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Post by liftlock on Aug 11, 2023 3:53:21 GMT
I own F and GM. These are very small but annoying positions I hold. Their stock prices have been hit hard recently, particularly today. CNBC speculated this is because of the UAW demands which would cost the automakers some $80+B in additional costs. Tesla stock price did not show any such effect. Are its workers not unionized? Tesla workers already paid well? Also, are F and GM just a distraction in a portfolio, with limited to no near term upside? Thanks. I recently read an article, in Barron's I think, indicating that GM makes an average profit of $3500 per car. The UAW request for wage increases would cut that profit by about 50%. GM is an inexpensive stock and Mary Barra seems like a capable CEO. She is making a big bet that consumers will want nothing but EV's. GM also has a several thousand workers dedicated developing to self driving vehicles.
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Post by anitya on Aug 11, 2023 7:14:19 GMT
I am starting to wonder if eventually it is just Tesla and a bunch of foreign EV / hybrid cars in the US market. The Chinese EV makers are going to export to the US and beat the US manufacturers on price first and then on quality. I am just thinking back to how the Japanese entered and later dominated the US car market. My extended family have only bought Japanese cars in the past 30 years, except a few digressed to Tesla to show off they have made it.
Mary Barra may be good but a good management can not do anything about a broken opportunity set and legacy culture.
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Post by retiredat48 on Aug 11, 2023 13:53:52 GMT
Recent couple months show poor sales of EV's. Daily backlog now about 92 days (from memory) vs 43 days for ICE. Had a midwest ford dealer interviewed who stated he sold five new EV F150 trucks; and all five later returned to dealer...not accepted for various reasons.
My bet would back Toyota, who has made a major decision not to push EVs; rather that the hybrid auto will dominate next ten years.
R48
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Post by bizman on Aug 11, 2023 14:39:34 GMT
I am starting to wonder if eventually it is just Tesla and a bunch of foreign EV / hybrid cars in the US market. The Chinese EV makers are going to export to the US and beat the US manufacturers on price first and then on quality. I am just thinking back to how the Japanese entered and later dominated the US car market. My extended family have only bought Japanese cars in the past 30 years, except a few digressed to Tesla to show off they have made it. Mary Barra may be good but a good management can not do anything about a broken opportunity set and legacy culture. I hesitate to add my $.02 here as I am the furthest thing from an expert on the auto business. My extent of knowledge here is that I know it is outside my circle of competence so I avoid it. That and that the economics and dynamics of the industry in terms of competition and regulation don't look positive for the legacy players, at least to me. Having said that, I have some high level business and strategy thoughts that may or may not be useful. As strange as this probably sounds, I see some unpleasant similarities between the auto business and the legacy media/streaming business. The established legacy media players are making money from dying businesses while investing heavily in streaming competitors that are likely to never reach the profitability of their old businesses. My thoughts here are based on those of Tom Rogers, who has been a fairly frequent guest on Squawk Box talking about this for a long time and who seems smart and right to me. All these legacy media companies are spending like crazy to move into this new business of streaming just based on the hope that they can eventually get there and compete/win against Netflix, which has the scale today and no burden of an old business that is dying. This doesn't seem like a high probability bet I want to make. All of which is why I am not interested in Disney, et al. It seems somewhat analogous to the original Berkshire Hathaway (the textile company), when some new technology came out in the 70's or something that was going to increase productivity and demand new investment, and Buffett knew they were heading for guaranteed liquidation so he just wrang the cash out of the biz and wound it down, investing elsewhere. If you have to invest a pile of new money into a lousy business just to compete and keep your head above water, that isn't the kind of thing I'm interested in. Nick Gogerty, in his book The Nature of Value, described businesses like these as belonging to the Red Queen quadrant. Having to run really fast just to remain in place. Areas I prefer to avoid. Somewhat similarly, Tesla has no dying legacy business that generates a large and disappearing profit stream, and also no massive unionized workforce to deal with. The US car companies have hitched their wagons to the desires of the political class to move into the brave new world of all electric cars for the sake of the environment. They seem to be operating on the hope that the government will force consumers to buy more expensive electric cars and so guarantee them a market and profitability. Given the plans of the political class to soon outlaw the sale of the gas guzzling SUVs that produce most of their profits, one must think Mary Barra is the new Steve Jobs to pull this off. GM and Ford aren't close to being able to turn a profit on any of their electric vehicle operations. It's more of a faith-based idea that through breathless marketing and favorable media, the sheep (consumers) will be able to be convinced to buy the new products at higher prices for the good of the environment. As an example, the recent "announcement" of the coming electric Cadillac Escalade at a price point of $130k or so. This just seems ridiculous to me. Tesla has a huge advantage in terms of their cost structure and the fact that they are actually producing a large number of real cars that people seem to want and like (this is not a recommendation to buy the stock, just an acknowledgement that they seem to have a real, sustainable business). It seems like Ford and GM have produced some prototypes and a bunch of favorable media and marketing that have convinced people they can fly. Reminds me of the old quote from Stephen Jay Gould, that nothing is so convincing as an anticipated discovery. I'm going to need to see proof that they can compete in actually building cars at similar quality and cost to Tesla that people want at scale. Maybe I'm dead wrong on all of this and Detroit will become the new Silicon Valley, only by bending metal rather than manipulating computer code. The enormity of the task ahead doesn't fill me with optimism on that score, though. Higher probability bets seem to exist. Just my thoughts, probably worth less than $.02.
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Post by richardsok on Aug 11, 2023 21:50:53 GMT
I read in Grand View Research that "nicotine pouches", recently selling at $2bil/yr, are expected to grow 35% compounded annually as more people look at smokeless, spitless nicotine alternatives. MO is back down near support. I'm going to start tracking it and the other bad actors, looking for possible oppty to buy.
Preferreds are holding up well in down mkt this week EXCEPT my GLP-B got hit; odd b/c the common had a good day. Probably just got too exuberant up over 26 last month. Serves me right for napping, wiping out ALL my gains. BUT the new YOC is back over 9% with call date still three yrs away. The common has good numbers and good yield, so I might add to the preferred right here near 25. Beats bonds, IMO
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Post by retiredat48 on Aug 12, 2023 2:07:53 GMT
bizman,...nice, insightful post above, biz. R48
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