[Maarten88]

Disruption at work. Ford can't make money on selling EV's, their overall margin suffers with every EV they sell. They have large existing investments in factories, processes and people that produce combustion engines. They can't lower prices and sell enough of them for economies of scale to start working.

Tesla is the new Ford. Ford (and most other car manufacturers) will have a difficult time, most manufacturers are probably doomed. After the current hesitation phase, when the economics are there (very soon), customers will almost all go electric.

[s1artibartfast]

If the marginally produced EVs are profitable, then total profit trumps average margin.

It seems like the bigger concern is that the trucks simply arent selling

[hollerith]

What investors (and their "agents" CEOs) want is ROI, which depends on not only total profit, but also total amount invested and how long it has to stay invested. Hence the relevance when GP says that "They have large existing investments in factories, processes and people that produce combustion engines".

[s1artibartfast]

That's not how stocks work.

Margin is profit over total revenue, not profit over Capital invested

When someone buys stock on the market, they are giving money to another trader. They are not giving money to the company to invest in production capacity.

Shareholder profit tracks net corporate profit, not profit margin. It's better to hold a stock that makes a 1% margin on a billion dollars revenue, then one that has a 90% margin on $10 of revenue

[hollerith]

That is incoherent.

[s1artibartfast]

not sure which part you are confused by. The Key take aways are:

1) At a high level, shareholders are interested in stock price to earnings, not margin.

2) When you buy ford stock, none of that money goes to the company for capital investment. It goes to some other stock trader.

3) shareholders and CEOs want ROI. that investment is stock price, which detached from manufacturing capacity investments.

[hollerith]

>When you buy ford stock, none of that money goes to the company for capital investment

Companies regularly sell their own stock and use it for capital investment. It is an important way that large capital projects are funded in capitalistic countries.

Federal Express is a great example: as a start-up, it could not become profitable till it had a big network (planes, airport landing rights, a huge sorting facility) so the cost of the network had to be paid for by selling stock or by borrowing, and corporations at least in the US raise more money from stock sales than they do from borrowing.

Another example is training AI models: most of the tens of billions of dollars in GPUs and electricity that has been used or will soon be used to train AI models comes from the sale of stock.