Ford Says EV Unit Losing Billions, Should Be Seen As Startup (apnews.com) 140
Ford's electric vehicle business has lost $3 billion before taxes during the past two years and will lose a similar amount this year as the company invests heavily in the new technology. The Associated Press reports: The figures were released Thursday as Ford rolled out a new way of reporting financial results. The new business structure separates electric vehicles, the profitable internal combustion and commercial vehicle operations into three operating units. Company officials said the electric vehicle unit, called "Ford Model e," will be profitable before taxes by late 2026 with an 8% pretax profit margin. But they wouldn't say exactly when it's expected to start making money.
Chief Financial Officer John Lawler said Model e should be viewed as a startup company within Ford. "As everyone knows, EV startups lose money while they invest in capability, develop knowledge, build (sales) volume and gain (market) share," he said. Model e, he said, is working on second- and even third-generation electric vehicles. It currently offers three EVs for sale in the U.S.: the Mustang Mach E SUV, the F-150 Lightning pickup and an electric Transit commercial van. The new corporate reporting system, Lawler said, is designed to give investors more transparency than the old system of reporting results by geographic regions. The automaker calculated earnings for each of the three units during the past two calendar years.
Chief Financial Officer John Lawler said Model e should be viewed as a startup company within Ford. "As everyone knows, EV startups lose money while they invest in capability, develop knowledge, build (sales) volume and gain (market) share," he said. Model e, he said, is working on second- and even third-generation electric vehicles. It currently offers three EVs for sale in the U.S.: the Mustang Mach E SUV, the F-150 Lightning pickup and an electric Transit commercial van. The new corporate reporting system, Lawler said, is designed to give investors more transparency than the old system of reporting results by geographic regions. The automaker calculated earnings for each of the three units during the past two calendar years.
They won't be the only ones (Score:2)
Expect similar losses from other automakers making the switch to electric. Some may hide it better with accounting tricks.
Re:They won't be the only ones (Score:5, Informative)
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Expect similar losses from other automakers making the switch to electric.
They should set up and fund an open-source project for self-driving tech so they don't have to individually incur repetitive expenses.
Tesla and Waymo would not join an OSS project, but for everyone else, it would be a no-brainer.
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What does something like this have to do with the power train?
The Lightning has "BlueCruise" self-driving tech. Other manufacturers are also developing SD tech for their EVs.
The SD tech is much more expensive to develop than the power train.
Re:They won't be the only ones (Score:5, Insightful)
Expect similar losses from other automakers making the switch to electric. Some may hide it better with accounting tricks.
I'm not sure there's anything to "hide" here. I remember back when the Xbox first came out and there were stories about how Microsoft was losing money with every one that they sold and some people on Slashdot says "let's all buy as many Xboxes as we can and bankrupt" Microsoft, and the understanding of the situation was just so fundamentally wrong. Everything that takes initial investment can look like a loss until you've paid down the initial investment from the income, but that's a naïve view of the reality. Microsoft was not losing money on every Xbox, that was just an artifact of an innumerate way of looking at the situation. The reality was that, if the number of Xboxes Microsoft sold at the time doubled, their "loss" per unit went _down_. That's not a loss, that's a gain. You're only actually operating at a loss if your sales numbers will never be enough to pay the interest on the loans you needed for the initial investment.
After all, if you build a car factory for five billion and forty thousand dollars, then you sell your very first car for forty thousand, is it realistic to say that you lost five billion dollars on your first car sold? After all, that "loss" is retroactively slightly more than halved by the second car you sold, cut into thirds by the third car and so on.
Obviously their concern is the stock market. Without "accounting tricks" shareholders just looking at the raw numbers will get spooked and sell. The unsophisticated at least, but there seem to be a lot of them. Of course, that does create all kinds of opportunities for sophisticated investors.
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Shareholders do eventually want results. Some sooner than later. How much money are you willing to burn through to move to EVs, and how many units would you expect to sell per month/quarter versus your old gas fleet, and at what prices?
Are you willing to shrink as a company in the transition, serving fewer people at higher price points?
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Acknowledged, but it's right in the summary that they have a pretty clear projection of profitability. It's possible that it all goes wrong, but eventual profitability does seem a lot more likely than not.
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I read an article a couple days ago that the fact that people charge at night when demand is low will just
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New homes being built will have chargers built for them. Older homes will have chargers installed as people purchase EVs. Apartment Rental places will slowly have people demand chargers and chargers will be installed to meet that demand. Chargers already are being installed at stores, rest stops, and other businesses. It's not a problem that needs to be solved immediately, so can be incremental. If where you live doesn't have an EV charger, you include that information in your overall calculation when
Re: They won't be the only ones (Score:2)
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Car loan doesn't factor into it, not sure why you mention that over the total purchase price & operating cost over the life of the vehicle.
With a 60 mile round trip that is 15,600 miles per year just work and back, Add in other driving I'll hit 100k in 5 or so years easy.
If I drive low miles, I don't need a car with a bigger battery and longer range. None of what you responded with really matters to my points.
I'm not sure what your point was?
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Five years is a long time for a car to pay itself back. Who knows what shape the car will be in by then? How long it will be if you figure in interest?
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If you would have to get a loan for the EV but not the equivalent ICE than it does.
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And when they project profitability, no one takes into account the inherent weaknesses of EVs.
Sure, because they have no analysts, they just throw darts at a board. As for the inherent weaknesses of EVs, what you mean is the issues with current battery technology. Aluminum-air batteries are already a thing, and existing versions can already hold about 7 times as much as existing lithium batteries by weight. So an EV with equivalent weight batteries that could normally go 200-300 miles on lithium batteries could go 1400 to 2100 miles on aluminum-air batteries of the same weight. If they get the alumi
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I would need to tear out the ceiling in the first floor the entire length of my home as well as my garage walls to get a charger where I need it. The entire ceiling will need to be drywalled again. Then if my kid gets an EV
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Provided all production cars can get around 350 miles on a 5-10 minute charge and have a similar price to ICEs and without a risk of having to buy an expensive replacement battery later, then it won't be a problem. But I won't hold my breath until I see those cars in the dealership.
Don't hold your breath. Just don't talk about "inherent problems" that are not actually inherent to EVs or BEVs themselves.
I would need to tear out the ceiling in the first floor the entire length of my home as well as my garage walls to get a charger where I need it. The entire ceiling will need to be drywalled again. Then if my kid gets an EV I'll need to somehow trench under my driveway to get a charger to his parking spot. These wont be small costs.
Ok, let's ignore the fact that you're acting like patching a ceiling is some herculean task. I am trying to picture the layout of your house and I'm not understanding why you would need to rip out your ceiling in the first place. Is your breaker box not on the inside of one of the outer walls of your house like most people's? Is it _in_ the ceiling? I'm about 90% certain you don't actua
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To expand upon your doubts a bit, I can't say for fluffer's situation exactly, but there are generally options. My brother is an electrician.
Some points that Fluffernutter seems to be ignorant of:
1. Electricians can and do often run cables through finished walls without demolishing them. There's snakes and extra long rods and all for that very purpose.
2. It's also possible that it would be easier to just, I don't know, add an extra 16 feet or so of cable and run it up to the 2nd story and put it through
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You wouldn't expect them to project anything else.
Then it's better to not do anything ever?
I don't where this is going. Any new project or production line is going to be in the red for years. Manufacturing requires huge capex to get shit going.
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Concur. All business endeavors "lose money" for years or even decades after they get started if you're insisting that capital costs be paid for from revenues before they stop "losing money". As a statement, it's virtually meaningless.
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I'm not sure there's anything to "hide" here. I remember back when the Xbox first came out and there were stories about how Microsoft was losing money with every one that they sold and some people on Slashdot says "let's all buy as many Xboxes as we can and bankrupt" Microsoft, and the understanding of the situation was just so fundamentally wrong. Everything that takes initial investment can look like a loss until you've paid down the initial investment from the income, but that's a naïve view of the reality. Microsoft was not losing money on every Xbox, that was just an artifact of an innumerate way of looking at the situation. The reality was that, if the number of Xboxes Microsoft sold at the time doubled, their "loss" per unit went _down_. That's not a loss, that's a gain. You're only actually operating at a loss if your sales numbers will never be enough to pay the interest on the loans you needed for the initial investment.
That's not at all what was happening with the Xbox. The cost of the components to build an Xbox was higher than the price they were selling Xboxes for at retail. That's a loss no matter how you look at things.
There were two issues at play:
1) Microsoft was making about $10 off every Xbox game sold that was made by other third party developers, and more than that on every Xbox game they published themselves. They went into this assuming everyone that bought an Xbox would also buy at least a few games for it.
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Fair enough. Maybe the Xbox was not the best example since video game consoles, as you touch on, can be loss leaders for video game sales. I was just looking for a concrete real world example.
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Ehhm, no. Losing say $25 per unit instead of $50 per unit is still a loss.
When you are actually losing $25 per unit instead of $50, then yes, it is a loss. However, when it's only a "loss" calculated by counting revenues so far against capital costs, it's not actually a real loss.
Think of it this way. The loss per unit in the scenario we're talking about is not actually a number. It's a formula that you plug various factors into, including the number of items sold. As the number of items sold increases, the "loss" goes down retroactively. How can it be a real loss if the value is
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Sure, but sold at a loss until sales volume drives down component price is still only a virtual loss if that actually happens. Another poster has said that never managed to happen for the Xbox, so it was basically a loss leader to sell video games. I can accept that. In the end though, the "loss" is not actually realized until after the product stops selling.
amazing this is even an issue (Score:5, Insightful)
It amazes me that the business world has been so financialized that the now quaint concept of "invest money today to earn profits in the future" requires explanation. That is exactly what we want companies to do when new opportunities arise, especially ones with a strong incentive to resist change.
Ford is doing it right.
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https://insideevs.com/news/655... [insideevs.com]
Ford has spent an enormous amount of money to only sell 1336 F-150 Lightnings. Shareholders might not agree with you.
Re:amazing this is even an issue (Score:5, Insightful)
Ford has spent an enormous amount of money to only sell 1336 F-150 Lightnings. Shareholders might not agree with you.
Your comment illustrates the exact point I am trying to make. The low number of F-150 Lightnings sold reflects the challenges of manufacturing a different type of car than Ford is used to, not a lack of consumer interest.
The shareholder focus on profits today, dammit!, is a counterproductive long-term strategy. If Ford doesn't make a successful transition to EVs, they are doomed. This transition is difficult and bumpy. but totally necessary.
The only companies "allowed" by shareholders to lose significant amounts of money to build out new technologies are startups, and that is why Ford is trying to sell itself as a startup in this case.
It is very shortsighted.
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The shareholder focus on profits today, dammit!, is a counterproductive long-term strategy.
Most companies that lack short-term profits are just poorly managed, not "focusing on long-term strategy."
Shareholders are willing to be patient if there is a real strategy for long-term growth. E.g., They invested in Amazon for a decade before it became profitable.
"Growth funds" specialize in investing in companies that reinvest profits. If your opinion is correct, they would perform better than funds investing in the broader market. Guess what? They don't. Historically, they underperform "value stocks" th
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Yes, and I think Ford shareholders here are probably going to be patient, because the current order book for F-150 Lightnings currently exceeds Ford's production capacity to build them. People are buying up the Lightning (and Mach-E's - sorry, it's not a Mustang) so much there's over a year wait for them.
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And their reason for failing to meet demand is . . . ?
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Re: amazing this is even an issue (Score:2)
No you can't spend 20k less. The average workhorse f150 is 50k. Sure you might get a dirt cheap work truck for 40k but all itfs going to have is am/fm and maybe crank windows.
Sounds good until you drive it.
The biggest issue with lightening is range and recharge time. But like most jeep wranglers rarely go in off road it isn't like most trucks haul stuff regularly.
If it was in my budget I could almost get away with the lightening for range covers 90% of my needs even towing my camper.
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Huh? You must be looking at a Chevy. Base F-150 tows nearly 10k lb. And AM/FM is a feature because it doesn't include the XM nagware. Everyone uses their cell phone anyways. The audio upgrade is only like $300 if you wanted XM + navigation. And crank windows? Even my '09 base model has electric as standard. It's cheaper to manufacture base models with most electronics and features. You're paying for appearance and things like electric adjustable seats instead of manual.
Lightening will work for you with a ca
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Re: amazing this is even an issue (Score:3)
Re: amazing this is even an issue (Score:4, Insightful)
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Using a 150kW+ DC fast charger, the standard-range 98kWh pack can charge from 15-80% in about 36 minutes
I'm assuming they were referring to charging at home, where you're certainly not going to have a spare 625 amps of power at your disposal.
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Re:amazing this is even an issue (Score:4, Insightful)
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Really? Was at my local dealership for service yesterday and I found one for you. They have one that' been sitting there for a while. Only gonna cost you $90k.
Or is the waiting list full of people waiting for a price drop rather than availability?
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Really? Was at my local dealership for service yesterday and I found one for you. They have one that' been sitting there for a while. Only gonna cost you $90k.
I'm not sure why you think your little floor showcase is relevant to the discussion. You will almost certainly not be driving away with it if you showed up with $90k, even if that specific model met your needs out of all the various customisation options available for any given car.
There's a backlog of nearly 200000 units to the point where Ford stopped taking orders for them for most of last year.
Or is the waiting list full of people waiting for a price drop rather than availability?
The base model costs $55k. The fact you found the most expensive version on the market sitting on the showroom
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You could use that argument for literally anything. Are we going to argue against having things from toothbrushes to airplanes because "people are dumb"?
The mental gymnastics people go through to "prove" that EVs won't work are getting tiring. We get it, you don't want one, or it won't fit your lifestyle. That's fine, if you don't want an electric car don't buy one. And yes, I understand people are working to ban selling new gas burners. But that's 12+ years away, and only in certain areas. How far into e
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Listen, as long as people can buy a new ICE that fits my purpose without having prices disrupted and the free market still applies than there is no problem. But it doesn't look like that will happen. I'm in Canada, and my prime minister has created restrictions that may cap sales of ICEs by less than 1/3 in 2026.
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You're right, it's not a lack of interest in owning one. It's a lack of interest in spending $55,000 for a pickup that averages 250 miles on a charge - without towing anything. It then takes 10 hours to charge.
A utility vehicle without the utility aspect? No thanks. I can spend $20k less for better mileage and I can actually use it as a utility vehicle. I can think of a lot of other things to spend 20k on.
I suspect the initial market for the Lightening will be utilities where trucks drive less than 250 miles a day and will often have access to charging stations while in use. For example, an electric utility can outfit field workers with them and install chargers at various substations so they can be charged while a crew works. Even without that, mot field workers won’t drive 250 miles per day anyway. Similarly, tradespeople can use them as work trucks since they are also likely not to drive over 250
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I reserved a lightning and my reservation number was 2 million and something. My local dealer said they had more interest in the lightning than all other trucks on the lot combined. The demand is clearly there and people are buying them even with the insane "market adjustment" that the dealers are tacking on.
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$55k? lol. The lightnings that are being sold around here are fully loaded models, meaning the MSRP is closer to $80k. Then dealers tack on 10-20 grand for "market adjustment", meaning you will pay over $100,000 to get a Ford Lightning F150.
However, I agree that the range is terrible. You have a giant truck, and they couldnt find extra places to stuff more batteries? I LOVE electric vehicles, but it will be a LONG time before I replace my gas truck with a fully electric one.
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To put this number in perspective, Ford ordinarily shifts about a half-million F-150s every year. The gas models are huge sellers. Electric? Not so much.
On a whim, I thought I'd compare the F-150 Lightning to an expensive (2-4x) car that's not expected to put up huge sales numbers: the Porsche 911. In 2022, you know how many 911s shipped? 7419 [carfigures.com], and I think that's only in the US. Even something as exclusive as the 911 manage
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Oh, wait, no I can't. Any on dealer lots are sitting there with a huge dealer markups, and the wait list if you try to order is years out.
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No, Ford just can't figure out how to build enough of them.
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Indeed, Ford can't build enough of them. Between chip and battery sourcing needs...
I think that people tend to forget a critical difference between Tesla and traditional automobile manufacturers.
Tesla builds their own batteries. Even when they were in the deal with Panasonic and using 18650 cells, they were rapidly investing in manufacturing their own batteries, just under license.
GM, Ford, Toyota, and such? They're attempting to buy them on the open market, when they've just proved with chips that they'
Re:amazing this is even an issue (Score:4, Informative)
None of these problems are lack of demand. It is lack of supply. Although if you outsource every part this is what can happen; you have nothing to assemble for customers
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What do you mean by "the lithium isn't there"? There's plenty of lithium in known reserves, much less the ocean. Yes, if the need is high enough, we can pull lithium from the ocean.
Now, obviously the mining and refining systems aren't there - but people have been seeing the writing on the wall for a while, so investments into expanding production are happening. Plus additional technologies are being developed to make it all more efficient, greener, etc...
Re:amazing this is even an issue (Score:5, Insightful)
> to only sell 1336 F-150 Lightnings.
In February 2023. (Source: the article you linked)
They've sold probably close to 20K at this point... every one they've been able to manufacture, and there's a waiting list over three years long at this point.
If I were an investor, and I see that Ford can essentially sell every F-150 Lighting they can build at least for the next year or more, yeah I'd be fairly upbeat about them spending money on production...
=Smidge=
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Are you sure? How good of a job do you think Ford is doing of building those trucks?
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Extremely good. The only thing an investor really has to worry about is Ford not getting the manufacturing capacity online before the competition catches up: There's an all-electric Silverado pickup expected to start selling this spring, and an all-electric RAM and GMC pickups some time next year.
I don't consider the Rivian R1T or Hummer EV to be competing in the same market space, and nobody except Tesla fanbois gives a shit about the Cybertruck at this point. Ford, Chevy, RAM and GMC are all big names in
Re: amazing this is even an issue (Score:2)
> 1336 F-150 Lightnings
So sad! just short a single sale!
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When was the last time Ford failed to scale production this badly?
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That is exactly the parent's point. The people pioneering stuff are not the ones who make record profits at first. Look at the Diamond Rio versus the iPod, or the StarTAC versus the iPhone. For a "version 1.0" model, the F-150 Lightning is a pretty darn good vehicle, all things considered.
The problem is when companies just focus on the next quarter above all else, they will pretty much be dinosaurs and out of the game long term unless they buy a small company that does cool stuff and implements their ite
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"Ford has spent an enormous amount of money to only sell 1336 F-150 Lightnings."
For any product that anyone offers, money has been spent before the first unit is sold.
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Ford is throwing good money after bad. It's all part of the Sunken Cost Fallacy.
Not really. Ford is investing in a technology expected to reap benefits in the long run, not merely continuing to spend money because they already have. If they felt there was no future profit and acceptable ROI but still spent money, then it would be attributable to the Sunk Cost fallacy.
Takes me back it does (Score:3)
Remember the days when just about every other post in any /. thread about how EVs would never be profitable and Tesla would be out of cash in three months and liquidated in six? Oh, and Elon Musk is going to be arrested by the SEC any minute now.
Yeah. Good times.
The press and the financial institutions just cannot seem to wean themselves off of the narrative that the EV business and the ICE business are just the same, just a little itty bitty change in the drive train. And Ford, GM, and VW were all going to crush Tesla just as soon as they caught up.
Do you think they ever will learn?
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I certainly remember all the (sometimes even violent) hate directed at me for pushing back against that notion.
I hope those people shorted Tesla.
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EV are truly a disruptive technology that we haven't seen in decades.
The last was the introduction of the iPhone and still that doesn't have the high overhead costs of making a new type of car.
I think what is hurting legacy auto in the shift to EV is Software. It covers a lot of the driving experience, acceleration curve how well it charges keeping the battery near optimal levels. As well network to fast chargers integrated in the navigation system for optimal charging times.
For car companies Software is
Insurance? (Score:2)
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Remember the days when just about every other post in any /. thread about how EVs would never be profitable and Tesla would be out of cash in three months and liquidated in six? Oh, and Elon Musk is going to be arrested by the SEC any minute now.
They wouldn't be if there weren't massive amounts of subsidies, at least at this point. Not something you can necessarily account for in advance.
Startups that make money in the end (Score:3)
are the ones actually sitting on new, valuable, technology that they can produce at scale and find customers for, at scale.
Whiz bang stuff that can only be made in tiny batches, under the direct supervision of the one world expert on the subject, at a cost that only the richest kings of Europe can afford is the stuff of scifi, not the stuff of a sound business.
Electric cars aren't quite the latter, but they aren't the model t either.
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Electric cars aren't quite the latter [luxury cars], but they aren't the model t either.
We are not at the end of the road, are we?.
In the beginning EVs used to be toys for the ultra-rich that wanted to show how environmentally conscious they were (and experience some ludicrous accelerations). Fortunately, someone had a plan to ride that wave, and use the money from selling luxury cars to build more affordable ones. And the trend continues... We will get to Model T eventually.
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Tesla Models 3 and Y are being manufactured at Model T rates today. And they're still able to sell every single one they produce with 20%+ margins.
Other companies need to get to that level of manufacturing commitment.
https://www.ev-volumes.com/wp-... [ev-volumes.com]
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EV battery manufacturing is rapidly ramping up, with prices falling fast too. At the moment the Chinese are dominating, followed by Korea, and then all the others from Europe and the US. It's a huge market that is limited by supply.
The battery supply issues are one of the major reasons why some manufacturers can't meet demand. Ford is buying batteries from Korean vendor SK On. They are building their own facilities for making batteries, but it will take time to complete them and to develop the batteries the
Ford deserves some credit, but they won't make it. (Score:2, Insightful)
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Indeed, like hot-air balloons are aircraft. That is 100% technically accurate.
Thank you for such a highly-intelligent and germane observation. You're not certifiably obtuse at all.
Not surprising (Score:3)
Most forward looking manufacturers are going through this process - VW, Ford, Renault, Hyundai plus various Chinese manufacturers. It obviously costs billions to get manufacturing plants, assembly lines and new processes up and running. I wouldn't be surprised if it is heavily loss making until production ramps up and sales start clawing back some of that investment.
I'd be more interested in knowing what the likes of Toyota and Honda, are going to do because presently it looks like they are royally fucked. Toyota has been a firehose of FUD over the last 5 years - hydrogen cars, solid state batteries, "self-charging" hybrids, political lobbying etc. This thinking has tainted other Japanese manufacturers too and it could spell doom for their economy. Countries are already putting dates on when ICE cars can no longer be sold. The lights will going out, figuratively speaking, for any company still stuck making combustion vehicles when that happens.
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The "logistics" of charging a Tesla are to just plug the thing into a wall charger. This is not rocket science. Charging infrastructure will also become ubiquitous. This is exactly what has happened in Norway where 80% of new cars are pure EVs, and it will be 100% when ICE vehicles are no longer sold in 2 years. So none of this is a reason to keep ICE cars. And whatever you think, like it or not they are on the way out. Some countries are just forcing the change.
And so what if your car goes 500 miles on a t
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Toyota and Honda will be providing ICE cars to those of us who have driving habits where EVs will 100% not work. And before you say I just don't know -- my girlfriend drives a Tesla. She hardly takes it beyond very local trips shopping because of the logistics of charging it. My car does 500 miles with its 11 gallon tank.
I only have one other friend who has an EV and he bought it after he got a work-from-home job. Every one of my other friends is 100% not interested in an EV or the hassle of dealing with one. At least where I am 25+ miles is considered a short trip.
I don't foresee me going to an EV ever. Thankfully I live in a sane place where there will not be a ban on ICE vehicles. So if my next vehicle is a Toyota or Honda then so be it.
It sounds like you live in a smaller community (maybe even a rural one) where people typically have garages.
So when you park your car in the garage plug it in.
Mildly more annoying than parking an ICE, but way less annoying than going to a gas station.
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My garage is for storage. I park my car outside.
You're not alone but I think your car will last longer inside (less exposure to the elements).
But that's not the real problem. The real problem is the pain of upgrading my electrical service. Even drawing 30 amps is likely to trip my main breaker (I'm close to the limit of the panel). My house is pretty odd in that the breaker panel is nowhere near the garage - it's in the master bedroom closet and the meter is on the other side of the house meaning there is a very, very long run of service entrance wiring that would need to be upgraded too.
Yes, this is probably a bit specific to my house; but many houses simply don't have the spare power without lots of electrical work. Maybe a house built in the 80's or newer is a bit easier. But many houses in the US are running on 60A or 100A service. My A/C is always drawing around ~30A year round. I have a pool pump that draws around 10A for 8 hours a day. Add in a hot water heater and a few other appliances... That doesn't leave much left.
The wiring would certainly be a bit of a pain, even without the weird situation it sounds like you'd need to spend a few hundred (thousand?) getting a charger installed in the garage (outside the garage?).
But otherwise I'm not sure the house panel is a big issue though, it looks like you can get a 16amp EV chargers [chargepoint.com]. You'll need to plug in more often, but it should still do the trick if you plug in overnight.
Oh for fuck's sake (Score:2)
They already get grants, subsidies, and breaks for producing EVs at all. They're constantly getting government concessions and kickbacks in general.
If you can't make the business work like most of the other EV manufacturers have, you should hang it up and stop making EVs. Given it's Ford, they should probably stop making all vehicles.
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Re:making an EV is a whole new venture (Score:4, Insightful)
Depends on how you look at "profit", I guess.
https://www.visualcapitalist.c... [visualcapitalist.com]
https://www.reuters.com/busine... [reuters.com]
https://jalopnik.com/tesla-sla... [jalopnik.com]
From what sources I can find, Tesla is "profiting" nearly $10-15k per car.
However, Tesla is busily dumping any excess revenues, what would be profit, into expansion. They can still easily sell 100% of the cars they make, so it still makes sense to build and expand more factories. Every supercharger they install is just that much more reason for potential customers to buy a Tesla rather than something else. Even when non-Tesla EV owners can use them, it's a constant advertisement that it'd have been better for them to have bought a Tesla(faster charging, for example).
The more product lines they have, the more secure they are, etc...
Though on the "per car" profit, I think I want to point out that Tesla is far more vertically integrated than most car makers these days. Tesla builds more of the car "in house", rather than going to suppliers. So that's a cut that they don't have to pay, increasing profit per car. They also don't have dealers taking their cut per car either, again, more profit for Tesla itself.
Re:making an EV is a whole new venture (Score:5, Interesting)
Uh, yes, Tesla is profiting hand over fist on EVs. [twimg.com]
Oh, and BTW, Ford's big losses? Those were from before Tesla went and started a price war.
This is a game of COGS and volumes. And the reason all of these "Competition is coming!" and "Tesla killers!" pronouncements always fail every single year is that Tesla crushes its western competition on COGS and volumes (in China, it's at least a closer game - BYD is Tesla's best competition out there**). It's especially pronounced when you keep in mind that until recently, Tesla's European vehicles had to pay 10% import tariffs that most of the competition didn't, while in the US they were competing against Mexican-made vehicles with vehicles from a factory in one of the most expensive parts of the US.
** - Though even in China there's been pushback [globaltimes.cn] against Tesla's price war (CAAM is basically "everyone in China except for Tesla")
Don't get me wrong - especially lately, Musk seems to be on a mission to do everything he can to drive down Tesla's margins by reducing the pool of potential customers. But the COGS advantage is very, very real, and very, very important. And it comes from a huge range of things - just to name a handful: intense vertical integration (capturing the whole profit chain and allowing rapid iteration), far less organizational compartmentalization (greater unificiation of subsystems that would normally be fanned out to different departments, allows for greater vehicle efficiency across numerous metrics), consistently ranking among the top desired employers among college engineering graduates (their pick of the best), a culture that encourages heavy innovation rather than CYA, platforms designed from the ground up for EVs and evolved over a decade and a half, rapid turnaround (no "annual model upgrade schedule") for rapid iteration, etc.
Will this trend break? Maybe; it's hard to say, though I certainly don't see it in the near term. My main concern would be not Musk driving off buyers and thus hurting margins (by forcing lower prices to compensate), but rather driving off engineering talent. I haven't seen it happen yet, but I'm always on the watch for it. They also have other automakers working to try to clone their business plan, with varying levels of success. But it involves a radical transformation for most, and I honestly doubt a lot of them have it in them to shake things up to the degree required.
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Uh, yes, Tesla is profiting hand over fist on EVs. [twimg.com]
Not really, based on your link. If you take out the non-automotive revenue, Tesla barely made a profit, Gross, Operating, or Net. That’s not to say they can’t be more profitable or will thrive as an ongoing entity, but they will face mounting challenges as competition heats up in the EV space.
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Non-automotive revenue has lower margins and higher cost of revenies than automotive.
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Non-automotive revenue has lower margins and higher cost of revenies than automotive.
EV credits don’t and if the cost of the battery installs is low margin tehy may very well be worth dumping.
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You can very visibly see how small of a line regulatory credits is on that graph.
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You can very visibly see how small of a line regulatory credits is on that graph.
True, but the point remains Tesla, absent non-automotive revenue would probably be barely break even; the challenge is for them to continue to increase revenue and control costs in a market that will get increasingly competitive. In addition, since nearly a quarter of their revenue is from China, there are significant geopolitical risks as well. None of that means Tesla can’t survive, just as there is no assurance they will.
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Not if you ALSO cut out non-automotive COGS and non-automotive cost of revenue, which are, again, lower-margin, higher-cost-of-revenue products.
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Uh, yes, Tesla is profiting hand over fist on EVs. [twimg.com]
Not really, based on your link. If you take out the non-automotive revenue, Tesla barely made a profit, Gross, Operating, or Net.
That link also hides $1.858 billion in capital expenses under "Cost of revenue", even though a decent chunk of that is presumably ongoing expenses arising from factory expansion. (I can't find a specific line item anywhere for that.) So that may be significantly understating their real-world profit margins. (Their adjusted non-GAAP EBITDA was $5.404 billion.)
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Uh, yes, Tesla is profiting hand over fist on EVs. [twimg.com]
Not really, based on your link. If you take out the non-automotive revenue, Tesla barely made a profit, Gross, Operating, or Net.
.
That link also hides $1.858 billion in capital expenses under "Cost of revenue", even though a decent chunk of that is presumably ongoing expenses arising from factory expansion. (I can't find a specific line item anywhere for that.) So that may be significantly understating their real-world profit margins. (Their adjusted non-GAAP EBITDA was $5.404 billion.)
Depending on the nature of expenses - i.e. will they increase less than the revenue from expansion, or are the a variable cost that will rise in proportionality to revenue, will make a difference in their long term impact on profits.
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Ignoring your "iffy cars" comment (I have a Tesla, it's been by far the best car I've ever had), I'll repeat it's not about what you "can" make, or what price you sell it at, but rather what it costs you to make it (COGS) and your associated cost of revenue.
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Seems to be more of a Ford problem than a general problem. Nissan (Leaf), Renault (Zoe), Hyundai (Ioniq) and Geely/Volvo (Polestar) all seem to be doing OK with their electric vehicles.