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: 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: 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. “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. 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: 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. 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. 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: 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. 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.” 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:
Back To You
Support our mission of championing car culture by becoming an Official Autopian Member. “We have to consult after we decide our direction,” Mizuno said. “At this point, we are thinking about what is the beneficial point to the customer.” 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. 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.
- 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.
- 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.
- 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.
- Electric Ford GT for a halo-car. Target weight under 2,500 lbs.
- 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.
- 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.
- 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. 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. 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. Third, scrap semi-autonomous driving and giant screens until you’re making the chips in house, not talking about adaptive cruise, that’s decent stuff, but blue cruise can go. And if you’re not going to do over the air updates and run a high powered processor then don’t bother trying to be Tesla with a giant display, just a regular old 8 or 10 inch screen, have android auto and carplay and call it good, most people are using their phones now anyways. Fourth, bring back 90s side decals for the Maverick and Ranger!
