Ford’s EVs are getting more affordable and faster to charge thanks to new chemistry
The Ford Motors Explanation for the Announcement of an Electric Factory in the U.S. (and How to Get It Done Right)
The electric carmaker said it made $3.3 billion in the third quarter, up from $1.6 billion in the same period a year earlier and nearly matching the record profit it reported in the first three months of the year. It reported $21 billion in revenue, up from $13.6 billion.
In the third quarter, the company produced over 365,000 cars, a fifty percent increase from the same period a year ago. Sales also surged but investors have grown increasingly concerned about signs that suggest that demand for the company’s luxury cars might be weakening.
The company behind the Jeep, Dodge, and Fiat brands plans to lay off 1200 workers in February. Its reasoning? All those electric vehicles it needs to make are its main concern, even with a dash of chip shortages.
Ford is the latest automaker to announce a major EV factory project to be located in the US — a sign that the tax credits and other financial incentives in the Biden administration’s Inflation Reduction Act (IRA) are having the desired effect of bolstering the US’s energy and manufacturing infrastructure.
Ford’s an interesting comparison, though, because it also went through a recent round of layoffs, cutting around 3,000 jobs. No prizes for guessing one of the excuses it gave employees; “We have an opportunity to lead this exciting new era of connected and electric vehicles,” read a memo from CEO Jim Farley and chairman Bill Ford. “Building this future requires changing and reshaping virtually all aspects of the way we have operated for more than a century.” That, of course, meant cutting jobs.
At the Washington, D.C., Auto Show last month, attendees Xavion Butler and Frank Smart recently agreed that electric vehicles are the future. “Get on board or get left behind,” Butler said cheerfully.
There were 11 EV models that sold more than 1,000 units in 2019. This year, there were 26. The new cars from Korea, the Ioniq5 and the EV6, are not terribly exciting but they are the ones that were already on the market. Rivian rolled out the R1T truck and R1S SUV. And General Motors saw a huge run of sales for its Bolt EV and Bolt EUV once they returned to the market following a battery fire recall. Luxury brands like Audi, BMW, Mercedes, Genesis and Volvo have also added EVs to the market.
The vehicles with LFP batteries will also be more affordable than Ford’s current lineup — though how much more affordable, the company wasn’t prepared to say. We may not have to wait too long to find out, as the company says it expects to introduce its first LFP-powered Mustang Mach-E later this year and F-150 Lightning next year. In a bid to compete with the No. 1 EV seller, Ford slashed Mach-E prices.
Are We Sold Out? The Case for Electric Cars in Light of Recent Gas Prices and Inflation Reduction Laws, as Revised by Car and Driver
“We could sell it out at least two or three times over,” he said. We have not yet launched more global markets because we are sold out.
Less expensive electric vehicles are also getting better with longer driving ranges and faster charging, said Tony Quiroga, editor-in-chief of Car and Driver. The Hyundai Ioniq 5, which has a starting price around $41,000, earned Car and Driver’s Electric Vehicle of the Year award this year.
Gas prices can be taken into account. The increase in the cost of gasoline earlier this year made people aware of the electric cars, even if they weren’t thinking about them before.
The recent drop in gas prices might make some drivers hesitant to make the switch to electric in the near future.
The impact of the Inflation Reduction Act is also still unclear. The act, passed this year, changes the rules around which electric vehicles are eligible for consumer tax credits. It imposes limits on the price of the vehicle and on income of buyers, as well as requirements that promote domestic production of electric vehicles and their batteries.
“So, if a Tesla Model 3 and the Chevy Bolt, and the Tesla Model Y, and a Ford Mach-E and an F-150 Lightning all qualify, those are high volume vehicles,” he said.
The Waterfall Effect: Why Price Cuts Can Save For Model Y Models, and What They Can Tesla Tell Us About It
The move of auto companies to offer discounts to promote sales sparked a lot of reaction, which is nothing new. So what was so special about these price cuts? And what do they mean?
A lot, actually. The changes it could spur across the auto industry and the impact on the owners ofTesla are all related to the announcement.
Marin Gjaja, the chief customer officer of Ford’s Electric Vehicle business, told reporters that the company was responding to changes in the marketplace.
On an earnings call this week, General Motors CEO Mary Barra said she doesn’t plan to cut prices on the Cadillac Lyriq. The luxury SUV is supposed to be a Model Y competitor, but GM only managed to deliver 122 of the vehicles in 2022.
Used car prices began to trend down after a steep rise last year. According to CarGurus, prices overall are down less than 2% for the month, while prices for Teslas are down 8%.
“This is what we call the waterfall effect,” said Jeremy Robb, senior director of Business Intelligence at Cox Automotive. “If new prices come down, used prices have to be cut as well.”
A variety of discounts, like rebate, price reductions, and other discounts, are offered by the dealership to reduce what customers actually pay. The price for the entire model year tends to stay the same.
For most of the time, the price that is listed on the website is the price. It can change whenever the company likes it.
Source: https://www.npr.org/2023/02/02/1152586942/tesla-price-cuts-ford-mach-e-gm-electric-cars-tax-credit
The Tesla “secret plan” and the future of the electric vehicle market: Why is Tesla interested in EVs? How does the Treasury Department interpret the tax credit requirements?
Levine is trying to be logical. He understands that not all people get every deal. His vehicle’s value loss was a bitter pill to swallow.
According to Edmund’s head of Insights, Jessica Caldwell, the percentage of people usingEdmunds to research Tesla was double after the auto maker announced price cuts.
On the other hand, Tesla’s not-so-secret “secret plan” has always been to become a mass-market automaker selling millions of affordable vehicles — like a GM or a Volkswagen, not a Ferrari or Porsche.
The price cuts could make some Teslas even more affordable, since they can qualify for a $7,500 tax credit.
Investors had been questioning if Tesla still had the magic touch after the company faced increased competition just as Musk appeared distracted by his purchase of Twitter.
There’s still more to it, including a dependable high-speed charging network. (Teslas can charge at the Tesla Supercharger network; other brands rely on a patchwork of chargers from various companies, and malfunctioning or poorly maintained chargers are a common frustration for drivers.)
Enter the price cuts. While some analysts had worried that they would cut too deeply into margins, overall, the stock market seemed relieved to see the company taking action to protect its dominance of the EV market.
Most of Ford’s batteries come from SK Innovation. Ford thinks it can avoid some of the conflicts that come from imports by making its own batteries in the US. It’s also crucial in ensuring that its EVs qualify for the IRA’s $7,500 federal EV tax credit, which requires vehicles and batteries to be manufactured in North America. We don’t know how the Treasury Department will interpret the IRA requirements that discourage dealings with foreign entities of concern until next month.
The Future of Electric Vehicles: The Case for a New Lithium Iron Phosphorus Battery Factory in the U.S.
“I think the IRA was incredibly important for us and, frankly, it did what it was intended to do,” she said. “And it allowed the United States to capture 2,500 fantastic technical jobs and all the indirect jobs that go with it plus the future growth.”
The plant will make lithium iron phosphate batteries, better known as LFP (lithium ferro-phosphate), batteries. This is a type of battery that uses no nickel or cobalt, elements that can be difficult and expensive to extract from the earth.
NCM batteries tend to have less energy density than LFP batteries but they are cheaper. LFP batteries are also less complex to produce. The company claims that a new factory will increase the capacity of the LFP battery by 35 gigawatt-hours.
NCM chemistries are used in most of the EVs that uselithium-ion batteries. But NCM also has a lot of baggage, due mostly to cobalt, which has been called the “blood diamond of batteries” because it’s been mined in a way that’s endangered child workers and wrecked the environment in the Democratic Republic of Congo.
During a meeting with reporters, Lisa Drake, vice president of EV industrialization at Ford, said that they tolerate more frequent and faster DC fast charging. The best time to charge them from zero to 100 percent is when they are awake. And that is ideal for customers who want to drive all the way to empty and then charge quickly back to 100 percent.”
The company wasn’t prepared to say how much more affordable the cars with LFP batteries would be.
Reducing costs is certainly top of mind for the automaker, which had a particularly rough earnings this past quarter. Jim Farley said that Ford left $2 billion in profits on the table, due to poor execution and entrenched issues in the industrial system.
There have been rumors for months of a new factory. Ford originally wanted to build it in a poor area of Virginia, as part of a string of battery plants across the South. The project would have created up to 2,500 new jobs building lithium iron phosphate batteries for Ford’s electric vehicles. But Glenn Youngkin, the state’s Republican governor, rejected the project because of the involvement of CATL, citing the influence of China’s communist government.
The General Motors Expansion: Job Cuts and GM Expected Layoffs in the U.S. after the First Report on Tuesday
The job cuts would affect a few hundred employees according to a person with knowledge of the plans. Of its 167,000 employees, GM has the majority of them in the US with 58,000 staff and 46,000 hourly workers.
“We are looking at all the ways of addressing efficiency and performance,” said Arden Hoffman, the company’s chief people officer, in a message to staff Tuesday. A few global executives and classified employees are being action with this week following our most recent performance calibration. The company will be closing its doors from today.
GM just reported a record annual profit for 2022. At that time it announced plans to reduce costs by $2 billion over the next two years, including cutting corporate overhead across the board. But at that time CEO Mary Barra told investors, “I do want to be clear, though, we’re not planning layoffs. We are limiting our hiring to only the most strategically important roles and will use attrition to help manage overall head count.”
The United auto Workers union has said that the Cherokee will be made in Mexico, although no plan has been made yet for where production will take place.
Source: https://www.cnn.com/2023/03/01/business/gm-job-cuts/index.html
An Overview of Financial Results From GM’s EV Operations and Planned Future Plans for Ford Blue and Ford Model e Segments
Both Ford and GM will be in contract talks with the UAW this fall. The union went on strike at GM
(GM) for six weeks in 2019 before reaching a deal on its current contract.
Ford said that the losses and overall profit come before taxes and interest. It lost $3 billion on EV’s and it’s similar to what it lost last two years combined. It said it lost over 2 billion dollars in just 2 years. It’s the first time it gave a breakout of the results from its EV operations.
John Lawler, Ford’s CFO, said the company is confident with its projection because it has been able to hire away employees from Musk’s company.
We were not aware that the wiring harness for Mach-E was longer than it was needed to be. We didn’t know it’s 70 pounds heavier and that that’s [cost an extra] $300 a battery,” he said on a call with investors. “We didn’t know that we underinvested in braking technology to save on the battery size.”
Financial data for EVs will be shown as part of a presentation by Ford at a meeting with investors later Thursday.
The presentation will show how Ford will report its results in the future, no longer by geographic region but by product line.
Ford Blue and Ford Model e are the segments for consumer and commercial vehicles that include both ICE and EV.
