Ford Is Now Paying for Its Lack of Urgency

You probably know all about Ford's struggles with Wall Street investors, which came to a head at the beginning of this year with the appointment of Jim Farley as COO (and possibly as future CEO if he gets things right.) But at Farley's first big speech to investors in New York on Wednesday, he said Ford's current era feels more like the Great Recession than it should.

While Ford famously didn't take taxpayer bailout money to survive like General Motors and Chrysler, it did go deep into private debt. And observers say that move left Ford without a culture of urgency—a sense that they have to get things right or there won't be a "next time," something commonly felt at the other American automakers. 

Here's The Detroit News on Farley's speech. The piece blasts the automaker for getting complacent in the post-recession years rather than properly preparing for the future:

Wasted time, indeed. Instead of using some of the best years since the 1960s to retool Ford thoroughly for today’s and tomorrow’s automotive world, Farley is telegraphing a reality that is proving easier to understand than to do. That is, strategic realignment of the past few years under CEO Jim Hackett means almost nothing without the action to achieve it.

And if there are two words that encapsulate Ford’s recent performance, underscore investor impatience and explain the Dearborn automaker's woeful share price, they’re “failed execution.” The question is whether Farley, once a rising star at Toyota Motor Corp., is the guy to increase the collective metabolism of yet another Ford turnaround.

"Ford people are good in crisis," a source familiar with Farley's thinking texted this week. That's true, but it signals a deeper problem that has vexed at least the past five CEOs to lead the automaker. Instead of using in good times the same discipline needed to navigate bad times, Ford's culture tends to follow grace under pressure with complacency.

So for Farley and CEO Hackett, the goal is to not botch anymore launches like the Explorer last year, better merge the current production efforts with the future-facing mobility stuff, combat declining market share and figure out a way to keep the lights on besides just trucks and SUVs. 

As the story I link to below notes, the market has become so saturated with those kinds of vehicles that it's increasingly difficult to stand out. 

Across town at The Detroit Free Press, at least one observer says Farley's plan doesn't feel much different than what Hackett has been saying for years, and it's still too light on specifics. Here's his takeaway on what investors want to see:

After listening to the presentation and reviewing the eight slides, market economist Jon Gabrielsen, who advises automakers and auto suppliers, said “I am literally stunned beyond belief. In my wildest nightmares, I never imagined that what Farley would present would essentially be what Hackett has been presenting now for almost two years.”

He said industry observers would like to see Farley consider the following actions:

Get out of Europe, the Middle East, and South America

Extricate from China and the rest of Asia

Solidify and rebuild market share in North America  

Secure a bigger credit line to buy time to execute the plan

Suspend the shareholder dividend and pledge assets as collateral

Cut more salaried jobs in North America, mostly in southeast Michigan

GM has been doing a lot of the first thing lately, most recently cutting its business in Australia and Thailand. I can't say I understand where Gabrielsen is coming from on the second thing, as China's had plenty of sales problems lately (even more so thanks to the coronavirus outbreak) but it remains the world's biggest and most important market.

Calfornia requires companies running autonomous vehicle prototypes to record their “disengagements,” or times when a human driver has had to intervene with the self-driving systems during testing. It's meant to be a yardstick for how good and consistent these vehicles can be. 

The state released its data trove from 2019 yesterday, and while Alphabet's Waymo is the frontrunner with the lowest disengagement rate, the company and GM both pushed back on this as a meaningful measurement of how good these vehicles are. From Reuters:

Waymo tweeted that the disengagement metric “does not provide relevant insights” nor does it distinguish Waymo’s “performance from others in the self-driving space.”

At an investor conference on Wednesday, Dan Ammann, chief executive officer of GM’s Cruise subsidiary, sidestepped a question about the relevance of the California disengagement data, saying “there is no really great way to track” the company’s progress, other than its own internal data.

Data provided to California showed Waymo had 13,219 miles between disengagements, compared with 11,017 miles in 2018. Cruise reported an even greater improvement, with 12,221 miles between disengagements in 2019, compared with 5,205 miles the previous year.

Waymo said its self-driving test vehicles logged 1.45 million miles on California roads last year, while Cruise vehicles tallied 831,000 miles, most of them on the streets of San Francisco.

Another former Waymo official who now heads self-driving startup Aurora added: “these numbers mean little when there’s no clear definition of what constitutes a disengagement.” This is true, and so is the fact that Waymo now does the bulk of its testing in Phoenix.

Maybe it's not the best report card, but as a driver who's not thrilled that these things get tested on public roads, I think any sort of transparency is positive. 

I feel bad for the Jaguar I-Pace. By most accounts, it's a great electric car, and it looks fantastic. But it's absolutely struggling to get sold. (When was the last time you saw one on the road? It's been a while on my end.) 

At an investor conference, Bloomberg quotes American Axle Chief Executive Officer David Dauch as saying his supplier company has had business trouble with EV demand for cars that aren't Teslas:

American Axle supplies the electric drive system for the British brand’s debut plug-in crossover, but sales are running at roughly half of what the carmaker expected.

“We’ve had to adjust our business accordingly,” American Axle Chief Executive Officer David Dauch said at an investor conference Tuesday. “That’s just a reflection of where electrification is, period. The Volt was that way, the Bolt was that way, the Leaf has been that way,” he said, referring to two Chevrolets and one Nissan model.

“The only thing that’s really met its numbers,” Dauch said, “and it took some time to meet its number, was Tesla.”

He added this bit, which is interesting:

“You’re seeing some of the lifestyle vehicles that are coming out or leisure vehicles that are coming out with the Rivians and the others,” Dauch said. “I acknowledge and applaud what they’re doing there. I think it’s great with the technology. I don’t see that cannibalizing the existing truck and SUV market today. I actually see it adding to that.”

There’s a Record Stash of Steel in China as Demand Slammed (Bloomberg) 

Denso could halt some production at Spanish plant on coronavirus shortages (Automotive News)

Tesla’s China registrations plummet as holiday, virus deter buyers (Automotive News)

The Creator of Gaming’s Famous “Konami Code” Has Died (Vice)

The Rebirth of SZA (Rolling Stone)

Laurene Powell Jobs Is Putting Her Own Dent in the Universe (NY Times)

What can the non-Tesla EVs do to compete? The automaker has gone from scrappy startup to the clear current leader in the electric game, at least in America. How does everyone else keep up?