Auto File: Tesla and Porsche and Bears, Oh My!
30/09/2022 16:28
Joe White
Global Autos Correspondent
Greetings from the Motor City!
Sometime later today, Elon Musk will kick off Tesla’s 2022 AI
Day. It will likely be late on the East Coast, so stay awake! If
Musk produces a working prototype of a humanoid robot it could
help you forget what a rough week it has been, in Florida,
Ukraine, Wall Street...just about everywhere.
After today, the Auto File will be taking a break until Oct. 19.
I’m looking forward to some great interviews on stage at the
Reuters Events Automotive USA conference, Oct. 18-19 at
Huntington Place in downtown Detroit. Put a quarter in the jar
if you still call it Cobo Hall.
Down to business. Today, Wall Street walks out on the auto
industry, Porsche sticks the landing with its IPO and Akio
Toyoda keeps up the fight against Electric Vehicle (EV)
mandates. Have a good weekend!
* The ‘pent-up demand’ story falls apart
Auto industry executives have tried to reassure investors that
after more than a year of production shortfalls, pent-up demand
among consumers is strong and will carry the industry through a
macro-economic slump. That theory now appears to have hit its
expiration date with investors.
Auto sector stocks tumbled on Thursday after used car retailer
CarMax rattled investors with worse-than-expected results for
July-September sales and profitability. CarMax Shares took a
double-digit nosedive. Spooked investors didn’t stop there. They
dumped shares across the auto industry, including manufacturers
and retailers such as AutoNation and Sonic Automotive. Online
used car seller Carvana lost nearly 20% of its value on
Thursday, and started Friday down 90% for the year.
Morgan Stanley warned clients: “The story of KMX's 2Q is clear:
demand destruction. High used prices and rising rates causing a
buyers' strike…”
Analysts at Cox Automotive warned on Wednesday that their data
on U.S. new and used vehicle sales point to a sales slump, full
stop. Cox cut its full-year forecasts for new and used vehicle
sales.
“Pent-up demand is quickly disappearing” as rising interest
rates put monthly car loan payments out of reach for more
consumers, said Cox senior economist Charlie Chesebrough.
This is not just a Detroit problem. Moody’s cut its outlook for
the global auto industry to “negative” and warned that high
rates, high costs and the impact of Europe’s energy crisis will
stifle demand.
* Porsche’s IPO outruns the bears
Volkswagen rolled the dice on launching the IPO for Porsche
into a market storm, and won.
Porsche shares started trading on Thursday at 82.50 euros, the
top of the range estimated ahead of the sale, and went up from
there while nearly every other automotive stock got clobbered.
Porsche AG shares P911_p.DE stayed flat on Friday.
Thursday was a great day for Porsche/VW CEO Oliver Blume, VW CFO
Arno Antlitz, and especially for members of the Porsche and
Piech families, whose Porsche SE holding company now has a 25%
plus one share stake in the Porsche luxury brand. That’s enough
to assert control. Blume said he will stay on as CEO of both VW
and Porsche, notwithstanding questions about potential conflicts
between the best interests of VW and Porsche shareholders.
Volkswagen raised 19.5 billion euros ($19.1 billion) to help
fund its electrification drive and a special dividend to
shareholders. Antlitz opened the door to a flotation of VW’s
battery unit PowerCo, or partnerships to fund those operations.
Investors appeared to be selling shares in Volkswagen and
Porsche SE, the family holding company, to buy the new Porsche
AG shares.
One challenge for Blume and his executive team: The success of
the Porsche sale exposes how little value investors place on the
rest of Volkswagen - the global Volkswagen brand, VW China,
finance operations, luxury brands Bentley and Lamborghini and
mass market brands Skoda and Seat.
* Akio Toyoda’s EV skepticism
Investors and policymakers waiting for Toyota CEO Akio Toyoda to
join rivals at General Motors and Volkswagen and embrace an
all-electric future will have to keep marking time. Toyoda told
Reuters that California’s mandate to end combustion vehicle
sales by 2035 will be difficult to meet. He compared the
deadlines for ending combustion vehicle sales to the
over-ambitious projections for mass deployment of autonomous
vehicles.
That said, Toyota is accelerating its EV plans. In August, the
automaker more than doubled a planned investment in a U.S.
battery plant. Toyota is also ramping up new EV projects for
China, where government and competitive pressure to shift to EVs
is relentless.
* Geely buys a stake in Aston Martin
Chinese automaker Geely now owns a 7.6% stake in Aston
Martin. Geely also owns a stake in British sports car brand
Lotus. Lotus Technology, an arm of the Lotus operation, said
earlier this month it was valued at $4.5 billion after a
fundraising. Let’s assign Agent 007 to figure out what’s going
on here.
*BMW turns to Amazon for a better voice assistant
BMW will use Amazon’s Alexa voice assistant technology as
the basis for its next-generation vehicle voice command systems.
“Alexa technology will enable an even more natural dialogue
between driver and vehicle,” BMW said.
Tech giants such as Amazon, Google and Apple have built a lead
in voice command systems backed by artificial intelligence
processing mega-rivers of data. Automakers have wrestled with
voice command tech, although the most recent J.D. Power survey
found that fingerprint readers and gesture controls have become
the most problematic digital features.
BMW said it will continue to use tech supplied by its current
voice vendor, Cerence, in some select markets.
* GM invests in silicon anode startup OneD
General Motors is investing in Palo Alto battery tech
startup OneD and will research how to use OneD’s silicon anode
technology in future EV batteries. Silicon anode technology
offers the promise of significant energy density improvement -
cutting weight and increasing driving range. A number of
startups are chasing commercialization.
Mercedes earlier this year said it will use a silicon anode
battery developed by Sila Technologies in an electric version
of its G-class ultra-SUV.
* Arrival will be late
Electric van company Arrival said it missed its goal of
starting production of its vehicles by Sept 30, but promised it
will deliver 20 vehicles by the end of the year. CEO Denis
Sverdlov said the company’s supply chain is broken, and Arrival
is going through “production hell.” When Tesla was in production
hell in 2018, financial markets were on the rise and Tesla could
easily raise capital. Today, cash is king and investors are
shying away from money-losing startups. Arrival had $513 million
at the end of the second quarter, and had started to slash costs
by 30%.
* Electric vehicles that go the extra mile
Measuring the efficiency of electric vehicles isn’t as easy for
most consumers as comparing miles per gallon. To help, the U.S.
government uses a “miles per gallon equivalent,” or MPG-e, that
translates electricity consumption into a more familiar MPG
measure, using 33.7 kilowatt-hours of electricity as the
equivalent of one gallon of gasoline. The Energy Department has
a list of 17 EVs that now achieve 100 MPGe or better.
* Citroen’s Cardboard Car
Imagine a world without steel. Designers at Stellantis’ Citroen
brand have imagined this post-carbon, post-mining scenario and
designed a car made of treated cardboard.
The Citroen Oli concept car in no way wants to remind you of the
infamous East German Trabant, a Communist-era people’s car with
a body made of duroplastic. Instead, the Oli looks like an
electric, pint-sized post-apocalyptic assault vehicle - a GMC
Hummer EV’s mini-me. Or Mini-Moi. After all, this is France!
Essential Reading
A court dumps a huge trove of Elon Musk’s Twitter deal texts
GM struggles with ‘return to office’
Watch out Optimus: Chinese robot installations are surging
(h/t to Automotive, Gardner Business Media.)
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