Intel Report | June 24 | The Weekly Automotive & Mobility News That Matters

BY AUTOMOTIVE VENTURES | June 24?2024?| VIEW ONLINE ??

Congratulations to Automotive Ventures portfolio company Kinetic for raising their Series B round. | Automotive Ventures

What We're Reading

???? Automotive

The 亚马逊 /Hyundai new vehicle sales pilot is expanding: Amazon is continuing to "add new dealers to the beta," and, in addition to adding employees, it will be expanding its "beta metros." The company did not provide further details on its plan to include dealers beyond the initial 18 Hyundai dealerships that participated in the initial pilot. Hyundai and Amazon are in the process of adding dealers and are planning to go live with an expanded pilot July 1.?| Automotive News?($)

CDK Global , in a note to customers, for the first time referred to the crippling cyberattacks that began June 19 as a ransom event and told dealers the restoration process for its systems was underway. “We anticipate the restoration process to take several days and not weeks for the major applications and ask for your continued support as we bring systems back online,” the company's June 22 update said.?| Automotive News?($)

Starting next month and for most of the next two years, the number of lease turn-ins — which fuel new-vehicle sales, provide valuable feedstock for profit-rich certified pre-owned programs and lure loyal customers back to the dealership — will decline rapidly.?| Automotive News?($)

Unlike mass-market automakers, Ferrari 's margins rival luxury titans like LVMH and Hermès, having posted a 27% operating profit margin last year. In contrast, Volkswagen and 三菱商事 hover around a 7% margin, 福特 is close to 3%, and even rival Porsche AG only aims for 20%.?Ferrari delivered only ~14,000 cars in 2023, but it has plans to ramp capacity up to as much as 20,000 a year to accommodate the new EV models.?| Sherwood

Tesla shareholders are fully on notice about Elon Musk’s various shortcomings as the Tesla CEO: spending time and Tesla shares to buy Twitter , allegedly treating female co-workers inappropriately, threatening to spend his time on side businesses. All the while, the EV sector gets more cut-throat every year. The puzzle of Musk is that he clearly gets a longer rope from his shareholders and adoring fans than perhaps any other CEO in history.?| Financial Times?($)

A California federal judge greenlit claims that Tesla maintains a monopoly in the electric vehicle repairs and services markets, a victory for EV customers arguing the Elon Musk-led car company is breaking antitrust law. | Bloomberg Law?($)

LexisNexis Risk Solutions released its 2024 U.S Auto Insurance Trends Report, which found that distracted driving is more prevalent among younger drivers, especially Gen Z. Risky driving behavior rises among younger demographics as distracted driving violations by Gen Z increased 24% from 2022 and a staggering 66% in comparison to 2019.?| PR Newswire ?

???Electric Vehicles (EVs)

Donald Trump has made bashing EVs a cornerstone of his campaign, effectively turning them into culture war fodder in an election year. Meanwhile, a fossil fuel industry group is pouring millions of dollars in ads in swing states tying Democratic senators to Biden’s EV push. Trump has vowed to roll back Biden’s electric vehicle efforts and warned “you’re not going to be able to sell those cars” if he becomes president.?| The Washington Post?($)

New Tesla registrations fell 17% in April, marking three consecutive months in the red. Tesla's share of the U.S. EV segment dropped to 46.3% in April from 63.8% a year earlier, S&P Global Mobility said. | Automotive News ($)

With signs of slowing growth in the premium EV market, manufacturers have been working on a substantial pivot from luxury to practicality. The $25,000 economy electric car is the industry’s new target, and a number of models are set to hit the road within a year.?Whether they can win over the next wave of American EV owners — and fend off Chinese imports currently held at bay by soon-to-be-102.5% tariffs — depends on how much range and how many features can be squeezed in.?| Bloomberg?($)

While EV technology is still improving and the popularity of electric cars is still increasing, sales growth has slowed. Many carmakers are rethinking manufacturing plans, cutting the numbers of EVs they had planned to produce for the US market in favor of combustion-engined and hybrid cars.?Electric vehicles have also found themselves at the intersection of two competing Biden administration priorities: tackling climate change and protecting American jobs.?| Financial Times?($)

Fisker , a much-hyped startup that sought to mimic Tesla’s success, has filed for bankruptcy, roughly a year after releasing its first electric vehicle model.?The filing marks the second time an automotive venture by car designer Henrik Fisker has gone bust and follows weeks of quietly winding down its operations.?| The Wall Street Journal?($)

Sales of new battery-electric cars in the European Union dropped 12% in May from a year earlier, led by a 30% plunge in Germany.?| Reuters?($)

In 2019, France and Germany agreed to pump billions of euros into a plan to boost Europe’s battery industry and catch up with China and the U.S. Five years later, that effort is running out of steam. As electric-vehicle sales slow, companies including Volkswagen, Stellantis and Mercedes-Benz AG are scaling back or refocusing battery projects. Chinese manufacturers are slashing costs and the U.S. is drawing away investment with lucrative subsidies. China already has excess battery-making capacity, can make cells at a fraction of the cost it takes in Europe, and has a head start on the next generation of cell technology. All of this means the continent risks falling further behind in the race to build and power the EVs of the future. | Automotive News ($)

In most cases, auto manufacturers don’t directly source battery materials, and it’s difficult if not impossible to trace the metal in a given car to a specific nickel facility. But an extensive review of Chinese, Indonesian, South Korean and U.S. corporate filings by Bloomberg Businessweek , as well as interviews with industry experts, shows that nickel from the challenged Indonesia Morowali Industrial Park (IMIP) is present in the supply chain that feeds virtually every major seller of EVs.?| Bloomberg?($)

Few cars have captured the popular imagination quite like the EV1, the pioneering electric vehicle that 通用汽车 launched a generation ago. The EV1 wasn’t unique only because of its fuel source; the car also introduced many features, such as regenerative braking and drive-by-wire technology, that were transformative. Had GM nurtured the EV1 instead of ditching it, the automotive industry might look very different today.?| Fast Company ?

????? China

The traditional Detroit automakers – General Motors, Ford and Stellantis – should exit the Chinese market “as soon as they possibly can,” 美国银行 ’s top automotive analyst said. The warning from BofA Securities research analyst John Murphy comes amid unprecedented competition in China – the world’s largest auto market – and as the country significantly increases vehicle production for Chinese consumers as well as for global exports. Murphy, who has previously asked General Motors about exiting the market, said the “D3” automakers need to focus on their core products and more profitable regions.?| CNBC

Michael Dunne : "Think of the new European tariffs on Chinese cars like a glancing blow thrown by a fading heavyweight fighter, one that will not stop China's advance. The reality is that the Chinese are already woven into the fabric of Europe's car markets—and often in partnership with the Europeans themselves. But the tariffs may be too late and too little. The Chinese are already inside – and they have all the leverage. As one Western executive put it to me this week: "The Europeans are screwed."".?| The Dunne Insights Newsletter

The U.S. is closing its borders to Chinese EVs before they even launch. The Biden administration last month raised the total tariff rate to 102.5% on Chinese EVs, despite extremely low imports. Canada, whose car industry is tightly integrated with the U.S., is considering new tariffs too. In case sky-high import duties don’t keep Chinese EVs away—for example if they are built in Mexico to benefit from the country’s free-trade agreement with the U.S. and Canada—Washington also launched an investigation in February to assess their security risks. This could be an even more potent blocking tool. If President Biden loses November’s election, a second Trump administration would likely be even more hawkish. | The Wall Street Journal ($)

A Stellantis joint venture with Leapmotor has started production of the Chinese automaker’s cars at Stellantis' Tychy plant in Poland. Stellantis will begin sales of Leapmotor EVs in nine European markets in September. | Automotive News?($)

Mining giant Brazil has big ambitions to build a rare earths industry as Western economies push to secure the metals needed for magnets used in green energy and defence and break China's dominance of the supply chain. Working to its advantage are low labor costs, clean energy, established regulations and proximity to end markets, including Latin America's first magnet plant which would provide a ready buyer for the metals.?| Reuters?($)

Zhu Min, the economist and member of China’s powerful five-year plan committee:

On government subsidies for EVs: "The answer is no, because most of the EVs produced in China are [manufactured by] the private sector. China does subsidize the consumer, but now not very much so. But that is open to everyone: if you buy a Tesla, you get a subsidy. So it’s sort of universal. The Chinese government [did] put money into charging, providing infrastructure to make things easier, this is true."

On dumping EVs into other countries: "Is there dumping [when a product is exported at a lower price]? The answer is no. 比亚迪 sells the same car in China for around €20,000, but here [in Brussels] it is €40,000, and that is still lower than the €60,000 for a Volkswagen .?.?. so [VW] still makes more money per car per sales. So it’s not dumping. Overcapacity is a concept that’s not easy to define. EV companies are competing furiously?.?.?.?they are evolving very fast. A car is really now [like] a semiconductor, so people say it’s quite a lot of capacity made, but it’s just evolving?.?.?.?the adaptation [of the semiconductors] is moving very, very fast."?| Financial Times?($)

China spent $230.8 billion over more than a decade to develop its electric car industry, according to analysis by the U.S.-based Center for Strategic and International Studies (CSIS) .?| CNBC

??? Autonomy & Robotics

One of the largest accident studies yet suggests self-driving cars may be safer than human drivers in routine circumstances – but it also shows the technology struggles more than humans during low-light conditions and when performing turns.?| NewScientist

The advancements in artificial intelligence that brought us AI chatbots and image generators are now fueling a fresh approach to self-driving cars. Autonomous vehicle (AV) development is essentially stuck — it's still too difficult and expensive to scale up the technology into a profitable business. By tapping the power of generative AI, some companies see a faster, more capital-efficient way to teach robots to drive. As AI begins to leap from the digital realm into the physical world, investors are pouring fresh capital into this next phase of AV development — "AV 2.0."?| Axios ?

??? Climate

微软 hopes to harness fusion by 2028, an audacious claim that bolsters the company's promise to transition to green energy but distracts from current reality. In fact, the voracious electricity consumption of artificial intelligence is driving an expansion of fossil fuel use — including delaying the retirement of some coal-fired plants. In the face of this dilemma, Big Tech is going all in on experimental clean-energy projects that have long odds of success anytime soon. In addition to fusion, they are hoping to generate power through such futuristic schemes as small nuclear reactors hooked to individual computing centers and machinery that taps geothermal energy by boring 10,000 feet into the Earth’s crust.?| The Washington Post?($) ?

?? Aviation

More than two dozen major eVTOL builders have been founded in the past decade, and a few are nearing commercial certification from the U.S. Federal Aviation Administration or its European counterpart, the EASA - European Union Aviation Safety Agency .?Each company is working on its own homegrown aircraft design, but all have the same goal: to provide on-demand air trips no longer than 18 to 25 miles—the “sweet spot” range for first-generation, battery-electric eVTOL taxis.?| Scientific American ? ?

????Car of the Week

We have a new "Car of the Week": a 1981 BMW M1. | Broad Arrow Auctions

Have a great week,

Steve Greenfield