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Updates
May 6, 2025:
Lucid got way too much attention in 1Q25 so I was curious: why? Why so much attention. Then looking at the numbers: if I'm reading this correctly, Lucid delivered 3,109
vehicles in 1Q25, up almost 60% compared the same quarter one year
earlier (2024). And almost the same number as Ford's electric Mustangs
and electric EVs combined.
Meanwhile, Ford sold a total of
4,667 electric Mustangs and electric F-150s combined in 1Q25 compared to
6,983 in the same quarter one year earlier (2024), a drop of 33%.
For me, this is not a story about Lucid. This is a story about Ford.
Ford:
First quarter, 2025, Ford sold:
- 2,927 Mustangs Mach-E; and,
- 1,740 F-150 Lightnings:
- total: 4,667
Lucid, 1Q25, link here:
May 6, 2025: shares recovered today in early trading, up 4%, trading at $10.56. The P/E of 7.23 is incredibly generous considering the underlying guidance (none/suspended).
Ford cannot afford to cut its dividend. Everything suggests that's the only thing supporting the share price. F pays 5.68%. At its recent low, F was paying 7.1% ad that was the regular divided of 15 cents quarterly. In addition, F has paid a special dividend of 15 cents to 30 cents once a year (on top of the regular dividend. 90 cents / 8.44 = 10.7%. F paid a special dividend of 30 cents in March, 2025 (at $8.44 / share = 10.66% dividend).
May 6, 2025: the more one studies the numbers, the more one gets the feeling that Ford literally bet the farm on EVs.
May 6, 2025: from earlier this year, link here:
May 6, 2025: how did Ford spin 1Q25 earnings?
Despite the surge in April, 2025, sales, Ford still sold fewer cars in April, 2025, than it did in April, 2015, and April, 2016. Link here.
May 6, 2025: a reminder --
May 6, 2025: Ford has three core competencies:
- the F-150 and several variations, including the Lightning
- EVs, including the Mustang
- miscellaneous, to include vans to support commercial fleets; and, a few legacy SUVs
The EV Mustang,
an update, May 5, 2025.
EVs struggle, an update, May 5, 2025.
EVs are taking a toll on Ford, others. Ford has literally bet the farm on EVs.
Ford needed a friend in the White House. When Biden was defeated by Trump, November, 2024, Ford lost the one friend it really, really needed. It's one thing to have one bad year, but even under the best of circumstances, it appeared EVs wold have several bad years. Now, with Trump in the White House and states on both the west coast and the east coast dialing back EV mandates, the EV revolution has hit a wall. Whether the industry can scale that wall will be fascinating to watch.
Ford manufactures its EV F-150 Lightning in Michigan but many of the parts are foreign. Ford has not made any plans to move production of the Ford Mustang (EV) out of Mexico despite a huge drag due to 20% tariffs. It's interesting: in 2023, Ford said it could not "survive" with UAW demands at the time (subsequently rolled back to some extent) but apparently the electric Mustang is a different story -- not really "too big to fail," but rather, afficionados will pay almost any price for a Mustang. Four years of tariffs on cars made in Mexico?
Ford estimated huge losses going forward for many years in its EV division and that was before the Trump tariffs.
Original Post
1Q25 Earnigs
After years of following automotive data very, very superficially, the fog is starting to clear.
I think there are two big takeaways in this for the automotive sector in the G-7:
- no growth;
- cars are lasting longer and longer; EVs will exacerbate the situation.
Expanding:
- first problem: no growth:
- within the G-7 (the US, EU, Canada, and Japan) when it comes to privately owned automobiles, the pie is finite and not growing.
- the automobile industry is not going to grow by selling more vehicles
- automobile manufacturers are competing with each other for a piece of the pie, for a pie that is not growing size
- at one time, mom and pop with one car would have six kids and eventually the family would need seven cars;
- now the size of families are decreasing in the G-7 and that mom and pop with fewer children can afford a second car, but they only having two children = four cars;
- the automobile industry is not a dying industry, it's simply static
- for the bottom line to improve across the entire sector in the G-7, the price per automobile needs to increase and/or the margins on each automobile sold have to increase
- as the prices increase, the industry becomes more and more dependent on the economic cycle
- money is not being made on automobiles with lower sticker prices; at some point, as the price of the automobile comes down, the margins reach diminishing returns
- so much more; one could go on and on, but I don't see the automobile sector as a growth sector.
- FRED auto sales by year: link here.
- the second big problem:
- used cars are simply lasting longer and longer and longer
- with cars lasting longer and longer, sales will become more and more dependent on state of economy
- in a bad economy, folks will be able to get "one more year" out of the car they are currently driving
- exhibit A: my three cars:
- 2005 Chrysler minivan
- 2007 Chrysler minivan
- 2012 Honda Civic
- EVs will make that even worse: parts won't wear out and software will simply be updated
- replacing batteries and tires -- that's about all there is
- with so little to go wrong, this will extend the life of a given EV
The winner:
- high end, expensive cars
- that pie -- the number of folks able to buy more expensive cars -- is growing bigger
This is all for the archives. It will be interesting to come back to this discussion in 30 years and see how the arguments all hold up.
Earning Are Out
- 1Q25
- EPS: 14 cents vs 2 cents expected (tariff fears helped this immensely)
- revenue: $40.7 billion vs $38.02 billion (tariff fears helped this immensely)
- y/y
- EPS: down 71% y/y
- revenue: 5% y/y
- q/q
- EPS down 64% q/q
- revenue down 16% q/q
- After hours: F --> at $9.89, down 2.75%
For The Archives
Original Post
Ford is a lot like Apple: their base is incredibly loyal. And if there's any brand that means "America" across all demographic groups, it's Ford.
Ford: link here to Barron's.
Will
report after hours tonight. Solid earnings report expected. Guidance
will be the real story. Even though some companies are not providing
guidance in the current environment, analysts suggest Ford will provide
guidance based on tariffs, and guidance will be significantly lowered,
based on GM's guidance earlier. [Later: Ford suspends guidance.]
- operating profit: $171 million; one year ago, $2.8 billion
- remember: tariffs did not affect the numbers being released today
- in fact, 1Q25 Ford should have benefited from tariffs as folks bought early to avoid possible tariffs;
- I thought that $171 million was exceptional
- will they break out EV numbers?
- breakeven per share on sales of $38 billion;
- last year: EPS of 49 cents on sales of $42.8 billion
- historically the stock rises or falls 7 - 9% after earnings released
- biggest question: dividend going forward -- for the next 24 months.
- number of outstanding shares: 4 billion shares
- 15
cents (per quarter; 7.7% annual payout): 15 cents x 4 billion shares =
$600,000 each quarter (plus the company generally pays a generous
special dividend at least once a year -- generally in February --
- the $171 million operating profit expected 1Q25 will not come close to covering the $600,000,000 dividend payout
- full year guidance: operating profit, $6 billion
- last year (2024), dividends paid, 90 cents x 4 billion shares = $3.6 billion, which suggests the dividend is very safe
- disclaimer: I often make simple arithmetic errors
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