Most Popular
1. Dow Max Drawdown Bear Stock Market 2022 - Accumulating Deviations from the Highs - 21st Feb 22
2.Putin Starts WW3 in Ukraine, Will Use Tactical Nuclear Weapons, China Prepares Taiwan Blitzkrieg - 28th Feb 22
3.World War 3 Phase 1 - Putin WINS Ukraine War! - 25th Feb 22
4.INVESTORS SEDUCED by CNBC and the STOCK CHARTS COMPLETELY MISS the BIG PICTURE! - 10th Feb 22
5.Will There Be A 2024 US Presidential Election? - 3rd Mar 22
6.Gold and SIlver, Precious Metals Sector Is at a Terrific Buy Spot - 6th Feb 22
7.Why Putin Wants the WHOLE of Ukraine - World War 3 Untended Consequences - 6th Feb 22
8.Dow Stock Market Expected Max Drawdown 2022 - 19th Feb 22
9.Stock Market Calm In the Eye of the Inflation Storm - 4th Mar 22
10.M = F - Everything is Waving! Stock Market Forward Guidance - 7th Mar 22
Last 7 days
Why Ray Dalio is WRONG About China - Principles for Dealing with the Changing World Order - 24th May 22
Globalists Convene to Plan Central Bank Digital Currencies - 24th May 22
After Recent Highs, What’s Next for the Gold Junior Miners? - 24th May 22
Why APPLE Could CRASH the Stock Market! - 21st May 22
Why Is Crude Oil Ignoring US Inventories? - 21st May 22
Here is Why I’m Still Bullish on Gold Mining Stocks - 21st May 22
THE INFLATION MEGA-TREND QE4EVER! - 20th May 22
US Real Estate Investors – Is There An End In Sight? - 20th May 22
How Technology Affected the Gaming Industry - 20th May 22
How To Set And Achieve Reasonable Goals For Your Company - 20th May 22
How Low Could the Amazon (AMZN) Stock Price Fall? - 19th May 22
Bitten by FANG? Clocked by Cryptos? -- 'Air Pockets' Everywhere - 19th May 22
Northern General Hospital Orthopedics Fractures and and Ankle Clinic Consultations Real Patient Experience - 19th May 22
Cathie Wood Goes All in on Teladoc, ARKK INSANE Noob Investing Strategy! - 17th May 22
This is Anything but Positive for US Housing Market - 17th May 22
What Should We Do If There Is No Fed Monetary Policy Pivot? - 17th May 22
All Possible Ways to Earn Free Litecoin - 17th May 22
How low Could the Amazon Stock Price Fall? - 16th May 22
Cathy Wood ARKK INSANITY There is NO Coming Back! - 16th May 22
NASDAQ 100 Stock Market LOWER LOWS & LOWER HIGH - 16th May 22
Sanctions, trade wars worsen US inflation - 16th May 22
AI Tech Stocks Earnings BloodBath Buying Opportunity - 14th May 22
Futures Contract – Trading Crude Oil With USO - 14th May 22
How to Get Kaspersky Internet Security for 80% Discount! Do not Pay Renewal Price! - 14th May 22
Sagittarius A* Super Massive Black Hole Monster at Centre of Our Galaxy REVEALED! - 14th May 22
UK Public Debt Smoking Inflation Gun - 13th May 22
What Happens When the Stock Market Dip Keeps Dipping? - 13th May 22
Biden Seeks Inflation Scapegoats; Gold Advocate Wins GOP Primary - 13th May 22
Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - 12th May 22
The War on Gold Ensures the Dollar’s Downfall - 12th May 22

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

© 2005-2019 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