Auto File: Tesla’s Second Quarter Scorecard

Nu Ride

28/06/2023 16:00

Joe White 
Global Autos Correspondent 
  
 
Greetings from the Motor City! 
 
Can you believe it? We are just two days away from the end of
the second quarter.  
 
Remember just a few months ago when Elon Musk and nearly
everyone else expected a recession in the United States and a
rapid post-COVID rebound in China? Kudos to anyone who took the
opposite side of that bet.  
 
And how many of us predicted in January that by the end of
June Tesla’s unique EV charging technology would be on a fast
track to becoming the North American industry standard? Okay,
maybe some folks did. But not the White House or any other major
automaker. 
 
So, with those fresh reminders of the virtues of humility in
mind, let’s dive right into the news from the World of Cars.
Today – 
  
    * Tesla wins charging, loses share in China 
    * The U.S. auto recession that isn’t happening
    *         Lordstown Motors starts a new chapter. 

 
    * Tesla’s Q2: Charging’s a Win, China’s a Fight  
A little more than a month after signing up Ford to its
Supercharger network and North American Charging Standard EV
charging technology, Tesla’s system is on the fast track to
become the standard for North American EV charging networks. 
 
    Volvo Cars is the latest rival automaker to sign on with the
Tesla  TSLA.O  supercharger network and NACS plug and connector
standard. Washington state and Texas have mandated the use of
Tesla connectors if charging network operators want to
participate in state subsidy programs. 
 
The full benefit to Tesla of having rivals send customers to
charge vehicles at its SuperCharger network, and adopt its
hardware standard, will only become clear with time. But Elon
Musk’s decision to build a proprietary charging network at great
cost, rather than wait for someone else to do the job, looks
like a big win heading into Tesla’s second quarter delivery
report and subsequent investor call next month.  
 
    Here’s a list of the automakers and charging equipment
companies that have signed on to the Tesla NACS connector
standard. With manufacturers representing 70% or so of U.S. EV
sales now on board the Tesla NACS, attention turns to the
holdouts, including the big European, Japanese and South Korean
automakers competing in the North American market. 
 
Stellantis said it will launch a new charging business unit to
relieve charging anxiety (the successor to “range anxiety” as a
reason for mainstream consumers to avoid EVs.) But Stellantis
said it is still considering whether to join the Tesla charging
ecosystem.  
 
That said, Tesla has an escalating fight on its hands in China.
The good news for Musk: Tesla sales in China appear to have hit
a new record during the second quarter, Reuters reported
Wednesday. 
 
However, the Chinese EV market overall grew faster than Tesla,
and Tesla’s share of the Chinese EV market will likely shrink to
13.7% from 16% in Q1, according to Merchants Bank International
Securities. 
 
    * Essential Reading 
    * The U.S. could restrict AI chips for China  
    *         Joby gets FAA clearance to test air taxis
    * The trouble with sticky inflation 

 
    * Blue Skies for the U.S. Auto Industry 
Cox Automotive boosted its forecast for U.S. car and light truck
sales this year to 15 million vehicles from 14.1 million
vehicles earlier this year, reinforcing a narrative that worries
about a U.S. auto industry recession are overdone. 
 
“I am optimistic we will not have a recession, certainly not in
calendar 2023,” Jonathan Smoke, chief economist for the auto
industry big data company, said during a briefing Tuesday. 
 
Smoke acknowledged that some of his colleagues at Cox and some
heavyweight economists and market players are not as upbeat. The
bull case requires looking past market indicators like the yield
curve and focusing instead on the low unemployment rate,
improving consumer sentiment and the continued willingness of
affluent consumers to splash out for expensive trucks and
SUVs.  
 
Senior executives at Ford and GM said earlier this month they
are encouraged by the strength of consumer demand in the face of
rising loan rates and high prices. 
 
Lear, a $23 billion a year seating supplier, told investors it
expects full-year EBITDA to be $100 million ahead of earlier
forecasts. 
 
What could possibly go wrong? Gosh, who’s got the time to run
down that list? A UAW strike this fall, a sudden spike in oil
prices, a resurgence of inflation that forces the Fed to
accelerate interest rate hikes...
 
    * Lordstown Motors Hits the Wall 
Notch another casualty in the deflation of the electric vehicle
SPAC bubble. Lordstown Motors filed for a Chapter 11 bankruptcy
restructuring late Monday, and simultaneously sued shareholder
and assembly partner Foxconn. 
 
You can read Lordstown’s Chapter 11 filing here. 
 
Lordstown  RIDE.O  accused Foxconn  2354.TW  of improperly
backing out of a deal to inject more capital to support the
launch of the Lordstown Endurance electric pickup. Foxconn in
turn said Lordstown failed to comply with the terms of the deal
– among them, remaining eligible for listing on the NASDAQ.  
 
The litigation and the bankruptcy restructuring will grind on.
Auto industry watchers will focus on what Foxconn does now with
the sizable former GM car assembly plant it acquired from
Lordstown Motors in 2021.  
 
    Foxconn has lofty ambitions to transfer its success as an
assembler of iPhones and other consumer tech hardware to the
production of electric cars – including as many as 300,000 EVs
annually from the Ohio factory. Foxconn needs a new high-volume,
solvent client. Stay tuned. 
 
    * Lucid’s CEO wants to help you build great EVs 
    Lucid CEO Peter Rawlinson told Reuters’ Nick Carey that a
deal this week to sell his company’s EV technology to
Aston-Martin will be the first of many such partnerships. 
 
Lucid sees licensing components as a key part of its business,
especially as it moves into higher-volume, lower-priced
segments, Rawlinson said. 
 
Lucid gets high marks for the efficiency of its EV powertrains,
which boast among the highest driving ranges in the industry.
But the company needs to crank up scale economies pronto. It is
deeply unprofitable, and last month turned to its main
shareholder, the Saudi sovereign wealth fund, for new capital as
it struggles to ramp up production. 
 
    * The plot thickens at Nissan 
Operatives working for Nissan  7201.T  installed cameras at the
home of former No. 2 executive Ashwani Gupta to monitor who came
and went, Reuters reported Wednesday, citing people familiar
with an internal report on the surveillance. 
 
The report by U.S. law firm Davis, Polk and Wardwell does not
determine whether the surveillance was illegal under Japanese
law, or whether Gupta was made aware of the monitoring. Nissan’s
board is investigating whether CEO Makoto Uchida ordered
surveillance of Gupta amid a dispute over relations with partner
Renault. 
 
Nissan’s board this week endorsed Uchida. 
 
* Fast Laps 
    Ford  F.N  is cutting more jobs in the United States and
Canada, the company confirmed following a report by the Wall
Street Journal. The company may not be done shrinking even after
these layoffs are executed. Ford said last month it expects to
take up to $2 billion in restructuring charges, much of that to
fund staff cuts. General Motors  GM.N  and Stellantis are also
cutting staff jobs ahead of tough negotiations with the United
Auto Workers, which represents U.S. factory workers. 
 
    Volkswagen cut production of EVs at a factory in Emden,
Germany, sending its shares on a rollercoaster ride Tuesday and
Wednesday. Analysts saw VW’s decision to throttle back
production of new EV models as a warning sign that European EV
demand is slowing down, just as a wave of new models and new
brands are entering the market – the latest example being
China’s Zeekr brand entering Sweden and Holland.  
 
    Former VW board member and Audi brand chief Rupert Stadler
was ordered to pay a 1.1 million euro fine and given a suspended
jail term for his role in the Dieselgate emissions cheating
scandal. 
 
    Faraday Future extended its runway with a fresh $90 million
in capital from existing investors. The struggling EV startup is
trying to launch production of its FF91 luxury EV, and continues
to look for funding. 
 
    Vietnamese auto assembler 
    Thaco Auto, a unit of the Truong Hai conglomerate, could get
new investment valuing the operation at $5 billion, sources told
Reuters. Thaco assembles vehicles for brands such as BMW, Mini,
Kia and Peugeot. Truong Hai is a property developer and one of
Vietnam’s largest conglomerates. 
 
    GM will challenge Tesla in the home energy storage business
with a line of new products designed to allow customers to store
electricity and use their EVs as a reserve power source should
the grid go down. Any similarity between GM’s new PowerBank
system and Tesla’s Powerwall products is not a coincidence. 

 (Editing by Emelia Sithole-Matarise)