"Prepare for a brutal future" Farley Tells Dealers

[jpd80]

26 minutes ago, Harley Lover said:

 

It's difficult to assess the true market demand overall for EV's because supply is extremely constrained right now due to all the well known issues with the supply chain. The constraint on vehicle supply industry wide might very well be misleading the OEM leaders into believing that demand is higher than it will be when supply is plentiful (whenever that may be) and all the current players in the EV space are truly able to open the spigots with supply. 

We’re getting a dual message here, Ford is seeing way more intest in its EVs than it originally estimated a few years ago, so a lot of this is also thanks to Tesla busting the market open and showing buyers what proper EVs look like, a credit to Ford that it got Mach E as close to Tesla Y as it did. The current Lightning was definitely a placeholder intended as limited production before next Gen Lightning went prime time. So yeah, Ford being over run with BEV orders right when all production is being stifled by lack of chips and other critical parts.

 

In a nutshell, Ford should be curing the current production constraints before trying to sign up Dealerships to BEV contracts and wish lists, get your own house in order first.

 

 

26 minutes ago, Harley Lover said:

 

That said, it's hard to blame Farley for moving in the direction he's chosen, given that all indicators are very favorable for demand for Ford's EV products. I'm curious to see how MME demand reacts to the significant price increases announced for the 2023 model. If demand remains high and inventory does not build (recall the goal of producing 250,000 MMEs in 2023) than that would presumably be a pretty strong indicator of demand, I would think. Time will tell.

I’m not convinced that price hikes will affect demand so much as all vehicles have increased in price, I just sense getting out of the soup of constraints is going to drag on and on which will make production ramp up  a moot point for Ford and maybe GM too, they’re counting on Ultium to do big things ….but will it if they ar equally constrained?

[jpd80]

Forgot to mention above that Ford also needs Ford Blue to be highly profitable to carry BEVs until they can carry their own costs. Massive infrastructure costs will have to be covered in the lead up to that. So Farley needs to play nice with dealers and make sure they get his Ford Blue sales as profitable as possible. So it will be interesting how this plays into the mix of fixed pricing, is ther a need  for greater transparency with all transactions?

Edited September 17, 2022 by jpd80

[akirby]

There is enough demand for the current Ford EVs and the ones currently in development to support a new division and new dealer investments.  Most of this is a one time investment so adding more vehicles later should not require big additional investments.

 

Ford is in a good place having strong ICE vehicles providing great profits plus very desirable BEVs available now plus BOC and future vehicles already in the pipeline.  I think they’ll be able to straddle both as the market evolves.

[7Mary3]

Interesting comments by Farley.  I suspect a lot of this was intented to placate dealers after the recent meeting, particularly those dealers unwilling or unable to sign up for 'Ford E' at the present time.  Also likely a nod to the hard core ICE buyer as well.  This is a good strategy for the short term as ICE sales will remain strong for some time, but I believe Farley knows that the future very much will be 'monolithic' as he states for BEV's.  It is pretty apparent that the new Mustang (an update of the current platform, not an all new vehicle) will likely be the last generation of ICE Mustang and the ICE light truck products will soldier on with periodic updates but a minimum of investment. 

 

  https://www.foxbusiness.com/lifestyle/ford-ceo-farley-all-electric-gm

[akirby]

He’s not placating anybody - that’s been the strategy from day one and it’s the right one given their market position.

[rperez817]

On 9/16/2022 at 7:11 PM, jpd80 said:

Behind the current thinking from Ford is Jim Farley’s belief that the switch to BEVs is going quicker than everyone expects. Now whether this is true or not or whether Ford is being swept up in its own self belief is something that only time will tell.

 

Farley's thinking that "the switch to BEVs is going quicker than everyone expects" is correct. Professor Enrique Dans wrote an article in Forbes about 20 months ago about the inflection point for mass adoption of BEV occurring in 2021 (which it did). The Five Factors Driving The Mass Adoption Of Electric Vehicles (forbes.com)

 

Everything indicates that we have reached the tipping point, that 2021 will mark the beginning of mass adoption, and that the internal combustion engine will have seen its day.

 

At this stage in the game, as deadlines on their sale and restrictions on their movement loom, along with higher fuel prices and taxes, buying a petrol or diesel vehicle makes no sense and so more and more brands are reducing the presence of these vehicles in their range. Simply put, an obsolete technology is now being abandoned, a process that points to a healthier, brighter future for all.

[jpd80]

13 hours ago, rperez817 said:

 

Farley's thinking that "the switch to BEVs is going quicker than everyone expects" is correct. Professor Enrique Dans wrote an article in Forbes about 20 months ago about the inflection point for mass adoption of BEV occurring in 2021 (which it did). The Five Factors Driving The Mass Adoption Of Electric Vehicles (forbes.com)

 

Anyone who has followed for for any decent amount of time will know they have a habit of trying to see things in all or nothing terms. In 2001, Bill Ford predicted that by 2006, 25% of all vehicles would be hybrids. Five years later, Mulally was preparing for the permanent demise of F Series and Full Sized SUVs, the future was all about small efficient vehicles, three years later Ford’s cash cows were back bigger than ever.

 

While causations optimism is there for BEVs, I don’t think that Ford should be racing like lunatics to embrace everything BEV at the cost of nailing the ICE coffin shut, it’s stupid and short sighted. Most of the Ford suits have this delusional idea that in five years, BEVs will be self sufficient and they can start winding down ICEs……I beg to differ, it’s not a foregone conclusion that everyone is going to jump to Ford’s super expensive BEVs (they wish). One big economic downturn and Ford’s plans will be in the toilet, where does that leave its dealers?

Edited September 19, 2022 by jpd80

[silvrsvt]

12 hours ago, jpd80 said:

While causations optimism is there for BEVs, I don’t think that Ford should be racing like lunatics to embrace everything BEV at the cost of nailing the ICE coffin shut, it’s stupid and short sighted. Most of the Ford suits have this delusional idea that in five years, BEVs will be self sufficient and they can start winding down ICEs……I beg to differ, it’s not a foregone conclusion that everyone is going to jump to Ford’s super expensive BEVs (they wish). One big economic downturn and Ford’s plans will be in the toilet, where does that leave its dealers?

 

But we've been in a huge economic downturn for the past two years due to COVID/Supply Chain issues etc when it comes to the auto industry.  

If Ford can sell less cars that are more expensive with no or next to no incentives, I don't think it will be too much of an issue going on what has happened over the past two years.

The real issue is what happens when supply catches up to demand? Demand for cars is going to be high for the next few years. Shortages of used cars due to lower sales and increased age of cars (just over 12 years old now) is going to drive prices up. Its going to cost more because of trade ins needing to offset higher MSRPs.

Used cars have been going up in price since cash for clunkers happened and that put a major hole into the used car market, what 15 years ago? Manufactures are doing better about not over producing products and not flooding the used car market-I remember when I first started driving a decent used car was about 1500 or so about 30 years ago. Now that same car is 2-3x that cost. 
 

[Champs]

9 hours ago, silvrsvt said:

 

But we've been in a huge economic downturn for the past two years due to COVID/Supply Chain issues etc when it comes to the auto industry.  

COVID had nothing to do with anything. It was tyrannical behavior by multiple governments in multiple jurisdictions. A virus with a tiny mortality rate was used to create fear and confusion. The virus is easily dealt with - but instead tyrannical measures, fake tests, and misconstrued statistics were used to justify tyrannical policies that have no medical or constitutional basis. As a medical doctor, I can tell you COVID was never the problem.

 

[jpd80]

10 hours ago, silvrsvt said:

 

But we've been in a huge economic downturn for the past two years due to COVID/Supply Chain issues etc when it comes to the auto industry.  

If Ford can sell less cars that are more expensive with no or next to no incentives, I don't think it will be too much of an issue going on what has happened over the past two years.

The real issue is what happens when supply catches up to demand? Demand for cars is going to be high for the next few years. Shortages of used cars due to lower sales and increased age of cars (just over 12 years old now) is going to drive prices up. Its going to cost more because of trade ins needing to offset higher MSRPs.

Used cars have been going up in price since cash for clunkers happened and that put a major hole into the used car market, what 15 years ago? Manufactures are doing better about not over producing products and not flooding the used car market-I remember when I first started driving a decent used car was about 1500 or so about 30 years ago. Now that same car is 2-3x that cost. 
 

OK first off we all agree that Ford and other manufacturers are nowhere near producing  the volumes of vehicles it would like to, even with the new discovered benefits of low inventory that drives mostly customer orders. Ideally, Ford would love to produce 40% or 50% more vehicles and see them all sold at near MSRP - the days of over production pushing cash incentives are gone and probably never coming back.

 

So what happens when supply chains catch up? probably a modest increase in production volumes but now that Ford and other manufacturers have seen how buyers react when everyone dries up the supply of “easy cars”, low or no profit vehicles that sell in volume more or less as dealer ship service fillers. It’s like auto companies know that BEVs are going to kill dealers because of low/no servicing. So my take is that the current conditions are going to hang around like fog for the next couple of years and make all this haste to race to BEVs and sign up dealerships a lot of nonsense about nothing…..Ford has to show it can get high volume with BEVs and again, that’s all ties to chips supply and other supplier components. Ford in particular is very cart before the horse at the moment….

 

 

[rperez817]

2 hours ago, jpd80 said:

all this haste to race to BEVs and sign up dealerships a lot of nonsense about nothing

 

Superficially it may seem like haste. But what's actually happening nowadays is a corrective action for Ford's and Ford franchised dealers' past mistakes when they didn't take BEV seriously. There's no time to waste amid the ongoing automotive industry revolution. Fortunately, Jim Farley understands that and hopefully communicated the appropriate message during the dealer meet in Las Vegas.

[jpd80]

40 minutes ago, rperez817 said:

 

Superficially it may seem like haste. But what's actually happening nowadays is a corrective action for Ford's and Ford franchised dealers' past mistakes when they didn't take BEV seriously. There's no time to waste amid the ongoing automotive industry revolution. Fortunately, Jim Farley understands that and hopefully communicated the appropriate message during the dealer meet in Las Vegas.

This is classic overcompensation, Ford tardy with EVs, fires the CEO for dragging his heals, the next guy in flitters around with mobility supports EV only doesn’t think battery supply is something to worrry about….in comes Farley to fix the mess, they have EVs but nowher near the battery supply required and orders up the Cazoo but only because everything was slow to begin with….

 

Ford is now breathing it’s own farts and thinking that massive BEV truck switch is coming, at the same time doing level best to piss off the very dealers he needs to push sell all those ICE trucks that pay for everything……..tell me that’s not betting the farm

[silvrsvt]

9 hours ago, jpd80 said:

Ford is now breathing it’s own farts and thinking that massive BEV truck switch is coming, at the same time doing level best to piss off the very dealers he needs to push sell all those ICE trucks that pay for everything……..tell me that’s not betting the farm

Well wasn’t it posted here that dealerships can wait till 2027 for the next round of converting over or adding BEVs to their dealerships?

 

I can see some dealerships waiting, but in other areas like California or other areas that are more urban moving to the BEV dealership sooner then later. When I see my sales guy I’ll ask him if he knows what they are planning on doing. 

[rperez817]

3 hours ago, silvrsvt said:

Well wasn’t it posted here that dealerships can wait till 2027 for the next round of converting over or adding BEVs to their dealerships?

 

They can wait until 2025 in order to achieve certifications needed to sell Ford BEV starting in 2027. Here is a summary of the rules from Inside EV. Ford Gives Dealers Six Weeks To Decide If They Want To Continue Selling EVs (insideevs.com)

 

Ford dealers must choose 1 of these 3 options by October 31, 2022.

• Become a Model e Certified Elite dealership with minimum of two high-powered DC fast chargers and a level 2 charging station, as well as offer at least one DC fast charger available for the public to use.
• Become a Model e Certified dealership with minimum of one DC fast charger, and it must be made available for public use. Dealers in this category will have a hard cap on the number of BEV they are allowed to sell.
• Discontinue selling Model e vehicles effective January 1st, 2024

If the last option is chosen, the dealership will have the opportunity to inform Ford of their intention to revisit Model e certification in the 2025 timeframe. If the certification is successful at that time, the dealer can sell Ford BEV starting in 2027.