■Reuters Auto File■ By Joseph White
■March 16, 2024 Auto File, By Joseph White, Global Automotive Correspondent
■Greetings from the Motor City!
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Beware the Ides of March, eh? Yes, today is that day, and if you are a Tesla shareholder you don’t need a reminder to be anxious.
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The downward spiral of what is still the world’s most valuable automaker has erased nearly $250 billion - the value of five Ford Motor Companies - from the collective wealth of Tesla’s owners, including Elon Musk, since the start of the year.
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A lot has changed in the World of Cars since the future was all about EVs and Tesla was worth $1 trillion. Yesterday, brokerage Piper Sandler said it was launching coverage of “five cornerstone stocks in the automotive sector.”
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Are they EV companies? Autonomous vehicle software builders?
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Nope. They are the Motor City Three and two well-established auto suppliers, Borg Warner and Mobileye. Of the MC3, “our favorite is Stellantis,” Piper analyst Alexander Potter wrote in a note. Stellantis – one of the companies along with Toyota that has been the slowest to launch electric vehicles.
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Apparently, it is not sunset time for legacy automakers just yet. We’ll find out why – and look at a new deal pointing the way to EV industry consolidation.
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Have a great weekend! Here we go -
Today -
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Tesla: Not going to the moon this week. Reuters/Cheney Orr
Wall Street rethinks Teslamania
Tesla hit an ignominious milestone Thursday when its shares replaced Boeing as the worst performing stock on the S&P 500 index. ?Worse off than Boeing is not a good place to be these days.
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Tesla shares edged up Friday morning. Still, they have shed nearly 35% this year as investors reassessed how rapidly electric vehicles will replace legacy automakers’ combustion models. The consensus: Not as fast or as profitably as Elon Musk and other EV advocates expected.
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One catalyst for this week’s selloff was a scorching downgrade by Wells Fargo analyst Colin Langan who called Tesla a “growth company with no growth.” Other analysts have drawn similarly bearish conclusions from Tesla’s continued price cutting, the short term disruption to production at the automaker’s Berlin factory, intensifying competition from Chinese rivals and signs that the pace of EV demand growth in the United States and Europe is shifting to a lower gear.
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Investors who bet against Tesla by putting money into EV laggards Toyota (up 27% year to date) and Stellantis (up19%) would have done better since Jan. 2.
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Tesla got some good news over the past 24 hours. Elon Musk was in Germany on Wednesday to celebrate the re-start of production at the Berlin Gigafactory following a suspected arson attack on its power supply.
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India’s government on Friday said it would cut the tax on a limited number of imported EVs for companies that committed to investing $500 million in manufacturing facilities within three years. Tesla has been lobbying for just such a deal – though rivals may try to squeeze through the same opening.
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Tesla shares still trade at nearly 38 times earnings – a far richer multiple than GM (5.38) Toyota (10) or Ford (11).
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The next check point for investors who believe Tesla’s lofty valuation is justified will come on or about April Fool’s Day, when Tesla should release its first quarter delivery figures.
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Nissan's Leaf gets left behind. REUTERS/ Androniki Christodoulou
Honda, Nissan team up to chase BYD, Tesla
Japan’s No. 2 and No. 3 automakers said they have agreed to study how they could consolidate electric vehicle and software development.
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The preliminary agreement between Honda and Nissan could fizzle – as partnerships between auto industry rivals often do. Just ask Nissan and Renault.
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But even talks between the Japanese rivals are noteworthy, because they underscore the pressure on legacy automakers and struggling EV startups to put aside big-budget efforts to develop unique EV technology, and start standardizing and sharing to match Tesla's technology and the Chinese EV industry’s superior economies of scale.
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A Jeep Wrangler 4xe plug-in hybrid. Reuters/Andrew Kelly?
All in on Hybrids
U.S. sales of gas-electric hybrid vehicles have accelerated this year, and automakers and suppliers are doubling down on investments that count on demand for hybrids to keep growing for years to come – notwithstanding California’s call to phase out all combustion vehicles by 2035.
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U.S. sales of hybrids – including those that plug in to the grid to enable 20, 30 or 40 miles of petroleum free driving – rose by 49% in 2023 from 2022, and are up 177% since 2020, according to S&P Global Mobility. Fully electric vehicle sales are up 320% since 2020, but they rose by 49.6% year over year in 2023 – impressive, but slower than the change from 2020 to 2021.
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Hybrids outsold EVs in the U.S. market overall in 2023, S&P data show. Certain hybrid models – Ford’s Maverick and F-150 hybrids, the Honda CRV, the Toyota Sienna and RAV 4, Jeep’s plug-in Wrangler 4xe – are among the industry’s fastest-selling models.
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Ford is adding production for the Maverick and F-150 hybrid at the same time it throttles back on building electric F-150 Lightning trucks.
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The hybrid bump comes as the Biden Administration next week is expected to back away from earlier proposals that effectively mandated that electric vehicles account for 67% of new cars and light trucks sold in 2032. ?
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Chery’s Italian Job
Chinese automaker Chery is talking to the Italian government about building a vehicle assembly plant that would compete with Stellantis’ Fiat operations, Reuters colleagues Giulio Piovaccari and Giuseppe Fonte reported.
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Surprised, given the geopolitical tensions between Europe and China? Don’t be. Rome wants to boost Italy’s national auto production to 1.3 million vehicles annually – translated, jobs. Chery needs a production base inside the European Union as a hedge against steeper tariffs.
Other Chinese automakers are looking to build factories outside their home market as politicians in Europe and the United States reach for bricks and trowels to build higher walls against imported Chinese cars.
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Chinese industry executives – and the Beijing government – are accelerating down the road that Japanese automakers traveled in the 1980s and South Korea’s Hyundai followed a decade later. Now tens of thousands of jobs in the United States, the UK and Europe depend on factories owned by, or supplying, Toyota, Honda, Hyundai and other Asian automakers.
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As in Italy, the promise of manufacturing jobs and investment could once again outweigh concerns about giving emerging global players a foothold to compete with domestic champions.
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Volkswagen promises a cheap EV… by 2027
Volkswagen has four teams working to develop a more affordable ID.1 EV that can compete with Chinese EV champion
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