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Ford beefs up F-150 Lightning production in a forceful bid to dominate the electric pickup market

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A Ford F-150 Lightning on display at the New York Auto Show, April 13, 2022.

Scott Mlyn | CNBC

DETROIT – Ford Motor is set to be the first automaker to bring a mainstream, full-size electric pickup to the U.S. market, poised to capitalize on a first-mover advantage in what’s expected to be a hotly contested segment in the years to come.

Ford CEO Jim Farley said the company plans to scale production of its electric F-150 Lightning pickup faster than its competitors, with plans to increase production of the Lightning at a plant in Dearborn, Michigan, to 150,000 units in the next year or so, up from an initial target of 40,000 vehicles.

That would dwarf plans of Rivian Automotive and General Motors, which are expected to be in the tens of thousands. Both are already producing and selling pricier electric pickups in smaller and larger truck segments.

Other companies, specifically EV start-ups, have previously touted the electric pickup as a massive opportunity, but have so far failed to execute on a large scale.

“In this market, being a first-mover is a very, very important move,” Farley told CNBC. “We didn’t know we’d be first, but we worked fast in case we were, and it’s worked out that way. I think it could be one of the most important advantages we have.”

Ford is “confident” it can hit its 150,000 production target, according to Farley. He said the company has secured the lithium-ion batteries needed for that level of production – a major concern of investors and Wall Street analysts. Ford also will prioritize supplies of semiconductor chips, which have been a major supply chain problem for more than a year, for the Lightning, Farley said.

“We’re not joking. We think this is as big a product as when the Model T came out for us,” Farley said, referring to Ford’s flagship product that is credited with being the catalyst for mass adoption of vehicles from horse and buggies beginning in 1908.

Shipping imminent

Some believe the F-150 Lightning could be the first true test of whether Americans are ready to adopt electric vehicles that aren’t Teslas. The pickup is also crucial to Ford’s $42 billion truck franchise and retaining its decades-long sales dominance as America’s best-selling truck and vehicle with its F-Series pickups.

Ford has started initial pre-production of its electric F-150 Lightning pickup truck at a new plant in Dearborn, Mich.

Michael Wayland | CNBC

While Rivian’s R1T electric pickup was the first to market last year, it’s a smaller vehicle than the Lightning and priced starting at $67,500. GM also started shipping its GMC Hummer EV pickups at the end of last year, but they’re larger than the F-150 Lightning and initially priced at about $110,000.

The F-150 Lightning starts at about $40,000 for a work-oriented version and $53,000 – only thousands of dollars over the average price paid for a new vehicle – for a consumer pickup.

Ford has started saleable production of the F-150 Lightning. The automaker is expected to begin shipping the new electric trucks to dealers within days.

Scale

First to receive the F-150 Lightning will be select commercial, or fleet, customers and the 200,000 reservation holders who have placed $100 refundable deposits for the vehicle since it was unveiled last May. It could take Ford more than a year to fulfill those orders, according to Farley.

That time frame is longer than historical lead times for such vehicles but is still expected to be sooner than other EVs. New orders for the Hummer EV aren’t expected to be fulfilled until 2024, and Rivian only expects to produce 25,000 vehicles this year.

Ford has started initial pre-production of its electric F-150 Lightning pickup truck at a new plant in Dearborn, Mich.

Michael Wayland | CNBC

Farley said the company is sharing the F-150 internal combustion engine plant, which should help it hit between 150,000 and 200,000 production units a year.  

“We build a million F-150s a year. We know how to do this. And we have incredible scale,” he said.

Ford’s recipe for profitability with the F-150 Lightning is indeed scale. The Lightning shares parts such as seats, doors and much of the vehicle’s interior with its traditional gas-powered siblings to assist with supplier pricing and development.

It’s a different strategy than GM, Rivian and Tesla, which all have unique electric truck platforms. And it’s a strategy that assisted Ford in getting the vehicle to market.

The parts sharing is also expected to assist with increasing production, but it’s opened the company up to criticism that a dedicated EV platform is preferred. Ford eventually expects to build a dedicated EV platform at a new plant in Tennessee.

Unlike the Hummer and R1T, Ford is making it a massive point to target fleet customers with the F-150 Lightning. About 20% to 30% of initial production will be for those customers, however Farley said he believes the demand from companies and work customers could eventually surpass the consumer market.

Growing segment

LMC Automotive expects the U.S. electric pickup truck market to increase from about 25,000 vehicles this year to 1 million or so by 2030. The five electric pickup models available this year is expected to jump to 21 over the next decade.

The race to release electric pickups was largely sparked by Tesla and other EV start-ups eyeing the segment, which the Detroit automakers have dominated for decades.

Ford’s F-Series, which includes the F-150 pickup and its larger siblings, has been America’s best-selling vehicle for 40 straight years and the industry’s top-selling truck for the 45 years. Neither are titles Ford wants to relinquish when it comes to electric pickups.

“We’re not going to cede the future to anyone,” Farley told CNBC last year. “Our electric strategy is very specific. We’re going to invest in segments where we’re the dominant player and we have scale, like the F-150, the Transit van, our Mustang.”

Ford has announced plans to ramp production capabilities to 2 million EVs by 2026, as it seeks to become the second-largest seller of such vehicles, behind Tesla, by that time. Its crosstown rival, GM, has said it plans to surpass Tesla in domestic EV sales by 2025.

Both automakers have a lot of catching up to do against Tesla, which accounted for roughly three out of four electric vehicles sold during the first quarter of this year.  

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Disney is raising prices, but this time, don’t blame inflation

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Another major American company is raising prices again, but this time, don’t blame inflation.

Disney is increasing the price on its streaming products and signaled that a price hike could be in the works at its theme parks as well. On Wednesday, the company said the price of Disney+ without ads is jumping $3 per month to $10.99 starting Dec. 8. Hulu with ads will increase by $1 per month to $7.99, and Hulu without ads will jump $2 per month to $14.99.

Then on Thursday, Disney Chief Executive Officer Bob Chapek indicated to CNBC’s Julia Boorstin that a price increase will likely happen at theme parks as long as people keep coming in droves.

“We read demand. We have no plans right now in terms of what we’re going to do, but we operate with a surgical knife here,” Chapek said. “It’s all up to the consumer. If consumer demand keeps up, we’ll act accordingly. If we see a softening, which we don’t think we’re going to see, then we can act accordingly as well.”

Instead of blaming the rising cost of materials, labor and gas, Disney is rationalizing the increases based on the consistency of the popularity of its products. Disney said Wednesday that Disney+ added 15 million new subscribers last quarter, blowing out expectations. It also said it expects further growth for core Disney+ (excluding India’s Disney+ Hotstar) next quarter beyond the 6 million it added in its fiscal third quarter.

Raising prices on the back of strong demand isn’t new for Disney. The price of theme park tickets has climbed for decades. During its most recent quarter, the company posted a 70% revenue increase in its parks, experiences and products division, rising to close to $7.4 billion. Per capita spending at domestic parks rose 10% and is up more than 40% compared with fiscal 2019.

Handout | Getty Images Entertainment | Getty Images

Disney strategically caps attendance at its parks, an effort that was borne out of the attempts to avoid crowding during the Covid pandemic. The move is a way to improve the customer experience. Additionally, the company has added Genie+ and Lightning Lane products, which curate guest experience and allow parkgoers to bypass lines for major attractions.

Beyond the parks, Disney annually asks cable TV providers to pay aggressive price hikes for ESPN because it knows there’s strong demand for its stable of live sports rights.

Disney+ first launched in November 2019 at $6.99 per month. About three years later, the price of the ad-free product will have risen 57%. The service now has more than 152 million customers.

Chapek has experienced his share of bumps in the road since taking over for Bob Iger as Disney CEO. But one thing hasn’t changed: consumers still seem to enjoy what Disney has to offer.

Correction: During its most recent quarter, the company posted a 70% revenue increase in its parks, experiences and products division, rising to close to $7.4 billion. An earlier version misstated the percentage and mischaracterized the dollar figure.

WATCH: CNBC’s full interview with Disney CEO Bob Chapek

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Disney streaming subscriber growth blows past estimates, as company beats on top and bottom line

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A performer dressed as Mickey Mouse entertains guests during the reopening of the Disneyland theme park in Anaheim, California, U.S., on Friday, April 30, 2021.

Bloomberg | Bloomberg | Getty Images

If Disney+’s subscriber growth is any indication, the rumors that the global streaming market is nearing saturation have been proven untrue.

On Wednesday, the Walt Disney Company reported that total Disney+ subscriptions rose to 152.1 million during the fiscal third quarter, higher than the 147 million analysts had forecast, according to StreetAccount.

At the end of the fiscal third quarter, Hulu had 46.2 million subscribers and ESPN+ had 22.8 million. Combined, Hulu, ESPN+ and Disney+ have over 221 million streaming subscribers. Netflix, long the leader in the streaming space, had 220 million subscribers, according to the most recent tally.

Disney shares rose more than 6% after the closing bell.

The streaming space has been in a state of upheaval in recent weeks, as Netflix disclosed another drop in subscribers and Warner Bros. Discovery announced a shift in content strategy. While Netflix expects subscriber growth to rebound, uncertainty has left analysts and investors wondering what the future holds for the wider industry.

Also Wednesday, the company unveiled a new pricing structure that incorporates an advertising-supported Disney+ as part of an effort to make its streaming business profitable.

During the fiscal third quarter Disney+, Hulu and ESPN+ combined to lose $1.1 billion, reflecting the higher cost of content on the services. Disney’s average revenue per user for Disney+ also decreased by 5% in the quarter in the U.S. and Canada due to more customers taking cheaper multiproduct offerings.

Starting Dec. 8 in the U.S., Disney+ with commercials will be $7.99 per month — currently the price of Disney+ without ads. The price of ad-free Disney+ will rise 38% to $10.99 — a $3 per month increase.

In addition, Disney lowered its 2024 forecast for Disney+ to 215 million to 245 million subscribers, down 15 million on both the low end and high end of the company’s previous guidance.

Disney had previously set its Disney+ guidance in December 2020 at 230 million to 260 million by the end of fiscal 2024. The company reaffirmed its expectation that Disney+ will become profitable by the end of its fiscal 2024 year.

Overall, Disney posted better-than-expected earnings on both the top and bottom line, bolstered by increased spending at its domestic theme parks.

Here are the results:

  • Earnings per share: $1.09 per share vs. 96 cents expected, according to a Refinitiv survey of analysts
  • Revenue: $21.5 billions vs. $20.96 billion expected, according to Refinitiv
  • Disney+ total subscriptions: 152.1 million vs 147.76 million expected, according to StreetAccount

Big quarter for parks

Disney’s parks, experiences and products division saw revenue increase 72% to $7.4 billion during the quarter, up from $4.3 billion during the same period last year. The company said it saw increases in attendance, occupied room nights and cruise ship sailings.

It also touted that its new Genie+ and Lightning Lane products helped boost average per capita ticket revenue during the quarter. These new digital features were introduced to curate guest experience and allow parkgoers to bypass lines for major attractions.

The company said it has been able to bring back in-park experiences such as character meet-and-greets, theatrical performances and nighttime events at Disneyland, which has allowed it to increase capacity at its parks, CEO Bob Chapek said during the company’s earnings call Wednesday. Disney has placed caps on attendance since it reopened after the initial round of pandemic closures in early 2020 and instituted a new online reservation system to control crowds.

“As it relates to demand, we have not yet seen demand abate at all and we still have many days when people cannot get reservations,” Christine McCarthy, Disney’s chief financial officer, said during the company’s earnings call. “So, we’re still seeing demand in excess of the reservations that we are making available for our guests.”

Per capita spending at domestic parks increased 10% during the most recent quarter, compared to the same quarter last year and is more than 40% higher than fiscal 2019, the company said. Occupancy at domestic hotels in the third quarter was 90%.

Chapek pointed to EPCOT’s new Guardians of the Galaxy Cosmic Rewind, the launch of the Disney Wish and the opening of Avenges Campus in Paris Disneyland as enhanced offerings for guests that have driven traffic and revenue to this division.

McCarthy noted that international visitors to domestic parks have continued to be slow to return. Traditionally, those parkgoers account for around 17% to 20% of total guests.

“We expect international visitation when its fully back to actually be additive to margins, because those guests tend to stay longer at the parks and they spend more money when they’re there, as well,” she said.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC. Comcast owns a stake in Hulu.

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Serena Williams announces her retirement from tennis

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Tennis legend Serena Williams announced her retirement in a Vogue article published Tuesday.

“I have never liked the word ‘retirement,'” Williams wrote. “Maybe the best word to describe what I’m up to is ‘evolution.’ I’m here to tell you that I’m evolving away from tennis, toward other things that are important to me.”

Williams, who turns 41 next month, has 73 career singles titles, 23 career doubles titles and over $94 million in career winnings.

Williams is widely hailed as one of the greatest athletes of all time. In her Vogue piece, she noted that some of her detractors point out that she hasn’t won the most Grand Slam titles in women’s tennis history, however. 

“There are people who say I’m not the GOAT because I didn’t pass Margaret Court’s record of 24 grand slam titles, which she achieved before the ‘open era’ that began in 1968,” Williams wrote. “I’d be lying if I said I didn’t want that record.”

She said she will retire after the U.S. Open, which will run from late August into September. A victory there would tie her with Court’s Grand Slam record.

“I don’t know if I will be ready to win New York. But I’m going to try,” Williams wrote about the tournament, which is played in Queens.

She has counted sponsorships from companies including Nike, Audemars Piguet, Away, Beats, Bumble, Gatorade, Gucci, Lincoln, Michelob, Nintendo, Wilson Sporting Goods, and Procter and Gamble.

“I never wanted to have to choose between tennis and a family. I don’t think it’s fair,” Williams wrote. “If I were a guy, I wouldn’t be writing this because I’d be out there playing and winning while my wife was doing the physical labor of expanding our family.”

Williams focused on her family in the announcement, writing that her nearly five-year-old daughter wants to be an older sister. Williams is married to Reddit founder Alexis Ohanian.

“I have to focus on being a mom, my spiritual goals and finally discovering a different, but just exciting Serena. I’m gonna relish these next few weeks,” Williams wrote in an Instagram post Tuesday.

Professionally, she looks to expand Serena Ventures, a small investment firm of six people that was one of the first investors in MasterClass. Her firm raised $111 million in outside financing this year.

Williams wrote that only 2% of venture capital goes to women and that “in order for us to change that, more people who look like me need to be in that position, giving money back to themselves.”

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