Starkman: Joe Biden Duped by GM's and Ford's Lofty Electric Vehicle Ambitions

July 21, 2023, 2:36 PM

Mary Bara, Jim Farley, Joe Biden.

The writer, a Los Angeles freelancer and former Detroit News business reporter, blogs at Starkman Approved. This column is an expanded version of what originally ran on Eric Starkman's LinkedIn page.

By Eric Starkman

When I worked in public relations, I had a client who was paid mega bucks by private equity firms and hedge funds to research companies and make qualitative judgments about their managements and prospects. Unlike most equity analysts whose depth of knowledge is based on what managements tell them, my client’s research involved talking to suppliers, former employees, competitors, and others. My client’s fees were well into six figures, but his clients profited handsomely making big bets on his findings.

As I’m always looking for ways to increase my smarts, over drinks one night I asked my client what publications he read. He named about a dozen specialized trade publications, most of which I never heard of. Not one mainstream publication was on his list.

“What about the Wall Street Journal?” I asked. At the time, the Journal was a more influential publication than it is today.

“The Journal is of no benefit to me,” I recall the client saying. “If a company fails, they will do a brilliant three-part series about why and how the company failed. My clients want to know about troubled companies before they fail.”

Reading automotive, technology, and specialty finance trade publications has given me a decided edge understanding the colossal failure of the Biden Administration’s electric vehicle policies and an appreciation that Ford and GM might never learn to profitably manufacture EVs. I’m not alone in my dim view of Ford’s and GM’s EV capabilities: Cathie Wood, a money manager who made her name loading up on Tesla stock, predicted in November 2021 that Ford and GM “don’t have the DNA for this brave new world of electric cars.”


In the past week or so, mainstream publications have reported that Ford’s electric Lightning pickup trucks haven’t been selling as well as the company claimed, nor have its electric Mustang Mach-E SUVs. Reports that inventories of Lightning pickups were swelling on Ford dealers’ lots was old news to readers of The Verge, which on June 27 reported that customers were cancelling their orders because Ford got greedy and hiked the cost of the pickup as much as 50 percent.

A day earlier, Ford Authority reported that Ford dealers had more than a three-month supply of Mach-E vehicles, more than double their average of gas engine SUVs and pickups. Ford Authority reported that Ford was running “secret” incentives packaged as an “inventory discount.”

The latest news from the trades regarding issues with Ford’s and GM’s EVs, and this Detroit Free Press story about a shortage of railway cars that’s making it difficult for automakers to transport their assembled vehicles from their factories to dealers, crystallized the incompetence of the Biden Administration politicos overseeing America’s EV conversion efforts. There are currently “at least” 70,000 new vehicles stranded across the industry unable to move to dealerships to be sold.

Martin Oberman/STB

“The trickle-down effect of this reduced production on suppliers and employees is significant,” Surface Transportation Board Chairman Martin Oberman said in a recent speech. “The direct impact to U.S.-based suppliers exceeds $350 million. If the direct impact is $350 million to these suppliers, then given the typical multiplier of 11 to 1, the impact on the U.S. economy could easily exceed $3.75 billion.”

The Surface Transportation Board is an independent federal agency that is charged with the economic regulation of various modes of surface transportation, primarily freight rail.

America’s railroads are ultimately overseen by Transportation Secretary Pete Buttigieg, who prefers to focus on achieving racial equity in America’s road system and railing against the discrimination he imagines takes place in the construction industry.  

The transport issue is particularly acute for vehicles assembled in Mexico for U.S. consumers, which is where GM proudly manufactures its electric Equinox and Cruise vehicles, and Ford puts together its electric Mustang. Mexico’s domestic rail system is also under pressure because China’s better quality electric vehicles are exported to that country.

Mary Barra/GM photo

Thanks to GM CEO Mary Barra, GM is Mexico’s leading automotive exporter, so the rail issue is acute for the highly profitable gas engine trucks the automaker also assembles south of the border. Transporting GM’s Hummer EV, a deplorable safety-challenged vehicle that I and others have previously warned about (see here and here) is especially difficult given the shortage of rail cars.

A railroad car can load three levels of gas engine cars in an autorack, but only two levels of trucks and SUVs, Nick Little, director of Michigan State’s Railway Education Center, told the Detroit Free Press.   

“It’s getting more difficult to load them on the autoracks safely,” Little said. “The Hummer (because of its weight and size) can only be loaded on the lower tier of the rack, so you have to find other vehicles to put on the upper racks that are going to the same location.”

Automotive News reported in January that GM was planning to reduce its dependence on rail transport with the purchase of 400 heavy-duty trucks that its own employees would operate to deliver vehicles to its dealerships. Placing greater reliance on trucks is an environmental affront; according to the Association of American Railroads, moving freight by rail instead of truck lowers greenhouse gas emissions by up to 75%, on average. AAR analysis of federal data revealed that if 25% of the truck traffic moving at least 750 miles went by rail instead, annual GHG emissions would fall by approximately 13.6 million tons.

It seems reasonable to expect that given the dire climate crisis the Biden Administration says makes conversion to EVs immediately imperative, automakers would only use electric trucks to transport their vehicles. That obviously would be a challenge for EVs given their weight and mandatory weight limits for trucks on U.S. roads, not to mention the frequent charging delays.

Another Biden Administration EV disgrace is the $9.2 billion below-market interest rate loan that Energy Secretary Jennifer Granholm recently approved to fund Ford’s EV assembly and battery plant operations in Tennessee and Kentucky. Meanwhile, Ford continues to pay dividends to its shareholders, distributing 76% of the company’s earnings last year – money that could have been used to fund the company’s EV operations rather than mooching off U.S. taxpayers.

“Ford Motor paid out more free cash flow than it generated – 139%, to be precise – last year, which we think is concerningly high,” said a column published on Simply Wall St. “We’re curious about why the company paid out more cash than it generated last year, since this can be one of the early signs that a dividend may be unsustainable.”

Paying dividends is critical to preventing Ford’s depressed stock price from falling further. Ford’s shareholders would benefit if the company miraculously made good on its EV sales predictions. The best U.S. taxpayers can hope for shouldering Ford’s $9.2 billion loan is that the company will eventually pay it back.

Granholm’s approved sweetheart loan approval makes a mockery of the Biden Administration’s professed commitment to diversity, equity, and inclusion. The Nashville Tennessean reported that to assemble the site where Ford is building its Tennessee plant, the state is using eminent domain to seize historic land owned by Black farmers for decades. The farmers are fighting the state in court and have gained public support from the NAACP and the Legal Defense Fund.

Tennessee cares as little about the state’s Black farmers as Michigan Gov. Gretchen Whitmer cares about rural residents in historic Marshall, where fertile farmland is being destroyed so Ford can build a lithium battery plant that will employ a mere 2,500 employees earning below area market wages. Whitmer, who the corporate media touts as a qualified presidential candidate, spearheaded $1.7 billion in grants and subsidies for the plant’s construction, amounting to about $700,000 per job.

Whitmer has also awarded Ford and GM billions in subsidies for their other operations in the state and has also subsidized a battery plant owned by a company headquartered in communist China.

Erich Merkle/LinkedIn

Ford last week disputed reports of bloated Ford Lightning and Mustang Mach-E inventories. Erich Merkle, head of Ford’s U.S. sales analysis, told Reuters that Mach-E inventories were only at 83 days’ supply, with more than half of the vehicles produced in transit to dealerships. Merkle said Ford Lightning inventories were at 58 days’ supply, with more than half of the vehicles produced in transit to dealerships.

“By no means are those inventories high,” Merkle insisted.

Less than a week later, Ford slashed the prices on its Ford Lightning vehicles, including a 17% cut on the base model. Ford Authority reported yesterday that Ford is offering some sweetheart incentives on its Mach-E, including factory rebates and near zero financing on some models. Automakers don’t cut the price of vehicles that are selling briskly.

Reading the industry trades, I’ve learned there are software issues with Ford’s Lightning and Mach-E vehicles, which causes delays in the responsiveness of screen commands.

Jim Farley/Ford

Ford CEO Jim Farley remarkably admitted in this TikTok interview the difficulties Ford is having. One of them is the company’s inability to understand the millions of codes in products provided by its suppliers, which is why the company has opted to write its own software.

“Just remember, car companies have never written software like this,” Farley said.

It’s a wonder to me that anyone would buy a Ford EV after watching the Farley interview.

More storm clouds are forming on GM’s EV horizons. InsideEVs, a publication obviously supportive of electric vehicles, last week tested the charging capabilities of GM’s Cadillac Lyriq, and the results were disappointing.

“It took 40 minutes to add back 60% of the battery, from 30% to 80%, which isn’t particularly good and translates to 187 EPA-rated miles added in forty minutes,” wrote Tom Moloughney. “Once I’ve had the opportunity to charge the Lyriq a few more times, I’ll have a more complete picture of its charging capabilities, but my first impression definitely wasn’t very impressive.”

Charging speed and range capabilities are the two biggest EV concerns of consumers.

In China, the NFL for electric vehicles where about a dozen companies aggressively compete, GM recently was forced to slash the price of its Lyriq because it was selling as poorly in China as it is in the U.S. GM once had a 15% market share in China, but its less than 10% today and falling fast.

“(The Lyriq) was considered a heavyweight in the Chinese EV market at launch, but its sales performance appears to have been weak, never making it into any China Passenger Car Association (CPCA) sales rankings,” reported CnEVPost, which covers China’s EV market.

Canadian media outlets have reported that GM’s battery production woes have forced the company to shut for a month the Ontario plant where it assembles the EV BrightDrop cargo van, a vehicle with supposedly strong demand.

In an even bigger embarrassment, GM sold only 49 of its monster Hummer EVs in the first half of this year. Lyriq sales are also poor. Most of the EVs GM has sold so far are Chevy Bolts, which the company is discontinuing.

GM CEO Mary Barra repeatedly promised that 2023 would be a watershed year for GM’s EV sales.

The Biden Administration botched the national rollout of charging stations, where even in Michigan, home of GM, Ford, and Buttigieg, where Granholm served as governor, and Whitmer has given Ford and GM billions in taxpayer subsidies and grants, charging capabilities remain a disaster. Watch the accompanying report from a local Detroit television reporter about his experience taking a family vacation in Michigan with a Ford Lightning. The reporter was fortunate he wasn’t towing a trailer, which would have caused his vehicle to lose about 50 percent or more of his charge.

Despite all the billions of taxpayer dollars supporting Ford and GM, the Biden Administration’s and the media’s dire climate change warnings, and all the EV hype from Farley and Barra, Tesla vehicles understandably are the only EVs selling in America. Tesla has been focused on EV technology for more than two decades. 

Thanks to forced government sales mandates, EVs have become a political issue and public resistance to them is mounting.

Tesla drivers must now worry about a practice known as “rolling coal,” which is when gas engine pickup drivers illegally modify their vehicles to bypass pollution controls and spew 40 to 100 times more exhaust than a standard vehicle at a Tesla driver.

Environmentalists who believe that EVs can make a meaningful solution to climate change should be outraged and demanding that Biden, Buttigieg, Granholm, and Whitmer be run out of office. They are responsible for overseeing one of the biggest government failures in modern American history.

Reach the writer at Confidentiality is assured.

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