The Intel Report: The Mobility and Auto News That Matters

BY AUTOMOTIVE VENTURES | May 20?2024?| VIEW ONLINE ??

Steve kicks off the 2024 Autonomous e-Mobility Forum in Doha, Qatar: discussing the Future of Mobility.?| Autonomous e-Mobility Forum

What We're Reading

???? Automotive

Robyn Denholm, chair of Tesla's board of directors: “If I had a magic wand, Twitter wouldn’t exist.”?Denholm faces the defining moment of her six-year tenure: convincing shareholders at Tesla’s annual meeting next month to award Musk the largest payday in US corporate history, and to approve reincorporating in Texas, following a Delaware court’s damning ruling that voided Elon Musk's record $56bn pay package. | Financial Times ($)

Ford has issued a “call to action” to suppliers, asking for help reducing costs on electric vehicle production, where the automaker is bleeding billions of dollars.?| Automotive News?($)

Polestar is dumping its direct-to-consumer sales model in Australia. Instead, the electric car brand will build an Australian dealership footprint.?| CarSales Australia

Why has the number of franchise dealers in the U.S. persisted at ~18k? Consumers appreciate convenience: Half of all new cars sold in the USA in recent years were sourced from a dealer just 9-12 miles from the buyer’s address. And 4 out of 5 were from dealers 26-33 miles away.?| Glenn Mercer

The UAW hailed its new contract with Stellantis in November as a triumphant moment, winning $19 billion in new U.S. investment, 25% wage increases and full-time status for more than 3,000 temporary workers within just the first year. But not all have been able to reap the spoils of that historic deal. Hundreds of Stellantis workers have since found themselves out of a job, and the automaker has raised the possibility of additional layoffs as it absorbs the higher labor costs, shifts to building more electric vehicles and confronts economic uncertainty.?| Automotive News?($) ?

???Electric Vehicles (EVs)

Fisker is winding down its operations, having burned through nearly all its cash and defaulting on a debt agreement that leaves it on the hook to repay around $180 million. Fisker’s collapse would add to the pileup of troubled and failed automotive startups that rode the wave of investor zeal for EVs during the pandemic. These young companies raised billions of dollars with bold promises to upend the more than century-old car business.?| The Wall Street Journal?($)

Many of the EV startups went public in 2020 and 2021 via mergers with special purpose acquisition companies. But the results were not as hoped, leading to bankruptcies, phenomenal cash burns and, for those still in business, an uncertain path to profits. Last year, EV startups were starting to come to terms with the complexities and elephantine capital needs of building functioning electric vehicles. High interest rates and inflation were persistent. Now, the situation has gone from bad to worse. | Automotive News ($)

Electric vehicle sales have risen sharply this year, led by growth in China and a strong demand for hybrid vehicles in particular, according to a report from Counterpoint Research.?The report showed that sales of EV units globally, including fully battery-powered vehicles (BEVs) and hybrids, were up 18% in the first three months of 2024 compared with the same period last year.?Sales of hybrid vehicles, which have both electric motors and combustion engines, vastly outpaced those of full battery-powered alternatives, rising 46% year over year. BEV sales rose 7%.?| CNBC

In the U.S., hybrid sales rose 62% from a year earlier in February, while EV sales fell. Only the much smaller market for plug-in hybrids grew faster. The trend is similar in Europe. Crucially, hybrids are highly profitable, unlike the EVs sold by Ford and General Motors. Honda said Friday that its hybrids in the U.S. commanded the same margins as regular cars but at higher prices.?| The Wall Street Journal?($)

JLR sees the U.S. as a crucial market for Jaguar's relaunch as an upscale all-electric brand that will compete with Bentley and Porsche instead of Mercedes-Benz and BMW. I'm not so sure that there's a big market right now for high-end EVs??| Automotive News?($)

Ford is rethinking its EV strategy, which includes reducing spending by $12 billion on battery-powered models, delaying new EVs, cutting prices, and postponing and shrinking planned battery plants. Ford has forecast EV losses of up to $5.5 billion this year and CEO Jim Farley recently said its EV unit, Model e, “is the main drag on the whole company right now.” As EV prices have plunged and demand has slackened, Ford’s losses per EV exceeded $100,000 in the first quarter, more than double the deficit from last year.?| Automotive News?($)

Mercedes-Benz CEO Ola Kallenius said in February that the goal of switching completely to electric cars by 2030 would not be achieved under current market conditions, as demand would not keep pace. Mercedes expects electrified cars – full-electric and plug-in hybrid -- to account for up to half of sales by the end of the decade.?Internal combustion engine (ICE) models could be sold "well into the 30s" if there is sufficient demand, Kallenius said last week. In February, the company cautioned that EVs would remain pricier than ICE cars for years because of slower-than-expected demand and acknowledged the underwhelming consumer appetite for EVs. | Automotive News ($)

Volkswagen Group’s strategy to go all-in on full-electric vehicles is no more. The core VW brand, which pitched its ID family of battery-electric cars as central to its future, has admitted it will need more plug-in hybrids as BEV sales decelerate. This marks just the latest adjustment VW has made to its electrification strategy after the company had problems with several model releases and fell behind in China, where local brands now dominate. | Automotive News ($)

Volvo Cars is all in on electric vehicles, vowing to go all-electric in 2030. Unfortunately for the brand, consumers in the world's two largest auto markets aren't as enthusiastic about its zero-emission offerings. U.S. sales of Volvo's battery-powered XC40 Recharge and C40 Recharge crossovers plummeted 65% in the first quarter to just 970 vehicles.?| Automotive News?($)

Tesla experienced a 12% decline in March registrations compared with the same month last year to 50,474. In February, Tesla suffered a 25% drop compared with the year-earlier month. | Automotive News ($)

What to do if you're an automaker and retail sales start to soften? Increase sales into fleet. Leasing and rental-car company purchases comprised 44% of Tesla sales last year in the UK and 15 EU countries, according to market researcher DataForce. | Automotive News ($)

California Republican voters are linked to 21% of EVs owned in the state, research from the Environmental Defense Fund and the data firm L2 found, just below their 24% proportion of state voter registration. That means hundreds of thousands of EVs are being driven by Republicans in a state where nearly 2 million have been sold. | Politico

Once all-in on EVs, automakers are now turning to older technologies, including plug-in hybrids and conventional hybrids, as consumers tiptoe rather than race into electric transportation. Contrarian Toyota, which has deemphasized EVs in the near term in favor of hybrid versions of most Toyota and Lexus models, looks to be the big winner. | Automotive News ($)

When Toyota introduced the world’s first hybrid gasoline-electric vehicle in 1997, it made a loss on every Prius it sold. Decades later, booming sales in the category are delivering a much-welcome cash boost. The world’s largest auto manufacturer recently reported annual operating profit of ￥5 trillion ($32 billion), the first time any Japanese company reached that threshold, with an industry-topping margin of 11.9%.?| The Japan Times

The number of buyers in the U.S. considering an electric vehicle purchase in 2024 has fallen from a year ago due to a shortage of affordable cars, inadequate charging infrastructure and ignorance about EV benefits, a study by J.D. Power has shown. The study showed that 24% of prospective vehicle buyers were "very likely" to consider purchasing an EV in 2024, down from 26% a year ago. The percentage of those who said they were "overall likely" to consider purchasing an EV this year decreased to 58%, from 61% in 2023.?| Reuters?($)

Recent data from Stable Auto has illuminated a rapid evolution of EV charging utilization across the United States. Charger utilization rates have surged, particularly for Level 3 "L3" (DCFC), marking a remarkable 58% increase in the last 11 months, growing from an average of 11.4% in April 2023 to 18.1% in March 2024. New Jersey had utilization rates as high as 27.3%, while South Dakota struggled with a low utilization rate of 0.4%. | Stable Auto

Truck manufacturers need to make significant advances in battery weight, range and charging times if battery-electric trucks are to seriously challenge diesel rigs in a highly competitive freight sector that runs on thin margins. Battery-electric trucks cost about three times as much to purchase as a diesel rig. There are federal and state programs to help offset the purchase costs, but operating costs and other issues present big hurdles.?Truckers say battery-electric truck operations are too difficult to set up and too expensive and inefficient to run. It can take years to install on-site charging facilities for trucks that can travel less than half as far as diesel rigs between refueling and that require at least several hours to recharge.?| The Wall Street Journal?($)

Purdue University and the Indiana Department of Transportation are creating a roadway capable of wirelessly charging electric vehicles, including Class 8 trucks, traveling at highway speeds. Researchers say that could lead to smaller batteries and lower barriers to electric fleets.?| Freightwaves ?

????? China

As part of the long-awaited tariff update, Biden will increase tariffs this year under Section 301 of the Trade Act of 1974 from 25% to 100% on EVs, bringing total duties to 102.5%, from 7.5% to 25% on lithium-ion EV batteries and other battery parts and from 25% to 50% on photovoltaic cells used to make solar panels. Some critical minerals will have their tariffs raised from nothing to 25%.?| Reuters?($)

Moody's estimates that only 16% of the EVs made in China are exported, and the US isn’t even among the top 10 destinations for Chinese cars overall.?China accounted for 2% of EV imports into the US — including plug-in hybrids — in 2023. That compared to 22% for Germany, 21% for South Korea, and 18% for Japan. Most of the rest of the US’s imports came from European countries and Mexico. | Financial Times ($)

U.S. automakers exported 155,337 vehicles worth $6.3 billon to China in 2021, according to the most recent U.S. government data. China sent just 64,067 vehicles to the United States in the same year, worth $1.45 billion.?| Reuters?($)

Chinese automakers will focus on global markets outside the U.S. now that the Biden administration has declared America off-limits to made-in-China electric cars. The 100% tariffs on Chinese EVs announced Tuesday in Washington are more of a symbolic blow than a practical one for Chinese carmakers. They have almost no business in the U.S. and already recognized that the political hurdles to entering the market were insurmountable. The cold shoulder from Washington won’t change Chinese EV makers’ ambitions for global dominance, but it will spur adjustments. The companies will emphasize emerging markets and localize production where possible, seeking to woo governments that are more open to Chinese EVs. | The Wall Street Journal ($)

In the first quarter, GEELY was the only Chinese automaker to export to the United States with 2,217 cars, according to data from the China Passenger Car Association. Geely has sold some EVs in the U.S. market under its Polestar brand. China's Geely and Sweden's Volvo Cars founded EV maker Polestar Automotive, which makes most of its cars in China. Volvo is majority-owned by Geely.?| Reuters?($)

BYD, the leader in electric vehicles in China, introduced its first truck in Mexico, the Shark plug-in hybrid truck Tuesday at an event in Mexico City. While BYD has said previously the Shark will be distributed globally, the automaker doesn’t have any plans to sell in the U.S. — the biggest single market for pickups — at the moment.?| Automotive News?($)

Stellantis is seeking the maximum manufacturing flexibility to navigate potential customs duties as it takes on China's budget electric vehicle (EV) players with models from its own Chinese joint venture (JV) partner Leapmotor. The two groups said on Tuesday their Leapmotor International JV would start selling two Leapmotor models in Europe from September through an initial network of 200 dealerships. The aim is to tempt buyers with a model priced at under 20,000 euros ($21,640), a level that would allow it to compete with models from rivals such as Chinese EV giant BYD.?| Reuters?($)

U.S. and Japanese automakers are falling further and further behind in China. Chinese domestic brands now have 53% of the market, up from just 37%, led by the likes of BYD to meet surging EV demand. | Bloomberg ($)

Glenn Mercer reports that most Chinese light-duty vehicle exports at present are gasoline-powered (aka ICE, internal combustion engines). | Glenn Mercer

Canada is seeing a surge of imports of Chinese-made EVs, particularly Tesla models made in Shanghai. The number of cars arriving from China at the port of Vancouver rose more than fivefold last year, to 44,400, after Elon Musk’s automaker started shipping Model Y vehicles made there. The situation is drawing howls of protest from some auto-industry players who want Canadian Prime Minister Justin Trudeau to follow the White House and do more to protect the domestic industry.Canada imposes only a small tariff on Chinese-made vehicles — about 6%. It also allows consumers to tap a federal rebate program when they buy foreign-manufactured EVs. Since Tesla started exporting from its Shanghai factory last year, many purchasers have begun using that incentive. | Bloomberg ($) ?

???Micromobility

New York City’s streets were laid out before anyone knew how they would ultimately be used — long before cars were even invented. The first city planners could not have anticipated Uber vehicles, let alone Amazon deliveries or commuters on electric scooters. Today, the city encourages residents and visitors to ride bikes. New York has bike lanes and a flourishing bike share program, plus an explosion of food delivery powered by e-bikes. The renewed popularity has also come at a grave cost: Last year 30 cyclists were killed on city streets, and 395 were severely injured.?| The New York Times?($)

Self-driving tech company Waymo has found itself entangled in the burgeoning trade war between the United States and China. Thousands of robotaxis the company plans to deploy in the U.S. could be subject to large new tariffs on electric vehicles imported from China. The White House unveiled the new tariffs Tuesday. Waymo has staked its long-term vehicle supply on a robotaxi codesigned and built by Chinese automaker GEELY. The robotaxi is based on Geely's all-electric ZEEKR branded vehicle.?| Automotive News?($)

According to credit card data, only about 2% of the Tesla owners who used Full Self-Driving in the free month trial ended up buying it after. Starting in March, Tesla offered a month of free trial of its Full Self-Driving (FSD) package to all its owners in North America. The automaker tried to increase the take rate of FSD with the new version by making more people try it with the free trial, and then tempting them to buy or subscribe to it with the price reduction. However, some data indicates that Tesla wasn’t really successful with the strategy. YipitData accessed credit card data from about 3,500 Tesla owners who participated in the trial and found that only 50 bought or subscribed to FSD after the trial.?| Electrek

BMW, Hyundai, Mercedes-Benz, NIO and Tesla are among the rising number of automakers deploying robot dogs and human-like robots in their factories as next-level automation and AI slowly redefine the relationship between people and machines.?| Automotive News?($) ?

??? Climate

Donald Trump vowed to issue an executive order targeting offshore wind development if he wins a second term as president, making his most explicit threat yet toward the growing industry. The presumptive Republican nominee derided offshore wind projects as lethal for birds and whales.?| Bloomberg?($) ?

?? Connectivity

The solar storm that brought the aurora borealis to large parts of the U.S. also broke critical GPS and precision farming functionality in tractors and agricultural equipment during a critical point of the planting season.?The outages highlight how vulnerable modern tractors are to satellite disruptions, which experts have been warning about for years.?| 404 Media ?

?? Aviation

Airlines are using artificial intelligence to save fuel, keep customers informed and hold connecting flights for delayed passengers.?| The New York Times?($)

There are 100,000 ways to assign five planes to 10 gates at an airport. Dial that up to 50 planes and 100 gates, and the number of possibilities balloons to 10 to the hundredth power—far more than the number of atoms in the visible universe. No conceivable conventional computer could keep track of all these possibilities.?But a quantum computer potentially could. | The Wall Street Journal ($) ?

????Car of the Week

We have a new "Car of the Week": a 1973 DeTomaso Pantera.?Yes, those rear tires are 345s. | Bring A Trailer

Have a great week,

Steve Greenfield