Today, I am reminded of the famous saying in motorsports: “The best way to make a small fortune in racing, is to start with a large one.” Replacing “racing” with “electric vehicles” and you can describe Ford’s second-quarter results—which were still profitable overall even as the EV costs mount.
A happy Friday morning to you, Autopians, as we prepare to close out July and enter the final stretch of summer. (I hope you’ve done something fun with yours, I feel like I haven’t? I need to fix that with a road trip or something.) On today’s docket, we have that Ford Q2 news; some updates on how Tesla owners are feeling about the company vibes these days; some rays of light for AM radio; and General Motors wants to take new buyers to school to use all these fancy new tech features in cars. Let’s hit it.
Ford Has A Good Q2, Wall Street Still Unhappy
Here’s another saying that springs to mind today: “Damned if you do, damned if you don’t.” Considering various challenges like recall costs and supply chain headaches, Ford still managed what its executives called a solid Q2: net income of $1.9 billion.
However, it now projects to lose $4.5 billion this year on its nascent electric vehicle division, and revised down its production and sales goals on electrics through the end of 2023. Here’s Automotive News:
Citing consumer concerns with pricing, the company also scaled back EV output plans but vowed to continue on a path to earning 8 percent margins on EVs in three years.
Still, overall revenue in the quarter jumped 12 percent to $45 billion, and net income nearly tripled from a year earlier.
“It was a really strong quarter,” CFO John Lawler said in a call with media, noting it was “more evidence of what’s possible,” with the company’s Ford + growth plan.
Ford’s adjusted earnings before interest and taxes rose slightly to $3.8 billion. About $2.3 billion came from Ford Blue, the company’s gasoline-powered vehicle business. Ford made $2.4 billion on its commercial business, Ford Pro, and lost $1.1 billion on its electric vehicle business, Model e.
Ford Pro’s profit margins were 15 percent, while margins at Ford Blue were 9.2 percent.
Thanks, gasoline pickup trucks. But both Lawler and CEO Jim Farley were, like many in the industry after a year of ups and down, circumspect on EV stuff—yet Farley says Ford can afford to be cautiously optimistic here because it’s putting in the work now:
“The near-term pace of EV adoption will be a little slower than expected, which is going to benefit early movers like Ford,” Farley said in a statement. “EV customers are brand loyal and we’re winning lots of them with our high-volume, first-generation products; we’re making smart investments in capabilities and capacity around the world; and, while others are trying to catch up, we have clean-sheet, next-generation products in advanced development that will blow people away.”
Naturally, Wall Street analysts were skeptical. Here’s MarketWatch on that:
Share gains started to fade, however, as investors zeroed in on the shifted production goal, and ended the extended session down 1.2%. Ford said it expects to reach a production rate of 600,000 EVs in 2024; when it reported first-quarter earnings in May it said it would reach that milestone by the end of this year.
The company’s EV production growth has been “disappointing,” CFRA analyst Garrett Nelson said Thursday.
Nelson said he was “cautious” on Ford in light of the stock’s run so far this year and the possibility that “higher-for-longer” interest rates would weigh on sales after a strong first half of the year. Looming labor negotiations with the United Auto Workers are another reason for caution, he said.
All of those things in the last paragraph are fair, and the same kinds of headwinds facing many automakers right now. But I dunno, for all Ford’s challenges (and any legitimate criticism you could send its way over quality problems and such) it does seem like the company’s doing what it needs to be done to meet a more battery-driven future. And exactly what it said it would do: finance that with profitable gas trucks in the short term. Isn’t this what investors wanted?
By the way, Insider points out Farley thinks things are on the right track, and sees BYD, Tesla and Geely as its main EV competition, not GM or Volkswagen or BMW. That says a lot, I think.
Tesla Owners Love The Cars, But Elon Musk These Days, Not So Much
I have spent a lot of time inside Elon Musk’s head this year. Like, a lot, even for an automotive journalist who covers a lot of EV and emerging tech stuff. (It’s OK, I’m working through it, but I appreciate your concern.) And while there’s still endless respect for the guy in many corners for what he’s built at Tesla, there is a real loss of the superhero status he had, say, a decade ago when the Model S was challenging the best and proving the viability of EVs. He has no one to blame for this situation but himself.
Bloomberg recently revived a survey of 5,000 early Tesla Model 3 owners to see how they’re feeling about the cars, the brand and the man these days. They get high marks on the first one, but not so much on the other two:
Tesla’s most ardent early adopters have, to a significant extent, soured on the boss. Out of dozens of questions repeated verbatim from our 2019 survey, the steepest change of opinion was the drop in Musk’s approval. In total, the follow-up survey posed more than 130 questions; the lowest scores went to Musk’s 2022 acquisition of Twitter — which he renamed X — and to the divisive tweets that followed.
The survey comments were intense, and many felt conflicted. Model 3 owners still overwhelmingly loved their cars and had a lot to say about Tesla’s technology, which we cover extensively in this three-part presentation of the results. Most owners planned to stick with the brand. But they also reported feeling a sense of betrayal as Musk picked political fights online, downplayed the potential consequences of climate change and backed controversial figures and ideas.
“I love the vehicles but do not want to support someone who has such vitriol and low opinion of the very people who have made Tesla a success.”
There are also a good chunk of respondents who don’t care, say things like “Nobody doesn’t buy a Ford because they dislike Jim Farley” or “Hey, that’s what you get sometimes with billionaire genius innovators.” There are some other super interesting stats to parse here, including the fact that 96% of Model 3 owners say they would not want another gasoline-powered car again.
Also, these respondents claim that in terms of quality, their Model 3s have largely held up and proven to be reliable; in my own anecdotal experience I’ve seen those early cars to be pretty rough but I do think Tesla’s got build quality a lot more dialed-in these days. But on the Autopilot and “Full Self-Driving” front, results were a lot more mixed. “Some said it improved their safety with proper oversight. Others strongly disagreed. The general consensus was that FSD isn’t yet reliable enough for the average driver… FSD Beta is like my 15-year-old with her learner’s permit. You never know what it might do or why.” Sounds about right to me.
AM Radio Lives To Fight Another Day, Maybe
The august body that is the United States Senate is taking on one of the most crucial issues of our time as it undertakes the People’s Business: making it illegal for automakers to remove AM radio from cars. Here’s Automotive News:
The Democratic-led Senate Commerce Committee on Thursday advanced the bill, known as the AM Radio for Every Vehicle Act, which directs the Transportation Department to issue a rule requiring automakers to keep AM radio receivers in new vehicles as standard equipment.
A modified version of the bill allows the department to establish an effective compliance date within two to three years of a rule being issued. Automakers that made 40,000 or fewer passenger vehicles in 2022 would have at least four years to comply, according to the text.
“Americans rely on a radio to provide them with safety alerts, news, talk radio and music. Unfortunately, several automakers have announced plans to take this important resource out of cars. That’s a big mistake,” Sen. Ted Cruz, R-Texas, told committee members.
Automakers have sought to remove AM radio functions from new cars, especially from EVs, as they claim the signals could come with annoying static thanks to electromagnetic interference from batteries. But I tend to think it’s more of a cost-savings issue; OEMs would rather not bother with this function because it adds cost and complexity when they’re trying to pare those things down, and AM radio is a declining format anyway. Still, many pro-EV and auto industry groups oppose the legislation:
If Congress were to pass the mandate, it would “impede domestic EV manufacturing by demanding significant drivetrain redesigns and signal interference paneling,” The Zero Emission Transportation Association, whose members include Tesla, Rivian and Lucid, wrote in a policy brief.
“In turn, this would add weight to the vehicle and cost the U.S. billions of dollars in decreased economic output and job loss,” the group said.
Billions of dollars! A looming economic crisis! America in a state of permanent decline! All because some people haven’t discovered podcasts yet. Anyway, great news for all you sports talk radio fans out there.
Hybrid Sales Way Up
It is true that EV demand has declined this year as customers balk at their prices. But one thing I have heard from those who pay attention to such things is that hybrid demand is way up. Maybe it’s environmental awareness as this brutal summer cooks us all; maybe they’re just sick of paying for gas, which nobody loves. Either way, we’re generally pro-hybrid (especially for Normal Cars) around here so we’ll take it as good news.
Also taking it as good news is Toyota, which had a very successful June, reports Reuters:
In the month of June, global sales rose 10 percent to 898,947 units, benefiting from growing demand, including for electrified vehicles such as hybrids, in key markets such as the U.S. and Europe, the company said in a statement.
China sales in June posted their first monthly decline in three months, falling 13 percent to 174,548 vehicles. China sales were down 2.8 percent for January-June.
Global sales of hybrid electric vehicles grew 38 percent year-on-year to 292,131 units, accounting for just under a third of the total number of vehicles sold worldwide last month.
In June, Toyota sold 10,191 battery electric vehicles worldwide, including its Lexus brand, with about 5,000 of those sold in China. That brought the total number of battery-powered vehicles sold in the first half of 2023 to 46,171 units.
This is why I wish more OEMs would invest in hybrids (especially PHEVs) rather than “skip a step” and go straight to EVs, but hey, they don’t put me in charge of such things.
Your Turn
How much do you care about the company behind the car you make? My wife won’t ever buy a Volkswagen after the diesel thing; I would not say no to GTI, myself, but I’ve been consistently overruled there. At the same time, she’s more pro-Tesla than I am. Everybody’s different. How do you feel about it?
I definitely can be turned off to a brand based on how the people running it behave. But most companies have skeletons in their closet. Question is what they are and how recent. It’d be hard to hold Henry Ford’s fascist leanings against the Ford of today, but their quality issues should be held against them.
That new Prius sure is good looking, and not just for a Prius (which it very much is).
Toyota’s blue for the Prius is decent, and reminds me a bit of Area 51 on the Maverick, though Toyota’s blue is unfortunately metallic. I do wish we got that mustard yellow on the Prius as some other markets enjoy… it looks shockingly good on that low, swoopy bodywork. Also, I saw a pic of one in something like the Maverick’s Cayenne (orange) metallic which was probably photoshopped (or maybe wrapped in real life?) and it looked pretty good that way too… softer than the metallic orange on the Honda Element and a lot of American cars some years back when metallic orange was a thing.
I’d probably really enjoy a Prius Prime, even if it were possible to buy one at MSRP of $32K+, which I assume that it isn’t. Dunno if I could bring myself to spend that much on a car though, just as a matter of principle.
Yesterday, for no reason in particular other than it was too hot to do anything else, I spent a few hours watching/reading reviews of the Hyundai Venue, which is almost 4 years old now (and relatively unchanged since its 2000 intro). I drove a ’00 with a manual and it was perfectly alright: a small, boxy hatchback really and there’s nothing wrong with that. Sadly but unsurprisingly, Hyundai no longer offers a manual Venue in the US, though other markets (like India) get to choose an automated manual they call iMT which seems to work just like a manual except there’s no clutch pedal. The shifter assy. even looks just like the one on a regular manual. I skimmed the used car websites for a ’00 manual near LA, but there are almost none (like a 20-to-1 ratio of auto to manual) and thanks the our effed-up market, prices are still improbably high. Used Venues are listed for prices that are almost as much as new ones (the new ones have incrementally increased in MSRP over the four years it’s been out). And this is for a relatively undesirable (to many) entry level Korean economy car! If we lived in a normal universe, instead of this perverse alternative one, a four-year-old entry level Hyundai with 70 or 80Kmiles on it would now retail in the low teens. At which point, it makes sense (to me).
I guess I’m going to have to do the headliner on my Volvo, and get some decent seat covers… seeing as how I’m probably going to be driving it for a while. Or the rest of my life maybe.
Henry Ford admired Adolf Hitler.
So you shouldn’t buy Ford’s…
I bought a Kia EV6 Wind eAWD last weekend instead of the Mach-E.
I liked the way the Mach-E drove as much as the EV6, but everything being buried in a large touchscreen, lack of ventilated seats and lack of a heat pump ruled out the Mach-E. The sales guy ruined it too by going along for the test drive and talking non-stop during the process.
It’s a good car, it just wasn’t right for me. There were over 30 Mach-E’s on the lot where I did my test drive!
It’s funny we had a reservation for a Mach-E and at time of pickup we just didn’t like it as much, ended up doing the Kia Niro EV and have loved it everyday. Nothing against Ford though, I love my Escape ST Line.
The EV6 seems to be the most popular non-Tesla EV in my area, I think it would be my choice in an EV as well just for some of the features alone like you mention. For me it’s the fact that the sunroof opens, rather than fixed.
It surprises me a bit that it seems like the EV6 is more popular than the Ioniq 5 around me too. even though the latter is the bigger seller nationally.
Wow, great to hear someone else express this sentiment.
This is why I wish more OEMs would invest in hybrids (especially PHEVs) rather than “skip a step” and go straight to EVs, but hey, they don’t put me in charge of such things.
Listen to your wife, LOL! I paid top dollar for a cheater (2012 TDI Golf 2-door) and am still bitter with the hit I took on the resale (Due to when I sold the car, I did not qualify for the compensation, so I am sure many others also got screwed as well).
How much do you care about the company behind the car you make? My wife won’t ever buy a Volkswagen after the diesel thing.
Musk – If you buy his cars, you are financing and validating hate speech and far right values. In this era, when much of the country is gerrymandered and votes are being suppressed, you wallet is one of the last ways you have to make your opinions count, plain and simple. You might as well replace that T logo on your car with a swastika.
“If you buy his cars, you are financing and validating hate speech and far right values….You might as well replace that T logo on your car with a swastika.”
Wow.
Sometimes a cigar is just a cigar, and a car is just a car.
Seriously you need to go out and get some fresh air.
he’s right but also there’s no ethical consumption under capitalism.
It’s hard to discount or entirely ignore the effect the brand has on the decision. “Toyota” will make me think “reliability”, even though I know a little better with my Prius v.
On the other hand, even with the most generous leeway granted to a newcomer or smaller brand, I’ll be concerned with a lack of dealerships or mechanics with relevant knowledge.
I am not in a position to buy or own an EV, but if I was, my understanding is that there’s acceptable alternatives to Teslas at this point, and while I wouldn’t say Musk is my only reason for avoiding them, I probably would search elsewhere.
“And exactly what it said it would do: finance that with profitable gas trucks in the short term. Isn’t this what investors wanted?” I think the person you want to worry about is the buyer, and those people buying those gas trucks do not want the EV equivalent. Because they are not equivalent currently or at any time in the forseeable future.
Yeah, I mean until backup cameras became mandatory, there were cars that could be had with NO RADIO AT ALL. I bought both a Dodge Omni and a Ford Ranger that came with blanking plates. But nobody in Congress demanded that either of them had a radio AT ALL.
Hybrids are a key transition vehicle for many people that may someday want an BEV. It’s important to know, however, that in ICE mode, it’s lugging around a heavy battery and motor — and in EV mode it’s lugging around a heavy engine and whatever gas is in the tank. So, not super efficient in either mode. The cars are way more complicated, having two drivetrains — and you still need to buy gas, deal with oil changes and getting the car smogged. Still, better than not having the option, though.
Full EV batteries are usually significantly larger and heavier than the weight of say an aluminum engine with a similarly built trans. the Hybrid batteries are considerably smaller and they generally only have one motor versus multiple, so the Gas engine kind of gets offset by that deletion as well.
Basically the Plug in Hybrid is the best option currently. you can benefit from the plug in at home and drive to work and back on that charge, but if you need to go further you don’t have to lug around the extra battery and of course if you need more range, at free way speeds, the gas engine has always been superior. the higher the speed, the more the range goes down on electric and even if you can find a DC fast charger, you still have to wait considerably longer for the charge to occur versus filling a tank with gas.
Er, that is a gross mischaracterization of how most hybrids run, most of the time. Powertrain engineers are not dumb, they are aware of the drawbacks of only using half of your propulsion system at any given time. Which is why virtually all hybrids on the market do a good-to-great job of running with their most efficient motive sources for the given conditions. Eg- using the electric motors to start from zero, and the gas motor for highway cruising. Happily electric and ICE motors have quite complimentary power and efficiency curves, so it’s not a particularly large challenge to nudge overall system efficiency higher than a single motive power vehicle.
Yeah, it’s almost unbelievable how well-tuned my Honda Clarity PHEV is for running efficiently under all conditions. And I’ve never seen the system “confused” no matter what driving conditions I’ve encountered.
For non-hybrid ICEs, weight will significantly hurt fuel economy, but with hybrids or BEVs, the penalty is minimal because of regenerative braking. Plus, even PHEV engine, transmission, plus battery systems typically weigh less than the much larger batteries + motor for a full BEV, so the weight argument really isn’t valid.
I wish I had any interest in a Tesla so I could not buy one in protest of Elon, but alas the “Oops, All Screens” interior design is such a non-starter that they won’t be on my list the next time I buy a car, Elon or not.
^ not going to be happy about the new mustang with a V8 and 6 Speed trans.
I won’t refuse to buy a Tesla because I don’t like Elon Musk. However, some of the actual shenanigans being pulled by the company certainly would keep me away (department to deflect customers on range issues, shadiness in FSD, bricking paid for options on used cars, etc.). Likewise, I won’t touch Goodyear tires after what they did with the RV tire problems where people died due to their negligence and they would not be accountable.
literally the same reason why I won’t buy apple either. that schmuck Jobs was equally as vile as Elon.
If you don’t like tire scandals, you’d better boycott Ford and Firestone too.
Already done!