Auto File: All electric by ... later

Fisker

23/02/2024 16:00

Feb 23 - Joe White
Global Autos Correspondent
    
    Greetings from the Motor City! 
 
Looking for evidence of climate change and not convinced by
photographs of melting glaciers? It was warm enough in Detroit
during the past few days that people took their Corvettes out of
storage and tooled around my suburban town like it was Palm
Beach.  
    It’s fun to see all those shiny sports cars. But it’s not
normal.  
    The tricky balance between long-term climate action and
short-term gratification is the backdrop for several of the
week’s big stories from the World of Cars. More legacy
automakers are delaying their plans to stop selling vehicles
with internal combustion engines – bowing to investors who have
switched from cheering huge EV investments to demanding more
cash. 
    It's not all serious stuff. We’ve got an item about
Deloreans! Read on! 
    Two quick housekeeping items: On Tuesday, I incorrectly
described the position that the future Cadillac Vistiq three-row
electric SUV will occupy in Cadillac’s lineup. It is scheduled
to arrive in early 2025 and fit between the midsize Lyriq and
the big Escalade IQ EV. I need to study harder for my IQ tests. 
    Second, the Auto File and I will be taking next week off for
a winter break. Enjoy the extra day of February! See you March
5. 
    And now, let’s motor… 
 

    Today – 
 
    *         Mercedes walks back its EV transition goal 
    * EV owners hack the charging infrastructure gap 
    *         BYD keeps cutting EV prices  

 

        * Mercedes abandons its all-electric by 2030* goal 
    Mercedes Benz CEO Ola Kaellenius on Thursday formally put
aside the company’s aspiration to stop selling combustion
vehicles by 2030. 
    Kaellenius said Mercedes now expects sales of electrified
vehicles, including hybrids, to account for about half of the
global sales by 2030. That’s five years later than the forecast
from 2021, when Mercedes projected it would hit the 50%
milestone by 2025 with mostly all-electric cars.  
    In the reverse, Mercedes expects combustion vehicles will
still be about half of sales by the end of this decade – how you
score the combustion motors used in hybrids is up to you. 
    Instead of winding down investment in combustion engines, as
Kaellenius predicted in 2021, Mercedes will invest to keep its
“high-tech combustion portfolio” fresh – mainly to supply the
range-extending combustion part of plug-in hybrid powertrains. 
    “The electrified high-tech combustion portfolio will play an
equally important role,” in the coming years, Kaellenius told
investors. “It’s the backbone of the cash flows” that will fund
the new round of share buybacks and dividends that Mercedes
promised on Thursday. 
    Kaellenius – like his counterparts at other established
automakers – had always put a virtual asterisk next to
statements about the timetable for going all-electric,
stipulating that goal was dependent on EV demand and continued
government subsidies.
    Now, the asterisk has become the strategy – not just at
Mercedes but at General Motors and Ford.   
    How did investors react to this pivot? They loved it.
Mercedes shares jumped nearly 6%. Did we mention the share
buybacks and a more shareholder-friendly dividend policy –
funded by combustion profits? 
    The tech investor community that cheered “all in” EV
strategies in 2021 has moved on to AI. As a colleague points
out, Tesla shares are down 20% year-to-date. GM, Mercedes, Ford
and Stellantis are up. 
    Remaining automotive shareholders are rewarding automakers
for declaring they will be flexible about the timing of EV
investments and will keep the internal combustion cash machines
cranking until further notice. 
    “The ICE machine is up and working again ... please proceed
to the end of the hallway and fill your buckets!" Evercore ISI
analyst Chris McNally wrote in a note after GM backed away from
earlier EV sales targets and promised more cash returns to
investors. 
    The Mercedes rethink amplifies the reality check shaking up
the EV industry. Slowing sales momentum, stubbornly high battery
costs and relentless price cutting by Chinese automakers have
made for a hostile near-term environment for all EV
manufacturers – even Tesla.  
    In the long-term, government climate policy and consumer
demand could converge to make electric vehicles the dominant
technology.  
    “The trillion-dollar question is how fast is this going to
happen?” Kaellenius said. Neither Mercedes nor any other
automaker has $1 trillion available to make a wrong bet. The
oldest automaker in the world is worth just $79 billion. 
 

        * Essential Reading 
    *         Breakingviews on Rivian’s dilemma 
    * EV market blues mean tough times for miners. 
    *         The state of China’s auto market – Automobility
Ltd
report. 

 

        * Rivian and Lucid go splat 
One-time star EV startups Rivian and Lucid delivered dismal Q4
results and dour 2024 outlooks, sending investors for the exits
and provoking questions about their strategies for survival. 
    Rivian is the more consequential case. The luxury electric
truck/commercial van producer’s shares lost 25% of their value
after the company forecast production this year of just 57,000
vehicles and said it would cut 10% of its staff. Shares were
down another 10% on Friday pushing the company’s market cap
below $10 billion – not much more than the $9.4 billion cash on
hand as of Dec. 31.  
    Rivian lost an average of $43,000 a vehicle in the fourth
quarter of 2023. CEO RJ Scaringe said he’s aiming for a gross
profit by the fourth quarter of this year. Rivian plans to
unveil its R2 model – designed to sell in higher volume and
support  a new $5 billion factory in Georgia. 
    But Wall Street is skeptical. As demand has dwindled, Rivian
has slashed prices for its pricey consumer trucks – which
qualify for only $3,750 in U.S. tax credits if buyers’ incomes
don’t exceed $300,000 for a couple.  
    “The EV landscape has changed decidedly for the worse since
Rivian’s November 2021 IPO, yet – tweaks aside – the company’s
strategy appears to have been largely unchanged,” Morgan Stanley
analyst Adam Jonas told clients. “What alternatives should the
company explore?” 
    Rivian’s situation looks manageable by comparison to Lucid.
The luxury EV company majority-owned by Saudi Arabia’s sovereign
wealth fund said it expects to build just 9,000 vehicles this
year. 
    That’s 36 vehicles a day assuming 50 weeks of production,
five days a week. Ford builds nearly twice that many Super Duty
pickup trucks in an hour. Evercore ISI analyst Chris McNally
reckons Lucid has only enough cash to “limp into ’25.” 
    Rivian and Lucid are being jammed into narrow, unsustainable
niches in a brutal market. Their paths forward currently depend
on launching vehicles that would compete more directly with
Tesla’s high-volume Model Y – as well as, in Rivian’s case,
numerous electric SUVs and trucks on the way from legacy
automakers.  
    Volkswagen’s electric Scout SUVs are just the most
eye-catching and on-the-nose example of the challenges Rivian
faces. 
    Tesla has a commanding lead in production costs and
economies of scale. Legacy automakers must sell EVs to avoid
fines for the combustion trucks and SUVs that ring their cash
registers. They will all intensify the pressure on Rivian, Lucid
and other weak EV players. Let’s not even talk about Chinese
competitors – until the next item.     
 

        * BYD’s prices are insaaaaaane! 
If you lived in the New York City media market during the 1970s,
you could not escape advertisements for discount home
electronics retailer Crazy Eddie which ended with the tag line:
“His prices are insane!” 
    Crazy Eddie is gone. But Chinese EV power BYD is stepping
into the role of unhinged price cutter – not for TVs, but EVs. 
    BYD on Friday launched a new version of its Dolphin EV in
China with a starting price equivalent to $13,865.35 – down
14.6% from the prior version of the car. That’s in the ballpark
of what just the battery pack costs in a Ford F-150 Lightning,
based on U.S. Energy Department figures. 
    BYD’s relentless price cutting is one reason why Western
automakers are looking for new strategies to cut battery costs,
including partnering with Chinese companies or other rivals. 
    Stellantis CEO Carlos Tavares said this week he’s
considering building vehicles based on Chinese partner
Leapmotor’s technology in Stellantis factories in North America,
Europe or anywhere else in the company’s global system.  
 

        * EV charging hacks become a business 
    The lack of convenient places to charge an EV is a major
roadblock to wider acceptance. Now, companies are springing up
offering new ways for EV owners to top up batteries, making use
of charging capacity that sits idle much of the time, Reuters
colleague Nick Carey reports.  
    One idea: Enable people who do have a home charger to rent
time to people who don’t – such as city apartment dwellers. 
    But app-enabled hacks such as the UK’s Co Charger
charge-sharing network don’t remove the underlying obstacles to
more and cheaper EV charging capacity. Among them is the web of
conflicting regulations and utility company practices slowing EV
infrastructure development in Europe. 
 

        * California slows Waymo’s expansion plan 
    California regulators said they will delay until June a
decision on Waymo’s application to expand its driverless rides
service in the Los Angeles metropolitan region and the San
Francisco peninsula. 
    The delay comes after incidents involving Waymo robo-taxis
and rival Cruise driverless cabs that demonstrated increased
public antipathy toward robot vehicles and emboldened opponents
of the technology. 
    Waymo said the delay was a normal part of a “robust review
process.”  
    California regulators will not have the last word on the
development of the U.S. robo-taxi industry. Waymo’s biggest
operation is in Phoenix, where it has expanded rapidly and is
about to launch service on freeways.  
    General Motors is expected to relaunch Cruise outside of
California with all eyes on Texas, where AV regulation has been
far less restrictive. 
 

        * Fast laps 
    - The Delorean Motor Co can pursue a lawsuit against NBC
Universal seeking more of the money generated by sales of “Back
to the Future” movie merchandise. Yes, the Delorean Motor
Company exists and is promoting a new Delorean-branded EV. In
the meantime, the company hires lawyers to defend trademark
rights for images of the classic aluminum DMC-12 sports car that
starred in the “Back to the Future” movie franchise. 
 
    - EV startup Fisker will report 2023 results and its outlook
on Leap Day, Feb. 29. It’s been a rough few months for Fisker.
Widely followed car reviewer Marques Brownlee’s video declaring
the Fisker Ocean the “worst car I’ve ever reviewed” has nearly
3.2 million views as of Friday.  
 
    - UAW will spend $40 million on organizing non-union EV
battery plants over the next two years. The effort will run
parallel to the union’s drive to organize non-union auto
assembly plants. 
 
    - U.S. vehicle sales: looking up 
U.S. sales of cars and trucks will rise in February to a 15.4
million vehicle annualized pace, up from January’s 14.8 million
rate, market researchers J.D. Power forecast. Average prices are
forecast to drop by $1,919 from a year ago to a still hefty
$44,015. 
 
    - Carvana reported a full-year net profit for the first time
since going public, turning a corner in its recovery from a
disastrous 2022. The online used car retailer reported $150
million in net income, boosted by an $878 million gain on
extinguishment of debt. The company forecast EBITDA for 2024 of
“significantly more” than $100 million. Shares jumped by as much
as 16% after hours on Thursday. 
 
    - Hyundai will invest 
    $1.1 billion in Brazil. 
 
    - Ford and the UAW reached a deal that avoids a strike at
the automaker’s Kentucky Truck Plant, home of the
ultra-profitable Super Duty pickup truck line. 
 
- Tesla has more labor trouble in Sweden, where a union warned
it could stop servicing the company’s charging stations. 

 (Editing by Andrew Heavens)