Auto File: Tesla falls short, Rivian Rolls

Proterra

02/10/2023 16:06

Joe White
Global Autos Correspondent
 
     

    Greetings from the Motor City!  
 

    Welcome back! I hope you did not bet anyone that by today
we’d be on the brink of a U.S. government shutdown, or that the
Green Bay Packers would beat the Detroit Lions. Those things
didn’t happen, giving us a reminder that there aren’t many
certainties beyond death and taxes. 
    That’s worth bearing in mind as we survey the news from the
World of Cars.  
    What was your estimate for Tesla’s third quarter deliveries?
If you followed most Wall Street analysts, you guessed high.
    And after Friday’s round of angry words between the United
Auto Workers and the heads of GM and Ford, it looks like a solid
bet the UAW and the Detroit Three will be playing the Strike of
the Week game for months.  
    Are you sure? Because the same UAW cut a deal with Mack
Trucks on Sunday that avoided a threatened strike. What’s your
bet? Put it in a sealed envelope and postmark it. No one will
believe you got it right otherwise. 
 

    Today – 
 
    *         Tesla disappoints, Rivian gets cheers 
    * The UAW gets a deal, but not in Detroit 
    * Japan shuts down its Russian auto sales channel 

 

        * Tesla hits a pothole, Rivian rises
  
Tesla dismayed investors Monday with third quarter deliveries
that fell short of even diminished analyst guesstimates.  
    Wall Street wanted to see Tesla Q3 deliveries at about
454,000 to 459,000 vehicles. Tesla reported it delivered just
over 430,000 vehicles – although Elon Musk is sticking with the
previous forecast that Tesla will deliver 1.8 million vehicles
for the full year. That implies deliveries of close to 500,000
vehicles for the final quarter of the year. (Tesla’s release is
here.)
    Tesla has a credible excuse for the sequential decline in
deliveries: Its factories took downtime to re-tool to make
updated versions of the Model 3 and Model Y. The restyled Model
Y launched over the weekend in China. 
    Tesla’s Q3 results call is scheduled for Oct. 18. Musk and
new CFO Vaibhav Taneja will have lots of questions to answer
about the state of demand, pricing and whether Tesla can sustain
its industry-leading profit margins.  
 

        * Meanwhile, shares in electric vehicle startup Rivian
jumped Monday after the company beat expectations for
third-quarter deliveries, and reaffirmed plans to build 52,000
of its luxury trucks and SUVs and Amazon delivery vans for the
year. 
    Rivian is a long way from exiting the woods, but beating the
Q3 delivery target is a signal that the worst of the company’s
production startup nightmare could be over. While rival electric
truck startups such as Lordstown and Proterra have left the
stage, Rivian remains on the short list of Tesla rivals that
investors still believe in.  
    CEO RJ Scaringe will have a chance to reassure investors
again when the company releases Q3 results Nov. 7. (The webcast
will be here.) 
 

        * Essential Reading 
    *         “Peak China” may pose peak danger 
    *         Ford CEO Jim Farley on the UAW stalemate 
    * From Detroit casinos to UK pubs, workers want better
deals 

 

        * Detroit Breakdown ... and a deal at Mack 
The Detroit Three automakers tried denial as a strategy for
dealing with United Auto Workers President Shawn Fain’s demands
for a record-busting contract. Now, Detroit’s CEOs have entered
the anger phase. 
    After Fain ordered another round of strikes Friday at Ford
and General Motors, Ford CEO Jim Farley held a conference call
where he said Fain is holding the automaker “hostage” while he
tries to compel the company to agree to pay workers at its
future battery plants the same wages and benefits as production
staff at Ford’s assembly plants.
    Three of the four EV battery plants Ford plans will be owned
by joint ventures with South Korea’s SK On. Those are separate
companies not bound by Ford-UAW agreements.  GM and Stellantis
also plan joint venture battery plants that are not part of
their master UAW agreements. But the UAW has made it clear it
will fight the Detroit Three over shifting UAW powertrain jobs
to non-union battery JVs at lower wage rates. 
    At GM, Friday’s other strike target, Chief Executive Mary
Barra expressed her frustration with Fain for “upping the
rhetoric and the theatrics,” adding “it’s clear that there is no
real intent to get to an agreement.” 
    GM on Monday furloughed about 160 workers at plants that
have lost work due to walkouts at GM’s Wentzville and Lansing
assembly operations. 
    Stellantis got a pass in last Friday’s strike announcement
thanks to a last-minute flurry of bargaining progress. In
response, the company toned down its comments about Fain. But
just the day before, Stellantis blasted Fain for making
“misleading and inflammatory statements” about incidents of
violence on UAW picket lines. 
    In the middle of Detroit’s rhetorical fist-fight, the UAW on
Sunday announced it had reached a new contract agreement with
Mack Trucks, now a unit of Sweden’s Volvo Trucks.  
    Terms of that deal hadn’t been released as the Auto File
went to digital press. Just the fact that Mack got a deal gives
the UAW a rebuttal to the Detroit Three line that Fain wants to
torture the automakers with one-plant-at-a-time walkouts for
months to come. 
    Analysts and Detroit Three negotiators will be digging into
the Mack agreement for clues as to what it takes to get the UAW
to yes.   
 

        * The U.S. auto industry’s $14 billion CO2 risk
    Automakers could face up to $14 billion in emissions fines,
an industry group warned, if the Biden Administration goes
through with plans to push up 2032 fuel efficiency standards
with the goal of shifting two-thirds of the U.S. new vehicle
market to EVs. 
    The Alliance for Automotive Innovation, which represents
most of the legacy automakers doing business in the United
States (but not Tesla), said  the administration’s proposed fuel
economy rules “exceed maximum feasibility” – a term used for a
reason. Under the law, government fuel efficiency rules are
supposed to aim for the maximum feasible improvement, but not
more.
    The automakers’ objections to the cost of the Biden
administration’s emissions rules are converging with the Detroit
automakers’ concerns about how to afford the rich labor contract
demanded by the United Auto Workers. The Detroit view is that
emissions rules threaten to phase out the combustion pickup
trucks and SUVs that Detroit needs to pay the wages and benefits
the UAW is demanding.     
 

        * Chery whistles past the EU’s tariff threats 
    Chinese automaker Chery plans to launch SUV models from
three brands in Europe and is considering a European assembly
plant. 
    Chery is China’s eighth largest automaker, and like the rest
of China’s auto sector needs new markets to sustain its
factories now that China’s market is slowing down. Chery plans
to send a mix of EVs, hybrids and combustion models to Europe,
notwithstanding the EU’s investigation of whether Chinese EVs
are benefiting from unfair subsidies.  
 

        * Japan shuts down used car sales to Russia 
    The Japanese government’s decision to block shipments of
used vehicles to Russia is rattling Japan's used-vehicle market,
which has long relied on exports to overseas markets to keep
domestic supplies low and prices stable.  
    Russian demand for second-hand Japanese vehicles soared as
Western sanctions on new vehicle deliveries took hold, creating
a $2 billion a year market and lifting prices for used cars in
Japan. Now, Japanese used vehicle prices are tumbling and
brokers are hunting for new export outlets. 
 

        * Quebec goes for the EV gold 
Canada’s Quebec province is in talks with battery makers and
auto manufacturers for C$15 billion ($11 billion USD) in
electric vehicle investments, a government official told
Reuters. Quebec has reserves of important battery minerals
including lithium, nickel and graphite. It also has a steady
supply of carbon-free hydropower and designation as a friendly
nation for the purposes of U.S. EV subsidies. C’est tiguidou!  
 

        * Fast Laps 
    -Italy could factor CO2 emissions from a vehicle’s supply
chain into the criteria for EV subsidies – a move that could
block government subsidies for purchases of Chinese-made
vehicles. Italy’s proposal is similar to a scheme adopted in
France. 
 
    -Fisker raised 
    another $150 million through a sale of convertible bonds to
an existing investor, and said it could raise another $550
million. The cash will fund the EV startup’s effort to ramp up
deliveries. Fisker shares are down nearly 12% year-to-date,
heading toward its Q3 results. Fisker had $467.5 million in cash
as of June 30, having burned $269 million during the first half
of the year. 
 
    -Catastrophic failures affecting engines in as many as
708,000 Ford SUVs are under investigation by U.S. safety
regulators.  
     
    
    Auto File is published on Mondays, Wednesdays and Fridays.
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 (Editing by Andrew Heavens)