gouging is profitable

Recall GM’s disappointing quarter, and it’s paltry 3.4% y/y price increase vs the 8.4-8.5 increases at Ford and Strabismus?

Ford reported today:

Ford beats expectations and raises dividend as company sells more of its top models

…said that its adjusted operating income more than tripled from a year ago, to $3.7 billion, as it was able to deliver more of its hottest new products to customers.

Shares were up over 6% in extended trading after the news was released.

Adjusted earnings per share: 68 cents, up from 12 cents in the second quarter of 2021. Wall Street analysts polled by Refinitiv had expected 45 cents.

Automotive revenue: $37.91 billion, up from $24.13 billion in the second quarter of 2021. Analysts had expected $34.32 billion, on average, according to Refinitiv.

Net income: $667 million versus $561 million in the second quarter of 2021.

…margin improved to 9.3% from 3.9% on supply chain improvements and a more profitable mix of products sold.

https://www.cnbc.com/2022/07/27/ford-f-earnings-q2-2022.html…

Simple. Discontinue your lowest price models, load up what’s left with expensive features, jump ATP to the moon, and brush off anyone that mentions “affordability” with “let them buy used”. Onward MBAs indoctrinated with analytics.

Steve

< Discontinue your lowest price models, load up what’s left with expensive features, jump ATP to the moon, and brush off anyone that mentions “affordability” with “let them buy used”. Onward MBAs indoctrinated with analytics.>

Fortunately, in a capitalist society, clever competitors will swoop in with products for neglected niches. Remember what happened to GM and Ford’s market share when the Japanese cars first came to the U.S. in the 1980’s?

Maybe this time the low-cost manufacturer will be China or India.

Wendy

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I knew I loved Wendy for a reason.

Maybe this time the low-cost manufacturer will be China or India.

Or Tesla!

The transition to EVs needs to be looked at with a MACRO perspective. In normal times low cost producers set the price of commodities – in autos earlier Japan, in the future maybe China or India. Or Tesla.

Currently there is excess demand over supply and prices rise. Some call it ‘gouging.’ No, call it by its proper name, ‘economics.’

With VW firing Herbert Diess now Ford is number one on the list of Western producers to catch Tesla (I don’t follow China or India).

From a Macro perspective, EV adoption is in the early stage of the “S” curve, demand is greater than production capacity and will remain so for a few years until production capacity catches up. Until that happens low cost producers don’t matter, winners will collect as much cash as they can to continue funding production capacity expansion.

Why “Or Tesla?” Because Tesla is disrupting the art of car making! Follow Munro Live on uTube to discover all the great things Tesla is doing. Sandy Munro is not a Tesla fanboy. He is an expert on industrial production efficiency and he gushes over what he sees when taking apart Teslas. Earlier he strongly criticised Teslas but now has changed his tune.

From an investing perspective, TSLA is the stock to bet on for next few years until competitors start to catch up. Watch Ford, Rivian, BYD, and Polestar (a Volvo EV).

The Captain

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Why “Or Tesla?” Because Tesla is disrupting the art of car making! Follow Munro Live on uTube to discover all the great things Tesla is doing.

The structural battery pack is one of the key components of the Tesla architecture.

4680 Battery Pack: What We Found Under the Foam!

Sandy and Cory give an update on the 4680 Battery Pack from our Austin-Built Tesla Model Y.

https://www.youtube.com/watch?v=ozesI3OZEG0

The Captain

Recently, in Oslo Norway, I did a double-take outside the window of a car company showroom window with a super-cool looking car (which turned out to be a "concept car, but did the trick of pulling me in) made by a company named “Neo”. This turned out to be a Chinese company. The fit/finish was superb and the designs clever. Their business model was to sell the car “cheap” (nothing is cheap in Norway, so I made a mental attempt to back out the taxes)and rent the batteries by the month - with a free option to swap them out for fully charged ones on demand.

Anyhow, while their market share in China is apparently small, EV’s now make up a 22% market share of the Chinese new sale market:

https://cleantechnica.com/2022/07/28/china-electric-car-mark…

Plugins got back into the fast lane, growing 132% year over year (YoY). They scored over 565,000 registrations in June, a new record. Plugin hybrids (PHEVs) surged 179% year over year (YoY). They reached a record 124,000 registrations in June. Their growth even beat the growth of BEVs, which was a paltry 121%….

Share-wise, with June showing a record performance, plugin vehicles hit “only” 28% market share since the overall passenger car market surged 41%. That surge was thanks to the start of the tax cut on most fossil fuel models (cars with an engine size lower than 2000 cc and priced below 300,000 CNY, or $44,000, got their registration tax reduced to half). Full electrics (BEVs) alone accounted for 22% of the country’s auto sales! This pulled the 2022 share to 26% (20% BEV).

And, in music to Capt’s ears, looking at June best sellers, the highlight is the Tesla Model Y beating the rest of the competition, including the little Wuling Mini EV, and winning the Best Seller title — not only in the EV category, but overall!

Jeff

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