The automotive industry is being completely disrupted.
Two companies are already starting to feel the pinch. Stellantis and Volkswagon are in trouble. Volkswagon is taking the unprecedented move of closing German plants. The company might have to close down 3.
Stellantis is in trouble also. The automaker is seeing its China sales drying up. This is what disruption looks like.
For years, followers of Tesla heard how "the competition is coming". It is something that people espoused since 2016. We are now 8 years in and legacy auto is dying.
The picture is simple: electric vehicles are the future and companies that resisted this are bound to have issues. China, the largest vehicle market in the world is closing in on 60% of new vehicles sales being electric.
Other markets are starting to follow suit.
California, the largest market within the United States, topped 25% of new sales being electric. The trend is clear.
So who else is in trouble?
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Ford Joining The Party?
Is Ford going to face a similar situation?
While I don't think this will be the next one to make headlines, it is a company that is making decisions that could spell trouble.
To start, Ford has a balance sheet that isn't bad, especially as compared to many other automotive companies. General Motors, along with the others mentioned, is in far worse shape.
That said, Ford has a golden nugget that is under attack. It might not seem this way but things often start as a trickle.
The company announced it is halting production of the electric F-150. It is obviously due to slowing sales. The company, in its earnings, noted how it lost $1.3 billion in the quarter on its EV division. Since Ford uses dealerships, it is likely the lots have these vehicles stacking up.
Ford claims the shutdown will last until January. We will see if that holds true.
The problem here is what I stated: the future is electric. If Ford going to compete in the full-sized pick up truck market? It is one that it dominates with the F-150.
Tesla's Threat
The Cybertruck is a real threat.
This might seem insane at this moment but this is where getting ahead of the curve is. When it comes to this model, it is already the 3rd best selling EV in the United States. While the numbers are small, we are looking at a dent in the market.
In 2023, Ford sold 750K F-series pickups. This is more than the F-150 although that makes up the majority of the total.
Here is the problem: Tesla sold around 16,000 Cybertrucks in the last quarter. This is a number that is going to keep increasing. We will have to see what the number comes for Q4 to see what we can project for 2025.
It is fairly conservative to project 100K Cybertrucks in 2025. I think we are going to see a ramping throughout the year that catches much of the industry off guard.
Tesla's advantage is they have basically zero market share in the pickup truck segment. This means aLL sales, if existing pickup owners, come at the expense of someone else.
2025 is not the year to look at. The bigger issue is what happens in 2026 and 2027. Here is where Ford could be in trouble.
Full size pick up trucks are very lucrative. This is where Ford makes the bulk of their profits. Actually, the same is true for General Motors, although they have a more varied product line.
Do not be surprised to see Tesla dominating the pickup truck market in a few years. Few expected the Model Y to become the best selling car in the world. It has dominated all SUVs, electric or ICE.
If Ford loses significant market share in the pickup truck market, they will be in deep trouble. Outside of the F-Series, they Mustang is the other model they can hang their hat on. Being a one trick pony (pun intended) means the company can survive, only that it will be greatly scaled down.
The next 18 months should give us insight into how the pickup truck market is shifting.