Ferrari Is Printing Money

Ahead of a push into electrification, Ferrari's profits remain good.

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Photo: Ferrari

Ferrari again made millions, Uber and Lyft again promise that they will too (at some point, maybe), and Ford. All that and more in The Morning Shift for August 2, 2021.

1st Gear: Ferrari Pulled In $459 Million In Profits In The Second-Quarter

The pandemic has sucked for almost everyone except for those rich enough to buy a Ferrari, who have done well. Ferrari has done well, too, via Bloomberg:

Adjusted earnings before interest, taxes, depreciation and amortization rose to 386 million euros ($459 million) during the second quarter, Ferrari said Tuesday, compared with an average analyst estimate of 344 million euros. While revenue was slightly below expectations, the company boosted its annual free cash flow forecast.

Ferrari has been slow to embrace electrification, and the carmaker’s hesitancy has started to catch up with the performance of its stock after years of outperforming rivals. The company has picked industry outsider Benedetto Vigna as its new CEO to put Ferrari on course for the era of battery technology and digital services. The 52-year-old will join from chipmaker STMicroelectronics NV in September.

Shipments during the period almost doubled from a year ago to 2,685 units, and were almost flat compared to 2019, before coronavirus lockdowns hit. Ferrari fell as much as 3.5%, the steepest intraday drop since June 14, and were 2.9% lower at 1:11 p.m. in Milan trading.


Ferrari has been a step behind its competitors Lamborghini, Porsche, Aston Martin, et al. in going electric and/or making an SUV. Because Ferrari is basically a religion, though, that hasn’t mattered much. If you’ve ever been whipped around a track by a Ferrari or have been lucky enough to whip one around a track yourself, it’s easy to understand why.

Anyway, the Purosangue (Ferrari’s first SUV) is supposed to be delivered next year, and an all-electric Ferrari by 2025. I’m sure some people will pretend to be excited about those, though they seem like token efforts at best, or, in the case of the Purosangue, pure capitulation.


2nd Gear: Ford Is Trying To Maintain Its Advantage In Commercial

To do that, it is relying on an executive named Ted Cannis, who Ford CEO Jim Farley likes and who The Wall Street Journal reported Sunday enjoys Dungeons & Dragons.

Ford wants to increase commercial-vehicle revenue two-thirds by 2025, to $45 billion.

“Trust me, we will make this just as exciting” as his previous job developing electric vehicles, the 54-year-old Mr. Cannis said.

For a century, selling a car or truck has been a one-off transaction for auto makers: They ship a vehicle to a dealership to sell and hope the customer returns in a few years to buy another one. But the growing ability for car companies to beam new features and services to the vehicle is opening up new opportunities.

Tesla recently began charging customers $199 a month for a subscription to an advanced version of its driver-assistance feature. Morgan Stanley said the value of Tesla’s subscription business could eventually eclipse the value of selling its cars.

Ford and other traditional auto makers are trying to catch up to Tesla’s ability to remotely add features. But Ford executives say they have an edge: a more than 40% slice of the market for vans and trucks sold to businesses and governments. This equates to roughly 120,000 customers who Ford is betting will pay for services that help them cut costs or work more efficiently.

“We know where our toast is buttered,” Mr. Farley told analysts last week.

This is all, you know, bad, as subscription creep has been a thing for a while now and seemingly poised to get worse. Pretty soon, the days of handing over a bag of money to someone to buy a car and that being the end of things will feel like some ancient past.


3rd Gear: I Had Wondered Where Former Aston Martin CEO Andy Palmer Would End Up, And, Well

Palmer was ousted last May, as Lawrence Stroll, the Canadian billionaire who entered the fray early last year, exerted his influence. I thought Palmer was in a good way at Aston, overseeing the introduction of the DBX, which has been successful, but then again these guys always seemingly end up in the wilderness after something like this. Palmer is now heading an EV bus company called Switch Mobility, which you probably have never heard of.


From the Financial Times:

In particular, newly appointed chief executive Andy Palmer, ex-boss of Aston Martin, has set his sights on challenging China’s sector leaders such as Yutong and BYD.

“Why is China dominant? Because it has a huge domestic industry and the help of Chinese subsidies,” Palmer told the Financial Times.

“India has a huge domestic industry that allows economies of scale and helps the rest of your business. As EVs start to accelerate in India, we’ll experience the same benefit.”

Switch combined its UK operations with the electric vehicle assets of Ashok Leyland, India’s biggest producer of buses, in April to in effect become the EV arm of its owner after changing its name from Optare in December. Ashok is the flagship of parent company the Hinduja Group.

Switch aims to achieve economies of scale through common platforms at its Leeds plant in the UK and manufacturing sites across India. At the same time, it will draw on the bus design expertise in the UK and commercial light vehicle knowledge in India.


I respect the hustle of Palmer. At his age and with his money, I would go Jeremy Clarkson and buy a farm in the English countryside. Except I’d never be heard from again.

4th Gear: Uber And Lyft Promise That They Will Be Profitable At Some Point

That is despite an uneven recovery from the pandemic which has hurt business, with cases rising in the U.S. because of the Delta variant and because a significant minority in this country refuse to get vaccinated because nothing is more American than being a willful jackass and dying early as a result. But back to the transportation news, via Reuters:

“The continued uncertainty around the pandemic’s trajectory will suppress both supply and demand for rideshare services until we see what the Delta variant’s death toll really is,” said Forrester analyst James McQuivey.

The Delta variant complicates efforts by both companies to achieve profitability this year on a basis of adjusted earnings before interest, taxes, depreciation and amortization. The adjustments exclude one-time costs, including stock-based compensation.

Lyft said it would achieve that target by the end of the third quarter, Uber by the end of this year.

Lyft in May said it would take advantage of its leaner cost structure to make more money per ride as passengers return to the platform in greater numbers. Uber, also in May, said it would become profitable in the second half of 2021, requiring the company to quickly reduce losses.


These companies’ whole long-term play used to be that they will eventually become robotaxi companies, cut out the drivers, and make it rain. Now they seem to be planning for a long short-term without that, probably because robotaxis are very far into the future. Also, for now, they have a driver shortage.

In New York City, the number of ride-hail vehicles has increased more than 20% from February to June, according to data from the city’s Taxi and Limousine Commission. But total NYC vehicles in June are still more than 30% below their highest level in March 2019.

Several analysts said they expect rider demand to continue to outpace driver supply in the coming months.

“Uber has had a bumpy ride through the pandemic but fresh signs that it’s becoming a much smoother journey are expected in the upcoming numbers,” said Susannah Streeter, an analyst at Hargreaves Lansdown.


5th Gear: Renault Has A Guaranteed Lithium Supply

That is thanks to a new deal with a German-Australian company called Vulcan Energy. Lithium, of course, is used in making batteries.


From Reuters:

Vulcan will supply 6,000 to 17,000 tonnes of lithium annually to the French automaker from its geothermal brine deposits in Germany starting in 2026, the companies said. The five-year deal is renewable if both parties agree.

Renault, with brands including Alpine and Dacia, has said it would like 90% of Renault models to be fully electric by 2030. The company said Vulcan’s geothermal lithium production process, which has no carbon emissions, was the main appeal.


Geothermal projects typically involve extracting super-hot lithium-rich brine from underground reservoirs and using the heat to produce electricity, after which lithium is extracted from the brine.

The brine is then reinjected into the earth, making the process more sustainable than open-pit mines and brine evaporation ponds, the two most-common existing methods to produce the white metal.


Reverse: War

The Shenandoah was the last major Confederate cruiser to set sail. Launched as a British vessel in September 1863, it was purchased by the Confederates and commissioned in October 1864. The 230-foot-long craft was armed with eight large guns and a crew of 73 sailors. Commanded by Captain James I. Waddell, the Shenandoah steered toward the Pacific and targeted Yankee whaling ships. Waddell enjoyed great success, taking six ships in the South Pacific before slipping into Melbourne, Australia, for repairs in January 1865.

Within a month, the Shenandoah was back on the loose, wreaking havoc in the waters around Alaska. The Rebel ship captured 32 additional Union vessels, most of which were burned. The damage was estimated at $1.6 million, a staggering figure in such a short period of time. Although the crew heard rumors that the Confederate armies had surrendered, Waddell continued to fight. He finally accepted an English captain’s report on August 2, 1865. The Shenandoah pulled off another remarkable feat by sailing from the northern Pacific all the way to Liverpool, England, without stopping at any ports. Arriving on November 6, Waddell surrendered his ship to British officials.


Neutral: How Are You?

I saw some youngsters in a first-generation Jeep Grand Cherokee driving in my neighborhood yesterday morning. One of them was asleep in the front seat, another one was in the back jamming with the music. The driver was a no-nonsense young lady who was shirtless. Written on the car’s windows was its price: $1,000, which struck me as a deal for a running car in these trying times. The vibe was up-all-night, and I was into it.