AD #3906 – The Minivan Segment is Dying; U.S. Faces Another Chip Shortage; ICE Price War Could Start in China

This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.

SALES & VALUE DROPPING AT STELLANTIS
The spotlight is on Stellantis today and it seems like things are getting worse. Third quarter sales in the U.S. were a disaster, falling 20%. For the year they’re down 17%. And investors are heading for the exits. The stock price dropped 12% this week and is down 40% so far this year. At the beginning of the year, the company’s market cap was $70 billion. Now it’s $36 billion, a $34 billion drop in value in only 10 months. Stellantis will not report its global Q3 sales until the end of the month, but Bloomberg reports that its production in Italy has cratered, dropping 41% so far this year. It only made about 238,000 vehicles there this year, which is less than it made in 2020 when the Covid pandemic shut down its plants. Last year Stellantis was one of the most profitable full-line manufacturers with double digit margins, and Carlos Tavares was hailed as one of the best CEOs in the business. But this year he’s managed to turn everyone against him: his dealers, his unions, his employees and even the Italian government. The board is also actively looking for a new CEO when his contract expires in 2026. And it’s possible he won’t last that long. The board of directors may have to buy out his contract, if only to prove it’s upholding its fiduciary duty.

TESLA INCREASES WORLDWIDE DELIVERIES
OK, now over to Tesla, where the story is a bit brighter. Tesla delivered just under 463,000 vehicles worldwide in the third quarter. That’s up 6.3% from a year ago, and up 4.2% from the last quarter. But that was less than analysts expected and investors took it as a sign to sell, sending the stock price down more than 6%, and wiping out all the gains that it made this year. The days of 50% annual growth and a trillion dollar valuation are probably over, unless something big comes along. And one week from today Tesla says it will unveil its robotaxi. But we’ll have to see if that’s enough to convince investors that this is still a growth stock with a lot of runway in front of it.

U.S. FACES ANOTHER CHIP SHORTAGE
Geez, just when we thought the chip shortage was pretty much over with, Hurricane Helene showed just how vulnerable the industry is. Two companies that mine high-purity quartz in North Carolina had to shut down their operations due to flood damage from the Hurricane. That quartz is used to make chips and the sites in North Carolina are one of the only ones in the world that contain the material. The mining companies say it’s too early to know when they can start running again but if the shutdown is long we could have another chip shortage on our hands.

LINAMAR HIT BY HURRICANE FLOOD DAMAGE
Speaking of that hurricane, Helene also disrupted operations at Canadian supplier Linamar’s two plants in North Carolina due to flood damage. One of the sites is gradually resuming production but the other is still without power, which may not come back until tomorrow. Linamar, which makes parts and components for engines, transmissions and drivetrains, says it expects to be affected for at least the next two weeks.

LONG PORT STRIKE WILL HAVE BIG IMPACT
But wait, there’s more! Now automakers are grappling with a port strike along the East coast and Gulf of Mexico. Even if it only lasts a week, experts say automakers and suppliers could feel the impact until Thanksgiving. According to AlixPartners, the ports on strike account for 70% of U.S. auto imports and S&P Global estimates they handle nearly $38 billion worth of vehicles a year. Automakers anticipated the strike and boosted shipments ahead of schedule. But if it goes on longer than a week, they’ll need to find alternatives, either shipping vehicles to the West Coast or even Canada and Mexico, and then bringing them back in by truck and rail. They could also ship parts by air but that can get expensive.

EU TARIFFS ON CHINESE EVs HAVE SUPPORT TO PASS
Yesterday, we reported that BMW is pushing Germany to vote against the EU’s tariffs on Chinese EVs. And now Mercedes is saying the same thing. It wants a “no” vote, and prefers a negotiated solution rather than tariffs. But Germany says it will abstain, and Reuters reports the proposed tariffs have the support to pass. EU countries will vote tomorrow, which would slap import tariffs up to 45% on Chinese-made EVs. To stop them, 15 of the 27 EU member states need to vote no. However, France, Italy, Poland and Greece will vote in favor of the tariffs and those countries account for about 40% of the EU’s population.

 

TOYOTA INVESTS EVEN MORE IN VTOLs
Toyota is serious about developing VTOLs or vertical takeoff and landing aircraft. Four years ago, it invested $394 million in a California startup called Joby Aviation. And now it’s investing another $500 million in the company which will go towards certification and commercial production of Joby’s electric air taxis. Its VTOL can carry 4 passengers and a pilot at up to 200 MPH for up to 100 kilometers or 62 miles. Earlier this year, Joby signed a deal with Dubai to launch an air taxi service in the city in 2026.

ICE PRICE WAR COULD START IN CHINA
While the EV price war in China has seen the most coverage, makers of ICE vehicles have started offering deep discounts as well. Geely’s Lynk & Co brand is offering a life-time warranty and nearly $5,700 off its 01 model with a trade-in, which brings its starting price to just over $18,000. Its problem is that sales of ICE vehicles are falling due to the popularity of PHEVs, EREVs and BEVs. And the 01 is Lynk & Co’s main model. It’s based on Geely’s CMA platform, is similar to a Volvo XC40 and is also sold in some overseas markets. But from April to August Lynk & Co sold less than 3,500 examples. That’s why it recently launched its first EV, the Z10, and plans to launch another soon.

MINIVAN SEGMENT DYING IN THE U.S.
The minivan segment is dying. According to Wards Intelligence data, roughly a million minivans were sold in the U.S. market 20 years ago. But last year that dropped to only 306,000 and so far this year it’s less than 200,000. The Chrysler Pacifica made up about 40% of last year’s sales, leaving Toyota, Honda and Kia to account for the rest. This helps explain why Chrysler is probably going to keep making the current Pacifica until the end of the decade, even though it launched in 2017. And we wouldn’t be surprised to see similar longevity from the Sienna, Odyssey and Carnival.

MERCEDES ALLOWS WORKERS TO TAKE FREE EV TEST DRIVES
To get its workers more familiar with its electric vehicles, Mercedes is allowing them to take free test drives during work hours. It launched the program last year and more than 17,000 employees at 10 locations in Germany, Poland and Hungary took advantage of it. For two-thirds of them, it was the first time they drove a Mercedes EV. Last year’s campaign was aimed at production workers but now it’s opening it up to all employees at those same locations and it expanded it to include all of its passenger EVs. The automaker says it’s also giving out test drives, so employees can experience its driver assistance features. In total, Mercedes expects 27,000 workers to take part in the program this year.

CATERHAM & YAMAHA PARTNER ON LIGHTWEIGHT SPORTS CAR
Caterham and Yamaha are two names you don’t hear much about anymore, but the two are coming together to collaborate on a lightweight sports car. Caterham says that Yamaha will supply it with a powertrain and motion control technology for the production version of its Project V concept. The model debuted last year at the Goodwood Festival of Speed and a specialist engineering company named Tokyo R&D is building the prototype, which is scheduled to be completed in the middle of next year. If you’re wondering why a British brand like Caterham is working with a couple of Japanese companies, it was bought by Japanese company VT Holdings in 2021. Interestingly, VT Holdings started out as an importer of the Caterham Seven in 2009.

At the top of the show we talked about Q3 sales, problems at Tesla and the disaster at Stellantis. And those are going to be three of the topics we get into at 3PM EST this afternoon on Autoline After Hours. Warren Browne, the analyst and forecaster and Stephanie Brinley from S&P Global Mobility will be on the show. So join John and Gary as they look beyond the headlines and dig down into what’s really going on in the industry.

But that’s a wrap for this show. I hope to see you later.