Shulou(Shulou.com)11/24 Report--

Start the hybrid model.

Author | Wang Lei, Cao Tingting

Car companies have been electrified for a hundred years.

Ford has just given a figure that the electric vehicle business will lose 4.5 billion US dollars, or 32.1 billion yuan, this year. Not only is it much higher than the previous estimate of $3 billion, but it is also more than double last year's loss of $2.1 billion.

Ford Model E, the electric vehicle division of the US auto giant, has lost $1.8 billion so far this year, and the loss will expand visibly in the second half of the year.

What is the concept of losing 32.1 billion a year?

Let's take Wei Xiaoli as a comparison. Wei, who has always attached great importance to investment and service, suffered a net loss of 14.4371 billion last year, an increase of 259.4% over the previous year, while Xiaopeng lost 9.14 billion last year, with even less ideals, with a loss of only 2.03 billion.

It is indeed very difficult for traditional car companies to be electrified, but I did not expect that the cost will be so high. And not long ago, Ford China was exposed to lay off more than 1000 people.

A loss of 270000 on the sale of a streetcar the tram has become a drag in all Ford's businesses.

Because apart from the tram business, all other businesses are excellent. In the second quarter, Ford's total revenue reached $45 billion, up 12% from $40.2 billion in the second quarter of last year. Net profit also increased to $1.9 billion, with a profit margin of 4%, almost triple that of the same period last year. Adjusted earnings before interest and tax reached $3.8 billion.

Source: Ford maintained its growth momentum in the first half of 2023, with total revenue up 16% year-on-year to $86.4 billion, adjusted profit before interest and tax of $7.2 billion, up 20% year-on-year, and net profit of $3.7 billion, compared with a loss of $2.4 billion in the same period last year.

And Ford's total sales grew by more than 11%, once again becoming the quarterly leader in brand sales in the United States and the best-selling car brand in the United States in the first half of 2023.

Ford also raised its 2023 guidance based on its first-half results, raising its full-year profit forecast to $11 billion and $12 billion, up from $9 billion to $11 billion, and adjusted free cash flow to between $6.5 billion and $7 billion, up from $6 billion.

The traditional fuel car business remains Ford's absolute engine, contributing more than 60% of EBIT. In the second quarter, Ford Blue (fuel vehicles division) had revenue of $25 billion, up 5% from a year earlier, while Ford Pro (commercial vehicle division) had total revenue of $15.6 billion, up 22% from a year earlier.

Source: Ford's electric vehicles division (Model E) had revenue of only $1.8 billion in the same period, up nearly 40% from a year earlier, but an operating loss of $1.08 billion and an operating profit margin of-58.9%.

So the excellent performance of fuel-fueled cars completely masked the losses of the electric car business.

And Ford estimates that the electric vehicle business will lose $4.5 billion this year, 50 per cent higher than previously forecast, due to a changing pricing environment, new investment and other costs. Ford CEO Jim Farley admits that the popularity of electric vehicles is slower than expected.

For the whole of the first half of the year, Ford Model E sold 47000 vehicles worldwide, generating only $2.5 billion in revenue. Coupled with investment and other costs in new models and capacity of electric vehicles, Ford's electric vehicle business lost $1.8 billion in the first half, which means Ford lost $38000 (about 270000 yuan) per electric car sold.

Source: Ford and China as the "battleground" of the automobile industry, Ford's domestic performance is enough to see the difficulty of Ford's streetcar business.

According to the latest retail data from the Federation of passengers, in the first half of 2023, Ford Electric Horse sold 3 vehicles, 84,283,332,249,231 vehicles respectively, with a cumulative sales of only 1182 vehicles. And this is after Ford Electric Horse has followed up the domestic price war one after another, after two sharp price cuts.

In 2022, Ford's annual Mach-E sales in China were only 4860, less than 1/8 of those sold in the United States, and even less than the monthly sales of a group of new power automakers in the country.

02. Layoffs, change of leadership, mixed efforts in order to complete the electrified transformation, Ford is also actively saving itself.

In January this year, it was very difficult due to the tremendous pressure in the global market, especially in the Chinese market. So Ford chose to cut about 3200 jobs in Europe, including more than 2500 product development jobs and as many as 700 executive positions.

In order to maintain the competitiveness of the electric car market, Ford said it will continue to cut jobs in Europe, planning to cut 3800 jobs in three years.

Source: Ford

Not only in Europe, but in early May this year, it was reported that Ford will also carry out a round of layoffs in China, mainly from Ford China and Ford Nanjing R & D centers, with a total of more than 1300 people, while Changan Ford will lay off about 3000 people. this is also part of Ford's "slimming plan".

In response to the news, Ford China later responded that Ford was planning to build a more streamlined and flexible organizational structure to "devote resources to our core business where we have an advantage and strive to achieve our business goals in China."

Ford CEO Jim Farley said in an interview with the media that he would not withdraw from the Chinese market like other companies. In other words, Ford's challenge in the Chinese market has only just begun.

Source: in 2022, Ford sold 496000 vehicles in China, down 33.5% from the same period last year, and its market share was further squeezed to 2.1%. At the same time, Changan Ford and Jiangling Ford also declined compared with the same period last year, and the impact of poor electrification transformation continues to be magnified. Ford sells less than 5000 electric cars a year.

In an effort to boost sales, Ford China announced last September that it would operate its electric vehicle business in China through independent company Ford Electric Mach Technology.

Not only did Ford invest in business, but at the same time, Ford also carried out a senior change of blood. On February 24 this year, Ford China announced that Chen Anning, president and chief executive officer of Ford China, had decided to retire. Wu Shengbo, current managing director and chief operating officer of Ford China, officially took over as president and chief executive officer of Ford China from March 1, and reported directly to Jim ∙ Farley.

Earlier, in July last year, Ford achieved a series of strategic cooperation to ensure the production capacity of power batteries and the supply of raw materials, and expected to achieve its production target of 600000 electric vehicles by the end of 2023. and to complete the fixed work of matching power batteries for 70 per cent of the capacity target of 2 million electric vehicles in 2026.

Ford also said it would spend more than $30 billion on electrification, including battery development, by the end of 2025.

Obviously, Ford began to do its best to make money in the electric car market. But at the beginning of the business, losses are still hard to avoid.

Or in order to accelerate profitability, Ford began to work in the hybrid market. At the scene of its second-quarter earnings report, Ford revealed that more than 10% of Fmur150 pickup truck customers chose hybrid models, and that proportion was increasing.

Source: Ford also offers a hybrid version of a small Maverick pickup, which is more successful, with more than half of Maverick buyers opting for a $1500 optional hybrid system over a standard four-cylinder engine.

In order to meet the demand, Ford said it will launch more types of hybrid models in the future.

03. Building trams is not so easy to burn money, unable to make ends meet, and the supply chain is tight. Traditional car companies have not been left behind by these new forces.

Ford is not the only one to encounter obstacles in the electrified market. Japanese, Korean and German cars, which were all popular in the market in the early years, have all lagged behind in the electrified transformation, which has also led to a continuous squeeze of market share.

Source: the most intuitive example of Ford is Toyota, where all Toyota executives bombard electric cars, but the team is still rolling in battery life, and recently announced significant progress in solid-state batteries, charging in less than 10 minutes, with a range of 1200 kilometers.

The era of electric cars has come, and even if Toyota talks harder, the fact is that as long as it is one step behind, it will be squeezed out of this track.

A few days ago, Volkswagen Group holding hands with Xiaopeng Motor was called a historic moment, when a traditional foreign car giant and a nine-year-old Chinese new power came together under the impetus of the times.

In this cooperation, Xiaopeng is responsible for the development of vehicle platform and intelligent cockpit and intelligent driving system. Volkswagen provides the world's leading engineering and supply chain capabilities.

Obviously, the German car giant has taken a fancy to Xiaopeng's autopilot research and development capability. While successfully holding hands with Xiaopeng, Volkswagen also held hands with SAIC.

Source: Volkswagen's elephant is difficult to turn around, the ship is difficult to turn around, and the poor performance of Ford's electric vehicle division is also a microcosm of the transformation of the traditional car giants.

These century-old car companies, why do they all fail in electric cars?

From the perspective of the supply chain, these traditional giants have already reduced the cost of each supply chain to the extreme after decades or even hundreds of years of operation, and there is no doubt that the profit is the most lucrative in this state.

However, under the threat of the wave of new energy, the giants are bound to reopen the production line of new energy models, which will not only reduce the production capacity of fuel vehicles, but also have to rearrange the entire supply chain. This makes it difficult for these traditional giants to face a new ecology in which they have not yet established bargaining power.

In addition, after decades of accumulation, traditional corporate thinking and rigid internal mechanisms have also become constraints on these giants.

These giants have also thought of grafting their advantages in traditional fuel vehicles to new energy vehicles, that is, changing fuel to electricity, but in the face of a large number of new forces that are almost full in "innovation", these models are uncompetitive, and consumers naturally will not pay the bill.

New energy vehicles can not be broken, the Nokia moment of the automotive industry has come.

This article is from the official account of Wechat: Superelectricity Lab (ID:SuperEV-Lab), by Wang Lei and Cao Tingting.

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