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Here PDL AE rant of the week. www.autoextremist.com

We’ve reached the point in this young year where everything is in play. Assumptions are worthless, gut feelings are suspect, at best, and a cloud of doubt hangs over everything.
What, you might ask? You mean the best and brightest who are hard at work on the future of this business have doubts? Yes, even the True Believers who are swelled with confidence from previous product successes have doubts. Every day, in fact. That’s why they question things every step of the way, and it’s because they’ve come to understand that hard-won assumptions learned from previous projects don’t always apply. Especially in this “Grand Transition” to electrification.
This cloud of doubt even hangs over the readers of this website. As highly knowledgeable enthusiasts and automotive consumers of all stripes and passions, the doubt plainly oozes from the emails we receive. As in, a majority of them are not buying this transition to electrification one bit. Oh, it sounds good for quite a few of them – at least on paper – and the environmental benefits are clearly understood and embraced, but the practical realities of EV ownership are simply not showing up on their radar screens (except for the Tesla zealots, of course).
And even though my acquisition of a Chevrolet Bolt several months ago has allowed me to learn about – and embrace – the positives of EV driving and ownership, I understand where the negative perceptions about electrification are coming from, to a point. But beyond range anxiety – which with every new EV that arrives in-market is frankly a moot point, especially in the urban environment – and the perceived challenges of charging (which is rapidly improving by the day), what else is there?
Price? Yes, Tesla put paid to the notion that EVs are affordable early on, because of the high price points of its Model S and X models. But even though the Model 3 and the Model Y can still be pricey when optioned-up, price really isn’t the factor it used to be for that manufacturer. And even though the new Ford EV crossover* can be optioned-up to be considered “pricey,” at least its base price is realistic. (*We refuse to call it by its given name. Not sorry. -WG)
And GM is doing its part by strategically cutting the price of its revamped 2022 Chevrolet Bolt and new Bolt EUV as well. Although our readers have weighed in with disappointment that GM didn’t go far enough with the design changes on the Bolt – a recurring criticism – the value of these excellent EVs is undeniable, especially in the larger scheme of things. Yes, manufacturers are rolling out pricey, “show pony” EVs at a prodigious rate to grab attention and headlines, but as EV technology becomes mainstream, the manufacturing efficiency will accelerate, and EVs will become competitive in all segments, price-wise.
It seems that every day now we’re seeing a manufacturer announce its definitive commitment to EVs. GM and VW have already come out swinging with very aggressive plans for an all-electric future across all of their various divisions. This is very real, folks. I keep saying that, but judging by comments from our readers they’re refusing to believe it. The latest manufacturer to go “all-in” on EVs? None other than Jaguar, which announced it will be an all-electric brand by 2025. And Land Rover will follow suit by 2030. Other manufacturers from around the world are offering new EVs seemingly every quarter, so again, this “Grand Transition” to EVs is picking up speed.
 

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The $29 billion figure Ford gave for EV and AV spending by 2025 is clearly fiction, and everybody in this business knows it. In fact, the real number is closer to $14B less than that. Yet they persist, for fear of looking bad (which only makes it worse).

It does sound like a lot of money to spend in four years, but how does he and everyone else know it is $14B less?
 

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It does sound like a lot of money to spend in four years, but how does he and everyone else know it is $14B less?
It's doubtful that Mr. Autoextremist really does know the actual figure. Even if Autoextremist is buddy buddy with finance and controller dweebs at Ford, those folks aren't going to share managerial accounting data internal to Ford. The actual figure is probably somewhere in between what Autoextremist suggested and what Ford mentioned in its press release.

Another thing that Mr. Autoextremist either ignores or deliberately obfuscates is the fact that the "Grand Transition to EV" he speaks about in this week's rant is solely a result of government intervention and control in the automotive marketplace.
 

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It's doubtful that Mr. Autoextremist really does know the actual figure. Even if Autoextremist is buddy buddy with finance and controller dweebs at Ford, those folks aren't going to share managerial accounting data internal to Ford. The actual figure is probably somewhere in between what Autoextremist suggested and what Ford mentioned in its press release.

Another thing that Mr. Autoextremist either ignores or deliberately obfuscates is the fact that the "Grand Transition to EV" he speaks about in this week's rant is solely a result of government intervention and control in the automotive marketplace.
Indeed. Free market, what free market? I see a Soviet 10-year plan, which had a yooj history of success after success. Not.
 

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Another thing that Mr. Autoextremist either ignores or deliberately obfuscates is the fact that the "Grand Transition to EV" he speaks about in this week's rant is solely a result of government intervention and control in the automotive marketplace.
The automotive industry has been highly regulated for at least 50 years. An automotive "free market" is a myth. The other side of that coin is that the automotive industry is highly subsidized. Not least of which was the bailout of GM and Chrysler(several times).

California has tried to force the transition to electric vehicles since about 1990. It didn't work because the technology was not there and the public was not buying.

Now the technology is there and the public is buying. Tesla has 80% US BEV market share without any Federal EV credits while every competitor save GM has a $7500 advantage.

EVs and Tesla in particular are the aspirational vehicles of Gen Z and to a lesser extent Millennials. Every day there are a few less Boomers in the automotive market place and a few more Gen Zers.

It is a pure myth that the transition to EVs is purely government driven.
 

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The automotive industry has been highly regulated for at least 50 years. An automotive "free market" is a myth. The other side of that coin is that the automotive industry is highly subsidized. Not least of which was the bailout of GM and Chrysler(several times).

California has tried to force the transition to electric vehicles since about 1990. It didn't work because the technology was not there and the public was not buying.

Now the technology is there and the public is buying. Tesla has 80% US BEV market share without any Federal EV credits while every competitor save GM has a $7500 advantage.

EVs and Tesla in particular are the aspirational vehicles of Gen Z and to a lesser extent Millennials. Every day there are a few less Boomers in the automotive market place and a few more Gen Zers.

It is a pure myth that the transition to EVs is purely government driven.
If it’s not government driven, why are they forcing it?
 

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The $29 billion figure Ford gave for EV and AV spending by 2025 is clearly fiction, and everybody in this business knows it. In fact, the real number is closer to $14B less than that. Yet they persist, for fear of looking bad (which only makes it worse).

It does sound like a lot of money to spend in four years, but how does he and everyone else know it is $14B less?
What PDL doesn’t yet realise is how much more spending Ford has just committed to with buying access to VW’s MEB platform both here and in Europe.

PDL doesn’t know because he’s wel and truly out of the loop with GM and Ford and he absolutely detests Farley for cancelling his company’s advertising contract with Ford.
 

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It's doubtful that Mr. Autoextremist really does know the actual figure. Even if Autoextremist is buddy buddy with finance and controller dweebs at Ford, those folks aren't going to share managerial accounting data internal to Ford. The actual figure is probably somewhere in between what Autoextremist suggested and what Ford mentioned in its press release.

Another thing that Mr. Autoextremist either ignores or deliberately obfuscates is the fact that the "Grand Transition to EV" he speaks about in this week's rant is solely a result of government intervention and control in the automotive marketplace.
True, if it weren't for gov't manipulation this endeavor wouldn't be near so enticing to them. Edit: Sort of akin to Wall St. and GM/Ms. Barra wrapped around each others little fingers and the bump in stock value. IMO
 

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The automotive industry has been highly regulated for at least 50 years. An automotive "free market" is a myth. The other side of that coin is that the automotive industry is highly subsidized. Not least of which was the bailout of GM and Chrysler(several times).

California has tried to force the transition to electric vehicles since about 1990. It didn't work because the technology was not there and the public was not buying.

Now the technology is there and the public is buying. Tesla has 80% US BEV market share without any Federal EV credits while every competitor save GM has a $7500 advantage.

EVs and Tesla in particular are the aspirational vehicles of Gen Z and to a lesser extent Millennials. Every day there are a few less Boomers in the automotive market place and a few more Gen Zers.

It is a pure myth that the transition to EVs is purely government driven.
So you say.
 

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What PDL doesn’t yet realise is how much more spending Ford has just committed to with buying access to VW’s MEB platform both here and in Europe.

PDL doesn’t know because he’s wel and truly out of the loop with GM and Ford and he absolutely detests Farley for cancelling his company’s advertising contract with Ford.
I consider that a great big negative for Ford. "Committed to handing over a vast sum of money to a competitor because they failed to invest in their future". VW certainly isn't giving access to their tech for free, so now Ford has another layer of cost added in to pass on to the customer or eat into profits. I'd be a lot more impressed if that vast sum of money were towards their own battery tech and architecture.

I will say that I don't feel like Ford's BEV path is clear in my mind, so I'm not sure how much they are actually giving to VW, but buying a competitor's tech doesn't sound like a long term win to me.
 

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I consider that a great big negative for Ford. "Committed to handing over a vast sum of money to a competitor because they failed to invest in their future". VW certainly isn't giving access to their tech for free, so now Ford has another layer of cost added in to pass on to the customer or eat into profits. I'd be a lot more impressed if that vast sum of money were towards their own battery tech and architecture.
Disagree. I think it gives them flexibility until the Tech is more fleshed out. EX: They could spend Billions and go all in on developing their own LiOn battery tech like GM does. What if that ends up NOT being the dominant battery Tech? Toyota, among others, is supposedly close on solid state batteries hitting the market in the next 5 years. What if that's real? We know they are coming at some point. So you just lost Billions investing in an outdated battery tech, that would seriously hurt Ford. This way they can pivot if/when the market changes. Hybrid Gas F150/SUV/Crossovers are going to be their bread and butter for the next 10-20 years anyway.

Lets be honest, most cars are appliances. eCars are going to be even more appliance like/generic than gas cars. There will be multiple sizes + features, just like refrigerators (GE to Sub Zero), but otherwise they are going to be generic boxes that take you where you want to go. Do you really care about the battery tech/platform/brand when the car is driving itself and you play on your phone until you arrive? I'll just want the seat to be comfortable. 😁
 

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Disagree. I think it gives them flexibility until the Tech is more fleshed out. EX: They could spend Billions and go all in on developing their own LiOn battery tech like GM does. What if that ends up NOT being the dominant battery Tech? Toyota, among others, is supposedly close on solid state batteries hitting the market in the next 5 years. What if that's real? We know they are coming at some point. So you just lost Billions investing in an outdated battery tech, that would seriously hurt Ford. This way they can pivot if/when the market changes. Hybrid Gas F150/SUV/Crossovers are going to be their bread and butter for the next 10-20 years anyway.

Lets be honest, most cars are appliances. eCars are going to be even more appliance like/generic than gas cars. There will be multiple sizes + features, just like refrigerators (GE to Sub Zero), but otherwise they are going to be generic boxes that take you where you want to go. Do you really care about the battery tech/platform/brand when the car is driving itself and you play on your phone until you arrive? I'll just want the seat to be comfortable. 😁
Solid state batteries are being worked on today, lithium is already yesterday's tech. I believe we had a story about GM working on it and aspects of it will be in the 1st gen Ultium (something with the connections). GM has R&D in place and working on it, they've shifted their engineering to focus on BEV. They have the Ultium architecture that is ready to accept it and will have battery plants already in place to go when the tech is ready. All of which doesn't happen overnight. Ford can't just wait until the tech is ready, by that time it is to late and they again have to rely on someone else's tech. Every time they buy a battery from VW, etc they are handing over profits, profits that won't be available to put towards developing their own in house tech. It becomes a self feeding loop. All the same time they have to maintain similar profits to GM otherwise Wall St will beat them up - that all leaves less money to develop their own.

I do agree that most people don't care if their Ford has a VW battery, especially once self driving takes off. While this scenario is far off, what will the point of a car company that doesn't make their own batteries? They'll be the same appliance that VW sells, a Ford will simply cost more. With self driving I bet individuals no longer own cars, fleets like Uber will own the cars, and they'll be looking for the cheapest vehicle - Ford won't be able to compete in that environment.

Now with that said, again, I'm not clear on what Ford's $29B entails, maybe they are developing their own tech... And my doomsday scenario with self driving cars is a very long time away....
 

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Lets be honest, most cars are appliances. eCars are going to be even more appliance like/generic than gas cars. There will be multiple sizes + features, just like refrigerators (GE to Sub Zero), but otherwise they are going to be generic boxes that take you where you want to go. Do you really care about the battery tech/platform/brand when the car is driving itself and you play on your phone until you arrive? I'll just want the seat to be comfortable. 😁
+1
Well said CJH. Ironically, the late Sergio Marchionne (one of Mr. Autoextremist's most formidable nemeses) conveyed the same theme in his 2015 presentation titled Confessions of a Capital Junkie. The gist of that presentation was "OEMs spend vast amounts of capital to develop proprietary components, many not really discernible to customers" and that "all this has produced poor results so far, as OEMs' returns and valuations are still depressed". Marchionne had ample data to support his assertions.

To your point, automotive OEMs should aim to avoid unnecessary capital investment developing proprietary components for electric vehicles even more so than for gasoline and diesel powered ones.
 
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Disagree. I think it gives them flexibility until the Tech is more fleshed out. EX: They could spend Billions and go all in on developing their own LiOn battery tech like GM does. What if that ends up NOT being the dominant battery Tech? Toyota, among others, is supposedly close on solid state batteries hitting the market in the next 5 years. What if that's real? We know they are coming at some point. So you just lost Billions investing in an outdated battery tech, that would seriously hurt Ford. This way they can pivot if/when the market changes. Hybrid Gas F150/SUV/Crossovers are going to be their bread and butter for the next 10-20 years anyway.

Lets be honest, most cars are appliances. eCars are going to be even more appliance like/generic than gas cars. There will be multiple sizes + features, just like refrigerators (GE to Sub Zero), but otherwise they are going to be generic boxes that take you where you want to go. Do you really care about the battery tech/platform/brand when the car is driving itself and you play on your phone until you arrive? I'll just want the seat to be comfortable. 😁
+1
Well said CJH. Ironically, the late Sergio Marchionne (one of Mr. Autoextremist's most formidable nemeses) conveyed the same theme in his 2015 presentation titled Confessions of a Capital Junkie. The gist of that presentation was "OEMs spend vast amounts of capital to develop proprietary components, many not really discernible to customers" and that "all this has produced poor results so far, as OEMs' returns and valuations are still depressed". Marchionne had ample data to support his assertions.

To your point, automotive OEMs should aim to avoid unnecessary capital investment developing proprietary components for electric vehicles even more so than for gasoline and diesel powered ones.
I agree. Until everything gets sorted out and these become like ICE as in all the same so to speak, options should be there as for which ends up being the chosen mainstream. I wouldn't want to be the odd man out or the odd duck in the end, that might prove to be very costly. IMO of course ;)
 

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Solid state batteries are being worked on today, lithium is already yesterday's tech. I believe we had a story about GM working on it and aspects of it will be in the 1st gen Ultium (something with the connections). GM has R&D in place and working on it, they've shifted their engineering to focus on BEV. They have the Ultium architecture that is ready to accept it and will have battery plants already in place to go when the tech is ready. All of which doesn't happen overnight. Ford can't just wait until the tech is ready, by that time it is to late and they again have to rely on someone else's tech. Every time they buy a battery from VW, etc they are handing over profits, profits that won't be available to put towards developing their own in house tech. It becomes a self feeding loop. All the same time they have to maintain similar profits to GM otherwise Wall St will beat them up - that all leaves less money to develop their own.

I do agree that most people don't care if their Ford has a VW battery, especially once self driving takes off. While this scenario is far off, what will the point of a car company that doesn't make their own batteries? They'll be the same appliance that VW sells, a Ford will simply cost more. With self driving I bet individuals no longer own cars, fleets like Uber will own the cars, and they'll be looking for the cheapest vehicle - Ford won't be able to compete in that environment.

Now with that said, again, I'm not clear on what Ford's $29B entails, maybe they are developing their own tech... And my doomsday scenario with self driving cars is a very long time away....
I respect your position, but I don't think you are seeing the forest for the trees. First, the deal with VW is much larger and far reaching than just the battery/platform. Just to name a few, but the Ranger, Delivery Truck (Transit) and Autonomous Tech (Argo) are all part of it. We can not separate one piece of the puzzle and expect to see the whole picture. Plus none of us know what is going on behind the curtain at Ford, so none of us can comment on what they are/aren't doing.

Secondly, a battery is a commodity. Unique technology matters at the beginning of the cycle, but in the cash cow stage it does become commonplace and anonymous. True Story, I owned the FIRST LiOn cellphone on the market, a Sony. It was a huge improvement of NimH, and cost double what the next most expensive phone was. That was in the late 90's. Now they are so affordable, everybody has one. Does anybody care that Apple used Samsung batteries in their phones? No. Was Apple unprofitable because they outsourced batteries and other components? No. Even in current ICE vehicles there are hundreds of components that are outsourced, even complex pieces like transmissions. It'd be hard to argue that has hurt any brand more than another.

Thirdly, whatever the ownership model is in the future (personally I think it will be long term leases) people will still have choice. Even in cheap appliances, there is choice. Even the cheapest car in the US market is far superior than cheapos in China or India made by third rate manufacturers. I will always want a nice interior with a great stereo, that won't be the cheapest. Being the cheapest isn't a position of strength. Manufacturers are going to have to differentiate themselves in other ways, the battery won't matter.

Cheers! Time for a Beer! 🍻
 
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PDL is now 70 years old. I've spoken with him a few times and it was enjoyable. Unfortunately I don't think he has the contacts with in the companies he had in by gone years, Many have retired. I am afraid that the current crop of executives just view him as an old disgruntled white guy. Even though he has tried to make himself relevant by driving a Chevy Bolt he doesn't represent the demographic that the current woke executive class want to reach. Of course neither do I.....
 

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Disagree. I think it gives them flexibility until the Tech is more fleshed out. EX: They could spend Billions and go all in on developing their own LiOn battery tech like GM does. What if that ends up NOT being the dominant battery Tech? Toyota, among others, is supposedly close on solid state batteries hitting the market in the next 5 years. What if that's real? We know they are coming at some point. So you just lost Billions investing in an outdated battery tech, that would seriously hurt Ford. This way they can pivot if/when the market changes. Hybrid Gas F150/SUV/Crossovers are going to be their bread and butter for the next 10-20 years anyway.

Lets be honest, most cars are appliances. eCars are going to be even more appliance like/generic than gas cars. There will be multiple sizes + features, just like refrigerators (GE to Sub Zero), but otherwise they are going to be generic boxes that take you where you want to go. Do you really care about the battery tech/platform/brand when the car is driving itself and you play on your phone until you arrive? I'll just want the seat to be comfortable. 😁
Meh... Ford is behind and the MEB deal is just to cover the fact they were caught completely flat footed. This isn't some master stroke to allow the technology to mature. There's so much money invested in Li-Ion batteries at this point that even if solid state batteries become a reality in the next year or two, there won't be an advantage at the mass manufactured level until the large battery manufacturers transition over, which will give the current leaders (i.e., Tesla, GM, VW) plenty of time to incorporate the change into their next gen platforms.

You are right that consumers don't care who makes the battery in their car but Ford will. They will have less control over the platform, they will pay more for it, and will trail VW in releasing vehicles with new features.
 
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