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Model S sales - allegedly down on April 2017. Has America fallen out of love with the sedan? Even the Tesla version? Ford announced they are not going to be s

Model S sales - allegedly down on April 2017. Has America fallen out of love with the sedan? Even the Tesla version? Ford announced they are not going to be selling sedans in America, Mustang excepted. GM are ditching the Bolt (or Volt?) and FCA aren't making a lot of regular cars in the USA. From now on monster SUVs powered by oil is what the future is in America, thanks to fracking and easy credit. Can't wait for the invasion of affordable Chinese electric cars.

Robotbeat 9y ago
This is one thing that is strongly in Tesla's favor. A pivot to SUVs and trucks has essentially zero geopolitical/oilprice risk, unlike every other domestic automobile maker which is gambling big time that gas prices don't continue to increase. I'm not sure Ford (focusing nearly exclusively on trucks) could survive a sustained $4/gallon gas price again, let alone whatever the gas price would be if the "$300 per barrel" scenario [0] happened (even for just a few months). Gas prices are about $1/gallon higher than they were when the Model 3 was unveiled and Tesla got a huge backlog of orders. That's about $5000 in additional gas savings over the life of the vehicle (some of that in the form of residual used value). OPEC is still cutting back, and they want oil at about $80/barrel, up from the current ~$65. Gas prices arguably still haven't reached equilibrium for the current price of oil, and continued under-investment in oil capacity during the last slump could lead to significantly higher oil prices going forward, particularly if the global economy stays fairly strong. This is incredibly good for Tesla. So I think Tesla has more going for it than a lot of people give credit. Theoretically, other car makers could've switched to electric tech, too (it's fairly simple, although it takes investment), but just about the only car makers who are TRULY serious about it (versus talking about it) are in China. Certainly when compared to other domestic car makers. [0] http://www.businessinsider.com/300-oil-is-not-impossible-says-oil-hedge-fund-manager-2018-4?r=UK&IR=T http://www.businessinsider.com/300-oil-is-not-impossible-say...
- ghazak 9y ago
  Aren’t electric vehicles more at risk of the reverse, ie. a big decline in gasoline prices? They’re more costly so users usually hope to make some of it back due to lower operating costs. It’s not a huge risk though.
  - adventured 9y ago
    The US has a radical cost difference in gasoline prices vs most of world. Some reference per gallon prices right now: China $4.41, India $4.47, Japan $4.93, S.Korea $5.46, Spain $5.90, Germany $6.45, UK $6.59, Finland $6.83, France $6.99, Denmark $7.22, Italy $7.29, Netherlands $7.48 The US by contrast is at $2.99. The US is now exporting immense amounts of oil and that is set to grow by a lot in the coming years. That hasn't occurred since the export law restrictions in 1975. The US is heading to 2 million plus barrels per day of exports this year. Chart: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCREXUS2&f=M https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=M... More likely the price of US gasoline will continue to drift slightly higher toward the rest of the world, as the exports bring the US closer to a normalization with everyone else (emphasis on closer). Those exports are seeking higher prices internationally, which will result in at least somewhat higher domestic prices (dramatically less domestic captive supply). Further, the dollar is on a longer term trajectory down, due to the vast US budget deficits that are set to continue perpetually. That will push up the price of commodities priced in dollars, ie oil, which will also push up domestic gasoline prices as a consequence. Tesla is going to sell a lot of cars as domestic gasoline prices gradually head toward $5 as a normal level (combination of less captive oil supply, and a perpetually eroding dollar value base).
    - dx034 9y ago
      > More likely the price of US gasoline will continue to drift slightly higher toward the rest of the world, as the exports bring the US closer to a normalization with everyone else (emphasis on closer). Those exports are seeking higher prices internationally, which will result in at least somewhat higher domestic prices (dramatically less domestic captive supply). Crude oil prices are not that dissimilar, European Crude Oil trades only $5/barrel more than WTI (US Oklahoma) Oil. The main reason for the huge difference in prices is taxes. The US has hardly any tax on gasoline whereas in many European countries, taxes make up 60-80% of the fuel price (fuel taxes plus VAT). If you strip out taxes, gasoline in Europe isn't much more expensive than it is in the US. That's also why gasoline prices in the US react sharply in the US if crude oil prices fluctuate whereas in Europe, they usually don't move by more than 10-20%.
- cityofdelusion 9y ago
  I don't feel like the risk is very high for Ford. The Ford Edge CUV gets 21/29 mpg. It isn't like in 2008 where a Ford Excursion got maybe 12 mpg. Giant SUVs just don't sell these days. Another factor is that Ford will continue to produce stuff like the Fiesta and Focus in Europe. If gas prices start climbing, they should be able to retool some factories and pivot back. GM's CEO Mary Barra also just announced they are still committed to sedans and more efficient vehicles. They don't have much choice in the matter if I recall correctly due to the terms of their re-org / bailout. I've no idea what Fiat-Chrysler is doing, as they seem to only produce gas guzzlers. They seem to have no plans whatsoever to produce a normal vehicle and just keep adding variants of models subject to the EPA gas-guzzler tax.
plaidfuji 9y ago
This was essentially what happened in late 90s/early 00's, and the subsequent rise in oil prices and '08 recession led to the bankruptcy of American auto companies that had stopped producing fuel efficient cars. The taxpayer-funded bailout included a stipulation that increased their fuel economy standards; that part of the deal is now being reversed by the current administration.
- adam 9y ago
  Thanks for commenting about this - I don't understand why there isn't more commentary about Ford deciding to drop sedans. It seems like someone is way way behind on the forecasting game. Just as oil prices are going back up and the demand for fuel efficient vehicles will increase, they're doubling down on...gas guzzlers.
  - cityofdelusion 9y ago
    Crossover vehicles (misleading labeled as "SUVs" by the industry) have largely replaced sedans in the last few years. Think vehicles like the Nissan Rogue, Ford Edge or Honda CR-V. These vehicles are essentially lifted sedans or hatchbacks with a slightly taller body. They have nearly identical combined fuel efficiency compared to economy sedans. I don't think there is much risk in the industry. Sales of full-size SUVs of yore (the gas guzzling V8s based on full-size trucks) are down, people want the newer, smaller, lighter 4-cylinder crossover and it will end the sedan era. Ford isn't alone here either -- every manufacturer is pumping out models of crossovers based on sedans. Sedans are either pivoting into territory that sportier cars used to occupy (Toyota Camry) or morphing into entry luxury vehicles (Honda Accord). Even with this pivoting, year-over-year sales of cars like the Nissan Altima and Honda Accord are significantly down. Real example: Mazda 3 sedan vs Mazda CX-5 crossover SUV. They use the exact same 4 cylinder engine pushing 155 horses. The sedan gets 30/41 mpg and the crossover 26/35. People aren't going to give up their higher ride height and comfy seats for 5 mpg. Another example to consider is that sales of crossovers are way up in europe, despite having gas that costs nearly double that of the United States. Ford is making a logical move. Their 4 cylinder ecoboost engines are efficient and they want to introduce hybrid drivetrains, even on their muscle car.
danans 9y ago
> GM are ditching the Bolt (or Volt?) The Volt PHEV might be discontinued in 2020 but that makes sense if increasing battery capacity makes PHEVs moot. They are a bridge technology. GM is supposedly planning to increase production of the pure Electric Bolt: https://www.reuters.com/article/us-gm-autos/gm-plans-to-expand-bolt-ev-output-asks-congress-to-help-idUSKCN1GJ2WP https://www.reuters.com/article/us-gm-autos/gm-plans-to-expa...
- Retric 9y ago
  PHEVs seems like a great option the issue is their electric range is not enough. Someone that commutes say 60 miles each way or 120 miles a day might as well get a hybrid as they don't really gain much from that extra battery. Push the range in the 100-150 mile range and people would see more significant cost savings. Another option might be to add some solar panels. If you get say 6m^2 * 22% efficiency * ~7.5 hours per day that's ~10kwh for free each day or around 30 miles. Not really a major savings, but would make a smaller battery seem more useful. PS: I suspect the downside is the IC engine really needs to run fairly regularly or you have issues.
  - Robotbeat 9y ago
    That's not really representative of the majority of commuters. I have a Volt, and the range is definitely enough. I can commute twice round-trip on a single charge. I do about 90% of miles electric, so I'm working that extra battery very hard. And it makes a very good hybrid on road trips. The engine doesn't have to run very often, maybe 30 seconds every month or two, which normally happens on long trips anyway.
    - Retric 9y ago
      My commute is under 5 miles so I could defiantly use a Volt both ways. However, due to that short commute the cost savings would fail to offset the added costs. Which is my point, they don't really provide significant savings over a hybrid if you drive a lot. And if you don't drive much then owning just about anything works fine. Sure, for people that have a short commute but take long weekend trips it's a net gain. However, I suspect that's a relatively small segment.

Robotbeat 9y ago

This is one thing that is strongly in Tesla's favor. A pivot to SUVs and trucks has essentially zero geopolitical/oilprice risk, unlike every other domestic automobile maker which is gambling big time that gas prices don't continue to increase. I'm not sure Ford (focusing nearly exclusively on trucks) could survive a sustained $4/gallon gas price again, let alone whatever the gas price would be if the "$300 per barrel" scenario [0] happened (even for just a few months). Gas prices are about $1/gallon higher than they were when the Model 3 was unveiled and Tesla got a huge backlog of orders. That's about $5000 in additional gas savings over the life of the vehicle (some of that in the form of residual used value). OPEC is still cutting back, and they want oil at about $80/barrel, up from the current ~$65. Gas prices arguably still haven't reached equilibrium for the current price of oil, and continued under-investment in oil capacity during the last slump could lead to significantly higher oil prices going forward, particularly if the global economy stays fairly strong. This is incredibly good for Tesla. So I think Tesla has more going for it than a lot of people give credit. Theoretically, other car makers could've switched to electric tech, too (it's fairly simple, although it takes investment), but just about the only car makers who are TRULY serious about it (versus talking about it) are in China. Certainly when compared to other domestic car makers. [0] http://www.businessinsider.com/300-oil-is-not-impossible-says-oil-hedge-fund-manager-2018-4?r=UK&IR=T http://www.businessinsider.com/300-oil-is-not-impossible-say...

ghazak 9y ago
Aren’t electric vehicles more at risk of the reverse, ie. a big decline in gasoline prices? They’re more costly so users usually hope to make some of it back due to lower operating costs. It’s not a huge risk though.
- adventured 9y ago
  The US has a radical cost difference in gasoline prices vs most of world. Some reference per gallon prices right now: China $4.41, India $4.47, Japan $4.93, S.Korea $5.46, Spain $5.90, Germany $6.45, UK $6.59, Finland $6.83, France $6.99, Denmark $7.22, Italy $7.29, Netherlands $7.48 The US by contrast is at $2.99. The US is now exporting immense amounts of oil and that is set to grow by a lot in the coming years. That hasn't occurred since the export law restrictions in 1975. The US is heading to 2 million plus barrels per day of exports this year. Chart: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCREXUS2&f=M https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=M... More likely the price of US gasoline will continue to drift slightly higher toward the rest of the world, as the exports bring the US closer to a normalization with everyone else (emphasis on closer). Those exports are seeking higher prices internationally, which will result in at least somewhat higher domestic prices (dramatically less domestic captive supply). Further, the dollar is on a longer term trajectory down, due to the vast US budget deficits that are set to continue perpetually. That will push up the price of commodities priced in dollars, ie oil, which will also push up domestic gasoline prices as a consequence. Tesla is going to sell a lot of cars as domestic gasoline prices gradually head toward $5 as a normal level (combination of less captive oil supply, and a perpetually eroding dollar value base).
  - dx034 9y ago
    > More likely the price of US gasoline will continue to drift slightly higher toward the rest of the world, as the exports bring the US closer to a normalization with everyone else (emphasis on closer). Those exports are seeking higher prices internationally, which will result in at least somewhat higher domestic prices (dramatically less domestic captive supply). Crude oil prices are not that dissimilar, European Crude Oil trades only $5/barrel more than WTI (US Oklahoma) Oil. The main reason for the huge difference in prices is taxes. The US has hardly any tax on gasoline whereas in many European countries, taxes make up 60-80% of the fuel price (fuel taxes plus VAT). If you strip out taxes, gasoline in Europe isn't much more expensive than it is in the US. That's also why gasoline prices in the US react sharply in the US if crude oil prices fluctuate whereas in Europe, they usually don't move by more than 10-20%.
cityofdelusion 9y ago
I don't feel like the risk is very high for Ford. The Ford Edge CUV gets 21/29 mpg. It isn't like in 2008 where a Ford Excursion got maybe 12 mpg. Giant SUVs just don't sell these days. Another factor is that Ford will continue to produce stuff like the Fiesta and Focus in Europe. If gas prices start climbing, they should be able to retool some factories and pivot back. GM's CEO Mary Barra also just announced they are still committed to sedans and more efficient vehicles. They don't have much choice in the matter if I recall correctly due to the terms of their re-org / bailout. I've no idea what Fiat-Chrysler is doing, as they seem to only produce gas guzzlers. They seem to have no plans whatsoever to produce a normal vehicle and just keep adding variants of models subject to the EPA gas-guzzler tax.

plaidfuji 9y ago

This was essentially what happened in late 90s/early 00's, and the subsequent rise in oil prices and '08 recession led to the bankruptcy of American auto companies that had stopped producing fuel efficient cars. The taxpayer-funded bailout included a stipulation that increased their fuel economy standards; that part of the deal is now being reversed by the current administration.

adam 9y ago
Thanks for commenting about this - I don't understand why there isn't more commentary about Ford deciding to drop sedans. It seems like someone is way way behind on the forecasting game. Just as oil prices are going back up and the demand for fuel efficient vehicles will increase, they're doubling down on...gas guzzlers.
- cityofdelusion 9y ago
  Crossover vehicles (misleading labeled as "SUVs" by the industry) have largely replaced sedans in the last few years. Think vehicles like the Nissan Rogue, Ford Edge or Honda CR-V. These vehicles are essentially lifted sedans or hatchbacks with a slightly taller body. They have nearly identical combined fuel efficiency compared to economy sedans. I don't think there is much risk in the industry. Sales of full-size SUVs of yore (the gas guzzling V8s based on full-size trucks) are down, people want the newer, smaller, lighter 4-cylinder crossover and it will end the sedan era. Ford isn't alone here either -- every manufacturer is pumping out models of crossovers based on sedans. Sedans are either pivoting into territory that sportier cars used to occupy (Toyota Camry) or morphing into entry luxury vehicles (Honda Accord). Even with this pivoting, year-over-year sales of cars like the Nissan Altima and Honda Accord are significantly down. Real example: Mazda 3 sedan vs Mazda CX-5 crossover SUV. They use the exact same 4 cylinder engine pushing 155 horses. The sedan gets 30/41 mpg and the crossover 26/35. People aren't going to give up their higher ride height and comfy seats for 5 mpg. Another example to consider is that sales of crossovers are way up in europe, despite having gas that costs nearly double that of the United States. Ford is making a logical move. Their 4 cylinder ecoboost engines are efficient and they want to introduce hybrid drivetrains, even on their muscle car.

danans 9y ago

> GM are ditching the Bolt (or Volt?) The Volt PHEV might be discontinued in 2020 but that makes sense if increasing battery capacity makes PHEVs moot. They are a bridge technology. GM is supposedly planning to increase production of the pure Electric Bolt: https://www.reuters.com/article/us-gm-autos/gm-plans-to-expand-bolt-ev-output-asks-congress-to-help-idUSKCN1GJ2WP https://www.reuters.com/article/us-gm-autos/gm-plans-to-expa...

Retric 9y ago
PHEVs seems like a great option the issue is their electric range is not enough. Someone that commutes say 60 miles each way or 120 miles a day might as well get a hybrid as they don't really gain much from that extra battery. Push the range in the 100-150 mile range and people would see more significant cost savings. Another option might be to add some solar panels. If you get say 6m^2 * 22% efficiency * ~7.5 hours per day that's ~10kwh for free each day or around 30 miles. Not really a major savings, but would make a smaller battery seem more useful. PS: I suspect the downside is the IC engine really needs to run fairly regularly or you have issues.
- Robotbeat 9y ago
  That's not really representative of the majority of commuters. I have a Volt, and the range is definitely enough. I can commute twice round-trip on a single charge. I do about 90% of miles electric, so I'm working that extra battery very hard. And it makes a very good hybrid on road trips. The engine doesn't have to run very often, maybe 30 seconds every month or two, which normally happens on long trips anyway.
  - Retric 9y ago
    My commute is under 5 miles so I could defiantly use a Volt both ways. However, due to that short commute the cost savings would fail to offset the added costs. Which is my point, they don't really provide significant savings over a hybrid if you drive a lot. And if you don't drive much then owning just about anything works fine. Sure, for people that have a short commute but take long weekend trips it's a net gain. However, I suspect that's a relatively small segment.