And now he’s hiring them back?

The CEO of Ford Motor said that, having killed off all their passenger cars, because SUVs offer higher prices and fatter margins, he now wants to exit the two row SUV market, because there is too much competition. Welchism strikes again: cut whatever product offers the lowest ATP and GP. Every time one thing is cut, that makes something else the lowest ATP/GP, so it is cut. Keep cutting until there is little left.

https://fordauthority.com/2023/02/ford-ceo-farley-says-company-is-done-with-two-row-ice-suvs/

1 Like

Be interesting to see the MSRSP for their LAST vehicle (the one with the LOWEST ATP/GP). Then they cut it, and then WHAT ???

The last one to be cut, would be the last vehicle sold, so would have the highest ATP and GP. Then, in Welchian fashion, they put all their capital into financial speculation. No more depreciating factories. No more pesky workers. Just making money off of money.

Steve

There is an alternative explanation to “Welchism” that is less palatable and one that I certainly don’t like thinking about.

Perhaps the American way of manufacturing with American workers and American engineers and American managers simply isn’t good enough to compete in many industries.

US car OEMs have had decades to figure out how to compete with the Corolla and Camry and gave up. Meanwhile the Koreans have done well with Hyundai and Kia and everyone is so convinced that the Chinese will dominate that a 100% tariff was slapped on their vehicles.

Worth noting that the only US exception is Tesla, who seems to be able to go head-to-head with the European, Japanese, Korean, and even the heavily subsidized Chinese car makers with some success. Tesla is nonunion, has a Silicon Valley mentality, and runs its business in ways that are consistently criticized by the more conventional members of this discussion board who may be representative of the kind of thinking going on in conventional American companies. It is sadly fascinating to watch the one profitable American electric car company that has rescued the American space program and done the most to mitigate GHG emissions getting pounded by this board and the American media.

The response to Tesla innovations is greeted both here and the conventional media by not just skepticism, which is reasonable, but more like hateful cynicism reflecting a visceral dislike of all things Musk. FSD will never work, gigacasting is hype, humanoid bots is just PR, unboxed manufacturing is a joke, etc. Meanwhile the Chinese are copying everything Tesla does with such success and that the West is threatening all sorts of tariffs and protectionist policies.

A big chunk of America has gotten old, both in age and in thinking. We are becoming better at finding excuses (e.g., Welchism) than solutions. Hate to say it, but this board reflects that.

5 Likes

You incorrectly conflate criticism of Musk as criticism of Tesla. The two are not the same. The above paragraph is a thinly veiled defense of Musk and not Tesla. Your fanboi is showing.

Also, you incorrectly conflate Telsa with SpaceX (likely based on the same logical mistake of conflating Tesla with Musk).

If Tesla completely fails, it will have no impact on SpaceX.

8 Likes

Welch played his hand of corporations pretty well while in charge but with anything supply-side econ time was running down. The number of valuable American industries was dissipating while GE Capital was financing them and property mortgages into a monetary policy that barely held the ship afloat. And then it did not.

The answer is economies of scale. We are in a different economic period.

That’s exactly correct. One can be highly critical of Musk, or at least Elon as the guy exists today, and yet still say “Tesla has done a lot of good things”. Count me as one of those people. But, I cannot stand the person Musk has become today and I think his behavior is very detrimental to the future of the company (and we are seeing that play out right now).

But I want to dive further into Tesla the company. It’s not the same company it once was either. Roadster, S, 3, then X, finally Y. The X had a mis-step with that gull wing door nonsense. Otherwise the X and Y seemed ok. Things started to falter after that.

Semi hasn’t gone anywhere. The Truck was the wrong product and is failing in the marketplace where even Ford is out-selling it 2:1. Not to mention all the ridiculous flaws in it. FSD has been promised for so long I now laugh about it. Robo Taxi? Sorry, but the August 8 announcement is going to be a disappointment. The long awaited and much hyped $25k car is… where? And how long has it been promised? And now falling sales, massive layoffs, and a SuperCharger network that appears abandoned.

We’ve gone from a company that was working to a company that is failing. And the reason for that is a CEO who appears to have gone off the rails with nobody to reign him in.

7 Likes

I agree with much of what you wrote, but I can’t resist continuing to point out that the $25K car has never been promised by Tesla. They never said they were planning to offer a car at that price point. Ever.

They said they were working on a next gen car. They showed a slide that hinted that one of the models for that next gen car would be a small sedan. They made some statements about the general size of potential production cost reductions. And then a bunch of commentators applied that to what they think the current production cost of the Model 3 is and came up with a $25K price point. Tesla never promised a $25K car.

I don’t believe they - or Musk - ever actually said they would offer a third sedan model beneath the Model 3 at all. Did they? I do know they never promised one could come in at $25K.

3 Likes

Historically, the CAFE standard forced the big three to make small cars, to offset the poor mileage of the cars they really wanted to build. The CAFE “reform” from around 2006 changed the entire methodology, so that the big three are no longer forced to build small, fuel-efficient, cars to act as a counterbalance. So the big three are dropping all their more fuel efficient models.

The second factor is that, because big three management didn’t care about the smaller models, because they made less money off them, the model’s development was shortchanged.

I happened to see a 2024 Chevy Trax CUV (a market segment that Ford and Stellantis have both abandoned in the US). Looked up some evaluations of it on line, and came across this piece by the “Savage Geese:” guys. They are typically sarcastic in their piece on the Trax, but they do talk about why big three small cars have been so terrible, compared to what the Asian manufactures bring. (caution, coarse language)

1 Like

Tesla, EV industry and Charging network exists because of Musk. He single handedly made it happen.

Elon haters like to pretend otherwise.

5 Likes

image

Hawkwin
Who will inform readers that Tesla existed in 2003, prior to Musk joining the board the following year. Musk’s biggest contribution in the early years was funding, not technical expertise. I would argue it was actually Straubel that is largely responsible for the success of Tesla.

One is J.B. Straubel, the Stanford engineer who teamed with Musk to take over the original Tesla, founded in 2003 by Martin Eberhard and Marc Tarpenning. Musk was the money man, Straubel the brains behind the battery technology. Straubel departed Tesla in 2019 after the board of directors agreed to a pay plan that has made Musk one of the richest people on the planet.

8 Likes

Musk did not start Tesla. He was not a founder. And sorry but he did not do it all single handedly. But even if he did, he’s gone off the rails. Something has changed in him. I don’t know if he over-stressed himself trying to run so many companies. Or if he fell into some social media rabbit hole. Or what. But, he’s not the same person I saw 5-6-7 years ago, and not in a good way. That Elon I liked. Current Elon I don’t.

And I think that is the problem with all the Elon lovers out there, they pretend to not see the degradation, the change.

5 Likes

and Buffett did not start Berkshire.
These are nonsense arguments made by Elon haters. Musk is the heart, lung and brain of Tesla.

Haters and Oil economy guys will continue to hate. Tesla will be a $10T global company.

3 Likes

Don’t waste your time, haters will hate.

Berkshire-Hathaway was one of Buffett’s worst investment decisions but he found the way to fix it.

The Captain

4 Likes

Note that the Trax is made in S. Korea.

It is selling quite well: 37k in Q1. Corolla Cross had 19k sales.
Chevy Trax Sales Remain Robust During Q1 2024 (gmauthority.com)

1 Like

If Christ had lived past age 34 he would have gotten over himself.

With Musk that is where it gets really twisted. He can not figure out how to get over himself. Autism?

Careful I remember the Bus haters. Life is not made better by ignoring the critics. Critics are haters but there is more truth in their arguments than the fanbois realize.

That is not reality-based.

1 Like

Would it be too much to hope and pray that your own attitude to those who rely on you in real life isn’t modeled on Musk’s ‘expendables’ approach to his employees?

1 Like

Yes, and, while they found the new one a reasonable proposition (reliability unknown as yet) the previous Trax, designed and built by the same folks in Korea, was a poo-box. The Trax is the only remaining big three product in the segment. Ford dropped the Ecosport, in the US, when they closed their Indian operations, rather than importing it, or it’s successor, which are built in the EU. The Jeep division of Stellantis has dropped the Italian made Renegade, from the US, tho Renegade production continues for sale in the EU. The CEO of Ford has said he wants to get rid of all the remaining two row SUVs, as there is too much competition, so, if you don’t want to drop nearly $40K on an Explorer, Ford doesn’t want to bother with you.

Steve

1 Like

One former employer claimed “everyone is expendible”. But only if you are willing to lose the knowledge and experience of the ones who leave. Can get VERY expensive, really fast, if the person who left held the business together.

2 Likes