Cramer's First Hour, Part 2 -- What's In Your Swag Bag -- October 14, 2024

Locator: 48576CRAMER.

The market: the Dow just turned green! Despite BA and CAT. S&P 500 has been at a record high since the opening. 

EVs: the EV story continues to fall apart. Link here.

EVs: the above comes on top of Ford's new Power Promise marketing push. Two-thousand dollars loss on each EV sold -- drops right to the bottom line. The "cheaper" the EV, the smaller the margin. If a US automaker is selling an EV for less than $30,000, profit margin must be zero; probably even negative after taking out "ramp-up costs." Right now, with "ramp-up costs," every EV sold by a US manufacturer is losing money. Needs to be fact-checked.

EVs: Ford's Power Promise -- way too little, way too late. This should have been part of the "swag" from the very beginning starting years ago.  

From the blog, September 15, 2024:

Locator: 48593EVS.

Link here.

Biden, Harris, Trump will put a stop to Chinese EV imports. 

From the linked article, the lede:

Jim Farley had just returned from China. What the Ford Motor chief executive found during the May visit made him anxious: The local automakers were pulling away in the electric-vehicle race.

In an early-morning call with fellow board member John Thornton, an exasperated Farley unloaded.

The Chinese carmakers are moving at light speed, he told Thornton, a former Goldman Sachs executive who spent years as a senior banker in China. They are using artificial intelligence and other tech in cars that is unlike anything available in the U.S. These Chinese EV makers are using a low-cost supply base to undercut the competition on price, offering slick digital features and aggressively expanding to overseas markets.

“John, this is an existential threat,” Farley said.

For years, Tesla was the main source of consternation for auto CEOs trying to tackle a transition to electric vehicles. Now, it is the rapid rise of nimble automakers in China that have rattled executives from Detroit to Germany and Japan. Even Tesla’s Elon Musk recently called the Chinese the “most competitive” carmakers in the world.

Long, long article.

I think the entire EV story is fascinating.

I found the closing paragraphs intriguing.

Farley and Field huddled around a laptop, looking at a spreadsheet of line items for the future midsize electric pickup. The goal: figure out how to extract $800 in cost.

The team had overachieved on the driving range by 16 miles, Field explained, which meant they could wring out about $500 by shrinking the battery. Finding the rest of the savings would be a slog. Would it really need a heated steering wheel? Maybe the front trunk was expendable, one of the execs suggested.

Before long, Farley worried aloud that they might be cutting too many corners, and that “the product could end up being really sh—y.” He suggested to Field an informal process: How about they slap sticky notes all over the prototype to hash out what should go?

In an age of ChaptGPT and OpenAI, the best and the brightest are using yellow stickies. 

But most intriguing -- "the team had overachieved on the driving range by 16 miles" which means they could "wring out about $500 by shrinking the battery." 

$70,000 vehicles and they're talking a cost savings of $500 by shrinking the battery. Say what? 

But worse, seeming to get excited by increasing the battery range by 16 miles. Really? 

The one thing that EV auto manufacturers will never be able to undo: the fact that EVs are tethered vehicles. 

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Top Ten Reasons To Avoid The EV

Top ten:

• a solution to a problem that doesn't exist
• tethered vehicle
• tethered vehicle
• tethered vehicle
• tethered vehicle
• tethered vehicle
• too expensive 
• infrastructure lacking (possibly getting worse, not improving)
• 40% of Americans live in apartments
• don't understand the technology

"Range anxiety" doesn't make the top ten list.

How to market EVs:

• extremely fun to drive
• comprehensive entertainment package
• CarPlay
• Sirius
• Apple GUI
• sporty; really sporty
• iPhone 16 part of the overall package at no extra cost
• free maintenance for ten years
• ten-year all-inclusive warranty
• insurance coverage provided by dealer
• fast charging installation to be provided by dealer
• never mention:
• cost
• range
• electricity 
• batteries

Make the EV a must-have sports car. Money is not an issue. Exhibit A.

It needs to be the entire package: EV auto manufacturers are not just selling a tethered vehicle; they’re also selling “lifestyle,” for lack of a better word.The folks buying $100,000 Cybertrucks don't care about pesky details like range, infrastructure -- they are into a “lifestyle”: they see and want to be seen. They want a swag bag with their EV.
 

This is the EV swag bag:

• comprehensive entertainment package
• iPhone 16 part of the overall package at no extra cost
• free maintenance for ten years
• ten-year all-inclusive warranty
• insurance coverage provided by dealer

What’s in your swag bag?

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Disclaimer
Brief Reminder 

• I am inappropriately exuberant about the US economy and the US market.
• I am also inappropriately exuberant about all things Apple. 
• See disclaimer. This is not an investment site. 
• Disclaimer: this is not an investment site. Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. All my posts are done quickly: there will be content and typographical errors. If anything on any of my posts is important to you, go to the source. If/when I find typographical / content errors, I will correct them. 
• Reminder: I am inappropriately exuberant about the US economy and the US market.
• I am also inappropriately exuberant about all things Apple. 
• And now, Nvidia, also. I am also inappropriately exuberant about all things Nvidia.