Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Are Cowboys Really Dreaming of... Electric Trucks?

Companies / Electric Cars Sep 21, 2019 - 09:16 AM GMT

By: Rodney_Johnson

Companies The title of this piece is a play on a book, but the question stands: Will cowboys, or anyone else who buys a truck, be interested in an electric version? Ford and GM are betting their companies on it, which could be a huge mistake.

A Truck-Loving Family

Somewhere along the way, we became a truck family. My wife wanted a small 4×4 to navigate flooded streets, which makes sense given where we live. She ended up with a Chevrolet Colorado, and couldn’t be happier. For whatever reason, my younger daughter always wanted a Ford F-150, so she drove off to college in a jacked up, 4×4 SuperCrew. Granted, it was used, but still pretty cool.



And then, after living in Colorado for a couple of years, my son got a Toyota Tacoma 4×4.

No one in our family works on a ranch, or even works outdoors. We can’t claim to “need” trucks, but obviously we like them. That will change when they go electric, which GM and Ford claim isn’t that far in the future.

The Problem with an Electric Truck 

Electric vehicles are more expensive than gas-powered vehicles, and not by a little. The much-vaunted Tesla 3, noted as the everyman’s electric car, starts in the mid-$30’s, but only if you wait forever to buy it. The company loses money at that price point, so it delivers higher-priced, feature-rich models first.

Trucks already are expensive, so paying more for an electric version doesn’t sound like a good idea.

The good news is that, because of their size, trucks can carry more batteries, which could eliminate range anxiety and give drivers 300 to 400 miles of travel before requiring a charge. Still, this won’t eliminate the hassle of charging on a trip, when drivers will have to find a recharging station, wait for anyone ahead of them, and then spend 30 minutes or more when they finally are able to connect.

Ford says the company will invest $11.5 billion to electrify many vehicles by 2022, adding 16 fully electric vehicles to the lineup. It anticipates every model to be profitable.

Color me skeptical.

It’s All About Profits 

Electric cars sold in the U.S. today are not profitable, and have to be nudged out the door by government subsidies. Even if Ford and GM are able to eek out a profit on electric trucks, will it be enough to replace the profits they earn on such vehicles today? That seems highly doubtful.

The average Ford F-150 goes out the door at just over $49,000, and earns the company a cool $10,000 in profit, or 20%.

Unless Ford either earns 20% on every electric truck, or only sells electric trucks to new, marginal buyers that would not have bought a traditional truck, then the company loses. Put another way, every buyer who would have bought a traditional truck but instead buys an e-truck will cost the company money.

And Then There’s the Question of Longevity

A great thing about trucks is that they last so long. Getting to 100,000 miles is sort of the get-to-know-you period. But the battery packs in electric vehicles last about 10 years, and then lose their ability to charge. Today we’re seeing Toyota Priuses from 2010 grind to a halt and need a $3,000 battery replacement. In the next couple of years, we’ll see the first group of Teslas from the early 2010s need their batteries replaced, a repair estimated at $7,000 or more.

Who wants to buy a truck that, just as it gets broken in, will need an almost $10,000 repair?

It’s possible the industry will change in the next couple of years to make electric trucks more practical. If it doesn’t, then the market for these vehicles will most likely be limited to enthusiasts wanting novel vehicles. Cowboys, and even casual drivers like my family, will stick with the tried-and-true versions.

As for the book reference in the title, the original is “Do Androids Dream of Electric Sheep,” written in 1968 by Philip Dick. It was the basis of the 1982 movie Blade Runner.

Rodney Johnson

Follow me on Twitter ;@RJHSDent

By Rodney Johnson, Senior Editor of Economy & Markets

http://economyandmarkets.com

Copyright © 2019 Rodney Johnson - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Rodney Johnson Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in