Ford announced the other day that it earned over $14 billion selling vehicles – and lost $4.7 billion not-selling electric vehicles.
The EV debacle in a nutshell.
Also something else. Evidence – that the free market, what there was of it, is a dead letter. The assertion backed by a telling fact. Ford is not cutting its losses, as it would have when there was some vestige of a free market. Why do you supposed Ford stopped trying to sell Edsels, back in the late ’50s – after just three years of trying and failing to sell what the market didn’t want? The question answers itself. Ford thought the Edsel would sell. It wasn’t just a new model, either. Ford saw Edsel as a new brand for Ford. The initial Edsel car was supposed to be so revolutionary, it would create a whole new market for itself.
Does it have a familiar ring?
Of course, there was a very big difference back in the late ’50s. The free market still existed. Or at least, to some significant extent it existed. Ford was not pressured by the government – via the regulatory regime of the government – to “invest” in the Edsel. Ford management chose to do so because it truly believed there was a market for a car like the Edsel. The latter was not conjured into existence like a mechanical Golem in order to achieve compliance with government rigamarole. Its existence wasn’t premised on the need to find a way to offset the costs of government rigamarole. Ford management thought it had a great idea – the next Big Thing – and hoped it would succeed.
Of course, it didn’t. “Edsel” has become synonymous with flop in business schools as well as popular parlance. But when the Edsel flopped, Ford did what businesses used to do when a new product wasn’t selling.
They stopped trying to sell it. In order to stop losing money trying to sell what the market did not want to buy.
More recently, GM stopped trying to sell their incarnation of the Edsel, which was the Pontiac Aztek. Like Ford, GM management thought the “revolutionary” styling of what became known as one of the weirdest-looking production vehicles ever produced would attract lots of buyers interested in something different.
They weren’t.
When it became clear they weren’t, GM did what Ford did back in the late ’50s – and stopped manufacturing what wasn’t selling. In order to staunch the bleeding.
But that was when the free market was still more-or-less operative and car companies like GM and Ford were free to decide whether to continue the bleed – or apply a tourniquet.
They no longer are.
In effect, GM and Ford – the entire car industry – is being forced to increase the bleed, via federal regulations that all-but-legally require them to continue manufacturing that which doesn’t sell and loses money.
And in two different ways.
The first way is the direct way – via regulations that require each manufacturer to manufacture “zero emissions” electric vehicles. Even though they aren’t “zero emissions.” They cause them rather than “emit” them – which is a distinction that ought to make no difference, if the supposed reason for requiring the manufacture of these vehicles really were to staunch “emissions.” What does it matter – “climate change” wise – whether the dread gas carbon dioxide is emitted at the tailpipe of a vehicle or caused by the generation of power needed by an electric vehicle?
Well, it matters – in terms of compliance. Which has nothing to do, as such, with whether more of the dread gas is generated elsewhere. The regs require it – and so the manufacturers comply with it.
The government has become, for all practical purposes, the main customer of the car companies – though it is a customer that doesn’t buy anything.
Secondarily, the car industry is effectively forced to manufacturer vehicles that don’t sell in order to be able to continue selling those that do. Ford’s electric Edsel, the F-150 Lightning, may not sell but by manufacturing it, Ford is able to continue manufacturing F-150s that do sell – because the government credits the Lightning with averaging “68 MPGe” – which counterbalances the 21 MPG (average) posted by the F-150 equipped with the standard V6 engine and the 19 MPG (average) posted by the F-150 equipped with the available 5.0 liter V8 engine. Add “68 MPGe” and 21 MPG and 19 MPG and divide by three – and you’ll see. You end up with a number that is considerably higher than the one you’d have gotten if you added 21 and 19 and divided by two. Which is a rough-math way to understand how Corporate Average Fuel Economy numbers are calculated.
By adding “68 MPGe,” Ford gets credit for higher averages – and that helps Ford avoid the fines that would otherwise be applied (and transferred to F-150 buyers) for not averaging them.
Now you know why Ford hasn’t pulled the plug on the electric Edsel. Why it is committed to losing even more money than it already has. And the same for the rest of the car industry, which no longer responds to the market but rather, caters to its primary customer – the government – which makes the rest of us pay for what we aren’t interested in buying.
. . .
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From Scotty….
Toyota Just Got Raided By the Police…..
There are rumors Toyota has been cheating on crash tests, emission tests, etc….sounds like VW all over again….
Is Toyota being crucified for taking too long, switching to 100% EV’s?
Also Ford’s…and others….sales figures are misleading….Ford counts cars as sold when they leave the factory…sold to the dealer….the dealer pays interest on these cars just sitting there…….the Ford EV’s sitting unsold on dealer’s lots are the reality….not sold to a car buyer…..sitting rotting on the parking lot…..
https://www.youtube.com/watch?v=81eZnqtWN80
I wonder if losing money on making & selling BEV’s is cheaper than paying Elon for credits?
Although I don’t believe CAFE credits can be purchased. Only the “zero emissions” credits.
Thanks, Eric, for putting up that Edsel video.
I had no idea about that center steering wheel setup & the other do-hickies on the dashboard. I understand better now why it failed. And, it does fit so well with EV’s.
P.S.
I introduced a late Gen-X’er chick to this song today, amazes me she had no clue & hadn’t heard it before. Makes me think there’s two sets of Gen-X. …She liked it.
‘The Little Old Lady (From Pasadena)’
Jan & Dean
https://www.youtube.com/watch?v=E_6FKsei-oY
Excellent, Helot!
THere’s also this one-hit wonder from Duke Jupiter: https://www.youtube.com/watch?v=Ywa34q5F-PE
I actually think the Edsel isn’t a bad-looking car; even the “toilet seat” grille isn’t that ugly when compared to some of the garish designs of the late ’50s and early ’60s. The 1959 model is a little better than the original. It was just too “techie” for most people then as they were starting to prefer simpler cars like the Falcon a couple years later.
Much like the crappy EVs such as the Mach-E which sit on Ford lots not selling, just discharging. Modern day Edsels indeed.
My neighbor runs the used car section of a major local dealership. He said they just sold a used Lucid Air Sapphire something or another for $145000. Who the hell would spend that kind of money on a used eeeveeee? Who would spend whatever a new one costs?
As your neighbor surely knows, in the car biz, there’s an ass for every seat
More like a dumb-ass for every seat….
The MSRP is $249,000…some EEEEVVVVV fool took a big hit, that’s + $100,000 depreciation in less than a year. On another note, is they had just called it a Galaxie, they might have made it.
Hi Mike,
In re the Lucid buyer: Probably a rich government worker. There are lots of these.
We are well supplied with them, Eric.
Why don’t car companies make the cheapest EV they can, getting the most MPGe out of it they can to offset cars that sell?
The best course of action would be to collectively thumb their noses at fedgov, but they don’t have the anatomy for that.
Why don’t car companies make the cheapest EV they can
That’s more or less what they’re doing – the EVs they are making today are essentially the redressed compliance EVs of yesterday, only now no longer portrayed as compliance EVs.
Notice that not even a single EV automaker has even bothered to fix the charging time problem before bringing new EVs to market, which tells us that they must have skimped heavily on R&D. That’s a very odd decision to make for companies allegedly going all-in on EVs. (The fact that some EV automakers are only now trying to play catch-up in the lab doesn’t really count for much, since the charging time problem should have been solved a long, long time ago, and the decision to make EVs should have been a consequence of that problem being solved.) I guess the automakers’ philosophy is that if the government can create an artificial market for their lousy EVs and outlaw ICE alternatives, then there’s really no point for them in investing in R&D to make EVs decent.
I don’t know that there is any R&D that can be done to make BEVs effective cars. In the past if a car maker wanted to try something radical and new, they did it as a boutique offering. Like offering Edsel as an upsell to a Ford, appealing to the guy who has to try something new first. Or Corvette, the first “sports car” from a mass market American company. Or Cadillac and Lincoln through the years- lots of troublesome new tech way ahead of its time but a way to work the bugs out on a consumer base that just don’t care.
But the bugs of battery powered cars are intrinsic- physics and chemistry have built in limits. Moore’s law relies on changes in technology which are somewhat predictable- makin a transistor smaller relies on the current generation of equipment making things smaller than the previous generation. But the process of generation, transmission, transformation, storage (in an inherently heavy battery), and finally consumption by making the car go, are a crazy, Rube Goldbergesque way of making something which has been very well developed over the last 130 years.
They are making a mousetrap using the game mousetrap as a reasonable model. Fun, but dumb.
But the bugs of battery powered cars are intrinsic- physics and chemistry have built in limits.
Which means that automakers should have invested in R&D to find something else than batteries to power their EVs (an EV doesn’t have to be a BEV). And yet, nearly a quarter of a century after Tesla was founded, EV manufacturers are still using unfit-for-purpose battery technology, all because they couldn’t be bothered to invest in R&D to develop alternatives to batteries (probably because they gambled on government mandates to save them).
The problem with BEV’s is the base cost to make one. The more ‘luxury’ a BEV becomes the better chance its base cost can be covered. The luxury gadgets and appointments cost far less than the price increase they sell for. This margin nibbles away at the base cost.
A stripper BEV would be an even bigger money loser unless functionality and longevity were severely compromised (even by BEV standards) like the Nissan Leaf.
Hi Dan,
They are making the cheapest EVs they can. The chief reason they’re all so expensive is because they all have to be capable of sustained high speed highway driving and that requires a huge (and heavy) and expensive battery pack. It is effectively illegal to sell a “city” car that isn’t capable of sustained, high speed highway driving. The government won’t allow such a vehicle to be sold/registered as a car, effectively making such a car useless since it can’t legally be driven in the city, either.
In China, there are many “city” cars available. In China. But not here.
I get that they are trying to keep costs down, but I mean bare bones. No options at all. Just barely meeting the required specs of a legal car.
Since they aren’t going to sell anyway, make them & send them right to the trash heap, limiting the loss they’re taking, while still getting the MPGe “benefit”.
Hi Dan,
I agree – and I think it’d be a great way to send an FU to Washington. Make a fleet of “compliance cars” – and throw them away as soon as they leave the assembly lines. Add the cost of throwing them away to the sticker price of every car that people want to buy.
But this would take balls – and they are in short supply at car companies nowadays.
Eric, in light of the whole Michael Mann defamation lawsuit (of which the outcome was a travesty of justice), do you worry about being sued for merely telling the truth?
Hi Dood,
Yep. This can and will happen. I expected it. It won’t stop me from speaking my mind. I’m long past caring about accommodating anyone.
Hi Eric,
I’m sure you remember what the establishment (And many DEMOCRATS) wanted to do or have done to those who refused to be guinea pigs for Pharma and/ or (As it turned out) told the TRUTH about COVID, face diapers, and mRNA COVID vaccines.
From AP’s report on the Michael Mann defamation case:
“Mann could be said to be the Jerry Sandusky of climate science, except for instead of molesting children, he has molested and tortured data,” Rand Simberg wrote.
I LOVE IT! Superb imagery! Like eating people, torturing data is WRONG.
‘The jury found that Simberg and Steyn made their statements with “maliciousness, spite, ill will, vengeance or deliberate intent to harm.”
Ladies and gentlemen of the jury, please change that vacillating ‘or’ to a manly and.’ You’re damned straight I penned that scabrous screed with malice, spite, ill will, vengeance AND deliberate intent to harm.
And if you knew how I REALLY feel, you would have fined me ten times as much. *drops drawers and moons all twelve of them, while howling AHHH-ROOOOOOOO!!!!*
Wasn’t the Ford Edsel based on the name of Henry Ford’s son or some other relative of Ole Henry? I remember reading that somewhere.
Hi John,
I think it was his son, I could be wrong but it was definitely a family member.
At least a 60+ year old Edsel would be worth some decent amount of money, while an old EV would be trash.
Now you know why Ford hasn’t pulled the plug on the electric Edsel.
Ford is pulling the plug on itself instead. The way Ford is behaving, it’s only a matter of time before it succeeds. Good riddance.
EV sales are down….so action must be taken to force slaves into EV’s …or just walking…no mobility….
Will a new EU directive stop us repairing old cars?
….starts in the EU, then spreads everywhere else….
In this video we’re talking about the EU’s plans to ban the repair of older vehicles.
Cars over 15 years old are in the firing line – they really do want us out of our affordable old cars, and they’re coming for the classic car industry next.
This is the early stages of compulsory scrapping of old vehicles.
An organization is needed to protect the rights of and lobby for, classic car owners…and owners of older cars, that aren’t collectible……
https://www.youtube.com/watch?v=l2LIe1a6U50
Naming it “Edsel” should have been the first clue to Ford executives. But that is what “group think” gets you, and it’s not a new thing. Somehow these bad ideas just snowball and become fast moving train wrecks that seem unstoppable. Until they do, leaving a huge mess. And those at fault rarely have to face the aftermath of it. Mary Barra will never have to give back the millions she has taken from GM.
But those of us who understand history see these things coming a million miles away and we get stuck watching them happen again and again.
Can’t we all just get along?
Nope, gotta swing that pendulum to the extreme thus destroying remnants of free enterprise. Couldn’t leave well enough alone, early 2000s cars and trucks clean, “safe”, competition drove better fit/finish/reliability. This government driven regulations demanding the last particle not leave the tailpipe, no one gets an owie in a wreak etc ruined it. This government overbearing now out to starve us. Ag. Program on the radio this morning discussed coming tightening of dust requirements for the fertilizer producers that literally cannot be met. Again, they are already regulated for emissions but according to the regulators not good enough.
Then the age old “mission creep” and “circle the wagons” bureaucratic mentality, justifying their existence by doing something, anything even if it’s wrong.
Well, I can say the Edsel look is here to stay in modern form; we call them “Alfa Romero”
Watch it buster! That’s my motoring legacy you’re attacking! And it’s ROMEO.
My legacy didn’t start out life as a fish cart in downtown Tokyo:
https://youtu.be/Vnb7MSpti3c?feature=shared
I’m pointing out a pattern similarity to that grill on their modern sedans, but the old ones are totally different and beautiful, plus the high end ones in the video. Kind of a reverse of ford putting the aston martin grill on some basic cars. I know there is no relation though with alfa romeo’s style and edsel. Looking back at edsel with modern eyes, it is a damn cool car compared to the computer designed cars of today.
But I’m just throwing shade to see who pipes up
Yes I had a 63 coupe, first year 5 speed trans and a 69 spyder first year fuel injection. Both a kick to drive, and both cars I never should have sold. 69 was nearly identical to the 67 see ‘The Graduate’ for an example of a red 67. Another tear drop hits my bourbon. Sigh.
I had a ’65 Giulia. Wonderful machine. After having a TR3 and a 1956 Austin Healey, the silence was deafining. No rattles, no squeeks. Actually, a bit too quiet. Nothing beat the sound of that Healey’s 4 cylinders “backing down” in 3rd of a steep slope…..
There is a ’65 Giulia Spider Veloce for sale on Hemmings for $249,000! It is not even the rarest of Giulias. Mine was a Giulia Spider and I believe it was in the neighborhood of $4500 new. Guess I should have cosmolined it and put it in a bag. And it was a southern car. The TR3 and the Healey had been exposed to road salt, so even bagging them wouldn’t have helped my current financial position.
(previous should have read “in 3rd on a steep slope”)
Whoa! Now I know I really should have kept the ‘63 Giulia Coupe! I bought when I was 17, guy wanted $850 in 1972 Dad talked him down to $575. Monocoque body yep no squeaks or rattles. No exposed body panel seams, all leaded in. Stitched dash, real gauges, Blaupunkt AM/FM/SW radio, 5 speed trans.
Hi Sparkey!
Yup. You’ll appreciate this tale of woe: In the early ’90s, I could have bought a ’74 Trans-Am with the SD-455 engine and a manual transmission for about $5,000. The car was rough, but it ran. And it was an SD-455 TA. But I was not long out of college and $5k might as well have been $30k so I didn’t get the TA. That car – today – is worth $75k on the low end.
One really can’t even make a comparison to Edsels or Aztecs because those weren’t obnoxiously over-priced, functionally-flawed vehicles like the F-150 Lightning and other EVs. In fact, I know from experience that the Aztec was indeed very functional and practical. It was just dreadfully ugly. So was the Edsel with its vaginal grill and the awful way the bumpers terminated into it (like roadside guardrails protecting a fire hydrant). Its designers should have rightly been taken out back and flogged for that one.
What I find amazing is that a 290 hp 3.3 V6 F-150 (with a curb weight of nearly 5,000 lbs) gets 20 city/24 highway MPG. It can also tow 8,200 lbs and gets from 0-60 in 7.9 seconds! Imagine what this could do if they could shed some unnecessary weight.
‘The government credits the Lightning with averaging “68 MPGe”’ — eric
Correct. But it’s only the first step in a two-step process.
For CAFE calculations, a divisor of 0.15 is applied to that 68 MPGe, jacking it up by a factor of 6.67 times. Ford’s CFO John Lawler plainly stated this fact in the Automotive News article you linked:
‘Each F-150 Lightning essentially offsets 12 combustion vehicles when calculating Ford’s compliance with emissions standards.’ Non-paywalled link to the article:
https://archive.ph/bVwvE#selection-7435.179-7435.303
Eric, I am getting an itch to FOIA those CAFE calculations. Several weeks ago the WSJ ran an editorial denouncing the EPA’s 6.67 fudge factor, which dates back to the Clinton administration. I looked it up in the Federal Register.
But now I want to see the actual calculations of how that 0.15 divisor is being applied today, to Ford and other auto makers. I want to blow this scam sky high, with data, data, data — numbers out the fricking wazoo. That’s whut I do …
p.s. That lede photo of the 1959 Edsel would look so cool if you cut and pasted a couple of blue & yellow Ukraine flags on either side of its vertical grille. Victory in Kyiiiiiiiiiiv! Ah ha ha ha …
Good idea. Please FOIA and share what you learn.
Here is what I found out so far. NHTSA has a Public Information Center (PIC). Link:
https://one.nhtsa.gov/cafe_pic/home/ldreports
It includes a Civil Penalties Report showing how much manufacturers have been fined for CAFE noncompliance. Fiat Chrysler got raped for hundreds of millions. (No wonder the Challenger had to die.) Ford is not listed in the Civil Penalties Report.
Manufacturers Fuel Economy Performance Report is a table covering years 2004-2019. A note says, ‘a PDF copy of manufacturers’ estimated data [for future years] is available in the “Additional Information” section of the PIC.’
I couldn’t find an “Additional Information” section. So I emailed [email protected], requesting the latest PDF document showing Ford’s estimated data. 2019 is ancient history at this point.
What is not shown in the summary tables is how one Lightning can offset 12 ICE vehicles. Probably it won’t be shown in the requested PDF either. That’s when a specific, focused FOIA request might be needed, to winkle out the ‘0.15 divisor’ flim-flammery.
1959 Edsel was a family car, copper colored, prone to engine backfire and the carburetor would catch fire.
Didn’t last long, glad to see it gone, my dad traded it for a 1965 four-door hardtop Ford Galaxie. Drove it for a while when I was in my yute. It was a good Ford from the Ford Galaxie. Wish it was still here.
Seems as though dangerous lithium ion batteries make every prug-in EV an Edsel.
Not only are most people unable to afford an EV, this push for Net Zero from the Biden regime and other governments around the world would also cost people TRILLIONS of dollars for virtually NO impact on the climate…..governments have been trying to hide that almost as relentlessly as they’ve been trying to hide harms and deaths caused by the COVID jabs….
https://mishtalk.com/economics/the-true-costs-of-net-zero-are-becoming-impossible-to-hide/?fbclid=IwAR0zGCw9gIYEgL2YmRreSbxz-km-spAi0jMa2eOSXLRphl_zq1_O7Ga-mU8
Drove past the Ford dealer on Tuesday. Saw a whole line of Mach-E vehicles. Not out front by the sign. That space was reserved for the vehicles that get you in the door. No, these were lined up over by the side entrance where you pull into the service department. Next time I go by it wouldn’t surprise me a bit to see the Mach-Es lined up along the back fence of the lot.