G.M. Invests $500M in Lyft

Ford was in bad shape in 2006.

Does anyone even remember the Ford of 2006? With their awful Focus when everyone was clamoring for the euro version? Or the Ford 500?

They didn't avoid a "bailout" because they were a strong company. Two years earlier they mortgaged everything (including the iconic blue-oval logo) while money was still cheap. It was pure luck. Not strength or some sort of moral superiority.

So by the time the crash rolled arounds and GM and Chrysler couldn't do the same, Ford had already secured over $25 billion in funding, with another $5 billion in government loans to refresh some factories to produce greener cars.

I'm not trying to argue GM or Chrysler did or didn't "deserve" a bailout. It's just a pet peeve of mine that there's this revisionist aura around Ford these days. They sold Jaguar and Land Rover to Tata for $2.3B, about half what they paid, and significantly less than they've made since. They sold Aston Martin for about $1B (well, that one was probably not a bad idea at least). They also sold Volvo for another $1.5B. They liquidated their stake in Mazda to the tune of about $500M dollars. Discounting the F-series, Ford easily had the worst portfolio, and were in trouble years before the others. They sold off several brands at a significant loss for some quick cash. Not all of those were smart moves in hindsight and they lost their shirts on most.

While Ford has taken government assistance, they've milked their amazing ability to avoid TARP by failing before everyone else for all it's worth. Will they be as lucky next time? What are they going to put into a $10B fire-sell next time? And will they be lucky enough next time to secure $25B in loans while the market money is still flowing? Will the government be handing out $5B loans to modernize factories?

I guess time will tell, but I felt like the conversation could use a little balance.

It's interesting to see how the aggressive tactics of Uber are affecting the automotive industry. Companies are partnering which would have never even talked to each other previously. I'm very curious to see how this whole thing plays out.

The government didn't give money, they invested because the market wasn't in a position to do so when the industry needed it. The narrative that the company is only going to do good short-term because the government gave them a lot of money doesn't make sense when the government has since sold it's position in that company for a profit, meaning the market now viewed that company as a more favorable investment then they did when the government intervened.

> The free market is supposed to weed out the chaff.

The free market doesn't care about stability, but we as the people that deal with the market, should. An unconstrained free market will swing wildly, which is one of the ways it will identify the chaff to cull, or depending on how low the swing is, the not-quite-as-good wheat to cull. The US has long recognized the benefits of a steady economy though, so while there isn't as aggressive culling, allowing some mediocre companies to survive, the environment itself is more amenable to sustaining a population of people which is the whole point of the economy.

My theory is that with the ever increasing reliability of cars, they aren't being replaced as often due to low utilization (sitting idle most of the day). Having a more highly utilized fleet of vehicles will mean they get replaced more often.

This isn't a big vehicle sales growth strategy, but it could be a way to preserve vehicle sales, while keeping a foot in the door of the future. They might even be able to get away with spending less to manufacture these cars, since people don't care as much about finish quality in something they don't own.

Also, the interiors of the vehicles would probably degrade faster than the mechanical and electrical systems, so GM could probably make a business in remanufacturing and certifying such vehicles for return to service, or putting them into cheaper tiers of service.

Essentially, that would be the partial transformation of GM into a large fleet management/maintenance company.

EDIT: wording

Edison being the guy who ripped off Tesla?