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🚗 ford’s going electric

layoffs are very common in tech these days, but here’s news from F : last month, the company announced plans to cut as many as 8k jobs "in weeks' time", and it started today

• management confirmed Monday that it'll lay off ~3k white-collar and contract employees

• yes, that is only 1% of the company’s entire workforce, but the significance comes from where 2/3 of the job cuts are being made – the dearborn, michigan headquarter

so, why now? the reason’s a lil’ different from recent tech layoffs

• ford isn’t going through a coinbase-like monumental drop in revenues nor earnings

• it’s rather the start of a series of changes, as ford shifts more resources and operational strategies towards electric vehicle production

how serious are they? very, and they really have no choice

• ceo jim farley earlier this year reorganized the company's operations into two separate divisions – conventional gas engine business and ev/software business

• ford’ looking at 600k ev's produced annually by late 2023 and 2m+ by end of 2026 – that's claiming an annual growth rate (in production) of 90%+, more than double the forecasted rate for the industry as a whole

ford has no choice because: in 2021, for plug-in vehicles (electric & hybrid)

• TSLA had 14% share of the market, coming in #1 at 936k vehicles

• and the rest of top 5 being volkswagen, saic, byd, and stellantis

• these five clocked in 3.3m+ (51% market share)

imo:

• it’s very likely tesla’s market share of the total ev market will continue to sideline or decline as incumbents with much larger infrastructure pour resource and time into the space

• for ford though, there’s no clear evidence that it’s got new models on the way that’s a clear differentiator in terms of technology or traction among its already-prevalent competitors in the space

• but i wouldn’t stop at a hard no – ford, unlike tesla and like many other incumbents, has a strong established brand and b2b pipeline that's been established over generations of the company’s survival (not to mention multiple brands ford owns)

  • if i were to bank on ford in the ev space, a strong, unique software play would be interesting – that, we’ll have to see…

hope today’s letter was interesting. i’ve been trying not to focus on one company, but i may be totally wrong on that. if this is refreshing and you’d like to see more content like this, shoot me an email (apeofomaha@substack.com )!

💡 something im thinking about

as always, i am no financial advisor! (i am no substitute for professional financial services)

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