Ford Says It Will Get Worse Before It Gets Better

We may earn a commission from links on this page.
Image for article titled Ford Says It Will Get Worse Before It Gets Better
Photo: Ford

Ford made a big pile of money in the first three months of this year but still has a big problem on its hands, the European fate of Harley-Davidson could be in Joe Biden’s hands, and Lordstown Motors had an “unfortunate administrative error.” All that and more in The Morning Shift for April 29, 2021.

1st Gear: Ford Made $3.3 Billion In The First Quarter

Hitting $3.3 billion, according to the Wall Street Journal, is Ford’s best result in a single quarter in years. There’s trouble both here and on the horizon, though, in the form of the global chip shortage. Ford says that we still haven’t seen the worst of that.

Ford said the chip shortage will cut $2.5 billion from adjusted pretax profit this year, the high range of the $1 billion-to-$2.5-billion estimate it provided in February. The company said the lack of semiconductors will force it to cut second-quarter production in half, but it expects the situation to improve after June.

Ford finance chief John Lawler said a fire at a semiconductor supplier in Japan in March exacerbated a chip shortfall that had already hit auto makers hard at the start of the year.

“We now expect semiconductor shortages to get worse and bottom out” in the second quarter, he told reporters during a conference call.


Research firm AutoForecast Solutions estimates that the chip shortage has cost Ford more than 35,000 units of F-150 production so far this year, with the bulk of those cuts coming in March and April. That would account for roughly 10% of F-150 production over that period at Ford’s normal pace.

Mr. Lawler said Ford has set aside about 22,000 vehicles that were built without needed semiconductors and will equip them once supplies become available.


Ford will still likely make some coin in the second quarter, so don’t feel too bad for it.

2nd Gear: Tesla’s Solar Business Seems A Little Messy

Tesla sells cars, but it also sells solar panels and solar shingles. The premise is to make electricity and also look decent, if you are into that sort of thing. The only thing is they can be a little pricey, and prices have gone up in recent times, according to The New York Times, turning some customers off.


The NYT collected some anecdotes:

Dr. Peter Quint was eager to install Tesla’s solar shingles on his 4,000-square-foot home in Portland, Ore., until the company raised the price to $112,000, from $75,000, in a terse email. When he called Tesla for an explanation, he was put on hold for more than three hours.

“I said, ‘This isn’t real, right?’” said Dr. Quint, whose specialty is pediatric critical care. “The price started inching up. We could deal with that. Then this. At that price, in our opinion, it’s highway robbery.”


Ana Bianchi of Walnut Creek, Calif., a San Francisco suburb, was also hit by a big price increase. Tesla initially told Ms. Bianchi that her shingle and battery system would cost $63,000. But two weeks before installers were scheduled to show up, an email from the company raised the price to $85,000.

She wanted the system to protect her family from losing electricity when her utility, Pacific Gas & Electric, shuts off power to prevent its equipment from setting off wildfires. She also hoped to lower her electricity bills, which have jumped from about $200 a month to as much as $400 in the four years since her family moved to California from New York.

She sought out Tesla’s shingles because contractors had told her that they could not attach conventional solar panels to her composite roof.

Tesla never offered an adequate explanation for the price change, Ms. Bianchi said, so she canceled the job: “It’s just outrageous.”


Tesla did not respond to requests for comment from the NYT about the matter, but as one person quoted by the Times said, Tesla’s solar shingles appear to be for “people who are looking to install expensive roofs,” which made me laugh.

3rd Gear: President Biden Has A Big Choice To Make That Will Have Big Effects On Harley’s Future In Europe

Europe is Harley-Davidson’s second-biggest market, following the United States, but a damaging trade war started by former President Trump led the European Union to impose tariffs on American-made motorcycles. That was almost disastrous for Harley until it was able to negotiate an entente, until that broke down.


This all means that, according to Reuters, Biden has a real situation on his hands.

The Biden administration faces a major dilemma in its dispute with the European Union over Trump-era steel and aluminum tariffs: back down to avoid acute pain for Harley-Davidson Inc and whiskey distillers or stick with the duties even though they are now exacerbating acute shortages for U.S. manufacturers.

The EU has threatened to double the tariffs on Harley-Davidson (HOG.N) motorcycles, American-made whiskey and power boats to 50% on June 1, cutting off any residual hope of exports to the continent.

President Joe Biden has pledged that he will maintain the tariff protections for the steel and aluminum industries until the problem of global excess production capacity - largely centered in China - can be addressed.

His sentiments were echoed by U.S. Trade Representative Katherine Tai on Wednesday, and his Commerce secretary, Gina Raimondo, said earlier this month that the tariffs “helped save American jobs in steel and aluminum industries.”


[United Steelworkers President Tom Conway] acknowledged the pain for Harley but said the protections needed to remain in place until Chinese excess capacity was reduced.

“Some people get hurt when this sort of stuff goes on. So, I understand what they’re saying. But I don’t think the 232 can be lifted,” Conway told Reuters, adding that perhaps the issue could be settled with steel import quotas for Europe.


There probably isn’t a good option for the Biden administration here. The issue is sufficiently complex that the administration also won’t get credit for a solution or blame, either, at least by the general public. This is the kind of problem technocrats are allegedly good for. At any rate, someone please just solve it because it’s too complicated for the rest of us to fathom.

4th Gear: The UAW Wants In On Battery Production

EVs will probably require fewer workers to build, because they require fewer parts than internal combustion engine cars, a fact which is seemingly making the UAW a little nervous. Suppliers have already gotten antsy, and France has started making job retention plans. The UAW has started talks with GM about making the battery plants union shops, according to Reuters:

United Auto Workers President Rory Gamble told Reuters the union is in talks with General Motors (GM.N) about representing workers at joint venture battery plants, and voiced opposition to proposals for Washington to impose a firm deadline to end use of gasoline- and diesel-powered vehicles.

Gamble said the UAW has raised concerns with GM and Ford Motor Co (F.N) about joint venture and potential electric vehicle operations set up by the automakers and supplier partners that so far are not represented by the union. GM is building two U.S. battery production plants with South Korean battery partner LG Chem. Ford is considering investments in battery manufacturing.

“We’ve got to make sure that work stays at a livable wage and those workers can organize,” Gamble said in an interview. “We’re having some discussions developing with General Motors.”

General Motors said in a statement that its Ultium EV battery facilities “are part of a joint venture and are a separate company – Ultium Cells LLC. The workforces at those locations will determine whether or not the facility is represented by a union.”


This is all understandable from the UAW’s perspective, though I wish it had a more forward-looking stance than “let’s make ICE cars indefinitely.” It’s always better to be a part of the solution and not part of the problem, etc.

5th Gear: Lordstown Motors Missed A $570,000 Tax Payment

The company is blaming the half-million-dollar miss on an “unfortunate administrative error.” The Associated Press is quite rightly calling it “another troubling sign,” in addition to, well, everything else.

The failure of an Ohio-based electric truck startup to pay $570,000 in real estate taxes due in early March is yet another troubling sign for a company that has been barraged by bad news this year.

Lordstown Motors Corp. stock has plummeted from nearly $31 a share on Feb. 11 to just over $10 on Tuesday in the wake of a U.S. Securities and Exchange Commission inquiry and the filing of four potential class-action lawsuits by investors who claim they have been defrauded.


Spokesperson Ryan Hallet said Tuesday the non-payment, initially reported by the Tribune Chronicle in Warren, was an “unfortunate administrative error” and that the company is in the process of paying the taxes and a 10% penalty of around $57,000.


This could, in fact, be just an oversight, but randomly missing tax payments is not the kind of thing well-run companies do. Sophisticated corporate tax avoidance, on other hand, is the American way.

Reverse: RIP Oldsmobile


I remember in high school thinking that the Oldsmobile Alero was slick. Imagine that — earnestly thinking an Oldsmobile Alero is slick.

Neutral: How Are You?

I keep my car interior reasonably clean, which is to say that I throw trash out on a regular basis and also occasionally vacuum it using one of those crappy vacuums that accepts quarters at the gas station. Out of boredom and curiosity, I took it to a detailing shop for the first time yesterday and asked them to do what they do, but only on the interior. No shampoo and nothing too crazy though. Well, they did an outstanding job and the difference is night and day. I paid $40 including tip and have no idea if that is high or low and, frankly, don’t care. Best $40 I’ve spent in a while.