Americans got battered for years by huge price hikes, especially on trucks, amid oligopolistic pricing behavior by legacy automakers.
By Wolf Richter for WOLF STREET.
Pickup trucks are a huge business in the US with obscene profit margins for automakers that, amid oligopolistic behavior, hiked prices every year in a similar manner, making sure that competition didn’t come down to price, but to marketing blitzes, power, luxury, etc. Ford is disproportionately dependent on its business of full-size pickup trucks, after having killed most of its sedan business. Any threat to Ford’s pickup business is an existential threat.
After Tesla announced on Sunday via Twitter that its first Cybertruck had finally been “built” at its plant in Texas after years of delays and over-promises, with mass-production of salable trucks still months away, Ford came out on Monday to announce that it cut prices of its electric F-150 Lightning, depending on model by 6.1% to 16.1%.
Ford’s price cuts range from $6,079 to $9,979, depending on model. The MSRP of the base model, the F-150 Lightning Pro, got cut by the most, by $9,979, or by 16.1%, with an “updated” MSRP, including destination and delivery charges, now of $51,990.
The base Pro is a four-wheel drive, four-door crew cab with 462 hp and a huge 775 lb-ft of torque. That’s the low end of the line! A step up, the extended-range Pro has 580 hp.
At the high end, Ford cut the price of the Platinum Extended Range by $6,079, or by 6.1%, to $93,990, including destination and delivery charges. By comparison, a number of Ford’s high-end ICE trucks come with MSRPs well above the $100,000 mark.
All of the Lightnings are big four-door, four-wheel-drive crew cabs with ridiculous amounts of horsepower and torque. But hey, that’s the American way. We like big powerful equipment. And electric motors make that easily possible.
Tesla instigated the price-cut waves. “I Love How Tesla Wreaks Havoc among Automakers with Massive Price Cuts, Huge Sales Growth, Even Huger Production Growth, and Overcapacity,” I said in April. And with Ford’s price cuts, the havoc continues. It started last year when Tesla cut prices on its car and SUV models that then triggered price cuts across other EV makers, including by Ford of its Mustang Mach-E.
After Ford’s three big bad price hikes. The irony here is that back in May 2021, Ford originally priced the base version of the Lightning at around $41,000, including destination and delivery charges. Then came three price hikes that pushed the MSRP to about $62,000. With today’s price cut, the Pro is back at around $52,000, so only about halfway back, and still up by 27% from the original price.
Price cuts are great for consumers, after having been battered by decades of price hikes – particularly for pickup trucks, and particularly since 2020 – amid oligopolistic pricing behavior by legacy automakers, to the point where purchasing a new truck has become a luxury that fewer and fewer Americans can afford. Which is why price cuts are so crucial for consumers.
And price cuts are great for unit sales (deliveries), if the automaker can build enough of them, as serial-price-cutter Tesla has shown. Ultimately, these price cuts are good for the industry because they widen the customer base.
But price cuts pose challenges on revenues and profit margins, though the equation gets complicated. If a manufacturer can get unit sales and production volumes up, revenues will outgrow the price cuts and the per-vehicle costs go down. And it might all work out. That’s the hope.
Price cuts are despised on Wall Street. Ford’s shares tanked by 5.9% today upon the announcement. Tesla’s stock too got hammered with price-cut announcements.
It’s not a lack of demand: Ford says it has 200,000 reservations for Lightning trucks. It has been mass-producing them since April 2022, but in relatively small numbers compared to its huge F-Series business.
Sales have been hampered by Ford’s inability to ramp up production and get the supply chains built. All of this has been slow and fraught with costs, problems, and production halts, including now, as Ford noted today: its plant in Michigan, where the Lightning is made, “is temporarily closed to complete final plant upgrades to triple the plant’s annual run rate to a targeted 150,000 F-150 Lightning trucks beginning this fall.”
In support of the price cuts, Ford cited this soon-to-be increased plant capacity, “continued work on scaling production and cost, and improving battery raw material costs.”
The money-suck. Building the production capacity and then ramping up production of a new model with a new powertrain technology and new supply chain – new for Ford – is a gigantic money-suck. And it remains a money-suck until production and sales volumes reach higher levels.
Rivian – a startup that Ford helped fund – is the only other company that has mass-produced electric pickup trucks out on the road, and its efforts to ramp up production are also fraught with issues. Rivian is burning ungodly amounts of cash to ramp up mass-production.
GM has been mostly mass-producing announcements about electric trucks and is just dabbling in small-scale actual production. Stellantis is only producing announcements about electric trucks. Toyota isn’t even producing announcements.
All electric pickups now on the road are big four-door, four-wheel-drive crew cabs with ridiculous amounts of horsepower and torque and a long list of luxury equipment, even the base versions. But as the production capacity ramps up and competition heats up, will we will see two-door two-wheel-drive pickups at lower price points? I hope so. That’s the classic pickup.
For perspective, how truck prices spiked. Here is the WOLF STREET price index of the two-door two-wheel-drive base F-150 XLT and the base Camry LE, with no add-ons and without destination and delivery charges, which I release in the fall every year when the new model-year MSRPs are out.
F-150 XLT in red, left scale; Camry LE in purple, left scale; Consumer Price Index for New Vehicles in green, right scale:
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I’m not buying the cause and effect here…
/S
I guess, now people want to see cybertruck pricing before committing to F150 Lightning.
This and the recent price increases probably causes F150 orders to nose dive!
Ford has 200,000 unfilled orders for the Lighting. Nothing is nosediving yet.
I went to the website. It’s not even accepting new orders for the Pro. Ford can’t build the orders it has.
I don’t think you are correct. According to the well known and respected industry source, Ford has an 88 day supply of the Ford Lightning truck.
https://www.coxautoinc.com/market-insights/new-vehicle-inventory-june-2023/
“I don’t think you are correct. According to the well known and respected industry source, Ford has an 88 day supply of the Ford Lightning truck.”
Cox does claim that.. I took the extra 3min to check for myself though, if you order today you may be able to receive an F150 Lighting by October at the earliest if you want the XLT at 55k plus or the Platinum at 92K plus, Lariat you have to wait till December (70K plus) and the Pro at 50k plus, well maybe 2024 model because 2023 is completely sold out and ford won’t even take an order. Try it yourself.
Day’s supply is a function of sales volume. If you sell one vehicle and have 100 in inventory, your days supply is 100. If you sell one more (2), it’s now a 50 days supply. If you sell one more after that, it’s now a 33 days supply.
It’s just math. People in the car biz count bumpers, not days supply, unless it’s a high volume vehicle – and this one has yet to achieve that status. In order to sell something that “counts” as a real sale, you need inventory. “Reservations” are fickle. They can be canceled. I’d bet a nickel that many of those Lightning “reservations” are from speculators, similar to what happened to the Electric Hummer, where those clowns took delivery and immediately put it on “Bring a Trailer” where some knuckelhead gave them a $50K profit (or more) so they could be the first on their block to own one. Dealers are also notorious for “ghost orders” on high demand vehicles, especially if the manufacturer is shifting deliveries to where it appears that there is demand. It fluffs volume, which makes it appear that the vehicle is a runaway success and grinds down that days supply figure as reviewed earlier in this post.
Not everything is how it appears.
If the demand is so high then why would Ford cut the price ?
May be the demand is high now but this is more of a strategic move for future
Just thinking..
jon,
“just thinking”
Think more deeply… Tesla is willfully creating MASSIVE OVERCAPACITY. I explained this in the article here, and in the prior article on this topic, which I linked in the article above, and here it is again:
https://wolfstreet.com/2023/04/22/i-love-how-tesla-wreaks-havoc-among-automakers-with-massive-price-cuts-huge-sales-growth-even-huger-production-growth-and-overcapacity/
Tesla is opening a couple of plants a year it seems. A few years ago, it built the factory in China, and it keeps adding production capacity to it. It opened a factory in Germany. It’s now talking with regulators in Germany about doubling the size of its factory there, to where it can produce 1 million vehicles a year, which would be the largest auto plant in Germany. Then late last year, it opened the car plant in Austin late last year. The truck plant in Austin is brand new and adds additional production. Tesla is talking with Mexico about opening a plant there (I think it already made a deal). It has even increased the production capacity of the factory in California.
These people are sitting on $20 billion in cash, they don’t have to borrow to build factories and ramp up production, the Model Y is already an overall best-seller (against ICE vehicles!) in many countries, regions, and states. The Model 3 is a best-seller in many places among sedans. Tesla’s deliveries are up by a huge amount. They’re cutting prices because it brings in volume, and they’re the low-cost producer, and still make money after the price cuts. They’re out for blood.
Even Ford’s puny sales — and despite production snafus — have more than doubled YOY. But Tesla is setting the pricing agenda, and Tesla is now setting the EV-charger tech agenda.
To watch Tesla shake up the legacy automaker oligopoly – including the for years immensely the self-satisfied Toyota – is THE most exciting thing in the auto industry I have ever seen. And a lot of this activity is taking place in the US, include the belated and half-assed response by the legacy automakers, and that’s great for the US economy.
The word on the street – not the puff pieces you read in the media – is that the Lightning range drops down to 50 miles under heavy load (towing trailer in hilly terrain). That’s horrific.
This quote from Motortrend sheds some light:
“With the largest available battery pack, a fully charged 2022 Ford F-150 Lightning electric truck has less energy onboard than a regular F-150 with four gallons of gas in its tank.”
I don’t know anybody who takes off on a trip with 4 gallons of fuel in the tank. You don’t even run the tank that low while towing.
The technology is simply not there for electric trucks. It’s just not. And it’s being crammed down our throat. They are trying to skip hybrid, which is a huge mistake.
Depth Charge,
“With the largest available battery pack, a fully charged 2022 Ford F-150 Lightning electric truck has less energy onboard than a regular F-150 with four gallons of gas in its tank.”
This is the kind of ignorant braindead bullshit that gets commenters booted off here. ICE waste between 65% and 100% (at idle) of the energy in gasoline/diesel as waste heat. With an EV maybe 10% to 15% become waste heat. I have explained this a gazillion times.
So deduct 60% to 100% from the fuel in your tank, and that’s the energy the ICE truck will actually have available for locomotion.
The only thing that is more energy-wasteful than an internal combustion engine an external combustion engine (steam engine). People need to get a grip on the inherent huge inefficiencies of using ICE engines for locomotion.
So in a 20-gallon tank, you will have about 8 gallons or less for locomotion and 12 gallons or more become waste heat.
“They are trying to skip hybrid, which is a huge mistake.”
More BS from you. You can buy Ford’s hybrid trucks right now, and it’s pretty good new tech too, suited for towing, and a commenter here just bought a couple of high-end ones for his company, he said.
Depth charge
“They are trying to skip hybrid, which is a huge mistake.”
Agree 100%!
sunny129,
You agree with BS. See my comment above.
Wow, that’s horrible. At least with a regular ICE truck, you can put a supplemental 50 gallon gas tank in the bed, and have extra for long towing trips. Here, you can’t even be assured of making it to the next charging station…
“If the demand is so high then why would Ford cut the price ?
May be the demand is high now but this is more of a strategic move for future
Just thinking..”
Well, if they both cost more than competitors and are unavailable at the same time they’re going to lose customers. At least with a lower price some of them may find the patience to wait longer, some will simply dislike the Tesla styling and will prefer to wait, but if there’s a huge price difference and people start seeing the Tesla on the roads and start getting used to it’s odd looking design, Ford could lose even more. Then again, if what Depth Charge says is true and the Tesla can actually tow anything then it’s already a huge problem for Ford, trucks and SUVs are it’s Bread and butter and it’ll get eaten by a competitor. If neither truck can handle a load then the transition is getting dragged out way into the future, some people still buy pickups for their original purpose and will continue to do so.
IMO anyway, I don’t work in automotive I’m in construction
First off I am a long time fan of Wolf Street. You provide lot’s of insights you don’t find in many other places. The auto sector sales process is rather confusing. While Ford states they have record sales in 2023 , dealer lot’s of piling up inventory and renting parking lots to store them. Ford trucks and EVs are now 120 + days in many dealers across the USA. Note the 200K in “unfilled orders” is a bit of a misnomer. Back a few years ago they took reservations for 200K on $39K Ford Lightening trucks. But they are selling now at $70-80K and people are passing. Ford build 4291 EV trucks in Q1 2023. Because at high interest rates and VERY high prices they are not selling EV trucks for $70K. Now they are offering more deals. Ford EV cars have poor demand as well. I think the big story in the next 6 months I that Americans are not buying EV auto’s except for Tesla which is the market leader and lowering prices. Ford just got $8B for a battery plant to supply models that are not selling well at all. Check out on YouTube “F-150 Lightnings are NOT Selling!” Town and Country TV. Keep up the great work.
1. “While Ford states they have record sales in 2023 ,”
Maybe record revenues in $, due to rampant price increases and going upscale and shedding its cheaper models (cars). But in terms of the number of vehicles delivered to customers, Ford was FAR below record.
2. On a model like the Lightening, that is produced and sold in very small numbers, days’ supply is meaningless. Supply also includes units “in transit,” and not yet on dealer lots. On low-volume models, like the Lightning, you need to know how many units are actually on the lot (and you don’t). Days’ supply is just meaningless with low-volume models.
3. Yes, ICE pickups are kind of a funny thing. Automakers prioritized them during the shortages and went upscale, and now the $60k to $100k trucks they have on the lot have trouble selling.
4. Whatever you see on YouTube that gets a lot of views is clickbait garbage designed for morons to feast on.
I’m definitely not buying “we’re dropping the price because we’re closing plants”. They have no inventory at dealers, but will cut price while they reduce production? Okay.
Maybe this kind of thing makes sense with dealer networks, everything on sale when no inventory to dealers, let them charge markup on preorders, increase price when production returns.
Please wait! Don’t buy a tesla while we retool! Look how cheap our non existing trucks are!
“Please wait! Don’t buy a tesla while we retool! Look how cheap our non existing trucks are!”
Yes, this is a big part of it.
Ford has already delivered a lot more Lightnings than Tesla has delivered Cybertrucks, LOL. Tesla is way behind. But pickups are Ford’s core business. And if Tesla or Rivian or some other automaker mauls it, Ford might not make it. It must protect its turf.
Wondering if Ford has a competitive answer to FSD.
Not sure Blue Cruise is it.
FSD might become very costly for Tesla. Musk recklessly overpromised it, and it’s killing people.
Ford has driving-assist features, which is all FSD really is.
Tesla doesn’t have real autonomous driving tech. Waymo and Cruise have that, and they’re testing actual driverless vehicles in San Francisco, with some mixed results.
Won’t legacy auto manufacturers have to run side by side production lines for EVs and ICE vehicles during a decade long transition period? Where will they get the capital to do this?
Do some of these big electric pickups come with sound generators so they can sound like a Turbo Diesel or a Hemi? Seems like driving a big hulking truck that sounds like a golf cart will have some marketing problems.
Surely there will be an aftermarket product out there to do that — maybe already is. You can dial in the sound you want: F-150 turbo diesel, diesel locomotive, Lambo, F-18 taking off, etc…. Select Mozart’s Requiem for the sound after the crash.
What is the resale value of these electric trucks / cars when the battery life is ~10 years. Surely, no one wants to buy one of these used when looking at 25k+ cost to replace the battery pack. Where do these electric bricks go to die?
Rather than predicting what a 2023 model-year EV will be selling for in 10 years, I can tell you what a 10-year-old Tesla Model S goes for right now, base version, good condition, 70k miles: $18k to $22k, Kelly Blue Book retail price. Much more for the good stuff at the higher end.
Battery packs are warrantied by law for 100k miles. Everything except the original bolt has active battery thermal management which prolongs battery life. A 11 year old tesla may have 80% of the original range sure, but if lithium price trends continue in 11 years lithium will be 80% cheaper too. No one drops new engines in the average 10 year old car either.
My brother went to buy his wife new Honda crv,fad a used pilot on lot hybrid . Salesman talked them out of it because of battery expense to replace
Flea,
Did that salesman then sell your brother a vehicle that the salesman could get a bigger commission or bonus on, maybe something that really needed to get off the lot and had a $500 extra bonus on it? Please don’t tell me that your brother believes what a used-car salesman tells him.
“Making predictions is hard; especially about the future” – Yogi Berra
“Select Mozart’s Requiem for the sound after the crash”
Haha.
Or a sad, slow, wah, wah, waah…
Or you could do what we did as kids with our bicycles: use a clothespin to hold a playing card in the spokes to generate that awesome high=power sound!
That kind of sound modules exist. RC Spitfire planes with the sound of a Merlin. Model railroad locomotives that sound like the real ones. Same with RC boats. All with sound syncronized with engine speed. Just get a sound module, amplifer and loudspeakers and your Mustang Mach E get the sound of a Merlin engined Mustang.
Noise pollution. Gee, drop your ego at the door and get over it.
Some of us ”motor heads” as far back as the 1950s used to say — usually with a sneer –”if you can’t make it fast, make it loud.”
That should and does tell you everything ya need to know about the loud ones,,, as well as the ones with some sort of thingy hanging off the hitch to compensate for something they obviously are lacking,,,
remember distinctly the first time I saw a puny little guy climb down out of the huge pick up with said danglers,,,
proved to be a total wimp, and nobody on the jobsite wanted to work with him after one day,,,
just saying
Trucks like that are nicknamed “emotional support trucks”.
VVNV – too true. Often found amongst those on two wheels, as well (aftermarket exhausts for a certain Milwaukee-based marque in particular…).
may we all find a better day.
Power does not require attention-seeking exhaust systems. When you drive an electric truck, you’ll quickly realize that silence turns more heads than a joy-ruining exhaust does.
Silence used to be a big selling point for Rolls-Royce, and BMW Rolls-Royce still makes that available and even more so with their amazing and wonderful new Scepter which is now out for 2024 in the US.
Howdy HC, your post helped me remember clipping baseball cards to my bicycle. Thanks…..
Used playing cards here. Certainly remember the parent’s later discovery of an incomplete deck!
I will stay with my reliable Camry. Where do people get the money to chase around $100K truck!!!
Howdy Zard, YEP, pretty crazy on vehicle prices. Purchased a house in 1980 for only $16,000 …. True Story….
Business owners. I picked up a 23 F150 Platinum and 23 F150 Limited this year. Both are hybrid Powerboost trucks. I wrote checks for the difference between the new trucks and the trades as I always do. Full-size pickups are one of the few business deductions worth a flip anymore.
Howdy nemo, YEP, small business owners should take advantage of Schedule C. Could never pull the trigger on power windows myself. Current vehicle still has window crank……
Multiplying a negative (per-unit loss on each EV sold) by a negative (increased loss due to price reduction) creates a positive?
Tesla has the biggest profit margins among major auto markets and can afford to cut prices. Others have to follow, they don’t get to choose. And so they have to get their production up and they have to improve their efficiencies to where their per-unit production costs come down. Tesla too went through this. EVs are cheaper to build at high volume than ICE vehicles, which is why Tesla has the biggest profit margins among major automakers.
Tesla went through this by building one type of vehicle – EV’s. Scaling up is proving to be a nightmare for Ford because they have to scale up while having to rely on ICE’s vehicles to fund the scaling. That funding just got $2 billion more expensive by cutting the price on 200,000 pre orders by $10,000.
The way Ford is going they will never get to the point where they can build EV’s at scale.
Tesla also has the advantage of not having to deal with UAW. The big three have to work around the issue of building cars/trucks that don’t require anywhere near as many parts, assemblies, and workers.
Ford and GM can’t just walk in and say, “We’re closing down the ICE production and switching to EV’s and 90% of you guys will find a pink slip in your paycheck.” The Germans are having the same problems.
Tesla also doesn’t have to work with dealerships.
Ford EVs will always generate less profit than Tesla’s EVs due to the requirement to give the dealership’s their cut of the sales price.
I was kidding (mostly), but Tesla also keeps it simple, with few relatively models, few exterior colors (no two-tone that I’ve seen), etc. And their far larger market capitalization gives them plenty of capital.
Almost 2M vehicles sitting on dealers’ lots. LOVE IT! I hope it grows to 4M and Ford and GM have to file for bankruptcy.
It’s absolutely unconscionable that they’ve stopped building cars. I’m officially a Toyota person nowadays. They understand that hybrids will be needed for many years to come.
I sincerely hope that EV sales are plateauing for many obvious reasons: high upfront cost, range anxiety, higher insurance, etc.
“I sincerely hope that EV sales are plateauing…”
EV sales are up 50% yoy in the US. Not exactly “plateauing yet.
“high upfront cost”
You can cross that off your worry list: read the article. EVs are now cheaper than ICE vehicles of comparable power, type, size, and equipment. Compare the Lightning to Ford’s ICE 4×4 crew cabs with 580 hp and 730 lb-ft of torque. Compare the Tesla Model 3 to direct competitor BMW 3 Series, but you have to go upscale with the BMW to get the same performance as the base Model 3. The base Model 3 runs circles around the base BMW 3 Series.
“range anxiety”
Anxieties are a personal thing. Maybe have a good beer and relax. Do yoga. Breathe deeply. That helps getting over anxieties, I’m told.
“high insurance cost”
Maybe. ICE vehicle insurance is jumping too.
But EV operating costs are a lot lower.
And if the power goes out in your house, you can plug in the Lightning, and its battery will power the house for days. Pretty nifty trick that Ford built into its trucks. I think that Lightning is the only EV that is equipped that way, but I assume this will become a standard feature of all EVs because it makes total sense.
“I think that Lightning is the only EV that is equipped that way, but I assume this will become a standard feature of all EVs because it makes total sense.”
It’s already happening. We have friends in Kansas City who lost power this week and were running their refrigerator from their KIA EV6.
Hybrids are the worst of both words.
Yes, but they work great! We have one. Cut our spending on gasoline in half, which came in handy when gas prices doubled, and still comes in handy. Wasting money on gasoline sucks. Looking forward to buying a good used EV in a few years to exit the “worst of both worlds” mess, LOL.
Sorry…..worlds.
Howdy Folks, old folks remember letting FREE markets and great ideas work things out. If you were the best, you got rewarded. Times sure have changed and this old fool is glad to be old. Very fond memories of the good old days…….Maybe Tesla should return the taxpayers those subsides?
1. Now Tesla has the biggest profit margins in the industry.
2. I hate subsidies. So….
Maybe homeowners should return the subsidies they got from the government’s and the Fed’s involvement in the housing market?
Maybe be airlines should return the subsidies they got?
Maybe the semiconductor makers should return the subsidies that they’re NOW getting? ($50 billion at the moment).
When companies set up a manufacturing plant, they get huge local subsidies. They all should return that, going back decades.
No industry is subsidized more than nuclear power.
Sure would be nice to live in a world without subsidies. But that’s just a dream. I can scream about subsidies all I want, and they keep coming.
But that has zero to do with Ford’s price cuts.
Howdy Mr. Wolf. Agree completely, subsides is just Government picking winners and losers and should not be done……
Guess you are against subsidies for the oil companies as well. They have been getting subsidies for decades.
Btw, I’m not against subsidies for innovations that are necessary for sustainable growth. At least in the early stages, it is not practical for individual companies to invest in newer technologies like EVs, solid-state batteries, solar, green hydrogen, etc.
When mature industries like oil can get subsidies, why not subsidies for the industries of the future? Doesn’t make sense.
@Sean
Farmers do too. Even when they are foreign companies growing food for their people.
Anyway, the subsidies in theory are paid by the citizens via taxes.
I think it is interesting that the Government let so much manufacturing go overseas and now is paying many of those companies subsidies to build manufacturing plants backin the US. Well played chip companies.
Whats the MSRP on the CyberTruck?
Is it above the new price for the Ford Lightening?
Musk today on Twitter after the Ford price cuts:
“The Ford Lightning is a good vehicle, just somewhat expensive, especially given the high interest rates these days for any kind of loan.”
So you can guess how aggressively the Cybertruck will be priced.
I’m very curious about this as well, Teslas sedans and SUVs are generally considered attractive vehicles, the cybertruck though I’ve still to meet someone who thinks it’s a good looking machine. However, priced well it might go, Ford’s lowest trim is completely sold out while higher trims can still be ordered at least, though with a long lead time. So I’m thinking a lot of Lightning Pro customers are already stretching their budgets, maybe they’ll accept what Tesla is selling if the price is good, or maybe I’m just not social enough and haven’t met the people anxiously awaiting their cybertruck.
Subsidies contingent on the use of domestic over imported goods violates World Trade Organization (WTO) rules; such has been reported for the “inflation reduction act.” These rules are enforced by individual WTO members through sanctions. Surprisingly the EU is maintaining an open market in this area when the legislation affects them with obvious harm.
The Chicken Tax is a subsidy for the Big 3 to continue to collude on pickup truck sales. A free market would allow real competition. EV trucks are still mainly toys. Real work trucks are controlled by a cartel.
Ford’s price cuts bring all lightening models under $80k and eligible for $7500 federal tax credits. So it has a bit to do with subsidies and it’s smart.
There is Zero chance that there is a 200k order backlog with in entry on lots. Ford would not drop the price unless they were getting mass cancellations.
I even saw one dealer quoted as saying they can’t sell the lightenings on the lot and Ford was stupid to make them.
Many of us CT reservation holders probably won’t go through with purchases as well since CT pricing and other options will have changed over time. But if CT pricing after a year is back down to unveiling price, legacy automakers will have a serious problem competing.
Tesla is the only EV company that can mass produce and make money.
Wolf says FSD is killing people. I say it is likely saving more people than it is killing already.
FSD will disrupt EVERY mode of transport when it is switched on. Insane multi trillion value unlock. Goodbye plains, trains, car ownership, uber, Lyft, taxis
Due to the “Chicken Tax”, Ford receives a huge subsidy from tax payers.
Ummm… no. No individual taxpayers involved. The manufacturers of said trucks pay the tax.
Most import branded pickups are now manufactured in the U.S. anyhoo.
when do you think the used car and new cars prices will be back to pre- pandemic levels?
Pre-pandemic prices are hard to envision. Used vehicle prices went down quite a bit, and then they bounced again this year. So maybe they’ll go down again some, and then bounce again? Supply will remain tight for years due to the production shortfalls of new vehicles in 2021 and 2022. Those new vehicles that didn’t get built won’t supply the used vehicle market over the next few years. We’re talking about 6 million vehicles that didn’t enter service in the US. So prices may drop some more, but I doubt they will get close to 2019 levels.
Funny how when the subject of the real estate market being short 4 million homes is mentioned, what follows is how the real estate market is going to crash because all the airbnb homes and rental properties and second homes are going to suddendly come flooding onto the market.
Makes about as much sense as me saying all the uber and lyft drivers are gonna flood the market with used cars because insurance rates are up 50% … and btw all those second and third cars and collectors cars people have are gonna get dumped too and crash vehicle prices.
Both are just wishful thinking
🤣 Comparing RE hype to new vehicle production and its impact on used vehicle prices. A used vehicle today will be worth salvage value in 20 years. You should have said that houses will be worth salvage value in 20 years? We already know that some older office towers are worth salvage value (land value).
That said, used vehicle CPI has dropped 8% from the peak 18 months ago, including the recent bounce. I said: “So prices may drop some more, but I doubt they will get close to 2019 levels” — the way we measure used-vehicle price changes, given that nearly all used vehicles will be worth salvage value sooner or later.
Here you go…..
It’s just a little gully.
Just a little valley.
Down in the valley, valley so low, hang your head over, watch your wealth go.
Watch your wealth go, dear, watch your wealth go, hang your head over, watch your wealth go.
Roses love sunshine violets love dew
Fed Reserve chairmen love to screw you
Love to screw you, dear, love to screw you
Fed Reserve chairmen love to screw you.
Just wait 2 years,your dreams might come true
Hopefully commuters switch to electric bikes over time, and Gen-Z+ might be the generation to make that happen. Car makers are shooting themselves in the foot with extreme oligopolistic pricing, when many drivers will soon be able to substitute at least one vehicle in their household for a bike after a quick cost/benefit analysis. Unnecessary new safety equipment on full size vehicles is making price and insurance not worth the benefit.
The biggest problem I see is pricing. Here in Europe there are a lot of E bikes, and the prices start at around 2000 Euro. In the USA that’s a price point most folks consider too high for a bike.
But I agree, E bikes are going to be more of a commuter tool provided provision is made in the infrastructure to accommodate them.
I also foresee E bikes being more generally regulated, requiring licensing, of both the bike and the rider, and PPE when riding, and a registration like cars (basically a tax).
In my view, never. The Fed increased the money supply by an incredible amount, and has no real intention of retrieving even most of it. They’ll stop QT once they’re confident that inflation has “stabilized” at 2%, and if that means leaving $3 trillion of those printed dollars out there, so be it.
Even if the inflation goes to zero, prices won’t go to pre pandemic level.
Zero inflation means no price rise and price stuck at very vey high level.
Basically means, poor and working class got really screwed even with zero inflation.
Such steep price cuts from Tesla, and now Ford, are driving the US toward deflation…
Mass production efficiency always drives price deflation. And Tesla is king at that.
Software and AI will eat the world!
That’s a feature, not a bug.
My theory is that as electric trucks become more popular the form factor will start to change. Even though the ong hood, tall cab, high bed style is popular at the moment I think that it will change as people adapt to a new fuel source. This happened early in the auto industry when cars went from looking like horse drawn carriages to aerodynamic cars. We could have modular trucks where the cab, battery and load bed could be rearranged to suit the customer. Or imagine a 1954 Ford F150 step side with a very low bed ( easy to load) and the battery in modules along the side where the spare tire or gas can went in the old days.
Maybe we’ll finally see a resurgence in small pickups.
I have parked my previously owned dually 1 ton long bed 79 pickup next to the modern Tacoma and it is roughly the same size. Yet I’ve had (illegally) 18k lbs grossed on a scale on and behind that poor 1 ton.
I’d for one just love to see a pickup truck with bed sides that aren’t 5 foot off the ground, an 8 foot bed for a full size truck, and something I don’t need to get a running start to jump up into or have to spend 15 minutes circling the home Depot to find a parking spot for a truck 4 foot bed truck.
Alas, these trucks are made an offered. I think all the American companies will sell a standard cab long bed in a 3/4 ton or better. It’s just nobody will buy anything but a crew cab lifted grocery wrangler. It’s the American people that are the problem. I work with guys that have gigantic lifted monster trucks and they just say they’ll pull a trailer if they need the bed for anything. No doubt it’s always some vastly overpriced bed framed tractor supply 5×8 trailer that will rust to nothing after 3 years.
I guess I’ll continue to be the irrelevant guy yelling at the sky about wanting a:
Manual transmission if applicable
8 foot bed
No lift kit
Naturally aspirated diesel fuel sipper or better yet EV
Manual locks and windows
Maybe extended cab at the most
Enough space for tire chains
An upgraded option for selectable lockers and dual fuel tanks
That’s for a full size. Then a smaller version of that like a first Gen Tacoma footprint.
Hell will freeze over while I wait with a disgruntled look.
+1 on wanting a stick.
One of the reasons they don’t make trucks the size of the Gen 1 Tacoma anymore is that the Governments CAFE standards for fuel economy are calculated with the footprint ( wheelbase x track) in the divisor of the equation. So a wide long truck that gets 20mpg scores Higher than a short narrow truck that gets 24 mpg. So you will probably never see small ICE trucks again. Maybe electric ones though.
Ford Maverick, ICE baby truck.
Great comment. The love for big pick up trucks are a personal taste that contravenes the vision of the other 70% of the population who view big trucks as a nuisance.
I drive a big truck.
The finish line is in sight ( retirement ).
I have one more work truck purchase( hopefully ) before I get
there. I spend way to much of my free time shopping for a 7.3
Thats what I started the business with….its what I want to finish with.
Long bed manual….and yes no d*mn lift kit.
I had a 1995 Tacoma first year. Regular cab. Manual everything. Only option was AC. I owned it for 21 years, and put over a quarter million miles on it. Everything was still good when I sold it. My needs changed so I purchased a different vehicle. Not one of the giant trucks.
Recently borrowed a relative’s Titan. Big, huge, tall, and expensive truck. I was getting some lumber for a home project. You had to climb up into it, and yet it has a little bed barely over 5 feet long. Smaller bed than my old Tacoma which btw was not so tall you need a ladder to get into it.
These modern new trucks are just big old 4 door sedans lifted with a vestigial bed to make it a truck. I guess that makes sense for CAFE standards, but why do people pay so much for such a misguided design?
I’ve driven a friend’s Titan, you’re right on the money about them. Re-roading my ’98 Taco and drive a ’07 e-250. Mass and metal makes the best insurance.
Amen, except for the Diesel (phu).
The move to sell trucks was made because they are not required to meet the same mileage and safety standards sedans are. There’s been a lot more profit making trucks that are less safe and bigger polluters. Change those regulations and level the field and trucks sales will taper off to just those who actually need to haul something.
Good point! The shape of things to come may surprise us.
Good point HC, and I agree:
When I first started getting paid to do construction as a teen in early 1960s, the boss had a cab over jeep pick up driven by an old man who had to pick me up.
That old guy – probably about 50 LOL – drove really really carefully because he knew he was first in line if he smacked into anything!
But boy did that truck haul stuff!!!
Seems to me that’s the configuration of the future when efficiency of EVs becomes the norm rather than the current ego driven nonsense.
The future is no driver at all for delivery vehicles. Just a box on wheels. It’s cheaper, easier to maintain, doesn’t require down time, easier to run 24 hours a day, cheaper to insure, and no wage or personnel issues.
Tesla is bankrupt in three years…
Contrarian opinion.
Trucks are now mortgage level investments…more bankruptcy for other manufacturers?
What do I know?
Not buying any of this is all I know.
If Tesla was going to go bankrupt it would have happened 5-10 years ago, before they started shipping 200,000 vehicles a year. Elon Musk now has the ability to force the rest of the world to match him on pricing. That’s huge.
For the life of me I don’t understand two things…
1) Why the Big 3 (Ford in particular) stopped making ICE sedans. You hardly have to know much about the history of the car industry to know that “legacy” models can last a LONG time. As Wolf said in a post a few months back… Toyota is just laughing all the way to the bank right now.
2) Why the Big 3 didn’t start with EV delivery vans instead of EV pickups. Obviously there is more profit in a pickup… but there is also more problems in getting that production line up and running. As Wolf says here, “Any threat to Ford’s pickup business is an existential threat”… and there are few threats as big as your “truck of the future” getting a bad reputation right off the starting block. It just seems to me that instead you would want to work out the kinks on an EV model that has buyers willing to buy in bulk each year (Amazon, Fedex, UPS, etc.) and work with you to improve the performance.
Agree re vans. They also seem like the vehicle with the most to benefit from an electric motor: frequent stops & starts but with a limited overall route distance. Plus the fleet can easily be charged overnight.
Electric buses would similarly benefit. I used to ride a “trackless trolley” to work and found it to be a nicer ride than the regular (diesel/CNG) buses.
Agree 100%
Not that I have any more knowledge of what the hell is going on in the head shed atop the corporate empire of the so called ” big three “.
I suggest that they have been legacy, brand corporations that long ago ceded the engineering expertise to their foreign competitors.
That being said, the truth is much more mundane than the romantic.
I owned a 1982 Cadillac Cimarron, four cylinder, fuel efficient ( 30 mpg) peppy SUV that was panned by the popular press.
The imports all copied it while the domestic industry introduced the dawgs of the 80’s, 90’s, etc.
How is the Cimarron an SUV? It was a compact sedan. In fact a tarted up Chevy Cavalier. Neither of them very good designs.
For point #2 I’d imagine panic, all legacy automakers were very slow off the line to build EVs to begin with and you don’t just switch overnight, if Ford started with vans there would be no Ford EV truck available right now while Ryvian at least has a product out there and Tesla is set to finally release their truck. From Wolf’s other articles it appears all these manufacturers had no long term plan, concerned about only returns in the near term they focused on highest margin products which are all “luxury”, setting themselves up to be crushed by anyone who can offer more budget friendly products.. but that was always a problem for later, well, unfortunately we are now in the “later” timeframe so they’ve made this EV truck and it better come off, if not I suppose they can just ask for bailouts by threatening to axe thousands of jobs again.
Why not EV vans? Because there is no profit in them and manufacturers need profit to survive. The cost to build the basic “can” is the same as a high end can… but add all the gingerbread and the retail price goes up disproportionately to the manufacturing cost. Many features are now “turned on” rather than added. Think heated seats. In some cases it’s nothing more than a software flag as many manufacturers only make one seat as it’s cheaper due to volume and less of a headache for the production folks. Plus “subscriptions”.
Waiting for the «jailbreak» 😉
It will come to cars too.
Engenext
No need to wait.
1)The CPI new cars barely moved between 1998 and 2021. It popped up in the last two.
2) If QQQ is turning around new vehicles CPI might test/ breach the 2009 low.
3) A good CEO must navigate and prepare his co to survive four scenarios, a stress test for each, in the next 5 years.
4) Ford and GM bosses were fully committed to the short term to sleaze, executives perks and bonuses.
5) TSLA will be toasted in the next recession, because TSLA is mono EV.
Yet every automaker is now switching to Tesla chargers? Seems like that alone would keep Tesla afloat, no?
It’s just a plug form factor…. an attempt to standardize the chargers… think Betamax vs. VHS
If I understand what your saying, that price of a plain jane, F-150 half ton electric work truck is now of $51,990. Definitely competitive with the ICE alternative for the less altruistically include climate crusaders. With the let’r rip crowd, way too expensive.
No, you completely misunderstood. What is $51,000 is a 4×4 four-door crew cab with a monster 480 hp and 730 lb-ft of torque. And it’s amazingly well-equipped. Got all kinds of stuff you couldn’t even dream off a little while ago. It will power your house during a blackout for days, for example.
The Lightning doesn’t have a “plain jane” 2-door, 2-wheel-drive 300-hp version yet. But it would have to be a lot cheaper.
Even the most basic low-end bottom-of-the-barrel Lightning is a high-powered huge fast luxurious cruiser.
Thanks for clarifying.
It sounds like my kind of vehicle. Perhaps my preference for reliable power stems from my birth and early life in a place surrounded by wilderness.
In those days, there was one third of the current world population. If you broke down you were likely to have a bad day.
There was a 30 year time period that I owned trucks with four wheel drive and an eight cylinder, carburetor engines. The 28 feet of average annual snowfall instigated the notion.
Thanks Wolf!
oligopolistic pricing – another reason to admire Elon Musk
oligopolistic markets, these firms are exposed to the privilege of influencing prices through manipulating the supply function. In addition to that, these firms can be described as mutually interdependent. This is because any action by one firm is expected to affect other firms in the market and evoke a reaction or consequential action.[2] To remedy that, firms in oligopolistic markets often resort to collusion as means of maximising profits.
The major Ford Dealer near me has multiple people looking at their phones taking the PPP money required by their employer so the employer can get a FREE loan forgiveness. The BILLIONS loan in this program should peter out about Dec as Ford will be letting go of the zombie PPP salesman for sure leaving only the fabulous few (or well-connected).
I am completely familiar with trucks as I have had them in different businesses (about 25 trucks or more) and in confronting the Ford dealer second in command security guard muscle man about the socialism of the Ford dealer his candid reply was “well there will always be used cars” makes me see the business community has sold out to those who do not believe in Capitalism…. Ford just got 9.5 billion from the Feds to build battery factories in the South. Geezzzz. Soon enough those here will be wondering what to do with all their worthless dollars.
1) Since Nov 2021 peak Tesla is making lower highs, lower lows.
2) TSLA reached Jan 8/11 2021 BB, 294.83/267.87. Today (H) : 292.23.
3) TSLA might breach it and turn around.
4) TSLA might close July 1/6 2020 open gap…
So Ford plan is to continue to die by 100k pickup and hemorrhage money on production costs, they deserve to go out if biz. Why not make a Mid and full size electric SUV and sell 4x as much. They refuse to learn, don’t rescue these idiots.
Ford already as the Mustang Match-E, a midsize SUV. It’s selling as many as it can make, which isn’t many, because it’s having a hard time ramping up production.
Also, about 40% of Ford’s total unit sales (Ford and Lincoln) in the US are F-series trucks. This is a huge business for Ford.
MACH E is not gonna appeal to the highlander crowd, that’s what Ford and gm need. An EV family Suv or make minivans. Can’t find minivans less than 55k, there’s some EV margin.
Wolfs points are always well taken and relying upon 40% of rev for pickups is not wise, guess production capacity for various models is expensive, hence Teslas advantage but take a page from them.
I always thought Obama should have done GM a favor by tying their bailout to mandating 30% EV lineup by whatever year. Would have incentivized battery r&d in this country They’d all be better for it and have been forced to make a good medium term investment that’d be paying off in spades by now.
The bailout of GM was government overreach. Just like cash for clunkers that destroyed the affordable used car market for years. Who got hurt? The poor.
Plus it made this humongous headache for the auto industry trying to administer that turkey. Not to mention the fraud…. Customers would go buy a qualifying car for $500 (some dealers actually stocked the junkers)…. then trade it in….. and then get the voucher.
American ingenuity at it’s finest!
Add to that: 7 of the 10 vehicles that benefited from the program were…. drumroll please….. import brands.
Fact check
Cars dotcom showing 7555 new mach Es available at dealers right now.
Many articles this week about EV inventory piling up .
Maybe many people deciding to wait until next year when most all EVs will come with the Tesla connector and get Super charger access.
Staying true to the old adage that ” a glimpse of the simplicity of the needs of humanity sometimes softens a hardened heart “, seems to be the message trying to be sold by the domestic automakers.
I’m positive that Ford intends to build and sell quality vehicles as it has done for the last 100 years.
so do we buy calls or puts on Wednesday?
Well, that all depends. Since puts and call options are a bet, a gamble, there is no certain outcome.
As a former Nevada resident, I would say that the premium, and the bet, are lost when placed.
What do you suggest.
1) TSLA conquered CA. What about China. Wed Jul 19 earning report.
2) Ford ceo : the Lightning has a different type of customer : a stripped 1K hp Lightning striker before dressing it with plates.
3) Ford 1M : a year ago, in July 2022, Ford bounced off Oct 1987 high. After reaching Aug 2022 fractal zone Ford turned down.
1W : yesterday plunge was on DM #9.
4) Yesterday plunge breached May 28/Jun 01 2021, 15.05/14.46 BB . Sept 12/13 2022 gap : 15.54/15.00 is still open.
Just interested if the 37 million borrowers who will have to start paying back their student loans after a 3 year hiatus, will actually make much difference or is it just a nothing burger….
More forgiveness has already been announced. As I said for many months, I believe that borrowers are actually making payments when I see them make payments.
Student loan payments won’t start at all.
At least not till the election is over.
Toyota doing nothing about EV’s at the pickmeup level. Could it be that they are waiting on their bet on solid state battery tech – a couple of years away according to them – to put into vehicles at lower weight, volume, and cost?
Toyota and Honda dropped the ball and are late to the game. They have recently pivoted. Expect more BEV entries from them in the coming decade. Japan was of the mindset hydrogen was the future
Toyota can’t even afford to pay good engineers. Why else would the wheels fall off the Evs?
Same reason they fell off the Tesla’s.
I usually yawn at the mention of battery ‘breakthroughs’ that have been announced every 3 months or so for the last 30 years. Not this one. First because it’s Toyota, not a usual BS source, and the claims they are making for it. Like recharging in ten minutes and allowing up to 700 mile range. Also the short time period they are claiming for proto to production: by 2027.
We’ll see.
PS: I was ready to diss a journo writing recently in the Globe and Mail. He criticized Canada’s massive subsidies for battery plants to be built by VW and Stellantis. He wondered what would happen if there was a battery breakthrough making these plants obsolete.
The Ford F150 is kind of an analogy for America. If we look at the evolution of a 1968 F150 to today’s F150 Lightening it tells us a lot about how America has changed. The 1968 version was lean and purposeful, built for work, out of materials mined, smelted, and finished in America. The people who drove them worked in an industrial economy that was still the envy of the World , and had the spare capacity to put a man on the moon.
The Lightening is an overweight ego boost for the guy who spends his days at a desk trying to skim off his share of the money printed by the fed. Like his income, his truck is mostly pretend. It has a pretend bed, a pretend purpose and runs on a pretend energy source. Sure its fancy and comfortable, and they will probably sell a lot of them, and many people will like them. But its not built for hard work, or hard times and won’t outlast the printed money it is based on.
“…not built for hard work,”
Actually… you can plug your electric power tools into the power outlets at the truck and let the truck’s battery power your big electrical tools on the construction site.
” won’t outlast the printed money it is based on.”
OK, I hafta admit, that’s a nifty phrase ❤ But electric motors last a lot longer than ICE and are essentially maintenance-free. The other stuff might break first, such as the computer screen in the dash, or the sun visor might fall off, or a control-arm ball joint might wear out if you keep hitting curbs, or a power-steering hose might leak, or the leather interior might get torn… but that’s the same stuff that breaks with other modern vehicles.
My nifty phrase was more intended to mean that the complex industrial infrastructure that underlies the manufacturing and charging of modern electric vehicles wouldn’t outlast printed money, not necessarily the vehicles themselves.
My concept of hard work is based on how we used our pickup on the farm when I was a boy. To give you a taste, my grandfather made us use hand tools because he said using power tools would make us sissies.
But I will admit that an electric truck would be a good match to farm use. Back in the day we had an underground tank and a gas pump, that is pretty much being regulated out of existence now. So being able to plug the truck in and not having to go in to town to refuel is a benefit. And if you were in a hurry you could rig up a charging station down by the river where we had the big 3phase service to run the irrigation pump.
In 1968 there was no F150. Ford half-ton trucks were originally designated as the F100. They became the F150 somewhere around 1976. I had a 1968 F100 with four-wheel manual drum brakes, manual steering and three-on-the-tree transmission. Talk about work!
Then I had a 1975 F100 with power everything and front discs, much easier to drive, and more GVW. Then I had a 1983 F250 after that.
Newer trucks carry more, tow more, last longer, are quieter, more comfortable and last longer. But they have too much unnecessary junk that makes them way too expensive.
Most construction sites get electricity on site pretty quick. Nice perk to charge at work and head home with a full battery. Try that with ICE.
Also when hailing heavy loads in city driving the EV trucks recoup battery charge when braking. Another nice EV or hybrid trick.
Just a humble old man here living out in the country. My truck has to haul stuff, often for long distances, that is why I have a truck in the first place.
I see some Lightning owners report trailer hauling, not even much weight, cuts the already limited range by 60% or so. I forget the exact figures but there is no way I could use this EV for what I use my truck for. Simply not enough hours in the day for both hauling and recharging.
Just an opinion, maybe a nice go to town show piece, but not much else.
I bet someone would rent you an ICE truck for those times.
I guess an ICE rental truck may work for some, but I couldn’t afford a $85k Lighting, and renting a ICE truck 2 or 3 times a week to do my hauling chores is not viable from a scheduling point of view but also impossible finanacially.
My electric utility has already instituted daily “premium rate” hours so charging an EV during that time period would be off the table. They are hinting at further expansion of these “premium hours” in the future and encouraging electric power conservation. Doesn’t sound too promising. I am trying to figure out how to replace my electric water heater with a gas model, this is just getting rediculous.
The legacy automakers all went upscale to widen the margins and try to pay off the legacy costs. The biggest problem with making low cost vehicles is the low margins involved.
The pandemic pushed that model to the extreme, and the amount of available cash from the upper 30% of the workforce enabled the bonanza.
The biggest problem is when people start spending money on travel and social stuff, the amount available for new vehicles drops. And used vehicle market was even more nuts.
The real question is how long with rebuilds will these electric vehicles last? The battery mumblers on here are missing the beginning of the new market- just checked the cost of a 2012 new Nissan Leaf battery is about $4500. So if someone can rebuild a “dead one” for $5k- they will be done and another 10 year cycle kicks off.
There is a whole ecology already dedicated to getting IC vehicles revived and moving again for affordable transport- and electric is just another profit opportunity.
If you really want a fascinating moment, check out the NPR show about flood vehicles from Hurricane Sandy being exported around the world and rebuilt. We at the top don’t quite understand that everything we just toss is often plucked out and resold to the bottom half of the world. A first world cell phone may work for 10 years, but rarely stays in the hands of the first owner for more than 3. We spend way too much time discussing our annoyances at the way stuff is sold to the very top of the food chain.
Someday this war’s gonna end…
CAM – good observation on ‘things we toss’. Have made more than beer money subsequently on multiple perfectly-good Japanese motos from earlier days that were gifted to me because they weren’t considered valuable enough to bother selling…
may we all find a better day.
Another gold rush goes busto. And the reality is people are natural at generating a boom and bust cycle:
MSN: “Airbnb bust short-term rental prices plummet in palm springs and some owners are worried”
The real news is the falling tax revenues- oops- short term rentals are fickle. LoL Those Palm Springs numbers are hard, and they show the easy money is now gone, and a decade into the AirBnB boom, now come reality. The funny part is it is just another way to work hard for small money.
The writing is on the wall, and how long it takes is the question. What I find amazing is how long the public rides a trend the insiders are selling. The older I get, the more it all just sounds the same, and enthusiasm is harder to come by in terms of booms. We run two vehicles in the household, one newish IC “small truck” that is as big as a large truck from 30 years ago, and a new iD4. Daily cost of the electric with a 12 mile round trip commute is $10 a month (employer subsidized charging station). Gas for the truck on a similar commute is running $120 a month- electric can’t be beat thanks to the suckers.
Now, we live in a world where everyone seems to miss the point, change is upon us, and it will continue to march along. The hardest part is the free money parade of the last 15 years is gone, and money will once again have a carrying cost, and assets will have this as well. Black Scholes once again will have a discount of the 10 year T-Bond rate that bites. Which means interest costs that were a hand waive become serious in almost any long term calculation.
The Boomer flood of investment money is now a receding tide, and is really going to be something to watch.
With all due respect, all of the MBAs don’t understand the engineering advantages of EV’s, and more importantly Musk’s approach to design.
The absence of the ICE and powertrain makes EV’s cheaper, with battery costs being the driver, and that is continuously improving. The fact that anyone can buy an EV that isn’t built strictly for emission compliance (e.g. Nissan Leaf) is amazing.
The cybertruck looks ridiculous because Musk’s goal is to be able to manufacture them as inexpensively as possible….function over form. When they start making them at volume, I think the price will be lower than the experts predict.
Musk made a comment, maybe at the last annual meeting, about sacrificing margins in the short term to support market growth. I don’t think he’s kidding, and that’s going to torpedo the legacy companies.
The Cybertruck has these geometric lines because the exterior body is made of stainless steel, which is a total bitch to work with; you cannot shape it by stamping it. So you cannot get the round shapes. Everything has to be straight. This is actually a drawback aerodynamically. Aerodynamics are a lot better if you round the shapes.
Then why did he use steel? Seems like a huge strategic error. And I agree with others, it aint gonna sell on its looks. Where is Musk getting his steel, same place as the rare earth elements for the batteries, China? Makes you wonder if the whole tesla thing is a way to scam china out of its raw materials, first solar, then batteries, and now maybe steel.
No paint shop on production line is massive cost savings.
You may be able to change your cyber truck stainless steel color with a blowtorch though and that is pretty cool..
The Cybertruck has these lines because tooling is too damn expensive for Elon.
Of course stainles steel can be stamped and formed.
Duke – mebbe ‘fingerprint patina’ is the coming trend in finishes???
may we all find a better day.
Been low key interested in a pickup for a few years for want of rugged utility (local terrain/weather/moving frequently/camping). But not at these prices.
While getting the humble MomMobile serviced the other day, walked the lot and found little else but giant pickups with only 4-foot, damn near useless truck beds, none under $65k and more than a few in the $70k range. Salesman said you can still special order larger (read: normal, actually functional) truck beds but it’s expensive.
A special ordered/customer backed out Bronco was parked at the road entrance, $68k, salesman (knowing I wasn’t interested in buying) said he expected it to be gone in a few days and they could probably ask more for it.
Its a relatively wealthy area, but I still can’t wrap my mind around paying these prices for a provate use vehicle. Can’t remember if I’ve asked previously but Ilis the section 179 tax deduction fueling this fire? I know/know of a few using this break but curious if its impacting these prices.
The cost of energy has increased since 2003, three times more than US inflation, that is a problem for which there is no solution for now and I don’t know if there will be. The price of energy goes up because it is more and more expensive and difficult to obtain
The design of the car responds to an equation that has to do with the number of individuals that a family has, except for the sophisticated sports cars that are for two people. If we use logic, does it make sense to use a four-wheeled vehicle weighing more than 1,000 kilos to transport an individual weighing 75 kilos? Couldn’t the design of the vehicle be modified? I am very clear that cars are symbols of hierarchy in the modern age, but we are no longer in the modern age, some use the name of postmodernism.
Let’s continue with the logic. Does it make sense to have vehicles that go more than 200 km per hour when in most countries the maximum speed is 130 km per hour on highways?
Again with logic. In an electric vehicle, which is promoted by marketing as “environmentally friendly”, does it make sense that it accelerates from 0 to 100 in 3 seconds?
Not to mention a Tesla truck in which Elon Musk talks about enormous acceleration, he shows it on the presentation screen, when a truck owner only cares about transporting merchandise from A to B in the best possible way and with the lowest possible cost.
There are 1,400,000,000 vehicles in the world, I do not count that it will continue to grow, a third part is 450 million, if we want to replace this part with electric vehicles, how much cobalt, aluminum, lithium, copper, lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium and neodymium will it take to make these cars? (I clarify that some of these elements are used in the manufacture of combustion automobiles)
The problem is not only that there are possibilities of getting them but what the price will be. How many chargers will it take to replenish power to the batteries?
For example, copper is at a price of almost US$8,000 per ton when in the year 2000 it was between US$2,000 and US$3,000. I add that, in Chile, where there are large copper deposits, they are building water desalination plants because there is not enough fresh water necessary for its extraction. On the other hand, in medium and large cities, 70% of cars spend the night on the street. Are they going to install charging centers every five meters? Thinking that once parked the VE is not going to move for the whole night.
There are many more things to analyze, without demonizing the car. But if we need a change of vision, establish new paradigms, and think.
I am not going to talk about the serious drawbacks of hydrogen vehicles.
Iron and oil have been the great promoters of this era that is ending to enter another that we cannot even define.
carlos – your logic ‘steak’ is impeccable. A lotta ‘Muricans, however have always preferred to be sold the ‘sizzle’…
may we all find a better day.
Wolf – You say that it is not a lack of demand and that Ford has 200K reservations for the Lightning, but those are not firm commitments to purchase and I am reading that converting reservations to actual orders on BEV vehicles is actually not going well for the domestic auto makers not named Tesla.
I personally think that Tesla created a dud with the cybertruck.
Tesla is getting real competition in China and the market share is down to 10% of BEV sales in that market. Chinese companies will expand to Europe and everywhere except North America will be a battleground with margins getting really whacked.
Ford and GM are probably in deep trouble. Declining ICE sales and difficulty selling their transition to BEV. And they are losing tons of money on BEV sales.
“Cox Automotive said General Motors, Ford, Hyundai, and Toyota each had more than 90 days’ worth of unsold EVs at their stores and that there were more than 92,000 new EVs on dealership lots across the country. The outlet then asserted that there were 86 days’ worth of Ford F-150 Lightnings and 113 days’ worth of Mustang Mach-Es but Ford quickly hit back at these figures, stating F-150 Lightning inventories sit at 58 days while Mustang Mach-E inventories sit at 83 days’ supply.”
whether the Cox counting of inventories is accurate or not, there are substantial inventories of BEV products and Tesla seems like the only brand that can sell alot of these. Ford and GM will need to lose alot more money to scale their BEV operations.
On another topic, I noticed that the Treasury is issuing 176 billion of short term notes, but only 29 billion of long term bonds currently. If they really wanted to cut inflation, they would start to crank up the long term bond sales and push up long term rates, which would impact asset bubbles and end the wealth effect.
But the Fed and Treasury stool-pigeons are just here to prop up the ultra-rich.
Treasury and FED won’t do anything to hurt ultra-rich.
Next week, FED would do piddly 25 bps hike with a dovish statement saying that inflation is tamed and market would roar higher.
Based on what I know on the ground from dealers that I am friends with, here’s my take:
1. Ford is spinning the price cuts hard
2. Tesla’s price cuts spurred Ford to act
Here’s the situation:
1. New orders have slowed to a trickle
2. Buyers have been canceling orders / refusing delivery
3. Ford is scared that they’ll be perceived as too expensive, especially in light of Tesla’s price cuts
4. They’re still production capacity limited
I think we’ve got a case of early adopter demand being satisfied combined with consumer price hike exhaustion.
FYI, using the Ford 150 Lightning to power your home is only theoretically possible in California. The utilities aren’t allowing it. I just listened to a seminar by the Solar Rights Alliance, and the largest battery available for solar in California is 15 Kwh for around $11,000. The last thing utilities want is for their customers to get solar, hang 100 Kwh batteries on their wall and go off the grid.
How can utilities stop it? No different than a safe switch to run home off generator during grid outage.
Solar and battery quickly becoming cheaper and more reliable than grid. Grid better play ball or consumers may opt out en masse.
A Toyota Corolla hybrid, rated at 53/46 mpg can be bought for $24k msrp. My real world fuel economy has been 60 mpg +/- 1 measured at each of my first 6 fill ups. There is no reason for me to consider an EV with fuel economy performance like this. I’m sure most people do not realize there are options like this still available. If your goal is to save the planet by buying a 7000 lb electric truck that is less capable utility-wise than its ice equivalent, good luck with that.
Completely wrong take from maestro. TSLA inventory check compared to last check two months ago:
S – Up 107%
3 – Up 90%
Y – Up (whopping) 591%
X – Up 8%
Tezzla is clearly sitting on massive unsold inventory. Q3 needs substantial price cuts to move metal.
The only havoc Tesla is wrecking is within their naive customer base, see the Vehicle Dependability by JD.
I totally nailed it. Revenues up 47% despite lower prices (lower prices mean less revenue per car). This means HUGE DEMAND. But even faster capacity build = over-capacity = more price cuts to bring up volume up even more. And it’s expanding capacity even further. The more it produces, the more its per-unit costs go down. Tesla is out for blood. It’s going to force automakers to cut prices across the board in order to compete, even on their ICE vehicles. Tesla is still very profitable at these lower prices, and it can cut more, and as volume comes up, it can cut prices even more. I LOVE IT. The oligopolistic legacy automakers had it coming. All they ever did was jack up prices. I said that, and I nailed it. I don’t give one iota about Tesla’s inventory. I want prices to come down. This industry has screwed Americans for two decades by jacking up prices. They just didn’t count on newcomers to muck up their party.
Demand doesn’t matter if supply is higher. Quality is one of the worst. Most of those who bought will never buy from Musk again. Used inventory ballooning. And most importantly – margins are shrinking, so no more tech company myth. Just a sweaty autoshop with a massive overcapacity problem.
Good lordy. Tesla’s deliveries to customers in Q2 were up by 83%, and reached 466,140 vehicles (from Q2 2022 of 254,695). Only a moron would think that you can get this kind of sales growth year-after-year if customers don’t like your product. Tesla doesn’t even advertise to persuade people to buy its vehicles, unlike the other automakers that have to spend billions on ads to persuade people to buy their stuff.
Tesla is sacrificing its fat profit margin — they were the highest of any major automaker, and they’re still fat, even after the price cuts — to get this kind of sales growth, revenue growth, and huge cash flow, and to bleed the auto oligopoly. It’s building a factory or two every year and paying for them out of its huge cash flow. It keeps growing its pile of cash, now up to $23 billion. Tesla is crushing other automakers. It’s out for blood.
The stock is way overpriced, and if had excess sleep and wanted to lose some, I’d short the stock. It’s ridiculously priced. But it has come down a bunch, and Tesla’s earnings and sales have come up a bunch, and if that keeps going – stock going down, earnings and revenues going up – eventually, they’re going to meet in the right place.
From this morning’s Automotive News “Don’t Miss” email blast (7/20/23)
“Heat wave lowers driving range in some EVs by 31%”
“Recurrent, a Seattle EV battery and range analytics firm, found that some EVs experienced significant declines in range as temperatures rose.”
#1. I call BS on that number. Recurrent, the analytics firm cited in the piece by Automotive News, wared about its own data: “Note that the range loss at 100 degrees is based on extremely limited data, and we will update it when we have more confidence in the value”
#2. Why did you not include this warning about the data???
#3. Heat is the worst thing for ICE vehicles. That’s why our shop was super-busy in July and August. All kinds of stuff breaks under the hood when it gets hot. Gas mileage goes down too, and that’s actual energy loss. Why don’t you mention that? Why always this anti-EV nonsense, even as a gazillion customers buy EVs and are very happy with them… Tesla’s unit sales were up 83% yoy in Q2. Do you think these people are morons?
1st of all, sorry for the late comment. I am catching up on posts as I have been too busy to keep up.
2nd, it is interesting to see Tesla held up as an agent of change. It is undeniable that they are forcing changes (generally for the better) upon the automobile industry as well as the economy as a whole. However, it is equally undeniable to say that Tesla is exhibit A when it comes to companies that flourished due to the FED artificially suppressing the price of capital for the past 3+
decades.
Tesla skyrocketed to the top due to the cheap easy monetary policies of the FED and the effects it had on asset prices. There are very few companies who weaponized their inflated stock price as well as Tesla did (Amazon is the only company in the same league). Not did they only get ridiculous amount of capital due to selling stock at silly prices, they were able to get crazy beneficial loan terms due to linking them to the price of their inflated stock, or hiring talent with the promise of options based on stupid crazy stock prices.
It is quite clear that if monetary policy was tighter, Tesla would have grown much (much, much) slower and probably would have gone bankrupt somewhere along the way. Musk himself has all but admitted how close the company was to bankruptcy despite the crazy loose monetary policy.
Don’t get me wrong, I am not advocating for the loose monetary policies of the last 3+ decades. Nor am I ripping on Tesla for taking advantage of them.
I am just pointing out that policies have consequences both good and bad. Sometimes even when the policies have bad that outweigh the good there is still some good that can come from it.