AD #3619 – BMW Doing Better w/ EVs Than Others; Tremec Develops EV Drive Unit; We Drive Nikola’s Trucks

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

U.S. CAR MARKET KEEPS IMPROVING
The U.S. car market is getting back to being healthy again. Automakers sold 1.3 million vehicles in July, up 15% from a year ago, according to GlobalData. And the SAAR or seasonally adjusted annual rate hit 15.8 million units, up from July’s 13.5 million. And for reference, a SAAR of 16 million is considered a strong market. Fleet sales are helping to boost sales too. They were up 61% last month, accounting for 18% of all light-duty vehicle sales. But inventory levels are also on the rise, standing at 1.9 million vehicles in August, which is 14% higher than a year ago. And because of that, automakers are offering more incentives. They averaged nearly $1,900 in July, up 107% compared to last year.

BMW SELLS MORE CARS & BRINGS IN MORE CASH
BMW posted its second quarter earnings and the numbers look pretty good. It sold 626,726 cars which was 11% better than a year ago. Motorcycle sales were up 8%. That brought in €74 billion in revenue, up 12%. It posted an operating profit of €9.7 billion, up a whopping 42%. But its net profit fell 50% to €6.6 billion. But that’s because a year ago BMW booked a massive one-time gain of €7.7 billion when it absorbed its Chinese partner Brilliance. And it generated €3.1 billion in free cash flow.

BMW DOES BETTER WITH EVs THAN OTHER TRADITIONAL OEMs
But the big news here is that BMW is outperforming its traditional competitors when it comes to selling electric cars. It delivered more than 88,000 BEVs from January to June, up over 117% and representing 12.6% of total sales. And in the second quarter it got even better. Pure electric cars made up over 14% of sales and BMW expects them to hit 15% by the end of the year. Because of that, BMW will invest about 20% more on developing BEVs, which also happens to be the same amount of growth it expects in electric vehicle deliveries next year.

BUICK CHINA EV SALES BETTER THAN GM IN THE U.S.
Speaking of selling electric cars, Buick is picking up pace in China. According to Gasgoo, Buick sold nearly 8,700 BEVs in China last month. And the majority of those sales, nearly 5,500 units, came from its two newest Ultium-based EVs, the Electra E4 and E5. So, that makes us wonder if we can expect similar output in North America once GM gets more batteries? It has been battery constrained in the region, resorting to building packs by hand, which has resulted in disappointing sales. GM has sold less than 2,400 Ultium-based EVs in North America for the entire year, while Buick sold almost 5,500 in one month in China. We expect North America to start to turn around as battery production picks up and more models, like the new Blazer, hit the market. But will it happen fast enough?

HELP YOUR JEEP OUTRUN DINOSAURS
Can you believe that Jurassic Park first came out 30 years ago? Well, to celebrate the anniversary of the movie, Jeep is offering a graphics package to make Wranglers and Gladiators look like the YJ Sahara that was used in the original film. There’s two graphic kits, one that sells for $550 and another for $650, which fit 2018-2024 Wranglers and 2020-2023 Gladiators. But it’s only going to make 100 examples and we expect them to go quick, if they’re not sold out already.

TREMEC DEVELOPS POWERFUL EV DRIVE UNIT
Here’s another example of a legacy supplier transitioning to the EV world. Tremec, which builds transmissions for high-performance models like the Corvette and Mustang, developed a drive unit for high-performance EVs. The two-motor unit weighs 243 pounds and produces 600-kW or about 800-horsepower. It’s even compact enough to fit in the same space as a single, rear-drive motor, like the one in the Mustang Mach-E, which weighs about the same but produces less than half the power. Tremec plans to introduce the drive unit in 2024 or 2025 but only for low-volume specialty vehicles. And it wants to ramp up to 10,000 units per year by 2028.

GM’S CRUISE SIGNS UNION DEAL
GM’s self-driving business Cruise just made a smart move. It just signed its first labor agreement with two unions in San Francisco that will employ “dozens” of workers who will construct and staff Cruise’s facilities. Unions like the Teamsters have complained that autonomy will cost jobs, so by letting its workers unionize, Cruise is taking some of the sting out of that criticism.

WE WERE IMPRESSED BY NIKOLA’S TRUCKS
Nikola could be on track to turn into a viable truck company. After its founder and CEO, Trevor Milton, was convicted of securities fraud, the survival of the company was in doubt. But now its future looks much brighter. Nikola has landed several hundred orders for both its electric and fuel cell Class 8 semi trucks. The trucks, fuel cells and battery packs are assembled at Nikola’s plant in Arizona. The cabs come from Iveco in Europe, while the fuel cells stacks come from Bosch. Nikola had signed up 12 dealer principles across the country, with 100 service points. Most of them are typically Caterpillar dealers who have experience with hydrogen fork lift trucks. And yesterday the company held an event in the Detroit area so the media could drive them. The trucks are a dream to drive. They’re quiet, have none of the shaking and vibrating that diesels have, and they accelerate far faster, meaning drivers will be able to keep up with traffic and make quicker turns. Nikola’s fuel cell customers will use the trucks for hub-and-spoke routes, not for long-haul trucking. That way, they’ll always return to a yard that is equipped to refuel them with hydrogen. But we will also say that two recent fires with its battery electric trucks has us keeping a close eye on any possible pack issues.

BORGWARNER’S SWITCH TO EVs PAYING OFF
With the chip shortage and a big drop in production over the last three years, we thought that automotive suppliers were struggling, But two of them just posted their Q2 earnings and the results are surprisingly good. Borg-Warner, which is one of our sponsors, is in the middle of transforming itself from a traditional manufacturer of components for IC engines to a supplier of EV components. It saw its sales jump 20% to $4.5 billion. Its operating profit shot up 40% to $383 million, but its net profit fell 5% to $204 million mainly due to a big increase in income taxes.

APTIV RIDES SOFTWARE TO SOLID PROFITS
Meanwhile, Aptiv, which used to be part of Delphi, but has transformed itself into a software-driven supplier of mobility technology, saw its revenue shoot up 28% to $5.2 billion. Its operating profit rocketed up 322% to $410 million, and its net profit came in at $229 million compared to a loss last year of $61 million. It also generated $535 million in free cash flow. We’ll have to keep an eye on other suppliers and see if they report strong earnings, because these numbers from Borg-Warner and Aptiv are much better than what we expected.

Hey, can it be true that car buyers are now more interested in gimmicks and tech features than they are in styling? That’s one of the things that we’ll be talking about on Autoline After Hours this afternoon. We’ll have Ed Kim from AutoPacific, which has some eye-opening data on this. Alexa St. John from Insider will also be on the show. So join John and Gary when we go live at 3 pm eastern time.

But that’s the end of today’s show. Thanks for joining us.