Auto File: Cruise's Plan to go Big in 2023
30/11/2022 15:54
Joe White
Global Autos Correspondent
Greetings from the Motor City!
My goodness there is a lot to cover today, and that does not
count Elon Musk’s escalating war with Apple. (Imagine what Musk
would do if Apple started building electric cars!)
Let’s start with highlights from my interview with the COO of
GM’s Cruise about the robotaxi/robodelivery company’s plans to
scale up in 2023, check in on the latest data on the bruising
competition in China’s EV market and take a look at new
technology from Mercedes and Bosch that could eliminate the
headache of finding a parking spot at the airport.
* Cruise plans to enter “a large number of markets” in 2023
Cruise, GM’s robotaxi/robodelivery unit, plans to enter a “large
number of markets” and scale operations up to “thousands of
vehicles” in 2023, Chief Operating Officer Gil West told
Reuters.
Cruise has announced plans to start offering rides in
Austin and Phoenix, adding those cities to its current base in
San Francisco. West said the company plans to expand to more
cities in 2023.
“You’ll likely see us expand the number of markets in a
large number next year,” he said. Cruise believes it can
accelerate application of its technology to other cities using a
“repeatable playbook” developed in San Francisco, Austin and
Phoenix. That should start to deliver revenue numbers with more
zeros in them, he said.
The planned launch of the Origin automated vehicle “is a
huge unlock” for Cruise because of its lower cost, West said.
Cruise is currently testing human operated Origins in San
Francisco. Volume production is expected to start in 2023. Up to
now, Cruise has operated its limited service in San Francisco
with a small fleet of Chevrolet Bolt EVs.
Cruise is working to expand delivery services - a
prototype of an Origin outfitted with lockers for goods is on
the company’s website. Walmart is an investor, and is currently
testing Cruise delivery at eight stores in Phoenix. Delivery has
“the potential to be a big part of the business,” West said.
Wall Street will be watching Cruise closely in 2023.
The decision by Ford and Volkswagen to pull the plug on
their jointly-controlled automated vehicle operation, Argo AI,
threw the entire automated vehicle sector into a tailspin.
Investors have hammered the shares of public AV tech companies
and driven a wave of consolidation deals.
Ford and VW said they saw no near-term profit in robotaxis.
GM CEO Mary Barra is taking the opposite bet - at considerable
cost. She has told analysts to expect GM to keep spending $500
million a quarter, $2 billion a year on Cruise’s expansion.
GM has promised the operation can generate revenue of $50
billion a year by 2030. Investors will want to see a robust
start toward that level in 2023. The shakeout in the AV sector
has cleared the field for Cruise to an extent. But rival Waymo
is already operating in Phoenix, and is driving to expand its
robotaxi and delivery businesses into Cruise’s backyard in San
Francisco and other markets Cruise likely has in its sights.
Cruise must also compete with ride-hailing platforms Uber
and Lyft. They have to contend with the costs of human drivers,
but they have millions of customers already signed up, and
experience dealing with local regulators who do not always
welcome more competition for public transit or licensed cabs.
* Nevermind the robotaxis, here’s robo-airport parking!
Mercedes and Bosch demonstrated technology that enables a
Mercedes vehicle to park itself in a Stuttgart airport garage.
No more frantic searches for a spot while the deadline for
boarding a flight ticks down? That’s a use of automation we can
all get behind.
* BYD, Tesla: Winning in China?
Chinese automaker BYD is on track to be the No. 1-selling brand
in the world’s largest auto market for November, outselling the
VW brand, Reuters reported. Tesla’s sales in China nearly
doubled in the month compared to a year ago after the company
cut prices.
At the same time, Chinese EV brand Xpeng warned that its Q4
deliveries could fall by nearly 50%. Xpeng shares rose,
nonetheless, as investors cheered signs that Beijing may be
ready to back off on its COVID restrictions, under pressure from
extraordinary mass protests.
Investors will have a challenge sorting out the effects of
competitive moves such as Tesla’s price cuts from the impact of
COVID lockdowns. Suffice to say that the “rising tide lifts all
boats” view of the Chinese auto market no longer applies.
* Tesla Semi Day is tomorrow
Tesla is promising a show tomorrow as it hands over the
first production versions of its Semi electric Class 8 truck.
Details of a webcast were not available on Tesla’s website
Wednesday morning.
* Ferrari puts the brakes on Purosangue orders
Ferrari has paused taking new orders for its 12-cylinder,
combustion-powered Purosangue SUV, a senior executive said. The
waiting list is out to two years - which makes it riskier for
Ferrari to guarantee a price given the uncertainty of materials
costs.
Ferrari has also said the Purosangue should not be more
than 20% of its total volume. That will require some serious
demand management. At Porsche USA, SUV’s now account for nearly
68% of total sales.
* Ford revs up its Electric Mustang
Ford will increase the global annual production rate for the
Mustang Mach-E to 270,000 vehicles. The expansion plan was
tucked into a press release trumpeting assembly of Mach-E number
150,000 at the assembly plant in Cuautitlan, Mexico.
* Honda’s law-abiding automated driver
Honda said it plans to launch a “Level 3” automated driving
system by 2029 that could allow drivers to watch movies or send
emails on the highway.
Just one catch: The vehicle’s automated driver would not
exceed the speed limit. That could limit the appeal in many U.S.
states (like Michigan) where speed limits are treated as
suggestions.
* Is VW scouting Foxconn’s Lordstown plant?
Automobilewoche reports VW is looking at Foxconn’s auto factory
in Lordstown, Ohio, and also is in talks with Magna’s Magna
Steyr contract assembly unit.
Very likely, VW will have plenty of options to consider as
U.S. states compete to land new jobs. A decision will need to
happen soon to meet a 2026 launch plan.
* Battery costs head up as oil heads down
Prices for EV battery cathode materials have surged by nearly a
third this year as lithium prices have soared to new records,
according to Benchmark Source, a UK firm that tracks mineral and
battery production.
That makes EV batteries more expensive just as legacy
automakers are trying to scale up production to compete with
Tesla.
At the same time, oil prices are volatile, but well off
their highs earlier in the year. U.S. gasoline prices are back
in the $3.50 a gallon range after jumping to nearly $5 in June.
Lithium hits production costs for EVs. Gasoline prices
drive operating costs for combustion vehicles. Different
metrics, but they do interact. LMC Automotive analyst Kevin
Riddell says that consumers considering an EV don’t focus on the
potential cost-savings of an EV over time. “They just see these
whopping initial price tags.”
* Make mine an E15
The U.S. farm industry’s efforts to expand sales of corn-based
ethanol motor fuel got a big lift. For the first time, the U.S.
oil industry is supporting legislation to expand sales of E15 -
a 15% ethanol/gasoline blend.
* Could Renault and Nissan get a new alliance deal for
Christmas?
Executives at Renault and Nissan are gearing up to announce a
deal to restructure their fraught Alliance next month, sources
told Reuters. Just in time for the holidays (and year-end
financial reporting.)
* U.K. car industry lobby sounds the alarm on
electrification
The U.K. is at risk of losing even more jobs in its auto
sector if the government doesn’t spend more to help
manufacturers make the jump to electric vehicles, the main U.K.
motor industry trade group said. The struggles of Britishvolt,
a would-be U.K. battery maker, have added to the anxiety in the
British auto sector, which has been shrinking for decades.
* S&P Global: Tesla will lose EV share, but hurt Honda and
Toyota first
Tesla’s dominant 65% share of the U.S. electric vehicle market
will decline by 2025 to below 20%, S&P Global writes in a new
study.
At one level, that is just math. Tesla will keep selling
more vehicles. But “S&P Global Mobility predicts the number of
battery-electric nameplates will grow from 48 at present to 159
by the end of 2025, at a pace faster than Tesla will be able to
add factories” or models in new segments, the company writes.
Equally striking is S&P Global’s finding that Honda and
Toyota are the top two brands losing customers to Tesla now. The
two leading Japanese brands have been slow to launch EVs.
Combined, they accounted for nearly 29% of Tesla’s conquest
sales, S&P Global found. German luxury brands BMW and Mercedes -
whose vehicles are closer to the price ranges of Tesla models -
account for 12.9% of Tesla’s conquest sales, according to S&P
Global’s data.
One more point: Of 48 EV models on the U.S. market
currently, two - the Tesla Models Y and 3 - account for 56% of
all EV registrations. “...The other 46 vehicles are competing
for scraps until EVs cross the chasm into mainstream appeal,”
S&P Global concludes.
Mr. Darwin, your ride’s here.
Essential Reading
Is GM considering an electric Corvette SUV????
Can Europe keep the lights on?
Baby Boomers keep making things worse.
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