The Wall Street Journal reported on Friday that a UAW official said in a memo that Ford was considering canceling a shift citing slowing demand and indicated that the company was looking to build more gasoline-powered trucks instead. “It doesn’t take a rocket scientist to figure out that our sales for the Lightning have tanked,” the memo said, according to the newspaper.
a) dealers maybe soured people with the high markups and not selling to those whose ordered VIN arrived
b) switching to NACS (Tesla chargers) next year, so who wants to spend that much on an out of date product
c) waiting to see what the CyberTruck is like (for those set on some type of EV truck)
General Motors is delaying the opening of a large electric-pickup-truck factory in Michigan, the latest sign that the auto industry’s enthusiasm around EVs is starting to wane as sales growth for these models slows.
GM said Tuesday that its Orion assembly plant in suburban Detroit would start to make electric versions of the Chevrolet Silverado and GMC Sierra by the end of 2025, a year later than originally planned.
Oh, I forgot Bloomberg is snooty about linking. Here’s the headline & stuff:
Ford to Double Output of Hybrid F-150 Truck as EV Sales Slow
[Ford Motor Co.] is doubling production and cutting prices of gasoline-electric [hybrid F-150 ] pickups as pure electric models become a [harder sell] among budget-minded buyers.
Ford is seeing growing demand for the hybrid-powered of F-150, which currently accounts for one-in-10 deliveries of its [top-selling model]. By cranking up production next year, Ford said Tuesday it’ll offer the hybrid for a starting price of $55,000 plus destination and delivery charges — the same price as an equivalent gas-fueled model.
“We expect sales to roughly double,” , general manager of Ford North American truck business, said in an interview. “As we get that scale, that allows us to sell it at price parity” with a conventional F-150.
Probably not before 2028. More likely not until some time in the 2030’s.
To be the biggest US automaker, Tesla will need to sell about 6 million cars - up from 1.8 million this year. Tesla can’t get there with their existing models and factories. This year is the acid test for Tesla’s “model-light” business model - the first year that the “law of large numbers,” as Musk put it, comes into play for Model Y sales. But no matter what happens, Tesla can’t sell 6 million cars with just the Model 3, Y, and CT as volume models.
They can’t get to be largest automaker until the “Model 2” and/or the robotaxi: i) launch; ii) ramp to several million units of production, while; iii) Modely Y ramps to well over 2 million in production. That’s just not going to happen in less than five years, even if Tesla was hitting on all cylinders.
And two things from last night’s conference call suggest that they’re not. First, Musk seriously dampened expectations on the CT ramp. It’s going to be slower and more difficult than hoped for because of the ‘innovative’ CT design (“we dug our own grave”?!?). Which, Tesla wasn’t supposed to do things like that. Their secret sauce is supposed to be that they design the car with manufacturing processes in mind, so that the vehicle can be mass-produced more efficiently. They may not be as adept as that as they’d like.
Second, Musk downplayed how fast they’ll build out Monterey. That might be a prudent call - the macroeconomy is uncertain, and they haven’t even unveiled either Model 2 or robotaxi yet. But if Tesla isn’t shoveling resources at expanding production capacity hand over fist, they’re probably not going to have production capacity available by 2028 to make more than 6 million cars.
I’d tend to agree. It’s very likely that Tesla grows slows at some point. That point might be now, might be in 5 years, but it is still very likely to slow.
That’s assuming that GM remains at 6 million. Over the last 3 years, they’ve dropped from something just over 6.8M to just under 6M, so if that continues, Tesla may only need 5M or so to be the #1 US automaker. Stellantis isn’t a US automaker anymore, I think they are more a European automaker now. Ford may continue to grow their sales, but if they keep slowing their EV transition, they will eventually hit a wall sometime between 2030 and 2040 when a wide range of EV offerings will be a must, and if they aren’t a few generations in by that point, they will probably suffer greatly.
Of course, right now we see the UAW doing their best to slow the EV transition at GM and Ford because they [rightly] believe that an EV transition will mean fewer UAW jobs.
I mean, the entire US auto market fell about 20% from 2019 to 2022 - COVID and the supply chain morass hampered production and sales for a while for nearly the entire market. I wouldn’t expect that to continue going forward. GM’s sales YTD for 2023 are up about 20% from 2022 in the U.S. market. So it’s entirely possible that Tesla may need closer to 7M or so to get to #1.
The 3 largest US-based automakers are GM, Ford, and Tesla. GM dropped from 6.8 to 5.9, Ford stayed steady at 4.2, and Tesla rose from 0.5 to 1.3 during that period of time (all numbers in millions of units sold).
I don’t expect it to continue, in fact, we can see even now that much of the supply chain issue has been resolved with only a few pockets of issues remaining. But I do expect new issues to crop up, at the moment we see the UAW hampering transitions to more efficient production techniques, and slowing the transition to EVs. While COVID and supply chain hurt the companies from 2020-2023, these new issues may hurt the companies from 2024-2028. It all depends on how much you believe in the transition to EV, and how strongly various countries will be pushing/legislating it.
I think that’s right, except for China (where a third of Tesla’s sales take place). In China, the EV transition is going guns a-blazin’ - but Tesla’s growth will depend more on how well it does against competitors and…well, just how much the Chinese government lets them grow.
I think Tesla’s in a bit of a no-win situation there. If Europe shuts off competition from Chinese imports, it helps Tesla’s sales there (one less market in which they have to fight off those competitors). But that would leave China with a lot of EV manufacturing capacity and fewer export options. I’m not sure they’ll be too thrilled letting Tesla expand their own production capacity in that kind of situation.
As posted in another thread, Big Three management are looking at ATP and GP. Tesla reported GP of a bit over 16%, vs 30% in 2021. That knocks a hole in the projected ROI on the Billions the Big Three are pouring into EVs. And, no-one can say right now where Tesla’s GP erosion will bottom out.
The Big Three could forget about EVs, and go back to their previous plan: forcing people into more expensive, more profitable, vehicles, by the simple expedient of discontinuing all the lower ATP, lower GP, models. This plan has the advantage of not requiring a huge investment, nor management getting off the golf course, and actually changing their business.
Maybe? I know the hope is that once EV’s hit a certain critical mass (north of 10%), the conversion of the rest of the auto market (to around 80%) is swift and inexorable. But that’s been the experience of a few smaller, very dense countries with very generous subsidy programs (hi, Norway!), pretty high gas prices, and little to no domestic auto manufacturing sector. That just may not happen in the U.S.
The local news at noon just reminded me of an item from yesterday: GM has cancelled an “investor’s day”, previously scheduled for Nov 16, and shift it to March. GM says it is because of the strike. So why the big delay? They can’t really think the strike will last another month. Even if the strike runs another month, why reschedule for March? Are they procrastinating, so they can see a couple more Tesla quarterlies, to see if the GP erosion continues?
GM and Ford have been culling their foreign operations, and concentrating on North America.
GM has abandoned India and Europe, and is loosing market share in China at a rapid rate.
Ford has abandoned India and South America, and has lost almost all of it’s market share in China.
The “JCs” plan may be to only sell in North America, and only offer vehicles so big, and expensive, they are irrelevant in the rest of the world, because those vehicles offer the highest ATP and GP.
It could be their embrace of EVs, was entirely due to their elevated ATP and GP, which are now evaporating.
So, GM postpones it’s “investor’s day” to cook up excuses for writing off it’s EV investment, and going back to “all ICE big SUVs and big trucks, all the time”, because they are a known quantity, where they can escalate ATP and GP, with minimal investment.
That might be the smart plan. Foreign automakers can only play in China by sufferance of the Chinese government (they never let any of them in without partnering with a local company, save Tesla), and now that they have a more vibrant domestic auto sector all of the foreign manufacturers may be in for tougher times. If the Chinese government is going to tilt the playing field so that their domestics don’t get wrecked with excess capacity, making further investments in expanding capacity there might not make a ton of sense. And GM has almost never had much success in Europe.
Not every company can be everything in every market. Sometimes you just have to play to your strengths.