Auto News: Ford and Tesla Shift Strategies

In the last 24 hours, Ford and Tesla made news regarding shifts in their strategies over the coming years. Ford’s CEO announced the company is reducing shifts building the F-150 Lightning and is tossing its previous strategy of attempting to become a full BEV by 2035. Instead, it will continue making some hybrid and gas vehicles in sync with market demands.

I’ve seen the story in The US Sun but also the Detroit Free Press:

Meanwhile, Reuters published a story stating internal documents within Tesla have confirmed it is abandoning its plan to build a low-cost vehicle.

Tesla’s cheapest current model, the Model 3 sedan, retails for about $39,000 in the United States. The now-defunct entry-level vehicle, sometimes described as the Model 2, was expected to start at about $25,000.

Tesla did not respond to requests for comment. After the story was published, Musk posted on his social media site X that “Reuters is lying (again).” He did not identify any specific inaccuracies.



Musk denied they were scrapping the Model 2…but I wonder if they are just shelving it for now with intentions of getting back to it later.

In hindsight, the Cybertruck was a mistake. Tesla effectively ceded the low end of the market to the Chinese.


If you believe Reuters, this


will be on sale for scrap! :imp:

A ‘source’ suggested that Reuters might have misunderstood, the mass market model was not being scraped but that FSD v12 as so good that Tesla was going to accelerate the RoboTaxi which will be built on the same platform as the mass market model. But then, that might just be hindsight having seem the 8/8 X announcement.

So much FUD floating around whipsawing jittery investors.

After hours

With earnings coming up on 4/23 the best thing is to take a stroll in the park.

The Captain


Further down in the Reuters report was this:

Tesla called the affordable-car project NV91 internally and H422 externally when discussing it with suppliers, according to two of the sources and company messages reviewed by Reuters.

Messages from the unnamed Tesla program manager to staffers referenced those code names in discussing the project’s termination. One of those messages sent March 1 said that “suppliers should halt all further activities related to H422/NV91.”

It’s possible that the cheap Model 2 and robotaxi might share components but there is enough difference in the cars that they were treated as completely distinct vehicles. This makes sense for two reasons. One, the robotaxi product is intended to be driverless so it has far greater dependency on that software not only working but being certified across enough markets to make high volumes possible. Second, as a driverless taxi, one assumes the interior accoutrements would be more utilitarian than desired by an individual consumer planning to use it as a daily driver or family vehicle.



I was wondering about this today. What are the possible reductions they could do to make the car significantly cheaper while still preserving a decent user experience in the taxi.

There will still have to be headlights, windshield wipers, and a dashboard screen of some kind, if only to allow a tech to “pilot” an errant vehicle off the road.

Will there be a steering wheel? Front seats? A trunk? A Frunk?

Does it require a smaller battery? Turn signals? Air conditioning/heating?

I know you could cut back on interior materials, but it’s not as though Tesla’s have been outfitted with leather bucket seats and inlaid walnut dashboards already, so is that a likely place to go cheaper?

I must be missing something, because the lowest end interior is already pretty low, and I’m missing what is going to be, um, missing.

I know, remove the rear view mirror! That’ll save $25.50.


I doubt that there will be two versions of FSD.

Except for the human space most of the rest of the car can be the same.

Why make simple complicated?

The Captain

Yes. Then why say ‘It’s not for the general public, it’s only for the robotaxis”? Is there a reason to produce high volumes of cars and not sell to the public?

Taxi interior decor?
All I have to say is that Pop Culture got there long ago with the “Mambo Taxi” of Almodovar’s insanely crazed and visionary “Women on the Verge of a Nervous Breakdown”:

Or would you prefer to hear a Cumbia?

d fb

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I’m not a mind reader, you’ll have to ask Elon. My point is that the mass market EV and the RoboTaxi will be built on the same production line. I stress “production” line because it’s not an assembly line but a number of production cells each one doing some specific job. The new “production” line will be even more LEGO like than the Y & S lines. It’s a high volume “production” line outputting two variants.

The Captain

I will be interested to see how this works, assuming it works at all. I am a bit doubtful because the supposed savings come from “people being in each others’ way on a traditional assembly line” as the final product is put together. But unless there are people standing around all the time (which is not my experience) then there is not a lot of human labor being wasted, it’s just distributed differently.

Interestingly, this is how autos were assembled prior to Ford’s “mass production line.” Not perfectly exactly, but close. Craftsmen put together parts in groups, and the finished pieces were delivered to a central location where the subassemblies were integrated into a whole. The problems included the timing of bringing all the subs together at the same time (else everyone was standing around waiting for Harry & the Gearshift Boys) or the overproduction of one component leading to excess inventory costs as managers tried to rebalance. For smaller items this was not such an issue but for cars (& similar) it was a difficult balancing act. Of course that was also true for Ford’s assembly line, and it wasn’t until Toyota’s “revolution” in “just in time” production was finalized and fine tuned that auto assembly changed significantly from what Ford wrought in the early 20th century.

As I say, I am skeptical of grandiose claims like “40% savings”, but if it happens it will be a revolution indeed. In truth I’m expecting a shower of tweets such as “Full Self Driving is harder than we thought” and “Production delays have caused us to…” and “Supply chains disruptions mean…” But I would love to be wrong.



It is more profitable to lease cars to users than to sell them. So a self-driving (i.e. effectively ‘FSD’) vehicle is far more valuable to the company as a vehicle it leases out (and makes money over years) than for one it sells for a one-time so-so profit.

I think Hertz would beg to differ. But I am told that was a one-time thing, even though that kind of rapid depreciation has been going on (indeed, accelerating) since the mid 20-teens, when EVs first started appearing in significant quantities. Syke, I believe bought one off lease where the depreciation made it a compelling buy, and looking at the used prices now for EVs makes me think that’s not a one-off.

Eventually I would assume it will stabilize, at least better than it is today. But with battery improvements coming along I think that day may yet be down the road.

Not the same thing, or even close. Hertz buys in volume to get a low price, with their model being rent the car to multiple short-term users for 1-2 yrs and then sell the car after taking large depreciation.

The mfr’'s real model is the mfr (or a related company) leases the cars to users for an extended period (could be robotaxi fleet), with vehicle maintenance done by the mfr (i.e. local service for the fleet of leased vehicles). The intent is to obtain a long-term revenue stream (i.e. lease income per vehicle) that far exceeds the profit from selling cars (per vehicle).

Sure. Hey, here’s a question: why do you suppose Hertz - and every other car rental company - gets rid of the cars after such a short period? Could it be because renters don’t take great care of them? Could it be because they depreciate faster? And say, is the car rental business a high margin, high leverage business?

Let’s pretend for a moment. Say the cars do “age” faster than the typical personally owned and cared for vehicle. And say the Robotaxi company decides it has to keep the fleet fresh by selling off the older ones, which started with (an announced) target price of $25,000, but are now “worth”, $16,500. What does that do to the used EV market, which everybody tells me I’m too pessimistic about?

I acknowledge that I could be wrong about all of this, I just see pitfalls that seem obvious and those with stars in their eyes seem not to.


This was part of their Tesla mistake. When they approached Tesla for a lower price, Tesla told them “no way, we are selling all we can make!”, so they bought at full market price by ordering online like everyone else did at the time. Turns out that the likely main reason they did it is because the Hertz CEO needed a big press release to drum up support.

Mainly because rental cars are used ALL THE TIME and the miles get piled on rapidly. But also because people renting cars like to get “new” cars whenever possible. That’s why Hertz and Avis (new cars) are the biggies, and Rent-a-Wreck (used cars) isn’t.

Rentals tend to be for a few days to a week, so the renter isn’t doing any care anyway. In fact, rental cars tend to have maintenance done more closely to the recommended schedule than privately owned cars do. That’s because the car is “in the shop” at least once a week anyway, whereas a private owner puts things off until “they have time”.


The cars would not “age” faster. To the contrary, the lessor takes care of the leased vehicle. Why? Because it was not built to be marginally “good enough” to last some mandatory warranty. The leased vehicles were designed and built to last 15-20 yrs. Otherwise, there is no reason to use a “built for sale” vehicle vs a “built for long term lease” vehicle.

Sure, and because car interiors degrade over time, certainly faster than the metal shell on the outside. The differences in year-to-year models isn’t substantial enough to warrant a wholesale turnover of the fleet ever 12-18 months, but the nicks and scratches on the dash, the fraying of a seat, the kid puke that won’t quite all come up…is.

Having just bought a used (Toyota) van, I can tell you that buying from an Enterprise or Avis or whatever would have saved a bunch over buying in the private market or from a dealer. (We eventually bought from CarMax, only because I couldn’t find the trim level & features anywhere else).

As for those who think the EV “depreciation” thing was a one time event, how much will mine be worth in a few years when the distance between charges doubles, and when the battery is 50% more efficient, and when the cost-per-mile falls in half?

In many ways this is like the falling cost curve we have seen of lots of things: Microwaves used to cost $1000, but you couldn’t sell one of those for anything near that cost even a few years later. Likewise computers and other technological marvels whose improvements were coupled with falling prices as adoption rates increased.

(And I suspect the skepticism/fear will dissipate as they become more common, just as we have seen with, uh, microwaves, Roombas, and expensive smart phones.)

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I think the main driver for the rental agencies is mileage. Everything else (interior wear, etc) is roughly proportional to mileage. I don’t think they care much about year to year small changes, or even large model changes, they just care that the vehicle appears to be “new-ish” to the customers. Here are some of the Teslas released for sale by Hertz yesterday. I saw it on twitter and happened to notice that they all have very high mileage (my 2021 Tesla has under 29k miles, and most of these have over 90k!).

We’ve purchased a few cars from Carmax in recent years (including one EV). Their service and availability is quite good, and it’s a no hassle experience. Similar to buying from Tesla. No dealers hassling you and trying to trick you, just the stated price and that’s the price you pay. Usually a fair price because otherwise, not many people would buy from them.

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My guess would be the end of warranty coverage.

As long as you don’t have unexpected repair costs, you pretty much know what the car is going to make for you over time. Someone like Hertz or Avis knows how much of the time their car is going to be rented out. They know the costs for routine maintenance. And as long as the car is under warranty, they know there won’t be significant costs for repairs. Once the warranty is done, repair costs become a major unknown. And that makes profit unknown. Not knowing roughly what your profits are going to be is a very uncomfortable place to be for a business.

So cars are turned over as the warranty on them expires. At least that is my guess.


Which is why a “high mileage” car that is only 2 yrs old gets sold at about 50% of original retail. High mileage and low vehicle age indicates a lot of highway miles at freeway speeds, which is what the car was designed to do. So it has the least “wear and tear” on it despite the high mileage.