Ford Tried To Be Tesla, And It Cost The Company Billions

[Dr_Strangelove]

To me it was a major misstep for Ford to launch their EV efforts with a product that ended up being a $90-110,000 vehicle for most people. Ford, to me, is the company that could make an EV for everybody and that means $30,000 - $40,000 trim levels for a basic vehicle with AC and a radio and cruise control that seats 5 and has a nice cargo hatch in the back like an Escape or something. Then if you want to pile on autonomous this and that and make it a $60,000 God bless you.

If they could build that they would rule the EV market. But it seems they might get beaten to that punch by Korea and now even Toyota is licking their chops for 2026.

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[Fordup]

A ZR2?!?

Yuck, just get a TESLER SIBER TRUCK. =p

I hope by the time my number is up they are better than that

 

[NTXTremor]

I read this thread from beginning to end, and I am not sure if it is about Ford selling EVs, the price of flat screen TVs or Taco Tuesday.

As for the EV part, that article scores pretty high on the clickbait scale. Regardless of your opinion on EVs, any automaker would be foolish not to start making them, like Ford has. It is Capitalism 101. Telsa has proven that there is a market for them, and if Ford, GM, etc. don't start investing in learning how to properly make EVs and all of the associated processes (maintenance, etc.), they risk being left behind.

As one of the other posters stated, the price drop could very well be to help the vehicles qualify for incentives. And the chip shortage was real, as were the associated increase in costs. Now that the supply chain has stabilized, it is reasonable to believe that Ford could afford to reduce the cost while maintaining profits.

Tesla dropped prices on the Model S and X back in April and the Model Y and 3 in July, yet I don't recall any clickbait articles about Tesla failing to be competitive.

 

[KJRR]

A ZR2?!?

Yuck, just get a TESLER SIBER TRUCK. =p

We haven't had a gingerbilly post in a long time!
...Wastes the rest of the day seeing what new stuff gingerbilly has out...

 

[AzScorpion]

I read this thread from beginning to end, and I am not sure if it is about Ford selling EVs, the price of flat screen TVs or Taco Tuesday.

As for the EV part, that article scores pretty high on the clickbait scale. Regardless of your opinion on EVs, any automaker would be foolish not to start making them, like Ford has. It is Capitalism 101. Telsa has proven that there is a market for them, and if Ford, GM, etc. don't start investing in learning how to properly make EVs and all of the associated processes (maintenance, etc.), they risk being left behind.

As one of the other posters stated, the price drop could very well be to help the vehicles qualify for incentives. And the chip shortage was real, as were the associated increase in costs. Now that the supply chain has stabilized, it is reasonable to believe that Ford could afford to reduce the cost while maintaining profits.

Tesla dropped prices on the Model S and X back in April and the Model Y and 3 in July, yet I don't recall any clickbait articles about Tesla failing to be competitive.

Unless I missed it I don't recall Tesla losing 3.6 Billion in one day. Elon was smart and saw that the higher interest rates were affecting sale so he dropped the price. IIRC sales took off again but he has several models priced where most families can afford them. Unlike Ford which alienated that market when they dropped their car line.

There's only so many out there who can afford these high priced trucks especially now with inflation still high and interest rates around 7%. As Adam said make a car for $30k-$40K and I'd bet their sales would be through the roof. They chose a different path which cost them Billions in only one day. Now I'm not hoping they fail, just the opposite, but I can't see this business model being profitable when all the others are still producing cars. I'm sure they all see this too and have rethought their strategy going forward.

Now if another manufacturer comes out with something lower priced (I'm sure there will be a few) this will hurt Ford even more. Those who want/need to do truck things (tow/haul) can't really do that with a $100K truck. I'm sure in time they'll figure it out but at what cost? Luckily they have their cash cow F150 ICE to prop them up but for how long? Recalls are taking another huge bite out of their profits margins so this can only go on so long.

 

[JJG]

I wonder if the sudden drop in prices has anything to do with the strict requirements to qualify for EV tax credits. You can get up to $7,500, BUT:

For vehicles placed in service January 1 to April 17, 2023:

• $2,500 base amount
• Plus $417 for a vehicle with at least 7 kilowatt hours of battery capacity
• Plus $417 for each kilowatt hour of battery capacity beyond 5 kilowatt hours
• Up to $7,500 total

And:
Qualified Vehicles
To qualify, a vehicle must:

• Have a battery capacity of at least 7 kilowatt hours
• Have a gross vehicle weight rating of less than 14,000 pounds
• Be made by a qualified manufacturer.
  • FCVs do not need to be made by a qualified manufacturer to be eligible. See Rev. Proc. 2022-42 for more detailed guidance.
• Undergo final assembly in North America
• Meet critical mineral and battery component requirements (as of April 18, 2023).

The sale qualifies only if:

• You buy the vehicle new
• The seller reports required information to you at the time of sale and to the IRS.
  • Sellers are required to report your name and taxpayer identification number to the IRS for you to be eligible to claim the credit.

In addition, the vehicle's manufacturer suggested retail price (MSRP) can't exceed:

• $80,000 for vans, sport utility vehicles and pickup trucks
• $55,000 for other vehicles

Qualified Vehicles
To qualify, a vehicle must:

• Have a battery capacity of at least 7 kilowatt hours
• Have a gross vehicle weight rating of less than 14,000 pounds
• Be made by a qualified manufacturer.
  • FCVs do not need to be made by a qualified manufacturer to be eligible. See Rev. Proc. 2022-42 for more detailed guidance.
• Undergo final assembly in North America
• Meet critical mineral and battery component requirements (as of April 18, 2023).

In addition, the vehicle's manufacturer suggested retail price (MSRP) can't exceed:

• $80,000 for vans, sport utility vehicles and pickup trucks
• $55,000 for other vehicles

To meet requirements set up in the IRA, manufacturers must ensure that battery critical minerals are “extracted or processed in the US or any country with which the US has a free trade agreement,” or recycled in North America. They must also ensure that battery components are “manufactured or assembled in North America.”


Maybe that last statement is what eating at the EV manufactures. I don't know what Ford and Tesla has in mind for their battery tech. It's possible that future batteries may not meet the requirements for tax credits, which means people aren't going to being getting an EV.

Here is the reason for the drop in prices. Less components to manufacture.

 

[NTXTremor]

Unless I missed it I don't recall Tesla losing 3.6 Billion in one day. Elon was smart and saw that the higher interest rates were affecting sale so he dropped the price. IIRC sales took off again but he has several models priced where most families can afford them. Unlike Ford which alienated that market when they dropped their car line.

There's only so many out there who can afford these high priced trucks especially now with inflation still high and interest rates around 7%. As Adam said make a car for $30k-$40K and I'd bet their sales would be through the roof. They chose a different path which cost them Billions in only one day. Now I'm not hoping they fail, just the opposite, but I can't see this business model being profitable when all the others are still producing cars. I'm sure they all see this too and have rethought their strategy going forward.

Now if another manufacturer comes out with something lower priced (I'm sure there will be a few) this will hurt Ford even more. Those who want/need to do truck things (tow/haul) can't really do that with a $100K truck. I'm sure in time they'll figure it out but at what cost? Luckily they have their cash cow F150 ICE to prop them up but for how long? Recalls are taking another huge bite out of their profits margins so this can only go on so long.

You're right. Tesla lost $51B in market cap in one day.

Tesla Loses Equivalent Of Ford's Market Value In A Single ...Forbeshttps://www.forbes.com › sites › dereksaul › 2023/04/20

 

[AzScorpion]

You're right. Tesla lost $51B in market cap in one day.

Tesla Loses Equivalent Of Ford's Market Value In A Single ...Forbeshttps://www.forbes.com › sites › dereksaul › 2023/04/20

I stand corrected. lol

But in defense it wasn't a one day loss from lower their prices it was their quarterly earnings report. But it's still a huge loss! After this he did lower the prices of Tesla. So seeing this it doesn't give me much hope that Fords numbers don't keep tumbling seeing as they only have their high priced Lightning that they're banking on.

 

[NTXTremor]

I stand corrected. lol

But in defense it wasn't a one day loss from lower their prices it was their quarterly earnings report. But it's still a huge loss! After this he did lower the prices of Tesla. So seeing this it doesn't give me much hope that Fords numbers don't keep tumbling seeing as they only have their high priced Lightning that they're banking on.

Agreed.

 

[NTXTremor]

I stand corrected. lol

But in defense it wasn't a one day loss from lower their prices it was their quarterly earnings report. But it's still a huge loss! After this he did lower the prices of Tesla. So seeing this it doesn't give me much hope that Fords numbers don't keep tumbling seeing as they only have their high priced Lightning that they're banking one.

And this also makes the point I was trying to make. The clickbait writers wanted to paint Ford's price drop as not being able to compete with Tesla while Tesla dropped their prices shortly after LOSING $51B in market cap due to investors being unhappy about profitability yet NO ONE wrote articles about Tesla being uncompetitive and circling the drain. They are literally just trying to get clicks.

As for Tesla's market cap ($917B as of today) being 16 times Ford's market cap ($56.49B), one of these is not valued correctly. You can decide on your own, but Ford's P/E ratio is 19.7 while Tesla's is 86.23. Ford's total assets are worth $255.9B, and Tesla's total assets are worth $82.34B.

 

[dtech]

I read this thread from beginning to end, and I am not sure if it is about Ford selling EVs, the price of flat screen TVs or Taco Tuesday.

Tesla dropped prices on the Model S and X back in April and the Model Y and 3 in July, yet I don't recall any clickbait articles about Tesla failing to be competitive.

Well today is Wednesday so if you have a craving for Tacos and need a good deal you'll have to tough it out till Tuesday. But all those Taco Bell ads seemed to be geared towards millenials and gen X ers, a good number who seemingly care less about nutrition and obesity. When I resided in Denver was always amazed how many cars were lined up a the Taco Bell drive thru, especially after 10 pm. I still think Taco John's is bad though, even Del Taco is better.

 

[NTXTremor]

Well today is Wednesday so if you have a craving for Tacos and need a good deal you'll have to tough it out till Tuesday. But all those Taco Bell ads seemed to be geared towards millenials and gen X ers, a good number who seemingly care less about nutrition and obesity. When I resided in Denver was always amazed how many cars were lined up a the Taco Bell drive thru, especially after 10 pm. I still think Taco John's is bad though, even Del Taco is better.

 

[dtech]

And this also makes the point I was trying to make. The clickbait writers wanted to paint Ford's price drop as not being able to compete with Tesla while Tesla dropped their prices shortly after LOSING $51B in market cap due to investors being unhappy about profitability yet NO ONE wrote articles about Tesla being uncompetitive and circling the drain. They are literally just trying to get clicks.

As for Tesla's market cap ($917B as of today) being 16 times Ford's market cap ($56.49B), one of these is not valued correctly. You can decide on your own, but Ford's P/E ratio is 19.7 while Tesla's is 86.23. Ford's total assets are worth $255.9B, and Tesla's total assets are worth $82.34B.

market valuation aside Tesla still has high per vehicle margins which allows them to reduce prices and remain profitable, in essence they can smirk and make Tesla wannabes like Ford make big investments and if they want to compete suck it up and take their lumps and hope eventually their longer term industry strengths allow them to succeed. Tesla however has made a lot of right moves - from direct sales model to developing innovations to providing a charging network. Ford needs to do better than investing heavily in an overweight, overpriced , limited appeal vehicle like the F-150 lightning or Tesla will continue to eat their lunch.

 

[NTXTremor]

market valuation aside Tesla still has high per vehicle margins which allows them to reduce prices and remain profitable, in essence they can smirk and make Tesla wannabes like Ford make big investments and if they want to compete suck it up and take their lumps and hope eventually their longer term industry strengths allow them to succeed. Tesla however has made a lot of right moves - from direct sales model to developing innovations to providing a charging network. Ford needs to do better than investing heavily in an overweight, overpriced , limited appeal vehicle like the F-150 lightning or Tesla will continue to eat their lunch.

This is exactly right. Tesla just reported Q2 profits of $2.51B on $23.33B in revenue as compared to Ford's Q1 profit of $1.8B on $41.5B in revenue. Ford won't report Q2 for a couple of weeks.

Ford and GM are bloated compared to Tesla, and they better watch out for the new Chinese EV makers like BYD. Current tariffs of 27.5% prevent them from entering the US market, but China also controls a lot of the supply chain for batteries.

 

[dtech]

It is a huge and amateurish blunder the way Ford has mismanaged the Lightning pricing - gain a whole lot of favorable press and customer interest by announcing an attractive price and then tacking on substantial price increases - and trying to blame supply chain issues and what not for the increases, folks will tolerate a level of price increases but not to the extent Ford has tacked on, and now they are left with little choice but to back down the pricing , I think they have shot themselves in the foot and lost a lot of the momentum they had early on.

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