of 25,000 units.
Whoa. So Ford isn’t optimistic about Rivian, and/or electric vehicles, or they don’t have any clue what they’re doing, and their shareholders are equally clueless? And speaking of Ford, let’s see how their crash electrification program is going, courtesy of Kevin Killough at Cowboy State Daily:
Ford Motor Co. announced Thursday [03-23-23] that it lost $2.1 billion in 2022 on its electric vehicle business, a loss offset by $10 billion in operating profit from its gas-powered lines and fleet business.
The company expects to lose $3 billion this year on its EVs, according to a company briefing for investors and analysts.
The losses were highlighted as a result of changes in the company’s reporting system. Rather than sorting financial information by geographic regions, the company sorts it by automotive customers. This gives Wall Street better clarity, the company explained, in understanding the cost of the company’s transition to EVs.
Oh, so Ford didn’t really lose any money? It was “a result of changes in the company’s reporting system?” That sounds like the Federal Government telling us spending trillions we don’t have–they call that “investment”–and raising taxes, will actually save us money. Is Joe Biden CEO of Ford too?
The company has invested billions of dollars in capital upgrades to start its planned transition to an all-electric line, so some analysts weren’t expecting profits on the new business.
Vince Bodiford, publisher of TheWeekendDrive.com based in Cheyenne, told Cowboy State Daily that the way Ford discussed the losses today suggests it’s a larger issue than just development costs.
No! Really?
In a press release published Thursday, Ford CEO Jim Farley said that the company had expected to do better in 2022. Ford’s earnings for the year came to $10.4 billion, less than expected, and supply chain issues were cited as a contributing factor.
Wait a minute. If you make $10.4 billion and lose $2.1 billion, that’s 20%-ish. Seems like a lot to me, but I can do math, so what do I know? Maybe Ford isn’t doing better because they’re not making cars people want to buy at a price they can afford, which makes marketing EVs, averaging around $70,000 each, kind of, well, stupid. Regular readers know all about Ford’s supply chain issues, which does not exactly inspire confidence in Ford. Aaron Turpen of CSD is optimistic:
‘They spent a billion dollars just on one assembly plant,’ Turpen said.
He expects other manufacturers that are investing in a transition to EVs will post similar losses.
Turpen said that Tesla spent several years trying to achieve profitability as a new startup. Ford and GM will have the benefit of not starting from scratch, but it’s no surprise they haven’t turned a profit this early into their transitions to EVs.
‘They’re just having to change a whole bunch of the paradigm,’ Turpen said.
Yeah, like apparently what constitutes profit and loss.
He said it’s also telling that their legacy auto sales are offsetting the EV losses. Their fleet sales of F-150s are doing well, as are SUVs.
‘I don’t think the electrics are going to take over really soon, but I think the automakers are seeing the writing on the wall. So they’re going that way,’ Turpen said.
I don’t think the writing on the wall means what Turpen thinks it means:
[Automotive writer Vince] Bodiford isn’t so certain that an all-EV future will materialize as expected for Ford and other large auto manufacturers.
The companies used to tool their production based on consumer demand, he said, but now production is being driven by the regulatory environment coupled with incentives for EV purchases.
He described it as an ‘if-you-build-it-they-will-come’ approach.
‘So if they show up at a showroom and the only cars to buy are electric, then magically we’ll have this all-EV future. I don’t think it’s that simple,’ Bodiford said.
No! Really?
While GM, Chrysler and Ford are betting on that future, Bodiford said companies like Kia, Hyundai, Toyota and Honda are waiting in the wings to fill a demand that American automakers are planning to gradually abandon. It’s similar to what happened in the 1980s when foreign-made cars gained so much market share over American manufacturers.
‘They’re going to clean Detroit’s clock, and I’m afraid that’s going to happen again,’ Bodiford said.
I have to admit, even though there are no Japanese car dealers close to the Manor, I’ve been considering going foreign if the all EV future comes to pass, or even if the Meat Puppet Administration goes any more green crazy. OK, so it’s only loads of billions, and you gotta expect that, because it’s only money, and there’s no reason for concern. So let’s see how Rivian’s EVs are doing these days:
When Chase Merrill took his first ride in his new Rivian R1S, it was instantly his favorite car he had ever driven.
Merrill, 24, put down a deposit on an R1S three years ago at the urging of family members who also own Rivians. He was unsure about making the switch from his 2015 Ford Edge to a fully electric SUV, especially since he lives in a relatively remote area in the Adirondack Mountains in New York.
But once he got behind the wheel on March 10 of the $85,626 car, those worries melted away.
‘I was in a honeymoon phase,’ Merrill said in an interview with Insider. “It’s an incredible car, and it handles unlike anything I’ve ever driven.”
Wow! Sounds dreamy…
The honeymoon didn’t last long.
Two days later, Merrill drove his R1S to his family’s shared property in the mountains. He wanted to put his rugged electric SUV to the test, so he drove it on the unplowed, snow-covered road into the property.
At first, the R1S sliced through the snow. Then, a large snowdrift stymied the car, he said.
‘I hit about 2 ½-feet of snow and it just stopped right there,’ Merrill said. ‘I had seen all the Rivian marketing campaigns with the cars just eating through the snow so it was kind of like, man this is disappointing.’
When I was a kid, we used to have snow drifts up to the roof of our home–I used to love clambering onto the roof and jumping off into the drifts–so I can understand Merrill’s disappointment.
Merrill said he’s dislodged cars from snow banks before, and enlisted another vehicle to help pull him out. While he was sitting in the driver’s seat, unbuckled, rocking the R1S out of the snow bank, he said he accidentally triggered a safety feature that got the car stuck between the park and drive gears.
His Rivian was bricked, rendering it completely useless.
The brand new Rivian ultimately had to be loaded onto a flatbed and driven to a service center in Chelsea, Massachusetts, hundreds of miles away. The towing fee was $2,100.
The ordeal now has Merrill considering trading the R1S for a Toyota Tacoma or a similar gas-powered pickup truck, he said.
I wonder how much he’ll get for a trade? How does Rivian feel about this?
In an interview with Insider, Rivian executives said the car did exactly what it was programmed to do in a dangerous slide-away situation. But in this case, it wasn’t sliding away.
‘There was an unfortunate cascade of events and edge cases that led to this situation,’ Wassym Bensaid, Rivian’s senior vice president of software development, told Insider. ‘But we take this feedback as a gift. It’s great input for us to improve the product.’
Awwww. Isn’t that sweet of them? But what about Merrill and his really expensive electric brick?
Merrill said he later learned that a simple reset may have resolved the issue that bricked his car, without requiring a service visit. But that solution did not come up in his initial call with Rivian’s customer service, he said.
A Rivian representative ultimately called to apologize to Merrill and offered to pay for the repairs, but the company refused to pay the $2,100 transportation fee, he said. After Insider called Rivian this week to ask about Merrill’s experience, a Rivian representative called Merrill and offered to cover the $2,100 bill.
The final straw for Merrill happened, he said, when the car was returned to him and a critical error message showed on his dash and saying the Rivian needed to go back to the service center.
‘The attitude the whole time from customer service was that a Rivian owner should be able to handle this no problem,’ Merrill said. ‘They just think this should be nothing for me and it’s not nothing.’
Hmmm. How much did Merrill’s Rivian cost? The article says $85,626, and according to Car and Driver:
Yeah. It starts at about $80,000, which means closer to $85,000 or more for a commonly equipped R1S, the “more” part being what Merrill, and any other R1S owner, will end up paying.
Final Thoughts: True, new vehicle start ups can be expected to lose money, but if they’re not making a product enough people want, at a price they can afford to pay, if it costs more–much more–to produce vehicles than their MSRP and they can’t make and sell enough vehicles to make a profit (duh), perhaps losing billions and laying off the people that produce the product isn’t such a clear path to success after all. One would think a company in business as long as Ford would understand that. I suspect their stockholders are going to understand, and soon.
To be absolutely fair, inflation is always a major concern for car manufacturers, because that dramatically increases the price of vehicles, the cost of loans, and decreases the number of people that can afford to borrow to buy vehicles, used and new. This is particularly a problem for high-end vehicles, like the Ford F-150 Lightning, which is in the $80-90,000 dollar range. One would think a company in business as long as Ford would understand that too, and would slow down, even put on hold, billions of dollars in capital expenditures for vehicles that just might not have the profitable future greenies promise.
But then again, I can do math, and I live in the real world where money actually has value and I can’t afford to lose hundreds, to say nothing of billions I’ve never had, so what do I know?
Foggytrucker said:
The problem is the car companies are building vehicles to please the government rather than the customer. It’s a common problem in totalitarian states (e.g. the infamous Trabant)
P.M.Lawrence said:
The Trabant was actually a very good engineering solution to the constraints and distortions the engineers and drivers faced. It hardly ever broke down, it could be maintained in field conditions with little or no support, pollution was a non-issue in those times and places, and fuel economy didn’t matter much when petrol was artificially cheap. All those things kept the Trabant in demand in the new post-U.S.S.R. republics of the ’90s.
There’s a saying about business, that “there’s no surer way of going broke than gaining an ever increasing share of a declining market sector”. That could happen to anyone who expands in the internal combustion car market sector if that shrinks, even if that only happens because regulators kill it. It doesn’t matter if it’s imposed rather than intrinsic to the business, it would still work out that way.
Me, if I were them, I would look into making and selling “range extenders”, which are little trailers carrying internal combustion powered dynamos to supply cars hauling them, sort of like a roll your own hybrid that can be uncoupled for short haul needs like some commuting or shopping trips. It could perhaps bypass regulatory restrictions on internal combustion cars proper – for a while, and perhaps longer if not many tried it.
They’re supposed to get those right up front or during shake down trials they do themselves, not by using customers as beta testers.
Eric Peters of http://EPautos.com also dissects electric cars. Did you ever follow up with him about that oil leak thing?
Mike McDaniel said:
Dear P.M.Lawrence:
No, I didn’t, but corporate Ford somehow got my dealer an oil pan. The catch is–you knew there had to be a catch–is they’re waiting for a gasket, and have no idea when the gasket will be available.
A meme I’ve used shows a Tesla towing a trailer with a running diesel generator and a charging cable running to the Tesla.
Mike McDaniel said:
Dear Foggytrucker:
What you said.
optimisticallypessimistic said:
‘So if they show up at a showroom and the only cars to buy are electric, then magically we’ll have this all-EV future. I don’t think it’s that simple,’ Bodiford said
It’s not. The next steps are ruinous taxes on ICE vehicles and strangling the gasoline supply chain by revoking business licenses and phasing out the network that delivers gasoline, and ultimately revoking the ability to register ICE vehicles at all for driving on the roads. That’s all coming. Won’t do you any good to have a vehicle if you can’t buy the fuel to run it or legally drive it.
Our overlords looked at all the dystopian novels and decided to use them as how to manuals rather than cautionary tales. We’re well past the point of voting our way out of this.
Mike McDaniel said:
Dear optimisticallypessimistic:
You’re quite correct, but it’s this sort of overreach that is going to provoke a second civil war. The residents of Flyover Country states aren’t going to take it, nor will their legislatures. They’re more than smart enough to realized those sort of totalitarian actions would destroy their economies and drive entire states into pre-industrial poverty.
Skinnedknuckles said:
Just got my Ford proxy today and voted against every proposed board member. Won’t make a pee hole in the snow’s difference, but somehow I felt a little better.
Mike McDaniel said:
Dear Skinnedknuckles:
Good for you. I suspect Ford will eventually realize their electric pipe dreams are impossible, but they’re apparently willing to lose billions of shareholder value before reality forces them to behave responsibly. That, and perhaps shareholder lawsuits.
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