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There's probably a pretty decent amount of regional variation. What part of the country are you in?
Ford does seem to have planned on these selling better than they actually did given that they've changed their guidance on the ramp on these. I think the pre MY2024 Mach E's have some issues that needed to work out, though it was the second best selling electric crossover last year, and meanwhile the full-sized truck form factor isn't a particularly great fit for EVs at the moment though it's fine if you don't tow large loads over long distances. I think people waiting on the switch to NACS will also be challenging for sales this year.
The big thing with the Ford Lightning is that they announced it with a much, much lower base price (~$40k!) than what it has now, and the difference between the base price now (~$63K) compared to its initial announcement is massive even if trying to account for inflation. Even if you get a discount of $18K it's still well above the initially announced MSRP. It makes you wonder what was going through Ford at the time that made them think announcing a $40K base price was a good idea if they weren't able to deliver anything even close to it. Did they really ramp up their production capabilities in line with what projected sales would be had they been able to hit that price point or was that price point a bald-faced lie in the first place?
The Mullinax Ford group is in central Florida mostly.
Ford had the Pro series F150 (base models) in the 40K price point range then the lariat/luxury versions which spooled up the price points to the high 70s.
Until Ford and Chevy can use the Tesla chargers they will struggle to get any real market penetration.
Your angry denials that traditional automakers are losing money on EVs doesn't agree with statements that they themselves make. How do you explain that discrepancy? Ford for example, says that they have the ambition that their *next* generation of EVs will be profitable. Perhaps you can show a reputable source that details the profits that Ford is making on their current generation of EVs?
ICE vehicles and hybrids also require R&D expenditures, manufacturing and marketing expenditures, etc. The traditional automakers are showing big profits there, in sharp contrast to their EV programs. Why are they saying these things if it's not really happening as you insist?
As I said, Ford is showing loss for TAX purposes, writing off the entire cost of the plants, etc. But cost AMORTIZATION for a production run DOESN'T EFFIN' WORK THAT WAY!
Again, you amortize R&D and plant building over the entire production run of all vehicles that USE that R&D and tech, now and into the future, and all the vehicles built in that new plant, now and into the future. You don't just amortize it over the first couple ****ing months of production. This holds true for ALL manufacturing businesses, not just automobiles.
That's like saying that a real estate company that puts up a $10 million building and has rental income of one million the first year is "losing" 9 million dollars, or several hundred thousand per renter.
Just like for the Ford EVs, naysayers did the same thing with the Chevy Volt back in 2011.
"Now, "father of the Volt" Bob Lutz has weighed in via Forbes to confirm just that--that the true cost of each Volt is nothing like the numbers estimated--and that the car is "doing exactly what it was designed to do."
The Reuters report explained that when dividing the $1.2 billion development costs, each of the 21,500 Volts sold so far has cost GM $56,000 per car. Throw in the actual cost of production and, depending on who you believe, the total per-car cost could be between $75,000 and $88,000. Minus the car's purchase price and--theoretically--you have your headline loss figure.
The Reuters article was based on figures from several Michigan-based industry analysts, claiming that Chevy might be losing up to $49,000 on every Volt it makes."
Those figures were estimated by working out the total cost of development of the Volt project, divided by the number of cars so far--a method which was a little spurious, and what caused Bob Lutz to respond:
From Lutz in Forbes:
"Let me provide a look at how a car company tracks profitability of a product program: measured are material cost and labor, and these are deducted from the selling price. The positive difference is called "gross margin." Then, one allocates per-unit "fixed cost" (advertising, general overhead, etc.) plus per-unit depreciation and amortization of the initial investment, based on the TOTAL NUMBER TO BE PRODUCED OVER THE LIFETIME of the product. If the margin, after all deductions, is still positive, then we call it a "fully accounted profit," and the car is a winner."
Dividing the number of Lightnings sold for 2023 (20,000 as of the end of December) into the total development costs and factory building costs that apply to all Lightnings and Mach-Es past, present, and future is either dopey or intellectually dishonest.
You could as easily say that on the day the first Lightning was delivered to a retail buyer, it carried a stunning, incredible, unconscionable $1.5 BILLION in loss. You'd be doing the same thing: dividing by the number of Lightnings sold at that point: 1. Same as if you added up the total costs of developing and tooling up for Fords newest big block gas pickup engine, and then saying that the first engine off the line carried with it a $1 billion loss. That's not how it works. That's not how ANY of this works.
Ford is trying to show massive loss for tax reasons, but you cannot calculate total program loses until you're completely done with the total production run. Which they are not.
As I said, Ford is showing loss for TAX purposes, writing off the entire cost of the plants, etc. But cost AMORTIZATION for a production run DOESN'T EFFIN' WORK THAT WAY!
Again, you amortize R&D and plant building over the entire production run of all vehicles that USE that R&D and tech, now and into the future, and all the vehicles built in that new plant, now and into the future. You don't just amortize it over the first couple ****ing months of production. This holds true for ALL manufacturing businesses, not just automobiles.
That's like saying that a real estate company that puts up a $10 million building and has rental income of one million the first year is "losing" 9 million dollars, or several hundred thousand per renter.
Just like for the Ford EVs, naysayers did the same thing with the Chevy Volt back in 2011.
"Now, "father of the Volt" Bob Lutz has weighed in via Forbes to confirm just that--that the true cost of each Volt is nothing like the numbers estimated--and that the car is "doing exactly what it was designed to do."
The Reuters report explained that when dividing the $1.2 billion development costs, each of the 21,500 Volts sold so far has cost GM $56,000 per car. Throw in the actual cost of production and, depending on who you believe, the total per-car cost could be between $75,000 and $88,000. Minus the car's purchase price and--theoretically--you have your headline loss figure.
The Reuters article was based on figures from several Michigan-based industry analysts, claiming that Chevy might be losing up to $49,000 on every Volt it makes."
Those figures were estimated by working out the total cost of development of the Volt project, divided by the number of cars so far--a method which was a little spurious, and what caused Bob Lutz to respond:
From Lutz in Forbes:
"Let me provide a look at how a car company tracks profitability of a product program: measured are material cost and labor, and these are deducted from the selling price. The positive difference is called "gross margin." Then, one allocates per-unit "fixed cost" (advertising, general overhead, etc.) plus per-unit depreciation and amortization of the initial investment, based on the TOTAL NUMBER TO BE PRODUCED OVER THE LIFETIME of the product. If the margin, after all deductions, is still positive, then we call it a "fully accounted profit," and the car is a winner."
Dividing the number of Lightnings sold for 2023 (20,000 as of the end of December) into the total development costs and factory building costs that apply to all Lightnings and Mach-Es past, present, and future is either dopey or intellectually dishonest.
You could as easily say that on the day the first Lightning was delivered to a retail buyer, it carried a stunning, incredible, unconscionable $1.5 BILLION in loss. You'd be doing the same thing: dividing by the number of Lightnings sold at that point: 1. Same as if you added up the total costs of developing and tooling up for Fords newest big block gas pickup engine, and then saying that the first engine off the line carried with it a $1 billion loss. That's not how it works. That's not how ANY of this works.
Ford is trying to show massive loss for tax reasons, but you cannot calculate total program loses until you're completely done with the total production run. Which they are not.
I am not looking at what Ford reports to the IRS. They are reporting EV losses on their investor calls, and I think the CEO and CFO know how amortization works, and so do the investors. The only EVs that they have even set a goal of profitability for is their next generation of EVs. Maybe you can explain to me what their incentive is to tell investors that they are losing money, if that's false as you say? It seems to me that Ford benefits by giving investors good news, and not bad news. Why would they lie to investors to tell them the company is doing worse than it really is? Are they not rational people? Or have they still not grasped amortization?
Last edited by OutdoorLover; 05-03-2024 at 05:22 AM..
I am not looking at what Ford reports to the IRS. They are reporting EV losses on their investor calls, and I think the CEO and CFO know how amortization works, and so do the investors. The only EVs that they have even set a goal of profitability for is their next generation of EVs. Maybe you can explain to me what their incentive is to tell investors that they are losing money, if that's false as you say? It seems to me that Ford benefits by giving investors good news, and not bad news. Why would they lie to investors to tell them the company is doing worse than it really is? Are they not rational people? Or have they still not grasped amortization?
If they are dividing total costs of plant building and tooling and R&D over the current total produced, then yes, they ARE doing it wrong. Again, argue with Bob Lutz, who knows more about this business than you do.
Here's another analogy...
Let's say you have a kitchen in your home and you like to bake cookies in your home oven. People love your recipe, so you decide to make a business out of baking those cookies. But your home oven can't handle cooking, say 100 cookies at a time, or stand up to constant use. So you upgrade your oven to a nice, commercial model that can bake 100 of them at a time and withstand the rigors of mass production.
Let's say it costs you $20,000 for said oven.
Well, now you buy enough materials to make 100 cookies, and since you are buying in bulk, it costs $20 in ingredients to make those 100 cookies, or 20cents per cookie. If you only make 100 cookies, then stop, you divide the $20,000 plus the $20 by the 100 cookies you've made. And if you are selling them for the industry average of $1 each, then you lost $199.20 on each of those 100 cookies! (20,020.00 divided by 100 cookies made) Huge loss, right? But here's the thing. While you haven't yet made them at that point, you ARE going to be making them at a rate of 100 cookies per hour, 8 hours a day, 5 days a week for 50 weeks a year (that's 2 weeks off during the year). Doing the math, that's 200,000 cookies, not the original 100. If you sell the cookies at that same $1 each, and stop making cookies after a year, you've brought in $200,000 in gross proceeds. NOW you subtract that $20k up front cost, and the $40k in ingredients costs (20cents x 200,000 cookies), and your profit on the cookies is $140,000! Extend that for 2, 3 years and the amortization of that oven makes the total profit higher. Now, if you want to reduce your business taxes that first year, you want to write off the cost of starting that business that year as a business expense, even though you're going to amortize that expense over the next few years of production to get a total profit picture. Which is what Lutz was describing.
Same with the car company. They are NOT stopping with the 3 months of Q4 production. They will be producing them for years. So you subtract the cost of the facilities, R&D and actual materials cost over the entire production run for years, not just the last 3 months, to get a real picture of the costs of each vehicle.
Or are you saying that they lost $1.5 billion on that 3 months of production, but every other EV they make going forward will be FREE to them? Because you can't use the total cost of R&D and factory building against the first three months production, and then count it AGAIN for the rest of the production run, right? (I mean the cost of the factory isn't repeated every three months of production, right?)
Follow the math and the logic. They are trying to write it ALL off on taxes in the year it was spent. But that's not the actual cost of each vehicle now and into the future.
If they are dividing total costs of plant building and tooling and R&D over the current total produced, then yes, they ARE doing it wrong. Again, argue with Bob Lutz, who knows more about this business than you do.
Here's another analogy...
Let's say you have a kitchen in your home and you like to bake cookies in your home oven. People love your recipe, so you decide to make a business out of baking those cookies. But your home oven can't handle cooking, say 100 cookies at a time, or stand up to constant use. So you upgrade your oven to a nice, commercial model that can bake 100 of them at a time and withstand the rigors of mass production.
Let's say it costs you $20,000 for said oven.
Well, now you buy enough materials to make 100 cookies, and since you are buying in bulk, it costs $20 in ingredients to make those 100 cookies, or 20cents per cookie. If you only make 100 cookies, then stop, you divide the $20,000 plus the $20 by the 100 cookies you've made. And if you are selling them for the industry average of $1 each, then you lost $199.20 on each of those 100 cookies! (20,020.00 divided by 100 cookies made) Huge loss, right? But here's the thing. While you haven't yet made them at that point, you ARE going to be making them at a rate of 100 cookies per hour, 8 hours a day, 5 days a week for 50 weeks a year (that's 2 weeks off during the year). Doing the math, that's 200,000 cookies, not the original 100. If you sell the cookies at that same $1 each, and stop making cookies after a year, you've brought in $200,000 in gross proceeds. NOW you subtract that $20k up front cost, and the $40k in ingredients costs (20cents x 200,000 cookies), and your profit on the cookies is $140,000! Extend that for 2, 3 years and the amortization of that oven makes the total profit higher. Now, if you want to reduce your business taxes that first year, you want to write off the cost of starting that business that year as a business expense, even though you're going to amortize that expense over the next few years of production to get a total profit picture. Which is what Lutz was describing.
Same with the car company. They are NOT stopping with the 3 months of Q4 production. They will be producing them for years. So you subtract the cost of the facilities, R&D and actual materials cost over the entire production run for years, not just the last 3 months, to get a real picture of the costs of each vehicle.
Or are you saying that they lost $1.5 billion on that 3 months of production, but every other EV they make going forward will be FREE to them? Because you can't use the total cost of R&D and factory building against the first three months production, and then count it AGAIN for the rest of the production run, right? (I mean the cost of the factory isn't repeated every three months of production, right?)
Follow the math and the logic. They are trying to write it ALL off on taxes in the year it was spent. But that's not the actual cost of each vehicle now and into the future.
I am giving up trying to discuss this with you. Besides only making sense now and then, you completely ignore what I say and then over and over again put words into my mouth that I didn't say. You continually talk down to me. It's hard to imagine a less satisfactory "discussion". So I will continue to listen to what company executives report to their investors. The accounting construct of amortization doesn't render every other way of looking at the data plain wrong or completely irrelevant, which is your stance. You just need to take into account the context of the numbers. Just put me on ignore, and don't read or respond to any of my posts. You obviously can't handle them, and believe me, I gain nothing from listening to your frothing.
Last edited by OutdoorLover; 05-04-2024 at 02:01 PM..
Just rebadge BYD EVs as Ford and they will turn a profit quickly. Coming soon. Labor and cost of production in US is just too expensive.
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