Auto File-Elon Musk Tanks Tesla

China Power Equipment

26/01/2024 16:00

Jan 26 - 
  
Joe White
Global Autos Correspondent

Greetings from the Motor City!  
 
How’s your week been going? If you didn’t blow $80 billion off
the value of your company, you’re doing better than Elon Musk.
How often can anyone say that? 
 
It’s been a rough week for General Motors CEO Mary Barra and
fans of self-driving cars, too.  
 
It’s not all bad news, though. In a world where you could land a
berth on a Ferrari racing yacht, the Detroit Lions could go to
the Super Bowl, and the 80-year-old members of the Rolling
Stones feel confident enough to stage a worldwide rock and roll
tour, anything is possible. 
 
Two more things before we jump to news from the World of Cars:  
 
My Reuters colleague Ernie Scheyder has a new book out today,
The War Below, about the competition between China and the West
to control minerals critical to electric vehicles and other
green technology.  
 
Ernie’s book will help you understand why electric vehicle
policy has become a hot issue in the 2024 U.S. election cycle.
You can keep up with all the political news by signing up for
the new Reuters weekly newsletter, On the Campaign Trail.  
 
Have a great weekend - on with the show! 
 
Today –  
 
    *         Tesla’s growth story runs out of gas 
    * GM’s Cruise headache becomes a migraine 
    *         Hyundai waves a caution flag 

 
Elon Musk feeds the EV bears 

Up until this week, investors gave Tesla the richest
price-to-earnings valuation among the U.S. technology industry’s
Magnificent Seven companies because they believed Elon Musk’s
electric car company had a lock on the future of the global auto
industry. 
 
    Musk shook that faith in the space of an hour on Wednesday,
prompting investors to slash $80 billion off Tesla’s market cap.
That’s the equivalent of General Motors and three quarters of
Ford vanishing from the earth. Tesla’s murky outlook for
near-term growth rained on the shares of rivals Rivian and
Lucid, deepening the gloom that has settled over the entire
electric vehicle industry. 
 
Musk repeated his arguments that Tesla is an AI and robotics
company, not an ordinary automaker. He doubled down on his
demand that unless Tesla’s board gives him 25% voting control,
he could shift AI development out of the company.  That threat
was amplified Friday with a Financial Times report that Musk’s
new AI startup is looking to raise $6 billion. 
 
But investors looked past the talk about AI and humanoid robots,
and focused instead on the automaker’s fourth quarter
performance and outlook, which had more of a low-growth Detroit
vibe than ever.  
 
    Tesla’s revenue per vehicle and profit margins have fallen
over the past year as rivals – led by China’s BYD – step up
pressure. The company faces a year of slow to no volume growth
while it flogs aging models and waits for the launch of a new,
low-cost vehicle line in the second half of next year.  
 
Musk borrowed a page from legendary Detroit lion Lee Iacocca,
warning that Chinese automakers will “demolish” Western
incumbents unless governments erect more trade barriers. 
 
Tesla’s troubles will fuel the debate over electric vehicle
policy and the pace of EV adoption that is getting wound into
the U.S. election cycle.  
 
Essential Reading 
    * Why Indonesia’s elections matter to EV makers 
    * Watching the Fed do the Pivot 
    *         EVs and green energy power China’s GDP 

 
GM’s Cruise mess becomes a federal case 

General Motors’ 79%-owned Cruise robo-taxi operation is under
investigation by the U.S. Justice Department and the Securities
and Exchange Commission for failures by senior Cruise executives
to fully and immediately disclose to state and federal
regulators that one of the operation’s self-driving cars had
dragged a woman down a San Francisco street after she was hit by
another car. 
 
Cruise and GM now face the challenge of convincing enforcement
agencies, regulators and the public that Cruise officials did
not intend to cover up the gravity of the Oct. 2 incident, even
though they failed to make key details of the accident clear to
state and federal regulators in meetings the next day, according
to a 195-page report by the law firm Quinn Emanuel that was
commissioned by Cruise’s board.   
 
A separate report detailed technology failures that caused the
Cruise EV to drag the victim down the street, rather than
stopping immediately. 
 
The Quinn Emanuel report and the technology assessment by
Exponent offer plenty for opponents of wider robo-taxi
deployment to work with as they argue against looser state and
federal regulation of AVs. That could be trouble for AV
operators such as Waymo and Zoox. 
 
GM Chief Executive Mary Barra could face more questions about
Cruise and the mishandling of the Oct. 2 incident when the
automaker releases fourth quarter results Jan. 30.  
 
Despite $8 billion in cumulative losses at Cruise, the GM CEO
has stood by her bet that Cruise’s self-driving vehicle
technology could generate $50 billion a year in revenue by 2030
and vowed last month to “right the ship” at Cruise. 
 
The Quinn Emanuel report does not mention Barra by name or
address what she knew and when about Cruise’s response to the
Oct. 2 incident.  
 
The report does suggest that GM officials pushed Cruise
executives to be more forthcoming with regulators. For example,
the report states that Cruise submitted two reports to the
National Highway Traffic Safety Administration that “did not
mention the pullover maneuver and pedestrian dragging; the third
did after consultation with GM.” 
 
Hyundai warns of a slowdown 

Hyundai joined Tesla in warning that this could be a year of
slow growth and tough price competition. 
 
North America could be a bright spot for the South Korean auto
group, which includes the Hyundai and Kia brands. The automaker
forecast 4.9% revenue growth in North America, even as it
forecast declines in China and Europe. 
 
Italy v. Stellantis 

Stellantis CEO Carlos Tavares and Italian Prime Minister Giorgia
Meloni are clashing over the automaker’s demands for more
subsidies to increase Fiat production in Italy. 
 
Meloni wants Stellantis to commit to building 1 million vehicles
a year in Italy, up from 750,000 last year. Tavares has said
that can only happen if the government stumps up more
subsidies. 
 
Fast Laps 

GM and Honda have begun commercial delivery of fuel cell power
systems manufactured at a joint venture factory near Detroit.
It’s a milestone for the decade-long partnership between the two
companies. Shipments will start out small relative to the
overall vehicle production by the two automakers. Honda plans to
show a fuel-cell powered CR-V crossover in March. 
 
Truck maker Volvo warned of weaker orders in 2024 after beating
Q4 profit estimates. 
 
Ford said its 2023 pre-tax results will take a $1.7 billion,
non-cash hit from revaluation of pension obligations. 
 
Ferrari will collaborate with Italian yacht racer Giovanni
Soldini to enter world sailing competition. Formula One powers
have a pattern of branching into yacht racing to promote their
brands and to use extreme sailing as a proving ground for
technology. 
 
Black Book, a used vehicle valuation company, will partner with
Recurrent to attack a challenge for the used EV market:
Assigning a value to a second-hand EV’s battery. Good news for
used car dealers and shoppers: Recurrent has found that 94% of
EVs evaluated have retained 90% or more of their original
driving range. 
 
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