The Coming Bankruptcy of Ford & Tesla.

Elon Musk just got the results of his

lawsuit not only that but Ford has some

insane things to say and boy it's gonna

make all the Tesla people nervous or

will it we'll talk about all of that in

this video so first musk and Tesla were

sued with potential damages as high as 6

to 12 billion dollars for Elon musk's

August of 2018 tweet taking Tesla

private at 4 20. the SEC alleged that

that tweet was false that Elon Musk had

no rational basis for making that tweet

Elon Musk replied and said I totally did

not only did I have Goldman Sachs and

bankers lined up to fund it but the

Saudi Arabian private investment fund

was essentially providing me with a

handshake deal that they would help me

buy out Tesla and even though later

there was some confusion and some

backtracking on that handshake deal Elon

Musk believes that at the time he made

the Tweet he was completely correct in

making the Tweet the SEC ended up

settling with Elon Musk and finding him

20 million dollars requiring Elon Musk

to have a Twitter babysitter that is

somebody who monitors Elon musk's tweets

before he actually posts his tweets now

I actually doubt that happens but so far

the SEC has been relatively silent on

whether or not Elon Musk actually is

maybe because he hasn't been tweeting

stuff like taking Tesla private at 420

anymore and most of his tweets have

turned more into Political tweets

but anyway moving on from that

settlement which Elon Musk says he was

forced into because otherwise Banks were

going to limit access to his wholesale

lines of credit which would have stalled

model 3 production at Tesla and led to a

potential Tesla bankruptcy what happened

today fast forward investors say they

didn't make enough money on their Tesla

option and trade contracts and they

missed out on the rally and even though

the judge in the San Francisco District

Judge Chan ended up telling the court

Elon Musk

tweets about testing taking Tesla

private at 420 funding secured were

untrue even though the judge said Elon

musk's tweets were untrue which would

have easily set up for an appeals court

claim because that could be deemed a

lack of due process despite that the

jury ended up deciding that Elon Musk

had no liability and making the Tweet

funding secured and any of the trade

losses that people incurred or lack of

additional gains that people wanted were

the fault of people themselves and so

the entire class action lawsuit was

dismissed and this is shocking given

that it was in a San Francisco Court

this happened which goes to show that

even people in San Francisco realized

what happened to Elon Musk is BS which

is pretty dang impressive now don't get

me wrong I like people in San Francisco

I think they're very smart and

intelligent people and I think this

shows Justice because it shows that the

people are not as loony as the political

system is in San Francisco I think the

Judge system the judicial system in San

Francisco is substantially more rigged

now don't get me wrong okay I'm gonna go

slight tinfoil hat here but I highly

believe it

I have been in San Francisco courts I

represented myself because I had to fire

my attorney in a San Francisco court

because I couldn't get any Democratic

attorney to represent me why because I

was running for governor against the

Democratic governor and nobody wanted to

be seen as representing somebody

fighting the Democratic governor because

if you take a democratic attorney into a

democratic Court while you're trying to

replace the existing Governor nobody

else wants to work with that attorney

because you can't go against the

existing Governor how dare there be a

free political process but here's the

part that could potentially be slightly

rigged of California courts and is

potentially why judge Chan okay again

maybe slightly tinfoil had here but

potentially why judge Chan went hard on

Elon Musk suggesting to the jury that

Elon Musk tweets her faults judge Chan

is a democratic judge in the San

Francisco District

Democratic judges in the San Francisco

District have a very close relationship

to the governor of California now why

does that matter well it matters a lot

because the governor of California

anytime he gets sued his cases end up in

courts in Northern California San

Francisco and Sacramento courts Northern

District Courts and guess what those

judges want they want to be in the good

graces of the governor now why would

judges in Northern California want to be

in the good graces of the governor of

California oh that's right because the

governor of California is usually seen

as a stepping stone to become president

oh well that's interesting so if you're

the governor of California maybe you

want to run to be president one day

which is exactly what Gavin Newsom is

basically revving up to do should Joe

Biden not run for president in 2024 we

widely expect Gavin Newsom to step in

now why is that really interesting

because if Gavin Newsom were to become

president guess what the president does

ah they appoint federal judges that

means you take judges from the state

level and you move them up to federal

judges and guess what federal judges get

to potentially become Supreme Court

judges and so you got to kind of stroke

the governor as a California judge to

have hopes that the California governor

becomes president and then potentially

you get promoted to a federal judge and

maybe a Supreme Court judge in the

future it's all part of the game so when

I say I'm putting on my tinfoil hat

let's be real some of that stuff

actually happens it's all long-term

planning okay this is why the judicial

system in California

really mirrors whatever the hell the

governor wants so if you go against the

governor even if you have a great

argument you're more likely to lose now

what do we have to say about Elon Musk

and Tesla well first it's great that

Elon Musk and Tesla don't have to

actually deal with a potential 6 to 12

billion dollar liability although if

this did end up being a loss that's 6 to

12 billion dollar liability would have

probably been settled down to 500

million to a billion dollars but it's

nice and after hours after the court

case was decided Tesla stock did rise

about two percent it never really made

it to 200 though so good news for those

of you who do not want me to dye my hair

green I will not be dyeing my hair green

Tesla did not make it it came within a

dollar and one cent and it just couldn't

make it it just didn't have the pricing

power to make it there however what you

did end up having was Tesla increasing

prices for some of its model wise model

y long range was increased 2.8 percent

model y a standard was increased 1.8 or

1.75 percent however the model 3 rear

rear wheel drive vehicle was dropped in

price one point one percent so you've

had some small pricing adjustments and

you did also have the IRS and Treasury

Department finally providing the

appropriate Clarity that was needed to

indicate that now all model y Vehicles

actually qualify for the full 7 500

federal tax EV credit including model

wise that sell up to an eighty thousand

dollar MSRP up from fifty five thousand

dollars this is a great win for not just

Tesla but quite frankly any EV

manufacturer so this is fantastic it is

great that these tax credit rules have

been clarified so good win on the

lawsuit by musk we learned a little bit

about the rigged system we learned about

EV tax credits but what the hell did

Ford just do okay Ford this is a

laughable one this I'm gonna bring you

first to the most Salient part of the

forward earnings call and I have to tell

you this part was ridiculous because

they basically sell you a stock that

isn't Ford

and that's the funny part

so first what we want to do is we want

to go to an analyst Rob latch

Rob latch asks the question

considering everyone's aspirations for

growth in electric vehicles do you think

you can stand by pricing assumptions and

maybe in another way of asking this do

you think you can sell and I'm putting

this on screen now as well so you can

see him just reading this verbatim from

the earnings call transcript okay this

is what I do by the way I read this

stuff with my team team by the way

amazing team now I used to do all this

stuff alone now I get to do more content

because I've got a great team helping me

these guys are awesome teams amazing

You'll Rock uh but anyway do you think

you can sell a forty thousand dollar

electric Crossover with a 20 gross

margin now why would Rod latch be asking

this question because Tesla folks Tesla

said worst case scenario their gross

profit margin would be 20 percent

so in other words Rod is asking the

question here hey do you think you can

compete with Tesla's margins and let me

provide you the CEO of Ford's response

he starts off by saying that's a very

important Crush question the reality is

we will we we are structuring our

portfolio to compete in very specific

segments now if you just read the

transcript there it seems like he's

saying we will get to 20 gross margins

but I actually went to listen to the

audio and he corrected himself he didn't

confirm that they will he kind of

stumbled over that the way I just said

it was kind of like he did the reality

is we were

restructuring to our portfolio to

compete in very specific segments

crossover is turning to be more core

Civic to the EV business blah blah blah

talks about the lightning being sold out

even though they are not profitable on

the EV segment we'll talk about that in

just a moment the real driver of our

future profitability is on second Cycle

products and this is really interesting

because listen to them talk about the

iterative process of manufacturing

we didn't know when we designed the

first three EV products we didn't know

that wiring harnesses for the machiave

were longer than they needed to be we

didn't know that batteries were heavier

than they needed to be we didn't know

that we under invested in braking

technology to save on battery size in

other words they're basically saying

look we've been really unprofitable at

EVS because we don't know what we're

doing with EV manufacturing but we're

learning okay that's super normal right

so far very very normal to expect the

iterative process of manufacturing to

make a better uh to make a better

vehicle right to be clear this is the

earnings call so this is not an article

this is an earnings call from Ford so

they talk about how they need their

learning how to manufacture better and

they're very optimistic they're also

very optimistic because they have a lot

of new Talent now don't get me wrong but

when I hear they have a lot of new

Talent it kind of suggests that the old

Talent just don't know how to make

electric vehicle and that's because

obviously they're in the internal

combustion engine business now what's

interesting here is they're basically

selling this idea that we want to make

cars with fewer Parts the CEO of Ford is

basically handing it to Tesla who's

making cars with fewer Parts via their

Giga presses but that's not even the

entertaining part let's keep going we

want to play hard our strength our

commercial truck larger vehicles on the

category side we don't want to have too

many choices this was a little the

transcription here wasn't great but

basically they're saying we don't want

to have too many cars for people to

choose from because that puts a lot of

costs on our engineers and we're trying

to be more profitable on electric

vehicles so we want to give people fewer

cars to choose from which is the

opposite of what Legacy car automakers

usually do and it's exactly what Tesla

does you don't have that many choices

it's kind of like Ford back in the 1920s

Henry Ford you can have any cars that

you want as long as it's black and it

was was basically just the black Model T

right and so they want they like that

because you can have better margins when

they you do this they're also talking

about designing smaller batteries for

competitive size now I personally think

that is actually really great and it's

something that Tesla's probably going to

do in the future as well you're going to

end up coming out with 20 kilowatt hour

battery packs as soon as people get over

the head the mental Head trip that you

need a big ass battery that you're

lugging around the fact of the matter is

most people don't need a big battery in

their car because what it does is it

adds more weight and ruins your fuel

efficiency you really only need 80 mile

charges and you plug the thing in every

night so you should have a daily

commuter and then maybe a more

long-range vehicle I think that's

perfect because most households have

multiple cars anyway so

then this is where things get

interesting okay he talks about how

basically we have negative pricing on

electric vehicles right now and this is

very true Ford does not expect to be

profitable on electric vehicles until

2026. there's a company called uh Ford

Authority they are a uh they're they're

sort of a news organization it's kind of

like a nine to five Mac but for cars and

uh here's the article from them where

they talk about investing 50 billion

dollars in electric vehicles in the next

coming years how they're trying to

produce 600 000 electric vehicles by the

end of 2023 this is a recent article by

the way from Feb one here and what's

interesting is six hundred thousand

Vehicles is a run rate of about 50 000

vehicles per month in 2022 guess how

many vehicles Ford produced per month

that were electric they want to produce

fifty thousand guess how many they

actually produced

12.

okay they produced 12 000 Vehicles so

they wanted more than 4X how many

vehicles they're making that are

electric in their ramp process uh they

expect to get to 2 million electric

vehicles by 2026. however folks let's

make it very very clear all you have to

do is read the headline here and we

already knew this

Ford electric vehicles still not

expected to be profitable until

2026. think about that for a moment

folks

Ford still can't figure out how to make

a buck on electric vehicles today in

2023 as they're ramping they still can't

figure it out neither can rivian rivian

people are like oh Tesla lost a lot of

money as well when they were ramping

their cars not on a gross profit margin

basis Tesla in 2014 when they produced

as many vehicles as rivien about 7000

Vehicles could actually go look at the

earnings calls they're all public and

the earnings reports Tesla had about 20

percent gross margin all the way back to

2014. in 2014 when they were doing just

7 000 Vehicles Tesla was positive

without energy credits let me let me

just like demonstrate that to you here

okay look 24 2014 Tesla had 20 percent

gross margin without credits it was like

29 gross margin with the credits okay

that was in 2014 Folks at the same time

in 2020 2. rivian producing about the

same amount as Tesla then

is negative substantially negative on

their gross profit margin and in 2023

2024 and 2025 Ford is also expected to

have a negative gross margin and byd the

only Electric Vehicle Manufacturer

that's actually remotely killing it is

sitting at a margin of about 1.5 percent

that's really really well that's I mean

like they're they're gross margins a

little higher let me not confuse that

here let's let's just stick with gross

profit I'm sorry with byd just pretend I

didn't say that for a moment because byd

that's their net margin that's not fair

that's their bottom line their gross

margin is a little higher uh actually

they you know they they that's how they

actually are remotely profitable uh is

they make ice Vehicles they make uh

hybrid vehicles and they're they're

definitely a better company than uh when

it comes to making Vehicles than like

rivien or Ford these guys can't figure

it out uh but the point is that Tesla

back in the day of a relatively similar

production of of rivian was able to

figure it out

Ford still can't figure it out they're

not figuring it out today they can't

figure it out going forward and they

probably won't figure it out until 2026

and I hate to say it but even as you get

to 2026 it's just hopium if they

actually end up making it profitable

which is kind of remarkable if you think

about it it's kind of embarrassing in my

opinion now not only is that

embarrassing but this is where things

get really embarrassing I hate to say it

but this is where the earnings call just

goes ugly you ready for this so in the

earnings call they talk about what

becomes more critical because they

realize that in the future there's going

to be more competition for electric

vehicles and they actually literally say

and because of that competition quote we

have to expect negative pricing okay now

after they talk about negative pricing

they talk about electric vehicle

software becoming more critical for the

business now this is where things in my

opinion actually get laughable because

the analysts ask them hey how are you

ever going to get profitable right how

are you ever going to make money on

electric vehicles and what Ford says is

the following I'm going to play the

audio of it so you could hear it because

I thought it was funny I also posted it

on Twitter ready for this here we go

play audio on Twitter now not the EV

platforms but our new fully updatable

electric architecture because what we've

learned on Pro is we can make real money

out of software

not our batteries all right

what you learned on profort is that we

can make real money on software and he

kind of says it like a creep

it felt very creepy listening to the

earnings call the way he said it but

yeah but beyond me just like bagging on

the way he said it let's think about

what he just said

he was asked by an analyst do you think

you can get to 20 gross profit margins

and he talks about trying to make the

manufacturing process better we know

they're not going to be profitable until

2026 we know they can't figure out how

to make EVS profitable and at the same

time he's warning that electric vehicles

are going to be a negative pricing

Market

and so how does he end the answer he

ends the answer with we can make real

money on software and I'm like dude what

software clown that's what I wrote on

Twitter because I'm sincere with that

what software what software I'll tell

you what software they're talking about

they're talking about the following

they're talking about their their blue

Cruise or whatever you call it yeah it's

Ford's Bluetooth and basically they

refer to this idea that Consumer Reports

suggest that blue cruise is a better

active driving assistance system than

Tesla and what they do is when you go to

the ratings you'll actually see that

some of the heaviest weights are the

following keeping driver engaged nine

out of ten for Ford

unresponsive driver 6 out of ten clear

when safe to use nine out of ten yeah

that's because you could barely use it

anywhere so they give these bigger

ratings for Ford when you scroll down to

Tesla it says keeping driver engaged

three out of ten clear when safe to use

three out of ten unresponsive driver 4

out of ten and what they say is the

following listen to this this is

ridiculous okay this is the bagging that

they give Tesla you ready for this it is

also disappointing that Advanced Driver

autonomy systems for some automakers

allow their vehicles to drive for a long

time without the driver applying any

pressure to the steering wheel so wait a

second let's pause for a moment let's

just think about what he said for a

moment

this author of this Consumer Reports

article is saying it's disappointing

that you don't have to grab the steering

wheel and wobble it more often in other

words it's disappointing that you have

to be annoyed less

look when I'm driving and my car is

steering I don't want to have to wiggle

the damn wheel all the time it's

annoying it's really annoying I sit

there I watch what the car is doing and

if there's a case where I get nervous I

grab the wheel and make sure it does the

right thing which it usually does

thankfully knock on wood if I need to

take over I take over I'm paying

attention but I don't need to sit there

like this the whole time if the car is

driving itself it's stupid

this is why the cameras now make you pay

attention to the road with your eyes

instead of always having these manual

inputs

but what is Consumer Reports say they

just happen to also be uh you know get

fundraising for fundraising and pro and

remember Consumer Reports as a

non-profit they you know there there's a

lot of Legacy auto uh and old school

Legacy auto and oil industries that are

sort of backing uh Consumer Reports so

there's some tinfoil hat you can put on

regarding that but we won't go down that

road let's just literally look at the

words that they're saying and the words

they're using are again it is

disappointing that

automakers allow their vehicles to drive

for a long time without requiring the

driver to apply any pressure to the

steering wheel let alone make sure the

driver is actually paying attention to

the road in our tests both Mercedes and

Tesla allowed the vehicle to drive down

the highway for about 30 seconds before

the first audible alert was given to the

driver to put a hand back on the

steering wheel

so to this I tweeted and I wrote yo Mike

Monticello and Consumer Reports did you

really sandbag Tesla versus Ford because

quote it's disappointing Tesla allowed

the vehicle to drive 30 seconds before

the first audible alert was given to the

driver to put their hand back on the

steering wheel how much is Ford paying

you

serious it's ridiculous so in other

words

Consumer Reports is trying to prop up

the Ford software by bagging on Tesla

because Tesla doesn't nag you enough

at the same time the Ford CEO is talking

about how important software is to their

margins because when they're asked about

ever being able to get to 20 gross

margin they are basically punting and

saying we don't think we can ever do

that without software what software Jim

what software y'all suck there's no

surprise your stock went down six

percent because you just gave terrible

guidance for the future of your ability

to actually compete with EVS now what's

crazy is a lot of people actually invest

in the value traps like Ford because

they think oh well they know how to

manufacture cars they're going to be

able to make it well apparently not

it's really embarrassing very

embarrassing now I'll give you some

highlights okay some highlights because

I don't just want to be bad

the Ford Lightning is sold out well

that's because they barely make the

lightning again they were only able to

make about 12 000 Vehicles a month uh

last year they hope to grow that but by

growing that they're just going to lose

even more money I hate to say that again

I'm not trying to be mean here I'm just

being a realist Ford lost money they had

not only negative net income look it's

on screen I'm not making this stuff up

here's the Ford Motor Company

Consolidated statement of cash flows for

the period ending December 31st 2022 net

income minus 2.1 billion dollars not

only did they lose money on a net basis

but guess what folks and this is before

we actually have the pricing War

happening they lost money before the

pricing cuts and now they want to ramp

EVs and lose money more until 2026 Ford

is going to be losing money year after

year after year and and if they can't

make it they're either going to continue

getting subsidized by their shareholders

and they'll have to continue to take on

even more debt or they'll go bankrupt

and somebody else will take over the

sort of the ideas of the lightning but

what do you have over here oh my gosh

you don't even have free cash flow

you have

6.8 billion dollars of operating cash

but you spent 6.866 on Capital spending

you've got negative free cash flow about

13 million dollars that's not that

terrible you're pretty close but

basically any kind of cash flow you

actually have you're blowing into losing

more money it's embarrassing

okay trying to look at some other I'll

try try to find some other bright sides

here what do we have they're building

battery plants in Tennessee uh Kentucky

Europe they're building a new battery

facility in Turkey enjoy the 68

inflation you got over there Ford

expects to have a hundred percent of the

raw material in Lock by the end of the

year so they can actually make these

cars that's great lock in all that raw

material pricing now so when deflation

happens y'all are still stuck at high

prices that's fine average retail price

of a Ford is 56 500 compared to forty

nine thousand dollars for average across

all brands and fifty two thousand

dollars for Tesla that's actually

interesting the average price of a Ford

is more expensive than the average price

of a Tesla or the average price of a

regular car yet some people like to go

test is a luxury auto manufacturer so is

Ford then as well is Ford also then a

luxury auto manufacturer if the average

retail price of a Ford is more expensive

than a Tesla

it's ridiculous it is a ludicrous some

of these people who prop up these Legacy

automakers on a pedestal suggesting that

oh but their valuation is good yeah

because they're a value trap come on

step bro you stuck

Ford expects to build up to high volumes

they're bragging about having the best

hands-free Automotive system on the

market thanks to the consumer reports

tweet uh or post it's ridiculous they do

expect a mild recession in the United

States and Europe they expect higher

industry incentives as supply and demand

comes back into balance uh they expect

Tailwinds because of improvements in

Supply chains great they complained a

lot about Supply chains being very

inefficient

and uh

they hope things get better not only in

materials but also in Freight because

they took a nine billion dollar headwind

in 2022. and going forward to 2023 they

actually expect a Tailwind on this

department but they still lose their

money