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Runtime: 11:13
0:00 Stellantis To Cut ICE Production to Meet EU CO2 Regs
1:18 EU OEMs Deliberately Wait For 2025 To Sell Cheaper EVs
2:33 CATL Q3 Earnings Miss Expectations
3:09 Hyundai, Lucid Sell More Stock to Raise Capital
4:39 U.S. EV Registrations Up 18% In August
5:12 Cybertruck Can Now Be Ordered with No Reservation
6:11 GM Using AI to Improve Software
6:59 Used Nissan Ariya EV Prices Plummet
7:50 Japanese OEMs To Cooperate on SDVs
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This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.
STELLANTIS TO CUT ICE PRODUCTION TO MEET EU CO2 REGS
Automakers in Europe face potential fines of up to €15 billion for not meeting stricter CO2 targets that go into effect next year. BMW and Renault want the rules relaxed, but Stellantis CEO Carlos Tavares doesn’t want any change. However, the COO of Stellantis in Europe says it may have to cut production of ICE vehicles to meet the standards. The company needs to double its EV share next year to 24% if it’s going to meet the targets, and it could start cutting production as soon as November 1st. And remember it’s already cutting some EV production due to poor sales. But one thing that will help Stellantis is its joint-venture with Chinese EV maker Leapmotor, since the JV’s sales will count towards its emission figures. But if automakers aren’t able to delay next year’s targets, other companies could also start cutting production to avoid fines. The rules require an EV share of 20-25% but as of August, the EV share in the EU is less than 13%.
EU OEMs DELIBERATELY WAIT FOR 2025 TO SELL CHEAPER EVs
While EV sales have slowed dramatically in Europe and are actually falling in Germany, global sales of BEVs and plug-in hybrids were up 26% in the first half of the year. And BloombergNEF forecasts they’ll hit 16.7 million units by the end of the year. That would be up from 13.9 million last year and represent 20% of the global car market. As you can probably guess, China fueled most of that growth. Six out of 10 BEVs and PHEVs sold are sold in China. Pricing plays a role. There are lots of inexpensive EVs in China, but not in Europe. Take the Fiat 500 for example. In Europe, the electric version is nearly 12,000 euros or about $13,000 more than a base ICE version, even though it only has about 3,000 euros worth of batteries. BloomberNEF thinks European automakers are holding back more affordable EVs until next year, because they already comply with the emissions regs this year. It thinks that next year, when the rules get stricter, is when automakers will flood the EU market with their cheaper EVs.
CATL Q3 EARNINGS MISS EXPECTATIONS
Even though EV sales are up globally, CATL just posted its third quarter earnings and while the numbers look pretty good, they came in lower than analysts expected. Revenue was $12.7 billion, but that was down more than 12% compared to last year. Net income hit $1.8 billion, which was up a sharp 26%, but analysts expected it to post $2 billion in profits. Even so, the market shrugged off the news. CATL’s stock was up nearly 8% today and it’s up 59% for the year.
HYUNDAI, LUCID SELL MORE STOCK TO RAISE CAPITAL
Speaking of stock prices, Hyundai and Lucid are turning to the equity markets to raise more capital. Hyundai is doing an IPO for its business in India that is raising at least $3 billion, making it the biggest initial public offering that’s ever happened in India. That gives Hyundai Motor India a market cap of $19 billion. Many automakers believe that India will be the next big growth market for cars and we’re starting to see a flurry of investments there.
Meanwhile, Lucid is going to sell about 637 million shares of its stock, which it hopes will raise over $1.6 billion. We think It needs to make this move. The EV startup is burning through cash and might only have enough to last it into 2026, even with the Saudi investment fund being a major shareholder. Investors did not like the stock-selling news, which will dilute their equity in the company. Moreover, Lucid warned that it’s going to post an even bigger loss for the third quarter. The stock dropped 18% and is now trading at only $2.70 per share.
U.S. EV REGISTRATIONS UP 18% IN AUGUST
Growth of pure electrics in the U.S. is outpacing the overall market. According to S&P Global Mobility, BEV registrations in August came to nearly 112,000 units, which is an 18% increase over last year. That means they represented 8.6% of all vehicles sold in the month, up from 7.5% in 2023. A few surprises might be the Tesla Cybertruck and Honda Prologue in 3rd and 4th place, respectively.
CYBERTRUCK CAN NOW BE ORDERED WITH NO RESERVATION
But it would be interesting to know where these numbers would stand if automakers actually sold their EVs for what they said they would originally list for. Many models have starting prices well above what automakers said they would cost, which is especially true of the electric pickup trucks. And we think that’s had a big impact. For example, the waiting list for the Cybertruck was once put as high as 2 million reservations, but you no longer have to be a reservation holder to order the truck. And based on a recent Cybertruck recall, we think Tesla has delivered around 30,000 units. So, it hasn’t converted most of those reservations to sales yet and price is probably a big part. And it’s not just Tesla. Ford actually capped F-150 Lightning orders at 200,000, but prices came in much higher and it still hasn’t able to get a lot of those people to buy the truck.
GM USING AI TO IMPROVE SOFTWARE
General Motors is using artificial intelligence to improve production and to help it catch any glitches with its software. The company has developed an automated tool, which operates around the clock, that runs simulations to find any problems with software before it goes into a vehicle. To help with production, it’s using another tool that inspects and validates weld quality. And it’s also using cameras and analytics to collect 165 million images a day to anticipate manufacturing equipment failures. GM’s VP of software, Dave Richardson, says these new tools are catching 10 times as many problems and much sooner, which is leading to the improvement of its quality.
USED NISSAN ARIYA EV PRICES PLUMMET
If you’re in the market for a used EV, you might want to put the Nissan Ariya on your list. InsideEVs reports that one-year old Ariya’s are selling for less than half their original MSRPs. One 2023 model with only 10,000 miles is priced just over $22,000. Its original MSRP was $48,580, which is about a 54% drop. In total, there are 270 used Ariya’s on Cars.com priced at less than $30,000, 39 of them are under $25,000 and 146 have less than 10,000 miles on the odometer. The drop in used prices is partly due to Nissan lowering the base price of the 2024 model.
JAPANESE OEMs TO COOPERATE ON SDVs
This next piece is a pretty important development in Japan. Toyota, Honda and Nissan are going to standardize the platform for APIs, or the Application Programming Interfaces. That will make it easier for other software companies to develop apps for their cars. They’re also going to collaborate on developing SDVs, or software defined vehicles as well as standardize certain functions for microprocessors in cars, like lowering a window or turning on the wipers. The whole effort is being coordinated by Japan’s Ministry of Economy, Trade and Industry, which is also going to work with universities to teach the people that will work in these fields. Japan recognizes that its auto industry has fallen behind in software defined vehicles and needs to catch up fast. And by standardizing many areas, automakers will be able to go with off-the-shelf technology instead of having to try and develop it on their own.
And that brings us to the end of today’s show and this week. Thanks for tuning in and I hope that you have a great weekend.
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Seems that maybe the SEC should ban this whole idea of vehicle reservations with a refundable deposit. No doubt Tesla getting 2 million reservations helped to spike stock price while reality appears to have resulted in a fraction 1.5% of those reservations becoming actual sales. Seems like a loophole way to manipulate stock value.
Seems EV manufacturers that can meet emission requirements have no incentive to offer competitive prices. They know the people with disposable income that want an EV will pay the higher prices. However, this is a limited group of buyers. Manufacturers are trying to balance a sliding scale of what the market will bear when it comes to price. Evidence of their price drops when sales dip. How low can they go? They can continue to play this game until a manufacturer (I’m guessing from Asia) will release an EV with a competitive price with normal margins. Then it will be time to stop playing the pricing game and offer the EVs with standard mark-ups.
I believe the original pricing that many of these manufacturers published they can actually do. For now, it’s a matter of trying to recoup some R&D and get as much $ as they can. IMO
I had a Ford Lightning reservation. Then they raised the price substantially and I cancelled it. I also had a Cybertruck reservation, but they too raised the price to the stratosphere and I cancelled it. I knew I was not alone despite outlets like elektrek cheerleading for the CT and the Lightning prior to it and praising the early reservation counts. One way to look at the reservations is that the market is there, if they get the pricing right. The other way to look at it, the number of reservations represents the maximum volume you will ever get for the entire run of say the CT and Lightning if you got everything right. If you didn’t get it right, such as the CT and Lightning, then your total lifetime volume drops from that initial reservation count.
I suspect a lot of people make reservations “for fun” when it’s cheap, and there’s no commitment. Ford and Tesla apparently overestimated actual demand, and planned too much production for their EV trucks. If they made it a $2000 non-refundable deposit, they’d learn more aboit actual interest.
I have a question. Does the 18% increase in EV registrations include both new and used? With a 50% depreciation in one year (unbelievably bad) for the Nissan for example, I wonder if the 18% increase is due to folks jumping on the cheap used EVs. For all the propaganda…err… reporting of EVs being the future, at our dealership in the real world we sell NO new EVs anymore (just large trucks and SUVs). We have sold a batch of 5 or 6 used EVs for half the original sticker price over the course of a few months earlier this year, but lately I have not seen any more in our inventory. I am really awaiting the sales progress of the new electric Chargers (when they finally appear) over a period of time to gauge interest.
Here in a suburb of Detroit, I see a number of new Equinox EVs along with a number of pre-production Charger and Wagoneer S EVs. The interesting thing, while a have seen a few Model 3s ober the pass several years, I have seen more of of the Equinox EVs in the month and a half than I’ve seen 3s in this area combined! As has been been said in the pass and to punctuate comments related to Friday’s report, price is a big factor to EV adoption, long with range and convenience of refueling. If the price was right, IMHO, range would probably not be an issue, even with towing, if recharging was quicker and the charging infrastructure was in place!
Kit —
You said: “If they made it a $2000 non-refundable deposit, they’d learn more about actual interest.” I agree that would definitely reveal true interest, but how would that be fare to the consumer, if the OEM then raised the actual price from $40K to $70-to-90K, as Ford, GM and Tesla did with their EV pick-up? IMHO, if the consumer has to put down a non-refundable deposit, the OEM has to stick to the price and trim level that the buyer is committing for those funds for. That way the OEM can just through crazy low ball numbers to make headline and have potential buyers running to drop these non-refundable deposits, only for the actual vehicle to be way more then they promised. Now the one who dropped the deposit has to walk away from the vehicle and their money, since they can afford the vehicle! Sure, the OEMs will try to get around that by saying the price they originally stated was an approximation, or it was the manufacturers suggested retail price (MSRP) or make the cheapest version the last of their model they build as the ramp up full production. Yet, it would only be fare that it the deposit was non-refundable, then to the OEM should have to build that version of vehicle they stated the price for, for the amount the promised if for!
wmb, I agree that if someone makes a $2000 non-refundable deposit for, say, a $40K Cybertruck in 2031, the deposit should be refunded if the vehicle is not available in 2021 for $40K.
wmb, what you see depends on where you are. This summer, in Kokomo, Indiana, with a few thousand Chrysler employees, it seemed like every other vehicle was a Ram truck or somr kind of Jeep. Today, back in the Florida “space coast” with a lot of SpsceX employees and a Tesla store here, I see Teslas.
Kit,
The Chargers and Wagoneer S’s that l’m seeing are, no doubt, going through their final shake downs before they begin production. I didn’t mention that I’ve also seen a few Blazer EVs on the road around here, but the Equinox have been more prevalent. They are all still in small numbers, but enough to standout. There are also several Chevrolet dealerships in the area too, that I’m sure are benefiting from customers being able to see and feel the metal before they make a purchase or, more probably, a lease. What’s crazy to me is that, even though a good number of the products that GM put of their current EV platform are JUST NOW getting to customers, they have indicated that they are walking away from it! That may shake some potential buyers confidence in getting the vehicles that are on that architecture, yet that does show how quickly this type of tech matures and becomes outdated in just a few years time! I’m sure it will eventually plateau and slow to a degree on the hardware side, but keeping up with the software will be a race against time itself, it seems.
wmb- You highlighted my concern all along. Even though EVs have been around for 12 years basically. They are still new and rapidly evolving. Lots of money is being spent on battery development seen in many episodes of ALD. Throw in other possible major changes like 48V electrical systems, Modular control systems, Mega castings and the advancements in AV tech and most of the vehicles releasing today are on the verge of being obsolete by time they are due for a refresh. When it comes to some of the software its obsoleted from inception to launch. Which can somewhat be alleviated with OTA updates. With the high prices and opportunities for above average depreciation I’m not sure an EV is a sound purchase at this time. Not that many vehicles are ever a good purchase but compounded by rapidly changing tech the EVs seem to be at a larger disadvantage when it comes to holding its value.
If it’s something you want and you don’t care about the higher-than-average depreciation cool. We need those people to keep buying to keep the ball rolling. Just isn’t going to be anytime soon.
The main area for real progress in EVs is batteries, period. The powertrain of the GM EV1 worked just fine, but the lead-acid and NiMH batteries, not so much. It seems like a lot of newer software applications make cars worse, not better, because the companies feel the need to make it unsafe to tune the radio while driving.
They could make tuning the radio extremely difficult and it wouldn’t matter to me. I don’t listen to local radio for anything. In my area local radio is a series of endless commercials followed by 5 minutes of more talking by the hosts, and then another 10 minutes of commercials. I can’t even listen to it anymore. I run spotify/pandora and have mostly music with very few commercials. I guess I am just not a talk radio fan which is all local radio has become around here.
I mainly use over-the-air radio for sports events. I use SiriusXM for music, and for listening to F1 races when I’m not home. My Mini has only 6 presets, and to tune between more than 6 stations is not very friendly. Yes, some people don’t use the radio, but why not make it user friendly for those who do?
Anyone buying an EV should learn to adopt the mindset that they are buying a disposable device. Kind of like a new phone, except you’re financing it for 72 months and it will be basically worthless long before you pass half that period of paying all of that sweet front-loaded interest. Good luck trading it in with all that negative equity and dealer reluctance to even take it because they can’t resell it with all of that end of warranty and battery replacement stigma,