ValueAnalyst
Closed
Hmm. Maybe I’m mossing something? What factors underpin your confidence on this?
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Hmm. Maybe I’m mossing something? What factors underpin your confidence on this?
RobStark
Well-Known Member
That global automotive sales are going to look very similar over the next 19 months to what they have been over the last 19 months and Ford has close to a $30B rainy day fund. Even if they lose money in a shrinking global auto market they are not losing "go out of business money."
And they have eliminated spending to develop the next generation Fiesta,Focus,Fusion, and Taurus sedan.They are winding down incentives to move sedans in North America and winding down that business.Making an Equivalent Crossover of those sedans cost about $300 more but consumers are willing to pay about $3k more. They will import from China whatever the market demand is for the Focus Active five door hatchback and not need to incentivize in order to reach X sales level to make a North American factory economical. Ford is getting out of the money losing shrinking end of the business and will stop trying to out-Toyota Toyota and out-Honda Honda. Even Toyota is incentivizing Camry and Honda is watching Accord sales drop as they refuse to incentivize.
ValueAnalyst
Closed
Sounds like a tall mountain to climb don’t you think?
“Losing, shrinking end of the business” is only so due to low oil prices. This is now changing, and the pendulum will swing again, just like it has in all previous cycles.
When do you expect Tesla Pickup to be revealed?
dc_h
Active Member
The 7500 policy was created in 2007 in response to $140 a barrel and $5 gallon gas prices that presaged the Great Recession. That was preshale impact and did and still does seem a bit cheaper than the $200 billion annual defense of Middle East shipping lanes and oil delivery. It also does not require loss of American lives defending oil and does not indirectly fund terrorist groups funded by oil wealth. EV’s won’t solve world peace, but they can reduce our dependence on a volatile product in a volatile region. It also gives America a chance to participate in next gen auto manufacturing, which will be electric because they are better and will improve more rapidly than gas cars. Throw the environment thing in there if you want. To some that’s the reason, for others national defense and some product quality.
I’m a transcendental libertarian, meaning we should focus on making ourselves free. Being interdependent is part of life and can coexist with freedom, being dependent without options limits freedom and choices. Policy that builds options long term is not hypocrisy it’s called planning. For about 3 billion in subsidies we get a Tesla company that makes our air and health better, a better car choice than any alternative and improve our personal and national security. To fight your own interests in the defense of polemics is hypocrisy.
RobStark
Well-Known Member
The difference between a sedan and the equivalent crossover is 1-2 MPG city and 3-4 MPG highway. I expect the shift to crossovers to be permanent. IF really high gas prices I expect consumers to buy smaller CUVs and/or electrified CUVs. Not a shift back to sedans of any variety.
I don't expect meaningful production of Tesla pickup for at least 3 years nor do I expect reveal of Tesla pickup to collapse demand of F Series. Model X did not collapse demand of conventional premium full sized CUVs and SUVs. Elon said last call Model Y is "about two years away." So pickup is after that.
mblakele
FSD Beta (99)
This week The Economist had some coverage of shale oil, OPEC, and recent market dynamics.
American shale-oil producers are on a roll
American shale-oil producers are on a roll
ValueAnalyst
Closed
Gasoline prices continue to push higher, and make no mistake: this is only the second inning of a major global energy crisis. The primary determinant of what percent TSLA drops in the fast-approaching recession, preceded by the accelerating energy crisis, will be the magnitude of cash inflow from higher reservations/orders as energy prices surge. If the cash inflow at $4/gallon national avg and $5/gallon California is in the order of billions of dollars across all products, then I would expect TSLA to sail through the next recession without a major hit. This will depend on how Tesla positions itself as a safe heaven against surging energy prices.
ValueAnalyst on Twitter
Cant say that i disagree with any of your points.
but still: that "planning policy", reasoned with what you think is good and right, is disturbing the free market. And that was what you were complaining about in the first place.
TheTalkingMule
Distributed Energy Enthusiast
Dumping $7500 onto something doesn't disturb the free market, it only manipulates incentive. The free market will still carry out the production and sale of transportation vehicles, the equation will just be changed slightly for EVs in support of agreed upon policy.
I'm not a massive fan of California style incentive manipulation, but this subsidy really doesn't disrupt any of the market's functions.
I'm not a massive fan of California style incentive manipulation, but this subsidy really doesn't disrupt any of the market's functions.
I agree, but here is the problem. For insane historical reasons, railroads are expected to cover the full capital costs and maintenance for tracks, while truckers pay essentially nothing to use the taxpayer-funded roads. Particularly with electric trucks. This puts a nasty thumb on the scales in favor of trucks. I have advocated for government owned railroad tracks for decades, and no less than Keynes agreed with me; every country outside North America already made this change.
Trucks!
A small number can switch to NS if they have connections to both, but mostly shippers are switching to trucks. Usually the cost is way higher, but reliable service matters more than cost and CSX just isn't delivering when they are supposed to.
They're phasing out most of their cars, focusing on their strengths (trucks), and slowly but surely moving into hybrids and electrics. Sounds like a sensible plan to me, that's the bad part of incumbency is it's hard to make big switches, they can't just go electric overnight. I could see a phev truck being favorable to an electric for a while. When is Tesla going to start making it's semis? Are they going to make pickups at the same time or after?
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The price is the primary guiding mechanism of a free market. Manipulating the price does not disturb a free market? Thats a weird understanding of economics imo...
TheTalkingMule
Distributed Energy Enthusiast
Not within our uses for it. We need the market to sell cars efficiently, not pick which version is inherently cheaper to manufacture at one moment in time.
If we truly want the market to function untouch then we need to inject the costs of carbon and price of wars for oil into the equation. As with energy subsidies, I'm happy to level the playing field entirely if that's what people want to do.
You have a point with external effects, but electric vehicles are not free of them either.
And also, history shows that aspects like the wish for a clean environment get factored in by most consumers and can lead to a change without regulations.
But its okay to have a different viewpoint on the finer aspects of whats a free market and whats not i guess
mspohr
Well-Known Member
Don't forget the $5.3 trillion fossil fuels annual subsidy. (IMF)
Which history are you referring to? This statement runs counter to my sense of the matter, which is that people in general are going to do what is cheapest and easiest. After that, people consider the environment maybe (if they know about it).
I'd love to know of a situation where consumer preferences for a more environmentally friendly product lead to a large change towards a cleaner product that wasn't also to be about as cheap/convenient as the dirtier product.
Can you point to any energy market where prices are not impacted by taxes, subsidies, regulations, permits or anything else a government may through at it? If your idea of a free market is that governments have no impact on prices, it's pretty hard to see where that has ever really existed. I believe that Mule's view is more that a market can freely set prices within the context of existing taxes, subsidies, regulations and permits.
The implicit permit to pollute environment is a huge externalized cost that amounts to government free ride to whole fossil fuel industry virtually everywhere. Specifically, to tax pollution or otherwise impose a fee is not a violation of a free market and is actually necessary for prices to reflect all material costs. Only when prices signal all cost inclusive of those that would otherwise be externalize can purely market mechanism optimize. Gaining the sympathies of end consumers may help, but it wholly incomplete and not as efficient as having all costs throughout a value chain reflect externalities.
skitown
Member
Exactly. Put an actual fair price on carbon and pollution negative externalities and all of a sudden ICE and burning fossil fuels start looking really expensive. What was it 6 million+ folks who died from air pollution related illnesses in 2016? What's the societal cost (subsidy) of that?
mspohr
Well-Known Member
I think the entire body of "organic food" falls into this category. Food marketed as "organic" is more environmentally friendly, cleaner and most of the time more expensive than industrial chemically farmed food. The fact that millions of people choose to buy organic food is a good example of people choosing to spend more for a more environmentally friendly product.
Also my purchase of a Tesla was my choosing to spend more for a more environmentally friendly product. I (and many others) have made this decision. I never would have considered spending this amount of money on an ICE car but was happy to give Tesla my money.
I don't think your "sense of the matter" makes sense.
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