Ford Sales -- This Sure Doesn't Feel Like A Recession Despite Poor EV Results -- Sales Soaring -- June, 2023 And 2Q23

Locator: 45915AUTOS.  

EVs update.

****************************************
EVs Forecast

These were forecast by the company back in 2022:

• 2023:
• Tesla: 1.1 million EVs
• F: 500,000 EVs -- original estimate
  
• run rate
• F-150 Lightning: 150,000 annual run rate
• on track to triple production y/y
• sold 3,600 through February, 2023
• list price: $52K to $97K
  
• Mustang Mach-E: 210,000 annual run rate

 *********************************
Today's Reports

Link here.

Ford, June, 2023: link here:

But look at horrendous EV numbers for 2Q23, link here: 

Sales of Ford’s F-Series trucks jumped 34% during the second quarter compared with the prior year, including sales of an all-electric version of the F-150 that more than doubled to 4,466 units sold.

However, Ford’s EV sales during the quarter declined 2.8%, to 14,843 vehicles, as supplies of the Mach-E were short amid an overhaul of the factory that makes the EV.

Ford revamped that plant to increase production of the Mach-E during the quarter, part of a larger plan to significantly boost its electric vehicle production and turn a profit on its EV business by the end of 2026.

Ford’s electric vehicle sales remain small for now: EVs represented just 2.8% of the automaker’s total sales during the second quarter, while traditional internal combustion engines represented roughly 91% of sales. Hybrids represented 6.5% of sales.

******************************
My Takeaways Re: Auto Manufacturers

Comments (pertain to US, only):

• transition from "legacy" ICE to EV is going to be very, very, very expensive;
• we will very likely see change in leadership positions at some legacy auto makers as shareholders become more frustrated;
• there are three major groups of auto manufacturers
• pure play EVs from the very beginning, e.g.: Tesla, Rivian, Lordstown
• legacy auto makers transitioning to EVs, e.g.: Ford, GM, Stellantis
• niche, luxury automakers, doing what they want, e.g.: Rolls-Royce, maybe Porsche in this group

Among the second group, legacy auto makers transitioning to EVs (Ford, GM, Toyota), there are three sub-groups:

• CEO not sold on EVs, yet, e.g.: Toyota
• CEO reluctantly moving forward, e.g.: GM
• CEO going all in, e.g.: Ford

The second group (Ford, GM, Toyota):

• will cover costs to ramp up EVs by inflating prices of ICE vehicles (already occurring)
• GM will lose money hand-over-fist on ramping EVs, we won't know how bad it is; GM won't report
• Ford will also lose money hand-over-fist ramping EVs, but F will break out the details

The second group (Ford, GM, Stellantis):

• will give lip service to affordable EVs
• they can't make money on "Bolt-like" EVs
• they will gravitate to luxury EV brands
• consumers will "see" entry level EVs starting at $50,000 whether or not that's accurate
• tax incentives don't matter to most car buyers
• tax incentives favor the wealthy who would buy/not buy regardless of tax incentives
  

The second group (Toyota)

• hybrids (e.g., Prius): fake EVs; will be nothing more than a small niche
• will reluctantly move to EVs, mostly to meet California mandates -- otherwise they can't operate in that state

First movers, autos: Tesla

• other than Chinese no-names, Tesla could be "last-man" standing

EV niche:

• medium-haul trucks / urban delivery vans / urban fleet  >>> long-haul trucks >>>> luxury sedans / SUVs >>>>> non-luxury SUVs EVs >>> pick-up trucks >>> muscle cars
• best niche for EV trucks and vans
• medium haul
• east coast / west coast ports to neighboring warehouses / fulfillment centers
• urban / last mile delivery
  

India:

• my enthusiasm for India and four-wheel EVs has waned

US recession / EU recession:

• will further dampen enthusiasm for EVs

Ukraine Without The Wagner Group -- July 6, 2023

Locator: 45914UKRAINE.  

Link here.

Article from link above --

One of many replies to tweet above:

Obviously someone who never studied the Vietnam War.

Usually the Scots are smarter than this.

Sure Doesn't Feel Like A Recession -- And If We Were In A Recession Would GDP Be 2% -- And Would We Be Expecting A 50-BP Jump In The "Fed Rate"? -- July 6, 2023

Locator: 45913ECON.  

We're in a mild recession (Charlie Munger).

Link here.

FDA Approves Alzheimer's Medication; Energy Sector Dividends; High Interest Rates And Oil -- July 6, 2023

Locator: 45912MED.  

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Dividends

Link here.

********************
High Interest Rates --> Tailwind For WTI

Link here.

EIA Weekly Petroleum Report -- Numbers Are More Than Just A Passing Interest -- KODA Resources With Four New Permits -- July 6, 2023

Locator: 45911WTI.  

EIA weekly petroleum report: link here.

• US commercial crude oil in storage decreased by an unremarkable 1.5 million bbls; and, at 452.2 million bbls, US crude oil in storage is 1% below the five-year average;
• the five years go back to 2018, so at least two full years of that five-year average include the plague years;
• take a look at gasoline demand reported today; see below;
• crude oil imports his the 7-handle which is not often seen;
• refiners are still at 90+ percent operational capacity;
• distillate fuel inventories decreased by 1.0 million bbls and now stand a whopping 16% below the five-year average; harvesting season coming up; and, then look at jet fuel demand:
• jet fuel product supplied was up 8% compared to same four-week period last year:
• all-in-all, one wonders if "something is going on"? Perhaps "analysts" at social media will help out.
  

Gasoline demand: link here.

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Back to the Bakken

Active rigs: 36.

WTI:

Four new permits, #40020 - #40023, inclusive:
Operator: KODA Resources

• Field: Fertile Valley (Divide County)
• Comments:
• KODA Resources has permits for four Stout wells, SESE 16-160-102; 
• two of which to be siteed 650 FFSL and with one at 827 FEL and the other 797 FEL;
• the other two will be sited 450 FSL with one at 778 FEL and the other at 748 FEL;

Five permits were renewed:

• CLR (4): two Charleston and two Olympia permits, all in Brooklyn oil field;
• Formentera Operations: SWD

Blog Note - And Bat Caves - July 6, 2023

Locator: 45910B.   

 All notes posted in the past 24 hours were done more quickly than usual.

There will be many typographical errors and content errors.

Formatting needs to be checked.

Be careful.

Everything should be back to normal within 24 hours. 

"Normal" -- in the eye of the beholder. 

***********************
From The Bat Cave

***********************
Bat Cave

Let's Talk EVs -- July 6, 2023

Locator: 45909AUTOS.    

Updates

EVs update.

Tesla: June sales, deliveries, China. Link here.

****************************************
EVs Forecast

These were forecast by the company back in 2022:

• 2023:
• Tesla: 1.1 million EVs
• F: 500,000 EVs -- original estimate
  
• run rate
• F-150 Lightning: 150,000 annual run rate
• on track to triple production y/y
• sold 3,600 through February, 2023
• list price: $52K to $97K
  
• Mustang Mach-E: 210,000 annual run rate

*****************************
Original Post 

Link here.

See this post for more detail and data for other auto makers, 1Q23 and 2Q23.

For GM, 2Q23: a horrendous report for EVs.

From the linked article, spend some time parsing these notes:

Comments, regarding GM EVs:

• SALES:
• 1H23: 36,3000
• 1Q23: 15,652
• 2Q23: 20,648
• PRODUCTION:
• company's forecast:
  
• 1H23: 50,000
• 2H23: 100,000
• sales "lag" production due to logistics and inventory on dealer lots;
• in other words, we have sales data, but not production data;
• so, we don't know yet if GM hit production targets
• but if they produced 50,000 and sold 36,300 ....
• EVs account for just 2.8% of company's total sales
• most concerning: 
• the vast majority of GM's EV sales in 1H23: the to-be-later-this-year-discontinued Chevrolet Bolt 
• Hummer sales? Not provided in this report, see below:
  

1Q23, link here:

 2Q23, link here:

******************************
My Takeaways Re: Auto Manufacturers

Comments (pertain to US, only):

• transition from "legacy" ICE to EV is going to be very, very, very expensive;
• we will very likely see change in leadership positions at some legacy auto makers as shareholders become more frustrated;
• there are three major groups of auto manufacturers
• pure play EVs from the very beginning, e.g.: Tesla, Rivian, Lordstown
• legacy auto makers transitioning to EVs, e.g.: Ford, GM, Stellantis
• niche, luxury automakers, doing what they want, e.g.: Rolls-Royce, maybe Porsche in this group

Among the second group, legacy auto makers transitioning to EVs (Ford, GM, Toyota), there are three sub-groups:

• CEO not sold on EVs, yet, e.g.: Toyota
• CEO reluctantly moving forward, e.g.: GM
• CEO going all in, e.g.: Ford

The second group (Ford, GM, Toyota):

• will cover costs to ramp up EVs by inflating prices of ICE vehicles (already occurring)
• GM will lose money hand-over-fist on ramping EVs, we won't know how bad it is; GM won't report
• Ford will also lose money hand-over-fist ramping EVs, but F will break out the details

The second group (Ford, GM, Stellantis):

• will give lip service to affordable EVs
• they can't make money on "Bolt-like" EVs
• they will gravitate to luxury EV brands
• consumers will "see" entry level EVs starting at $50,000 whether or not that's accurate
• tax incentives don't matter to most car buyers
• tax incentives favor the wealthy who would buy/not buy regardless of tax incentives
  

The second group (Toyota)

• hybrids (e.g., Prius): fake EVs; will be nothing more than a small niche
• will reluctantly move to EVs, mostly to meet California mandates -- otherwise they can't operate in that state

First movers, autos: Tesla

• other than Chinese no-names, Tesla could be "last-man" standing

EV niche:

• medium-haul trucks / urban delivery vans / urban fleet  >>> long-haul trucks >>>> luxury sedans / SUVs >>>>> non-luxury SUVs EVs >>> pick-up trucks >>> muscle cars
• best niche for EV trucks and vans
• medium haul
• east coast / west coast ports to neighboring warehouses / fulfillment centers
• urban / last mile delivery
  

India:

• my enthusiasm for India and four-wheel EVs has waned

US recession / EU recession:

• will further dampen enthusiasm for EVs

GM's Numbers For 2Q23 Are Out -- The Report Is Horrendous For EVs -- CEO Says As Much -- GM Down 1.6% In Early Trading -- July 6, 2023

Locator: 45908AUTOS.   

Link here.

GM's numbers are out. Link here for 2Q23. A horrendous report, see this post.

Previous Post Brought Forward

Locator: 45874AUTO.

UPDATES

*********************
GM

Since the original post from a couple of days ago,  social media is providing a bit of granularity.

The links:

• 2Q23 sales;
• 1H23 sales;
• GM Hummers;

*************************
Stellantis 

Link here.

Higher sales of the Chrysler Pacifica minivan and Jeep Compass and Dodge Durango SUVs pushed Stellantis’ second-quarter U.S. new vehicle sales up 6.4% from a year earlier. The uptick is another sign of demand for new vehicles rebounding, as inventories of cars and trucks improve from historically low levels during the coronavirus pandemic and supply chain problems. [Those in bold are high-end models.]

Stellantis’ sales increase is expected to be among the lowest of the second quarter, according to auto industry forecasters who project industry sales to have increased 16% to 18% during that time compared with a year earlier.

*************************
Rivian

RIVN: shares surges 2Q23 sales come in better than forecast.

ORIGINAL POST

 

*********************************************
American Legacy: Ford vs Chevy

Ford vs Chevy, 1Q23: link here.

• y/y -- cars sold:
• Chevy: up 16%
• Ford: up 11%
• Tesla: up 83%
• total vehicles sold in 1Q23:
• Chevy: 398,141
• Ford: 456,972
• Tesla: 422,900 (in 2Q23: 466,140)
  

Market:

• Tesla: $820 billion
• Ford: $60 billion, pays 4%
• GMC: $53 billion, pays 1%

All car sales here: link here.

*******************************
Tesla

Tesla: update here.

China: Tesla production jumps 20%. Link here.

 

*********************************
More, pending.

Forbes, US auto sales will likely gain in June, 2023, on bigger inventory, pent-up demand.

• the large sales increase vs. a year ago is due to pent-up consumer demand, a modest return to incentives, and a bigger inventory of new cars and trucks, as the auto industry gradually recovers from a shortage of computer chips, 
• this is why JPow raising rates will make things worse:
• S&P Global Mobility predicts new, light-vehicle sales volume in June to reach 1.38 million units. That would be an increase of 17% compared with June 2022. For the second quarter, its forecast is about 4.1 million units, up 16.5%. For the first half, that would mean sales of 7.7 million, up about 12%. 
• Edmunds had a similar estimate for the second quarter of about 4 million, up 16.1%. 
• automakers in the U.S. market report quarterly sales on Wednesday, July 5.

For My Montana Readers -- God's Country -- July 6, 2023

Locator: 45907MT.  

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For The Archives 

A reader sent me a note this morning regarding "core inflation" in the US and comparing it to Europe.

My not-ready-for-prime-time reply:

Timing is amazing. 

A year ago we got hit with a pretty big monthly rent increase (on a percentage basis) due to the inflation numbers: even so, not a big deal.

We just signed a new lease. The monthly increase was negligible on a dollar basis. Recent data suggests core could increase again over the next six months or so --- but our lease is signed and we might have dodged a bullet.

We have a vacant lot in Montana, on Lake Flathead. Property is appraised every two years in Montana -- at least our lot is -- the appraisal this year, almost exactly double the 2021 appraisal.

The increase in the appraisal: partly due to inflation; partly due to California folks buying property in Montana and willing to pay higher prices than local folks; but mostly due to fact God isn't making any more real estate around Lake Flathead.

What's there is all there will be for the foreseeable future.

**********************
Greedflation

Link here.

From the linked article:

When inflation took off in 2021 in the U.S., so did corporate profits, leading to accusations of “greedflation” and calls in some corners for price controls.

This year, Europe is going through the same debate amid soaring food prices. Judging by recent developments, inflation driven by corporations flexing their power to jack up prices more than costs—greedflation, as some called it—is on its way out.

Pretax margins, which widened sharply in 2021 and 2022, were roughly back to prepandemic levels in the first quarter of 2023, according to revised government data released last week.

Margins in six of the S&P 500’s 11 sectors were lower in the second quarter than four years earlier, according to FactSet.

Narrowing profit margins, though, doesn’t necessarily mean an end to inflation.

Wages are now growing faster than prices.

While that doesn’t provoke the same outrage as soaring profits, it’s just as problematic for getting inflation down. 

The circumstances of 2021 and 2022 made for a seller’s paradise. As the economy reopened, newly vaccinated consumers rushed to spend pent-up savings and stimulus cash. That demand collided with supply held down by pandemic disruptions and the inability of meeting so much demand with existing capacity.

The result: pretax margins shot from 15.6% in the fourth quarter of 2019 to 17.9% in the second quarter of 2021. That’s based on the Commerce Department’s measure of total value added by corporate businesses. This measure separates total costs into labor, profits, and nonlabor costs such as depreciation, interest and excise taxes, while excluding inputs, such as energy.

And more:

Exhibit A, breakfast cereal:

Link here.

It doesn't take a degree in statistics to "interpret" this graph. Grain prices for farmers actually decreased 2021 to 2022.

Jobs Report -- ADP -- July 6, 2023

Locator: 45906ECON. 

Comments:

• headline not big enough
• US economy on fire
• number of new jobs surge
• double what "analysts" forecast

Fact-check:

• "more than double"
• accurate, but understates how big the miss really was
• expectation: 220,000
• 2 x 220,000 = 440,000
• actual:
• 497,000
• 13% more than double expectations
• wow

***********************
The Story

Link here.

From the linked article:

The U.S. labor market showed no signs of letting up in June, as companies created far more jobs than expected, payroll processing firm ADP reported Thursday.

Private sector jobs surged by 497,000 for the month, well ahead of the downwardly revised 267,000 gain in May and much better than the 220,000 Dow Jones consensus estimate. The increase resulted in the biggest monthly rise since July 2022.

From a sector standpoint, leisure and hospitality led with 232,000 new hires, followed by construction with 97,000, and trade, transportation and utilities at 90,000.

Annual pay rose at a 6.4% rate, representing a continued slowing that nonetheless still is indicative of brewing inflationary pressures.

“Consumer-facing service industries had a strong June, aligning to push job creation higher than expected,” said Nela Richardson, chief economist at ADP. “But wage growth continues to ebb in these same industries, and hiring likely is cresting after a late-cycle surge.”

Devon’s Palo Pinto In The Bakken — July 6, 2023

Locator: 45905B. 

I made a mistake a year or so ago with regard to a post about Devon but it's not worth my time to correct it. It had no "material" effect on anything that followed, except my credibility and since no one wrote me to tell me I was wrong ... either it wasn't that big a deal or other folks missed it as well.

Whew. I hate it when I make mistakes. LOL.

Fast forward to Devon's 1Q23 earnings. Presentation.

Direct yourself to slide 18: Palo Pinto.

A little gilding of the lily? But other than that, fine.

Perhaps gilding the lily a bit but otherwise okay.

Must Read — Politics — Biden Approval Rating — July 6, 2023

Locator: 45904POL. 

Link here.

Interactive.

At the graphs pay attention to the y-axis.

Pay particular attention to George I (George H. W. Bush).

Joe Biden is polling worse than any president in modern (and maybe even ancient) history? Need to fact-check.

I’ll come back to this later today.

Memo to self: Chuck Klosterman.

Amazon: editor’s pick, best history.

Devon’s Palo Pinto In The Bakken — July 6, 2023

I made a mistake a year or so ago with regard to a post about Devon but it's not worth my time to correct it. It had no "material" effect on anything that followed, except my credibility and since no one wrote me to tell me I was wrong ... either it wasn't that big a deal or other folks missed it as well.

Whew. I hate it when I make mistakes. LOL.

Fast forward to Devon's 1Q23 earnings. Presentation.

Direct yourself to slide 18: Palo Pinto.

A little gilding of the lily? But other than that, fine.

EPD: If History Is Any Guide ….. July 6, 2023

Locator: 45903INV. 

EPD will declare its 3Q23 dividend tomorrow with record date either 28 or 31 July 2023, to be paid August 11, 2023.

The dividend is likely to remain the same. There is a greater likelihood of a slight increase than a slight decrease. EPD has not cut its dividend since 2002.

EPD currently pays around 7.4%.