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Ford And CATL – An Important Alliance
In his podcast addressing the markets today, Louis Navellier offered the following commentary. No Pivot This is a big week for economic news. The Labor…
In his podcast addressing the markets today, Louis Navellier offered the following commentary.
No Pivot
This is a big week for economic news. The Labor Department on Tuesday announced that the Consumer Price Index (CPI) rose 0.5% in January and 6.4% in the past 12 months. The core CPI, excluding food and energy, rose 0.4% in January and 5.6% in the past 12 months.
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Food costs rose 0.5% in January and 10.1% in the past 12 months. Energy costs rose 2% in January and 8.7% in the past 12 months.
Owners’ Equivalent Rent rose 0.7% in January and 7.9% in the past 12 months. Housing/shelter costs accounted for about half of the January CPI increase. Economists were expecting the January CPI and core CPI to rise 0.4% and 0.3%, respectively, so this was a disappointing report.
Although the 12-month CPI rate has declined for seven straight months, the details were disappointing, so the Fed will continue to raise key interest rates in an attempt to squelch inflation.
Retail Rebound?
The next big economic news will be on Wednesday when January retail sales will be announced. January’s retail sales will be indicative of consumer confidence and strength. There is a perception that retail sales rebounded in January, so the retail sales report will be closely scrutinized after big declines in November and December.
Important Ford-CATL Alliance
Ford Motor Co (NYSE:F) announced this week that it is investing $3.5 billion to build an iron-phosphate battery plant in Marshall, Michigan with China’s CATL. Iron-phosphate batteries can be 100% charged and do not have the fire risk of lithium-ion batteries, but are also heavier and less efficient.
So an electric vehicle (EV) with iron-phosphate batteries typically has a limited range. However, in trucks, like the F-150 Lighting and Mach-e, the difference may not be noticed by many customers.
The reason that Ford’s alliance with CATL is important is that iron-phosphate batteries do not utilize nickel or cobalt, so they are cheaper and will allow Ford to be more competitive and make more EVs.
Right now, Tesla in China utilizes CATL’s iron-phosphate batteries and VW Group is also supposed to utilize these batteries in some of its city cars with limited range. The fact that GM has no iron-phosphate battery announcement yet means that Ford Motor for the next few years will likely be making more EVs than GM due to an acute shortage of lithium-ion batteries.
Ford Motor at the end of 2019, held an 11.4% stake in Rivian Automotive Inc (NASDAQ:RIVN), but by the end of 2022, this stake had shrunk to only 1.15% after Ford decided to take a $7.4 billion write-down. Rivian lost 82% of its market value in 2022 after going public in the midst of peak ESG hype and briefly being worth more than Ford in its post-IPO hype.
The good news is Rivian produced 25,051 vehicles in 2022, but the bad news is the company may never reach economies of scale to achieve profitability due to an acute battery shortage due to high prices for copper and lithium.
Rivian is supposed to shift to cheaper, less efficient iron phosphate batteries that utilize no cobalt or nickel. Interestingly, this shift to less efficient batteries has not hindered Rivian’s backlog, which remains at over 100,000 vehicles. It will be fascinating if Rivian survives or will be acquired by another major automaker like Ford.
Coffee Beans
A Harley-Davidson motorcycle dating from 1908 sold for $935,000, making it the most expensive bike ever sold at an auction. The motorcycle, known as the Strap Tank due to the nickel-plated steel bands that suspend the fuel and oil tanks from its frame, is especially rare since it still has many of its original parts. Source: UPI. See the full story here.
