Good morning, y’all, and happy Friday. Congratulations to all involved for nearly powering through another work week. Let’s mount up some William H. Macy Signature Series Performance Coilovers and finish the job, shall we?
On today’s morning roundup of car news, we look at how Ford swung and missed in Q4 and all of 2022; why Mazda’s U.S. boss has hot takes about EV range; how it’s a tough time for EV startups; and why Honda’s dealers are nervous about this new Sony venture.
Ford Left $2 Billion On The Table In 2022
Despite all the many headwinds the automotive industry faced in 2022, General Motors had a pretty great year. The automaker closed things out with fourth-quarter revenue of $43.1 billion and a record net income of $14.6 billion for the full year, leading it to pay some very nice bonuses to its hourly workers.
The story couldn’t be more different for crosstown rival Ford. In an earnings call last night, CEO Jim Farley announced $2.2 billion in losses for 2022, missing analyst predictions in a big way, and responded by vowing change in Dearborn. What the hell happened?
First, Ford ate it on its investments in both Rivian and Argo AI, the autonomous driving startup it invested in with Volkswagen that closed up shop last year. Here’s the New York Times on that matter:
The company wrote down its investments in Rivian, a young electric truck maker, by $7.4 billion and Argo AI, a company developing autonomous vehicles, by $2.8 billion last year. Ford said on Thursday that it had almost completely sold its stake in Rivian. In October, Ford said Argo was winding down.
Ouch. But Ford’s big problem wasn’t really startup investments, but traditional automaker stuff: production is too costly and inefficient and quality stinks, leading to constant, expensive recalls all of the time.
This is a pretty well-known problem at this point. Ford seems unable to launch any new product without issues, and those after-the-fact repair costs are starting to add up. Add in all the volatility faced by the entire business in post-pandemic 2022 and you see why this was such a mess. Here’s the NYT again:
Ford has long struggled to reduce defects and recalls in its cars and trucks. Recalls can be expensive and time-consuming, and company executives said on Thursday that they were working to improve the reliability of their vehicles.
“In simple terms, we need to improve quality and lower costs now,” the company’s chief financial officer, John Lawler, said in a conference call.
Farley said Ford’s complexity is part of the problem.
“We have a lot of complexity relative to the customer and also inside our company. And we can cut the customer-facing complexity like we have, but it takes time to work that down to parts on the line, to the manufacturing line,” he said. “It just takes time to work through that and that’s what we’ll do.”
While discussing the fourth-quarter results with Wall Street analysts, Ford’s leadership declined to detail the specific steps it will take to cut costs and make the automaker more efficient and profitable.
Farley said the answer is not simply cutting jobs, which has historically been the way automakers have cut costs. “There are things we could do in the short term, but I don’t want to just make the output the cuts without redesigning the work. This has to be sustainable and that’s how we’re thinking about it nowadays,” he said.
Basically, things are so weird right now with supply issues in the auto industry that car companies can’t afford to get the basic stuff wrong anymore.
There are some upsides, though; Farley said Ford was producing 12,000 EVs a month at the end of 2022, but by this year’s end it expects that number to be around 50,000 (hence why it could do the Mustang Mach-E price cuts to compete with Tesla.)
I like Farley, and I think he’s one of the best leaders Ford’s had in a minute, but he’s certainly got his work cut out for him this year getting manufacturing in shape. Plus, the constant quality issues and recalls aren’t doing anything for winning return business on the customer side.
Mazda Doubts High-Range EVs Are The Answer
How much EV range is enough? I’ll have more to say about that later today. But at the launch of the new CX-90 this week, Mazda’s American boss had some takes about electric range that Green Car Reports scooped up. This is an interesting discussion:
[Jeffrey Guyton, the president and CEO of Mazda USA] told Green Car Reports at the 2024 Mazda CX-90 reveal that while electric vehicle buyers today are looking for 300 miles of range, the future’s not ever-longer range. Consumers will find they don’t really need even that much, he said.
Second-time BEV owners will learn, evolve, and shift their priorities and needs based on experience, Guyton thinks. As charging infrastructure develops, people’s experiences will develop, charging at home will factor in, and the technology will improve.
The executive noted that the adoption of EVs across the country will be inherently tied to how people feel about the infrastructure.
[…] On the subject of finite resources, Guyton also believes battery packs will be smaller and weigh less while providing less range but quicker charging versus what we see today.
The weight gain of electric trucks that aim well beyond 300 miles of range is a concern for Guyton, noting that the IIHS just upgraded its testing lab so that it can crash 10,000-lb electric pickup trucks.
“I don’t think that’s really sustainable,” the executive said.
He’s right about all this stuff. (Putting aside silly cars like the MX-30 with its 100-mile range, which, come on. Maybe if it was a European city car, but for the rest of us, that’s not good enough.) But I’ve heard this from other OEMs too; BMW’s even said that it finds these new 500- and 600-mile range EVs to be absurd, but it’s doing them anyway because it’s what EV buyers say they want right now.
This is a prominent stance of ours around here. Team Reasonably Sized, Efficient EVs. We should make some t-shirts.
Guyton’s also right about the inherent wastefulness and inefficiency of hulking, giant, high-range EVs. It takes a lot to make a battery pack that big, and some of these EV-behemoth SUVs just aren’t the way to go. Older generations of buyers especially care about super-high range, and as they move on from driving, those more accustomed to the charging process could be more comfortable with more reasonable EV ranges.
The EV ownership experience is likened to cell phones a lot. You charge when you need to, but you also charge overnight, regularly and when you can. All these people demanding 600-mile EV ranges, I think, are used to running their gasoline cars pretty low before they fill up again. Do you run your cell phone down to 0% before you charge it again every day? I doubt that; if that happens, it’s probably not intentional.
Then again, as Guyton notes, all of this depends on better charging infrastructure, including for people who aren’t homeowners. That’s certainly a work in progress.
A Rough Year For EV Startups Already
Speaking of EVs, it’s hard out there for a new venture. I mean, that’s always been the case, but 2023 may be a year when the field gets even narrower.
Rivian had to do layoffs this week as it struggles with costs and competing with Tesla and the legacy OEMs on prices; EV delivery van startup Arrival is cutting jobs as well; and Northern European “solar car” startup Lightyear’s parent company has entered bankruptcy just weeks after halting production on its $270,000 car and announcing it would work on something more affordable instead.
It’s hard to pin down any one, single reason for why this is happening; the truth is, it’s a lot of things. One analyst I respect likes to say “Everything’s great until the factory opens,” which speaks to Rivian’s ongoing production headaches, the kind faced by just about every startup automaker. Then there are the weakening capital markets for EV and AV startups as investors become more conservative. And I think there’s also going to be a natural selection process happening with some of these companies; how many EV van and delivery companies do we need? Especially with the legacy OEMs getting into that market too, when they can do production quite a bit easier?
Basically, not every startup will survive 2023. I think Rivian has a better shot than most given its early successes—it’s way ahead of where the old Fisker was a decade ago, for example—but it’s going to have its own “production hell” year just like when Tesla was struggling to build Model 3s in tents.
The bit players, like Lightyear? Yeah, who knows. It doesn’t seem great, especially as more established companies get serious about EVs.
Honda’s Dealers Aren’t Afeela-in’ The Love
The Sony-Honda EV joint venture is one of the more interesting experiments to come along in a while. Unlike so many startups, these are two Actual, Real-Deal Companies working together. It’s not some shady VC venture founded by an obscure weirdo who only keeps residences in countries that have no extradition treaties with the U.S.
I wrote a deeper dive into what Afeela is all about for The Verge a few weeks ago, and I can tell you that in all of my conversations with them, they’re indeed quite serious about breaking into the car market in a thoroughly modern way. That means a focus on longer-term ownership, OTA updates and subscription revenue. Afeela execs have also made very clear they’d prefer to do what Tesla does and sell online and direct to consumers, or have some hybrid model for sales.
Needless to say, however, Honda’s American dealers aren’t thrilled with any of this. Here’s Automotive News today with that angle:
But their plans are sure to rankle Honda and Acura’s U.S. franchised dealers, with many of them already leery of the venture’s intention to sell its vehicles online instead of through their dealerships.
Many Honda and Acura dealers assumed they would at least serve as the official customer-facing part of the equation, delivering the Sony-Honda EVs, servicing them and communicating with owners about Honda’s other products.
Bill Feinstein, chairman of the Honda National Dealer Advisory Board, was surprised to learn otherwise.
He told Automotive News dealers had not been advised that the Sony venture will work through other networks. But he had previously voiced worry the new brand could possibly compete with existing Honda dealerships.
“Unfortunately, there has been a lot of speculation and rumor regarding the Afeela product,” Feinstein said. “What I do know is that Honda dealers strongly believe that products designed and/or produced by Honda should be sold by Honda dealers.”
Yeah, I bet. But here’s the thing nobody likes to talk about, let alone auto industry execs, who live in fear of angering the dealer networks they depend on thanks to America’s tight franchise laws: if this connected-car, EV future pans out, the dealers are in for a hard time.
Besides the fact that it’s quite silly you can’t buy a new car online from most brands in 2023, dealers make most of their money on service and parts. And in theory, EVs will need less of both. Fewer parts, OTA updates to fix things, you get the idea. So if you’re Sony, and you’re taking a very Japanese and very new approach to the car market, why do you want to bother with Honda and Acura’s dealers at all?
(That’s the other interesting thing about Afeela, by the way; this is very much Sony’s jam. Some sources I’ve spoken to have likened Honda to a contract manufacturer, almost, like Magna Steyr. I’m not sure I’d go that far, but I can tell you all of the press, unveiling, design and planning has been Sony’s purview, not Honda’s.) Hell, even Yasuhide Mizuno, CEO of Sony Honda Mobility Inc., feels pretty frosty about working with dealers in America:
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It saddens me that Ford has fallen off. One of my favorite cars I ever owned was my 2016 (then a 2019) Flex. Bummed they killed it off 2 years ago because I probably would have bought another. Im also a Mazda fan – if the Flex was my favorite, the Mazdas ive owned have been some of the best (fun to drive, low maintenance – just unload it before the rust sets in). How about before Mazda decides that no one wants EVs with more than 300 miles of range they actually build one with more than 100…
Disagree, Farleys Ford is one making an automatic only GT500. Automatic only Ford GT. Joke of a Mustang replacement Suv.
I dont want a single car from Farleys Ford.
Bring back Fields. The sports car guy. Focus RS started back then even though he was gone before it released. Manual GT500s, the first V8 Raptor people wanted, Focus ST. Fiesta ST.
Crap people wanted. Hacket killed literally every good product the second he came in. Farley has ran with that.
Bring back some sports cars for manual drivers.
Knew Lightyear was dead when Valmet announced last month they stopped making the Zero after having only started late November.
I dispute the claim about playskool interiors. The durability and user friendly cleaning of playskool products is in a different universe than Ford’s current offerings.
They must not sell many Walkman’s. Otherwise they’d have been forced to call them Walkperson’s.
As for FarleyBrain, I’d fire Michael Keaton and Jeffrey Tambor to save money.
Stupid aliens. I didn’t ask for this. I will convert as much as I can into fungible and untraceable transportable items and ghost like Ghosn.
Find the next Alan Malally?
Heck i can tell you what will happen with Honda. The dealers have a contract with Honda written by Honda. They have many wishy washy terms but give the Dealership control of a certain territory. Contract law says in the event of unclear terms the decision goes to the party who didnt write the contract. So cars come out, dealers dont get them, they sue because Honda cars. It gets tied up in court until first Honda caves then partner caves because that is how business works.
Now Ford, they should just put me in charge instead of swapping. Farley has most of it right but ignores the facts when making the decisions. If it isnt a moderate change of a vehicle dont rush it take an extra year. Ypu srll a billion Mach Es they all get recalled no money mo problems. Is GM going to come put with a new Mustang? NO! Except for Tesla that came out with EVs almost a decade earlier 1 year doesnt matter. The customers are slow to accept the new technology let others fail. GM didnt rush made billions. Also restart the Focus plants just make fewer models fewer options. Toyota is killing it because everyone is gone. Make a 2 seater thunderbird with the exact same body style as the old original T Bird with modern engine, brakes etc you may not win the market but Mazda Miata will feel the pinch. Make a wagon based on Subaru. Cheaper older tech reliable. You might not win the market but you will sell a bunch since everyone bailed.
Sony Honda. Shonday, fixed it for you. Regarding Farley brain: Build every Maverick possible in 2023 and you will sell every one. Same with F-150 Lightning and the Mustang electric thingie. Also stop investing is shit or portfolio stretchers. Seriously, let us remind you of Jaguar, Mazda, Aston Effing Martin, Land Rover, some weird Korean Company that gave us the Festive, Rivian, Cars without drivers, and Mercury. I hate it but you all were spot on with pickup trucks and SUV’s and CUV’s. Make those, print money and get your stock cap up to par. Plus NEVER stop building the GT!
I’m in charge of Ford. The problems are not product desirability, but rather product delivery. We are not making money because the cars we build need too many repairs, and too many supply chain issues.
The cheap way to fix this would be to bring back the “Quality is Job 1” slogan from back in the day, slap it everywhere, call it good. Meantime, bring back the Mercury brand as our electric division, add a new GT under the current one to compete with Corvette, and get back to supporting grassroots racing in AutoCross, SCCA, NASA and other likeminded organizations.
In reality, I’d be boring. I’d focus on improving quality, across the board. Our job is to make fewer, higher quality vehicles. Not to cut costs – improve quality. I’d get all my business leaders in a room and do some brainstorming on how to improve quality. I’d do the same with the plant managers, then some guys from the plant floor at each plant. Ask the plant managers who is the biggest pain in the ass on the line, bitching about not getting things done right – and talk about quality. Maybe I do that the next time we have a shut down. I’d do the same with the engineering teams. And I might even ask the mechanics from our dealers about the reparability of our vehicles.
I’d emphasize that the strategy of Ford is to build the highest quality vehicles in the world. Highest quality defined by JD Power initial quality rankings, lowest warranty work numbers and longest life span.
Myself and the Mrs. actually like to do road trips. Driving is really the only way to actually see the country. So, until I can get a BEV that can do the range my 2500 Ram Diesel or Jetta diesel used to do (about 600 miles on a tank in either of them) AND I can recharge in 2X the amount of time (or less) it took me to fill the tank on either of those vehicles, I’m not interested. (I’m being generous on the recharge time at 2X my refill time on the Ram {32 gallon tank} because I recognize recharging a battery is a lot different than pumping 14-30 gallons of diesel)
Does not sound like a BEV will meet your needs. No shame in that. Don’t buy one.
For real fuckin unicorns here. An ev will meet my needs, hell, an e-bike meets most of my needs.
I’d never get my body back. Ford would fire me so fast…
Given all of the societal problems on the horizon, I don’t think there is any turning things around. The economy is currently failing because all of the problems that were present in the 2008 collapse were never meaningfully addressed and papered over with endless money printing and statistical chicanery. The problems have returned with a vengeance, and new, larger problems are on the horizon. The next quarterly report should therefore not be of concern, or even the next 2 years. Things are going to be rough.
Here’s what I do to attempt to turn things around. It’s going to be long term, not short term, as we could soon be looking at massive global political turmoil, even more wars(possibly another world war), and severe supply line disruptions and resource shortages. The vehicles will have to reflect that, coupled with consumers having less money to spend as the economy continues its death spiral.
1) The next Mustang is going to be a multimodal front engine RWD platform, for turbo L4, Mazda-powered L6(with optional turbo model), and 5.0 V8 gasoline(with optional twin turbo model) variants each also as optional hybrids using Maverick drive system components, as well as a PowerStroke diesel variant, and a pure EV variant. All engine options will have featureless stripper base models with manual transmissions, where the buyer chooses what options they want. It is going to shrink in size to reduce frontal area and mass, losing about 1 foot in width, and instead of focusing on retrograde ponycar aesthetics, look to the future. Aerodynamics will be heavily influenced by the Ford Probe concepts of 40 years ago, with a targeted Cd value around 0.18. The base 310 horsepower L4 could be geared for a top speed in excess of 200 mph, taking advantage of its aerodynamics, and might exceed 55 mpg highway and approach 40 mpg in the city, with the plug-in version having a 10 kWh pack and a Maverick drive system for 50+ miles all electric range. This drag reduction should also allow the base 5.0 V8 model to eek out 45+ mpg at 70 mph on the highway. City fuel economy will still be in the upper 20s to 30s depending upon engine options, but the pricier plug-in variants can mostly mitigate this. There will be future attempts to increase stock horsepower for all ICE engine variants, so perhaps the base L4 could be pumping out 450-500 horsepower, with the V8 models cresting 1,000. The base L4 model will have a targeted MSRP of $25k.
2) New Ford Ecosport. A CUV built with very slippery aerodynamics, and screw styling(it was already fugly anyway), reminiscent of the 2005 Mercedes Bionic concept. Targeted Cd value of 0.19. The vehicle will be lowered to Tesla Model Y-like height to cut frontal area. Standard option will be a manual transmission stripped of features that uses the Ford Maverick hybrid powertrain to eek out 40+ mpg city, and 60+ mpg highway. Targeted base price for the barebones hybrid model of $18k, but the buyer can pick and choose features, up to a $30k fully loaded plug-in model. Optional plug-in hybrid version, and 2 optional pure EV versions. For the EVs, the base would be a 25 kWh pack with 130 miles range for $18k using a Maverick motor, and the other with 40 kWh pack, Mach-E motors, and 200 mile range with a targeted sub-$25k price tag for the stripper up to a $40k fully loaded version with output spec’d to that of the fastest Mach-E.
3) Plug-in EV hybrid option for diesel-powered and ICE-powered F-series pickups, with 20 kWh packs and 40 miles all-EV range. If the emissions system on the diesel version of the truck fails or the urea tank runs out, the EV drive system can still run the truck at reduced performance.
4) Electric Ford GT for a halo-car. Target weight under 2,500 lbs.
5) Resurrect the Panther platform, and build a fuel efficient, overpowered, RWD streamliner of a land yacht out of it targeting a 0.16 Cd, with 5.0 V8 as standard ICE option, with Powerstroke and EV options that can use the same platform. Target base price for 5.0 V8 of $30k.
6) Bring in the Ford Fiesta variants from Europe and sell them for similar cost. Over time, re-develop them into affordable EV hatchbacks with improved aero, and tiny sub-30 kWh batteries and 150+ mile range with a targeted EV base price under $20k.
7) Ford Explorer gets a cheaper plug-in hybrid option with 15 kWh pack and 40 miles EV range, using the Ford Maverick’s drive system, and very slow performance, with most luxury features stripped from this base model, but consumers allowed to pick and choose. Targeted base price of $30k. Aero to be significantly improved for next iteration.
While everyone else offers resource hungry, feature-laden models for everything, Ford will now stand out for offering cheap versions of most of its lineup, and performance models being kept as affordable as possible, with massive fuel efficiency gains being a focus. As a result of the load reduction, the performance cars will become faster as well as greatly more economical to operate, and also greatly more dangerous for idiots behind the wheel. Stripper versions of vehicles will be available at rock bottom prices that offer as much value for the money as possible, that the competition will not. The dealerships will be deliberately screwed with narrow margins, as they’re vestigial at this point.
Did you say put a diesel in a mustang?
Damned straight. Tuned Powerstroke engine as an option.
“…put a diesel in a mustang?”
“Put a diesel in a Mustang” sounds like the harshest putdown ever. Is it the automotive equivalent of the southern “bless your heart?” Like “piss off,” but with a touch of new car smell?
That is, until you drove it! There are diesel engine swaps in Mustangs that are absolutely NASTY at the drag strip. And they can still get 40+ mpg driven sanely on the highway. This is stock bodied, with the brick-like aerodynamics Mustangs have always had. I’m proposing something different: streamlining the crap out of them and reducing weight to reduce load, which in turn is the single biggest determinant regarding fuel consumption.
Here’s one set up for drag racing with tubbed-out rear-end, body mods, and a parachute:
https://youtu.be/3rYqQBfO458?t=217
That same engine can be made to sip during the relatively low power demands of highway cruising and mundane A to B driving. I think with attention to drag reduction and a light enough setup, a non-hybrid RWD car powered by such with the engine tuned to 1,000 hp could run 9s in the 1/4 mile, but still exceed 60 mpg on the highway when you keep your foot out of it. At that point, it wouldn’t matter what the car looked like. It would sell itself.
Plus, there is a lot of appeal in pulling up to some high-strung V12 exotic that costs 10x as much while you’re sounding like a farm tractor, and then blowing its doors off when the light turns green.
Yeah but nobody else gets it. Most diesels in stock form are too hamstrung by BS rules and bad tuning.
I have a 330whp 1.9 TDI that revs to 6500rpm and gets 50mpg in a steel body car. 365k miles on it. So much torque I sheared the gears straight off the stock 5th gear and swapped a .840 gear and she is happy.
Fine choice! If it had 1/3 the drag and half the mass, as Casey Putch’s Omega sports car does, using that same engine, it could basically double the fuel economy. Casey Putch’s Omega sports car gets around 100 mpg, and can accelerate comparably to his Dodge Viper, as a demonstration of this in reality.
I want to do the musclecar equivalent of this. Focus on both more power and load reduction at the same time, and see what can be achieved. Stock-bodied Chevelles and Mustangs converted to Cummins and Powerstroke respectively, have been known to approach 40 mpg doing 70 mph on the highway, and their aero drag is kind of on the crappy side compared to the average sedan. What happens if you have an engine like that with the efficiency that it allows, when coupled with a slight weight reduction and aero drag force vs speed on par with a 1st generation Honda Insight, and long-legged gearing to reach 240+ mph but also to keep the revs low for highway cruising?
We could have wonderous things, if they were built…
Ford cannot make enough of the vehicles they just introduced to meet demand. The issue is that those vehicles are being returned due to poor build quality, raising warranty costs.
I like the idea of focusing on lower cost, de-contented models across the product line up. Ford and Chevy have given the entry level market to Kia and Hyundai. Maybe getting back into that market makes sense.
Right, but due to geopolitical events, there much are bigger problems on the horizon if current trends hold. The advantage of allowing decontented models is multifaceted. Less components are needed to be able to sell anything at all, and if consumers become increasingly cash-strapped, it will help them afford the products more readily. Even then, having sufficient parts available at all will be a massive stretch, if say, half the world’s semiconductor output is shut down.
Then there’s the possibility of gasoline becoming unavailable at all in much of the world, if say, the straight of Hormuz is blocked. Now imagine you were to couple that with tens of millions of job losses in the U.S. alone, hundreds of millions worldwide, with hyperinflation or even outright currency collapse in most of the G20 nations. Good luck selling anything at all in that environment!
Back to me: Easy peasy, sell the whole company to BYD.
“Mazda Doubts High-Range EVs Are The Answer”
Which is impressively stupid of them given the story that the BEV sales stats from the past 10 years tell us… and what those stats say is that BEVs with long range actually sell. Crappy BEVs with short range don’t sell.
Of course there will be a point of diminishing returns. But as it stands, a lot of BEV buyers will pay more for better range.
I myself won’t consider any BEV with less than 200 miles of range… as that amount of range is enough to do all my day to day driving with some extra buffer for safety.