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Ford To Stop Selling Every Car In North America But the Mustang, Focus Active (techcrunch.com)
An anonymous reader quotes a report from TechCrunch: Ford today announced it will phase out most cars it sells in North America. According to its latest financial release, the auto giant "will transition to two vehicles" -- the Mustang and an unannounced vehicle, the Focus Active, being the only traditional cars it sells in the region. Ford sees 90 percent of its North America portfolio in trucks, utilities and commercial vehicles. Citing a reduction in consumer demand and product profitability, Ford is in turn not investing in the next generation of sedans. The Taurus is no more. The press release also talks about a new type of vehicle, though it sounds like a crossover. This so-called white space vehicle will "combine the best attributes of cars and utilities, such as higher ride height, space and versatility." Currently, Ford sells six sedans and coupes in North America: the Fiesta, Focus, Fusion, C-Max, Mustang and Taurus. This lineup hits multiple segments, from the compact Fiesta to the mid-size Focus, C-Max and Fusion to the full-size Taurus. The Mustang stands alone as the lone coupe.
Ford currently sells five models of sedans: Taurus, Focus RS, Fiesta, Mustang, and Focus Active. They're phasing out the first three models over the next few years, to be replaced with all new electric and hybrid models. Still spending a bit to keep the other two in production for the foreseeable future though.
Mothers, pregnant, with children and elderly relatives. They don't have to crouch down to get into a car, limbo dance into the back seats through the narrow shaped gaps. Large flappy doors for two door cars (Peugeot) are another dislike. They are impossible to get out of in a supermarket car park. So sliding doors are preferred. Basically like having a personal Hackney cab. All the cars that people drive now seem to be either four wheel drive or something between an estate car and a van.
Vintage computer adverts: http://www.vintageadbrowser.com/computers-and-software-ads
Tesla makes plenty of money on the S and X. It's just that they are investing that money on bringing up the Model 3 and other projects.
That's not the case at all. Money for the Model 3 is coming from investors and loans.
According to their Q4 report, their gross profit is $438 million a quarter. Of that, $146 million goes towards paying interest on their loans. Another $1 billion goes to other expenses, including R&D, marketing and administrative. Notice how they're already $600 million the red before we even get to the $786 million in capital expenditures (aka. factory construction).
So they paying for all this with loans, which is not really sustainable.
To get in the black, they'll need a combination of several things:
- Drastically increase gross profit.
- Cut R&D, marketing and administrative spending.
- Reduce interest costs.
- Stop building new factories.
I personally don't think any of those are viable. Their margin is relatively high at 19% right now because they're selling luxury models. But the Model 3 will have a much lower margin, perhaps only 10% (which is what Ford is working with). Even if they can sell their target 5,000 Model 3's a week, we're still looking at only $200 million in additional gross profit for the quarter. The other $400 million loss will have to be made up with cost cuts.
Maybe they can kill R&D ($350 million) at the cost of future competitiveness, but marketing and administrative expenses can't be cut without affecting sales or production.
Not much can be done about interest costs, since it's the banks that set the rates. They also need the money right now, so paying the loans off is not an option.
As for capital expenditures, well, they're definitely not going to make enough sales to save them if they don't have factories for the production volume.
All in all a pretty bleak picture. But they have the backings of millions of fanboys and more importantly, investors, so they'll be ok until something bad happens to Musk. Even if they did get out of this hole though, I still don't see them turning into the next Apple or Amazon.
I think exception would be taken if I ran an extension cord from my second-story window into the parking lot and across to where I could actually park. I also suspect that my car would not remain plugged-in for as long as I might need.