In contrast, GM’s was $2.93 billion in first quarter of 2022, down 3.04% compared to the first quarter of 2021, and Ford had a net loss of $3.1 billion. How could a “green” horn-like Tesla leave the Big Two in the dust like that? And they did it without any advertising!
The two Detroit giants can still brag that they deliver more vehicles than Tesla, but their margins are lower than the young rival – and profits are what make the world go round.
Supply chain woes continue to beleaguer both Ford and GM, but GM is turning the corner faster than Ford. However, It is more than just the supply chain crisis.
In a word – bureaucracy. At last count, Ford has 186,000 employees. GM has 157,000 employees Tesla -70, 500. Ford and GM are saddled with middle managers, unions, and layers of red tape. It usually takes 2 to 3 years to build a vehicle from scratch at the Big Two. Tesla didn’t have that problem – they were years ahead of the EV curve in both styling and technology. The actual manufacturing time of a Tesla 3 is less than 1 minute. And Tesla has no unions.
To be fair, Ford’s hugely popular F-150 truck posted a net profit of $2.3 billion. Ford’s net loss of $3.1 billion was primarily caused by a loss of $5.4 billion by the company’s investment in Rivian – another EV manufacturer.
But the inability to turn on the dime even when research showed the sudden popularity of EVs is partly due to the vast size of GM and Ford, and because of the dreaded B-word – bureaucracy. It takes much longer to change with the times with all the layers of bureaucracy.
The next quarter will be interesting. Inflation and high gas prices could dampen the Big Two’s earnings, or any number of variables could change the forecast. In any case, young upstart Tesla has shaken the two lumbering giants to the core. And, at least with Elon Musk and Tesla, the American Dream is still alive and well. Henry Ford and William C Durant would be proud.
- Credit to Luc Olinga – The Street