The EV pricing death-match - MobilityBRIEF ??????? - February 6th
Hune Mobility (ex-The Fast Lane)
A place for sharing highlights, analysis and market data for the ever changing mobility industry.
In the news this week
The EV pricing death-match
Intensifying competition, disappointing sales in China, layoffs, hiring freeze, increasing regulatory pressures on FSD/Autopilot, Elon Musk’s antics… Reasons for Tesla shares dip last year were plenty as the confidence placed in the brand to maintain its leadership was eroding. The EV leader could have bet on trusting its strengths and simply wait for the situation to improve itself on the long run, but Tesla preferred to use these strengths to give the EV market a shake-up, slashing its prices by up to 20% in Europe, US and China.
A shock for current Tesla owners, who seen the residual value of their car dropping, a delight for EV prospective buyers as Tesla cars are considered by some as a benchmark in the industry. So what’s on Tesla’s mind with this maneuver? It’s obviously more of a direct hit to its competitors than a selfless gift to sweeten the current inflation for its customers. Tesla is willing to pressure its competitors by turning its large inventory and its top-of-the-industry margins (see fig below) into lethal weapons constraining them to either follow the price cuts hence threatening their own profitability, or let Tesla gain market shares and volumes on the future core market of the automotive industry.
Is it working though? Well, in China, yes: +18% sales in January compared December, 10% more than last year, right behind BYD in EV sales. It’s also effective on Tesla’s direct competitors who, despite following the price cuts, have seen their sales sharply falling: -46% from December for Nio, -54% for Xpeng, -29% for Li Auto (respectively -12%, -60% and -23% from last year). Impressive. In the US, only Ford has reacted, cutting the prices of its Mach E flagship by up to 9% (not in EU), a move they correlate with the increasing manufacturing output for this model. But other US and European manufacturers don’t budge, with Mary Barra (GM CEO) saying ??We think, right now, we're priced where we need to be??. Meanwhile, two European startups focusing on solar EV, Sono Motors and Lightyear, are either struggling to find financing or completely shutting down: is the pricing war already making investors even more frisky on EV startups? Some questions remain then: will Tesla be able to maintain this pricing policy on every market? If the Shanghai factory will reopen to keep up with the demand, the European inventory seems to continue to pile up (see fig below) and some prices in the US have been readjusted upwards, following changes in local EV tax credits rule. Is the lack of reaction from legacies an admission of impotence or a show of strength and confidence? In both EU and US, the consequences will likely be observed in February, as the prices cuts only took effect from mid-month. Will it hurt the confidence of its current customer base, as the prices for used Teslas fell by 8% in the US? Or should we just praise the fact that it could help EV democratization? Game is on.
News of the week
领英推荐
?? Micromobility
After Madrid, Lyon is in the spotlight as?Dott?and?Tier?have been selected for an additional four years to operate their e-scooter services. Both actors were operating in Lyon since 2020 but the new tender was much stricter and a strengthening of security measures will be put in place: allocated parking, speed limited to 20kmph, a reaction test in the evening (don’t drink and drive folks), cheaper rides if you wear a helmet, etc… A good signal before Paris vote one -scooters.
?? Automotive & Manufacturing
BYD never ceases to amaze us . The Chinese manufacturer sold over 1.86 million cars in 2022 (more than the cumulated past four years!) and expects a net profit of 17B yuan versus 3B in 2021 (+500%). The success story continues in 2023 as BYD announced on Tuesday to start selling its ATTO 3s in Japan, and on Wednesday that its total NEVs monthly sales reached 151,341 units, a YoY growth of 58.6%.
Unfortunately the news is not so good for all manufacturers and especially newcomers , as Arrival, the British EV manufacturer, is (again) laying off 50% of its remaining employees (nearly 800) to reduce costs. And some of its best talents are already exoding as Jeremy Offer, ex-Chief Design Officer and Design SVP, left for Volvo as Global Head of Design.
Let’s talk investments: General Motors will invest $650M in US lithium mining to secure EV raw materials. A record for a carmaker, in a move securing part of its mineral sourcing. This will be done in several stages, the first one ($32M) being made by mid-2023.
Crossing the Atlantic, ZF and Wolfspeed, American semiconductors manufacturer, announced a partnership to establish joint R&D center and to support the construction of the world’s most advanced and largest 200mm Silicon Carbide device fab in Ensdorf, Germany. Wolfspeed's investment is be part of the Important Project of Common European Interest (IPCEI). This announcement comes at a time when Brussels wants to retaliate against the massive aid provided by the Inflation Reduction Act (IRA). Will it be enough to reassure the European industry?
?? AV
Hey Nono, bring me a beer! It sounds like a doggy name but it is not. Nono, Natacha and Loulou are grocery delivery robots developed by Turkish company?Delivers.ai ?and are currently tested in Zaventem, Belgium with Carrefour. They are 100% electric and offer autonomous delivery in 15 minutes.?Delivers.ai ?also announced this week that they have secured investment by Ford Motor Company and Ford Otosan’s driventure. No turbulence in sight!
When it comes to human life’s, there’s no messing around. The U.S. Department of Justice has requested documents on Full Self-Driving (FSD) and Autopilot to Tesla. The software is already being investigated by the National Highway Traffic Safety Administration (NHTSA) following crashes into stopped vehicles.
Self-driving cars are a trending topic for years now but have you ever thought of their impact on carbon emissions? We bet you didn’t but the MIT did and they found out that the on-board systems will generate as many greenhouse gas emissions as all the data centers in operation today. Difficult to imagine the impact but let's not be defeatist, a solution remains: work hard on hardware to improve technological efficiency.
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