$3 Billion and Counting

Guest Post by Eric Peters

It used to be – how much money can we make? It is now how much money can we lose? At least, that appears to be the reasoning behind “electrification” – the neutral-sounding term commonly used to describe the out-regulating of everything that moves that isn’t battery-powered – in favor of everything that is.

Practically every car company has bought in, as it were – and it is costing them, literally, billions.

Maybe, eventually, everything.

Ford just revealed it expects to lose $3 billion – so far – on “electrification.”

In saner times, the losing of $3 billion would be reason enough to pull the plug. But not when it comes to “electrification.” Ford said it expects to lose more billions – through at least 2026. And this provides the impetus to build two million more battery-powered money-losers by 2026.

Emphasis on “build.”

As opposed to sell.

More exactly, build and sell at a profit.

Aye, there’s the rub.

One can build as many of something as one likes, just the same as one can dig (and fill in) as many holes in the backyard as one likes. According to Marx, this is how “value” is created – as by labor. The flaw in Marx’s reasoning is that there may not be value to others in the labor. If Marx had been right then we could all get rich by digging holes in the backyard and filling them in again. Or by hopping up and down for eight hours every day. But we generally get poor – and tired – doing either because there are very few other people willing to give us money in exchange for our digging (and filling in) holes in the backyard or hpping up and down all day long.

Isn’t this what “electrification” amounts to? Just keep building them! Build more of them!

And yet, even with an unprecedented push – via regulations and subsidies – to “electrify” cars, only about 6 percent of all cars sold are battery-powered and that is probably at or very close to market saturation in that there are only so many people who can pay what it costs to buy an EV and the rest aren’t interested in paying for one.

Battery-powered vehicles are luxury-priced vehicles, which excludes people who are looking for economically priced vehicles – which constitutes the bulk of people in the market for a new vehicle. One of the most incandescently absurd propositions underlying “electrification” is that most people can afford to buy a battery-powered vehicle that has a luxury-vehicle price, with the idea that people who can afford to buy a luxury-priced vehicle are interested in a compromised vehicle being a very close second.

The rule has generally been that when you pay more you get more. But when it comes to battery-powered vehicles, you get more liabilities. Apologists can make all the excuses they can muster but the fact remains that buying an EV means buying into long waits before you can drive, alarming reductions in how far you’re able to drive depending on the weather and myriad related annoyances such as having to reduce the use of the heater in the cold and the AC when it’s hot in order to eke out a little more range in order to avoid another long wait in a possibly very inconvenient or very sketchy place.

How many people will willingly pay the $50,000-ish it costs to buy the typical EV in order to experience that when for the same or less money they can avoid all of that?

Well, ask Ford!

It has sold about 17,000 of the electrified version of the F-150 pick-up, a vehicle that Ford has otherwise had no trouble finding more than half-a-million buyers for during the same 12-month period. This indicates that the Lightning – the three-ton half-ton version of the F-150, on account of the batteries it packs rather than engine it lacks – is appealing to a very small percentage of buyers. Is it enough to justify continuing to build this vehicle?

Almost certainly not.

At least, not without adjusting the price of the thing to reflect what it costs to build the thing. Ford has in fact already done a little of that, increasing the Lightning’s price (as well as its other battery-powered vehicle, the “Mustang” Mach e) several times over the past 12 months such that it – the Lighting – is now about $15,000 more expensive to start than it was at the start.

But even that is probably not enough.

To make money on the Lightning – as opposed to losing it – Ford would probably have to ask at least $80,000 for it. The problem is that at that price, there would be very few takers, which has little to do with it being battery-powered, per se but a helluva lot to do with it being way beyond the means of probably 90 percent of the people buying cars.

And trucks, too.

You cannot make money building nothing but cars that 90 percent of the potential market cannot afford. Yet that is precisely what “electrification” amounts to and – as this column has observed previously – that appears to be the point. By getting the car companies to build cars 90 percent of the people cannot afford, you get 90 percent of the people out of cars.

Meanwhile, Ford’s chief financial officer, John Lawlor, says “electrification” will proceed, no matter what it costs. In the manner of digging even more holes in the backyard – and hoping someone finds value in it.

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The Central Scrutinizer
The Central Scrutinizer

‘…and the train rolled on past houses,farms and fields. Past the graveyards of the rusted automobiles.” – Arlo Guthrie Jr.

capn'Mike
capn'Mike

Ahem…Steve Goodman.

The Central Scrutinizer
The Central Scrutinizer

It’s Arlo’s name on the album cover. Pretty sure his family gets the royalty checks too, so not really sure what point you’re making here…but I’m certain you’ll enlighten us all.

Cedartown Mark

Artistic Hair, Steve Goodman. Great album from the early 80’s.

boron
boron

How many of these battery-powered vehicles are purchased by D.C. bureaucracies with your tax dollars?

Euddie
Euddie

It sounds like a plan to force all the worker bees onto public transit.

Instead of a 3 hour a day commute, it will take 6.
Political benefit?
An electorate too tired to protest.

Anonymous
Anonymous

15 minute shitties.

Anthony Aaron
Anthony Aaron

Here in our general neck of the woods the local transit folks are apparently spending upwards of $55 million to upgrade just one major thoroughfare’s bus lines … what with expensive, designer bus stops and fiber-optic this and that … and new buses … and the route is only 7.5 miles long … and the population of the entire county is only 190K …

Do the math … and imagine just who’s funding this nonsense via tax dollars from various agenda driven agencies (here’s looking at you, mayor Pete …).

Kebie
Kebie

We’ll look like Cuba some day. Nothing but old gas cars while the e cars are sold to the rich.

Anonymous
Anonymous

No way you as a peon will be allowed to keep your “old gas car”. They are already being banned from some cities. That trend will just increase until they are outright banned from the streets entirely. Well, except for our rulers and their limos and security service trucks.

Of course the rich will still have their classic cars and the money to run them on private circuits.

The rules will not apply to the 0.01%, just the 99.99%.

The Central Scrutinizer
The Central Scrutinizer

Fuck them. Hard right onto Fury Road …and floor that bitch! Put it in the firewall! I’m ready for The Apocalypse.

A cruel accountant
A cruel accountant

$3B of virtue signaling

Steve Z.
Steve Z.

Yeah, a losing proposition but who cares, just look at that ESG score climb. Woo-hoo!

The Central Scrutinizer
The Central Scrutinizer

That’s our target? “King of the Conformists”?

That’s one game I refuse to play!

Cedartown Mark

Commieformists, I think is the word.

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