Tesla Continues to Ri(vian)de the Wave! Zeti's Weekly Newsletter

Overview

BMW has announced it is planning to spend over €200m to transform its Rosslyn plant, in South Africa, into an EV production hub. This hub will help manufacture the next generation of BMW X3 as a plug-in hybrid, from 2024 onwards. Historically, this plant has played an important part in exporting BMW vehicles, as it exports to 14 African countries and many others worldwide. This transformation aligns with the company’s global iFACTORY initiative, which is geared towards being sustainable and transitioning towards the production of EVs.

Tesla has reported very strong Q2 results, delivering a record 466,140 EVs, which beat market expectations, as analysts had pencilled in 445,000 EVs. The price cuts along with USA federal incentives helped Tesla achieve this remarkable figure. The price cuts were driven by the need to clear inventory but also maintain its market share in China. Tesla achieved both. To put this into context, there was a real concern that BYD would take some of Tesla’s market share however it appears that Mr Musk has again made the right strategic decisions. We do not expect Tesla to lose momentum, as USA policy tailwinds from the IRA incentives mean that Tesla will only continue to produce and deliver more EVs, as the Tesla models qualify for the full $7,500 IRA credit. Mr Musk stated in Q1, he is prioritising sales growth ahead of margin growth and profitability. When you factor in that the company opened its supercharger network to other OEMs and non-Tesla drivers, we expect Tesla will remain the market leader, for some time to come.

Rivian reported strong Q2 results, as it delivered 12,640 BEVs (up 183% YoY), which beat analyst consensus of 11,000. The company produced 13,992 BEVs (up 218%YoY) which is a new record beating the previous best of 10,020 BEVs units, in Q4 2022. This is impressive when you factor in that in Q1 the company stated it was experiencing supply-chain disruptions and stiff market competition. It appears that Rivian’s decision to launch a new production line, in Q1 23, so it can focus on developing its own drive unit to lower costs and reduce dependency on suppliers has helped the company hit these figures. These strategic decisions make Rivian’s target of delivering 50,000 EVs this year, more achievable.

Nikola has announced it will start liquidating Romeo Power’s assets, less than 12 months after acquiring Romeo. This is another setback for Nikola, as it has been besieged with problems ranging from high commodity costs to accessing capital. Bear in mind, that Romeo Power was one of the battery suppliers for Nikola’s electric trucks and there is no update, yet, on whether this will prolong the production of the electric trucks.

Nissan has launched a new EV subscription offering, called Nissan Subscription, which allows customers access to a new EV, ranging from 3-48 months, starting from a monthly fee of ￡599 (and upwards). The subscription will cover the cost of the vehicle, insurance for up to 5 drivers, road tax, servicing, and roadside assistance. This subscription will allow customers the flexibility to switch between Nissan models, such as the Nissan Leaf 39kWh Tekna and Nissan Ariya 87kWh Evolve. It will also simplify the approach to car ownership for customers. This is good news for EV adoption and (potentially) the secondary market.??

Polestar has signed an agreement with Tesla, which will allow all its North American customers access to Tesla’s Supercharger network. This follows other OEMs (e.g., Ford) who have signed the same agreement with Tesla, as it has over 12,000 charging points currently in operation. This will help ramp up EV adoption and help quell some concerns about range anxiety. Interestingly, from 2025 onwards, all newly sold Polestar EVs, in North America, will be automatically fitted with the NACS charging port. Collaborations such as this will help provide a clear roadmap for a more sustainable and connected future.

Addison Lee, London’s largest taxi & rental car company, is acquiring Green Tomato, a London-based ride service provider. This acquisition involves Addison Lee taking over a fleet of 500 EVs, which grows its overall fleet (EVs & non-EVs) to over 7,500 vehicles. This acquisition is significant, as it helps Addison Lee hit its target of having at least 1000 private hire EVs by 2023. The consortium of investors which bought Addison Lee from the Carlyle Group in 2020, has been prudently improving operations and strengthening its balance sheet. The (new) management has prioritised transitioning to EVs as a key goal, and to date, the experienced team have been hitting their targets. We expect Addison Lee to carry on aggressively transitioning its fleet to EVs. ?

Deals

Bluedot, a USA-based EV-charging single payment platform, has raised $5m, attracting investors such as Y Combinator, Leap Forward, Samsara Ventures, Operator Stack, and LACI Impact Fund. The capital will be used to build out its app and card which is aimed at both EV drivers and fleet charging management. The company aims to make charging payments easier and streamline expense management. Some of the advanced features it hopes to build out are route optimization and home charging reimbursement.

Service4Charger, a German-based EV charging systems provider, has raised €10m in a Series A funding round, led by bp ventures. The capital will be used to increase the company’s regional and global footprint alongside hiring more local operational staff.

GM has acquired Algolion, an Israel-based software startup that helps detect problems in batteries, for an undisclosed amount. This strategic acquisition comes during a period of time when (USA) safety authorities have been urging OEMs to focus and better battery standards. This is a good strategic acquisition, as it fleshes out GMs battery value chain.

See you next week!

Manjot Heer, Investment Analyst