If the Model Y was considered an SUV, would Tesla have dropped the price so much?

[thesmokingman]

businesses that are poorly operated should not survive. Canadians familiar with ICBC know what im talking about. Ford and GM are no different

In the US big auto is already supported by an alarmingly large oil subsidy. Talk about backstops in place to keep them from going under and yet they still manage to do it.

How many Lyrics did GM produce in 2022? 36 iirc, yea that is the what leading the revolution looks like!

 

[Occhis]

Ford and GM should have been driven out of business during the last recession instead of our tax dollars bailing them out so they can turn around and soak us for 15k over msrp on top of that

In case you missed it, GM did go into bankruptcy in the Great Recession. Their stock went to $0. Actual victim here. Billions in federal loans brought it back to life. In fairness, the loans were paid back with interest, but stockholders got nothing.

 

[Hiline]

Yeah unfortunately there are too many jobs in big auto for the government to allow them to fail. They do make certain positive contributions though. They provided the facilities to produce ventilators in the early days of Covid.

 

[scratch]

Agree the MY would not have been cut so much but for the tax credits.

But another motivation might have been to shaft Ford.

Ford had a lot to do with the tax credit scheme, my understanding is their lobbyists wrote most of it. The SUV designation has a weight limit, the MY didn't qualify because it's too light.

The Ford Mustang Mach E was purpose-built specifically to compete with Tesla. Right now, it costs $68k for similar features to that of a MYLR. It's also very expensive to produce, Ford was complaining last year they were losing money on every unit sold. No guarantees it qualifies for a tax credit.

Can't help but see MY pricing as a way of screwing Ford.

 

[origingalatic]

Nope. Not at all. The $7500 credit would have been enough.

This is Elon giving the administration a middle finger.

Right on about Ford/GM helped scheming the tax credit. How you punish a car manufacturer for making a better and lighter car (eventually good for the environment as it is more efficient) is beyond me..... using a outdated definition of SUV to categorize EV is laughable.

Your move Ford/GM....

 

[TuMadre1337]

Unintended consequence: Ford/GM bankrupt in 12 months because they cannot compete with the lowered prices of Tesla. Don't you love government meddling in the market

Ford can't stock enough EV's as it is anyways. EV is still a very niche market outside of forums like these, they'll be just fine as long as they can ramp production within the next few years, and once that happens tesla will probably be the ones playing catch up on pricing and features. Competition is good for the space

 

[Brian-MS90D]

Ford can't stock enough EV's as it is anyways. EV is still a very niche market outside of forums like these, they'll be just fine as long as they can ramp production within the next few years, and once that happens tesla will probably be the ones playing catch up on pricing and features. Competition is good for the space

I agree competition is good for the space, but not sure it will be Ford being competitive at "pricing and features."

A good part of a Ford vehicle purchase has to go towards their massive debt. They have low operating profit (despite lower investments than Tesla). By their own public statements and current plans, they will be smaller than Tesla in 2026 (Ford's 2mm planned EV's are not in addition to their current ICE production).

Ford long term debt: $84b
Ford 2022 annual revenue: $152b
Ford 2023 forecast future revenue: $162b consensus
Ford operating profit over last 10 years: 4.36%
Ford typical cash on hand: $40b
Ford global vehicle production 2022 (all types): 1,864,464
Ford EV production plan: 2mm global units by 2026

Tesla long term debt: $2b
Tesla annual revenue: $54b
Tesla 2023 forecast future revenue: $110b consensus
Tesla operating profit over last 10 years: 14.95%
Tesla typical cash on hand: $20b
Tesla global vehicle production 2022 (all types): 1,370,000
Tesla EV production plan: 4mm global units by 2026

* This is not a judgement on Ford vehicles. The Mach E and Lightning are great as products.

 

[patmurphey]

The part of Ford debt that is carried by the financing arm is offset by the future repayment of car loans. I haven't seen a publicly available breakout, but that long term debt number is misleading. The same applies to GM's debt.

 

[Brian-MS90D]

The part of Ford debt that is carried by the financing arm is offset by the future repayment of car loans. I haven't seen a publicly available breakout, but that long term debt number is misleading. The same applies to GM's debt.

I suppose the number is misleading until it isn't. See, GMAC history (in short, dramatically collapsed requiring government bailout and was spun off and is no longer part of GM and therefore your statement on GM is incorrect). Ford Credit is the only financial arm of Detroit's "Big Three" still owned by its parent automaker. Your statement is true until the "future repayment of car loans" stops happening during a down turn.

More to the point, debt is debt. Yes, Ford Credit constitutes an arguably large portion of the Ford's long term debt. Let's hypothetically say it's $70b. That $70b is still money that Ford (Ford Credit) went out and borrowed, then re-lended to its customers (for sale of vehicles). If Ford customers stop paying, Ford itself has to service that $70b debt still.

You seem to imply (?) that Ford had $70b of cash sitting around, and decided to lend that out to its customers (for sale of vehicles). If that were the case, then that $70b would not be reported as debt.

Customers stopping making car loan payments is a real thing (as we've seen time and again). Indeed, in 2009 Ford took a $6b loan from the government to survive and as of 2020 a $1.5b balance remained (many know Ford avoided bankruptcy, but not everybody knows it required government assistance just like the others). Tesla (and other automakers) "learned" this in the 2008/2009 era and have strengthened their practices and positions. Time will tell if Ford staying the old-fashioned course will make them stronger or weaker.

I would argue weaker.

 

[nate704]

I agree competition is good for the space, but not sure it will be Ford being competitive at "pricing and features."

A good part of a Ford vehicle purchase has to go towards their massive debt. They have low operating profit (despite lower investments than Tesla). By their own public statements and current plans, they will be smaller than Tesla in 2026 (Ford's 2mm planned EV's are not in addition to their current ICE production).

Ford long term debt: $84b
Ford 2022 annual revenue: $152b
Ford 2023 forecast future revenue: $162b consensus
Ford operating profit over last 10 years: 4.36%
Ford typical cash on hand: $40b
Ford global vehicle production 2022 (all types): 1,864,464
Ford EV production plan: 2mm global units by 2026

Tesla long term debt: $2b
Tesla annual revenue: $54b
Tesla 2023 forecast future revenue: $110b consensus
Tesla operating profit over last 10 years: 14.95%
Tesla typical cash on hand: $20b
Tesla global vehicle production 2022 (all types): 1,370,000
Tesla EV production plan: 4mm global units by 2026

* This is not a judgement on Ford vehicles. The Mach E and Lightning are great as products.

Laughing so hard at this line:

"Ford EV production plan: 2mm global units by 2026"

Not going to happen. LOL

 

[thesmokingman]

Laughing so hard at this line:

"Ford EV production plan: 2mm global units by 2026"

Not going to happen. LOL

Legacies lead at what they think they will probably do in the future. And that's why they will fail cuz they don't appreciate how hard it actually is.

 

[slashtom]

Ford and GM should have been driven out of business during the last recession instead of our tax dollars bailing them out so they can turn around and soak us for 15k over msrp on top of that

Tesla fan but ford and gm did repay their loans.

 

[rickybobbee]

yes but we had to finance it and cars would be a lot cheaper if they didn't have to make up for billions in debt.........the money to pay the debt inevitably comes from consumers

 

[Brian-MS90D]

Tesla fan but ford and gm did repay their loans.

GM kinda did & kinda did not repay.... end result was taxpayers lost a lot of money.

In the five years since GM's bankruptcy it made $22.6 billion. But taxpayers lost $10.6 billion on bailout that saved the company.

In five years since bankruptcy GM made $22.6 billion while taxpayers lost $10.6 billion on bailout that saved the company.

money.cnn.com

 

[patmurphey]

...You seem to imply (?) that Ford had $70b of cash sitting around, and decided to lend that out to its customers (for sale of vehicles). If that were the case, then that $70b would not be reported as debt...

Please don't attribute nonsense like that to me...

Finance arm debt is balanced by the asset of repayment obligations, and those are not going away in any way other than a modest percentage in a deep recession. Ford (and GM) finance borrows and relends just like any bank/lending institution.

 

[enemji]

once the irs limits are reached by March, the prices will be back up

 

[enemji]

My guess is that this EV credit provision will be amended to fix the chaos it created. People will be very angry if GM and Ford are driven out of business.

*few* people will be angry. Rest are sheep and will buy what everyone else is buying

 

[Brian-MS90D]

Please don't attribute nonsense like that to me...

Finance arm debt is balanced by the asset of repayment obligations, and those are not going away in any way other than a modest percentage in a deep recession. Ford (and GM) finance borrows and relends just like any bank/lending institution.

I wasn't sure which is why I added the "?"
I guess I don't understand the point of your fact, then. And here you essentially just repeat yourself while ignoring what happened just slightly more than 10 years ago (the repayment obligations DID go away!). Debt obligations do not cease when revenue craters. Debt obligations limit available cash to put towards investments that could grow the business. This is arguably one major reason while Ford continues to shrink each year in modern times.

I do see that I was wrong about GM and that after bankruptcy and losing GMAC, they bought a finance company and renamed it GM Financial to replace GMAC. Almost hard to believe the hubris...

Those that do not learn from history are destined to repeat it. Subprime consumers are not paying their car loans more than ever before. 7.11% of subprime loans were severely delinquent in December; the highest since 2006. Total auto loans now delinquent by more than 60 days are up 26.7% from a year ago. Source, Cox Automotive.

So what was the point of your fact? That this is nothing to be concerned about? That the past won't repeat itself? That Ford is secretly poised for explosive production, revenue, and profit growth (despite their public statements to the contrary)?

 

[vishnumrao]

I fail to understand why the MY AWD 5 seater has a 55K limit while a "Volkswagen ID.4 AWD Pro" has its price cap at 80K. To me they are both in the same league.

 

[patmurphey]

I wasn't sure which is why I added the "?"
I guess I don't understand the point of your fact, then. And here you essentially just repeat yourself while ignoring what happened just slightly more than 10 years ago (the repayment obligations DID go away!). Debt obligations do not cease when revenue craters. Debt obligations limit available cash to put towards investments that could grow the business. This is arguably one major reason while Ford continues to shrink each year in modern times.

Geez! I never said Ford didn't have significant debt (which will get worse with build out of EVs). I said that the debt should be evaluated without counting the portion relating to car financing.

BTW, repayment obligations of car loan debt have never gone away.