Follow us on social media:
Runtime: 10:59
0:00 Lucid Gets New Billion Dollar Saudi Investment
1:38 Continental Wants to Spin Off Automotive Operations
2:53 Nissan Offers Buyouts to U.S. Salaried Workers
3:42 Special Paint Keeps Cars Cooler
5:04 EVs & ICEs Could Hit Breakeven Point Next Year
6:09 Dongfeng Close to Deal for Italian Plant
6:49 Mercedes EQS Gets More Chinese Competition
8:09 Humanoid Robots Being Trained to Make Cars
Visit our sponsor to thank them for their support of Autoline Daily: Bridgestone, Intrepid Control Systems, MEDC and Teijin Automotive.
This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.
LUCID GETS NEW BILLION DOLLAR SAUDI INVESTMENT
Lucid reported a Q2 net loss of nearly $800 million, but it also got another $1.5 billion in commitments to the company. Nearly 2,400 Air sedans were delivered to customers in the second quarter, a jump of over 70% compared to a year ago. The vehicle benefited from an up to 10% price cut, which meant some models had over $16,500 slashed from their sticker price. Those vehicle sales brought in a little more than $200 million of revenue, a jump of 33% from Q2 of 2023. But now let’s get back to that big investment. Lucid entered an agreement with an affiliate of the Saudi Public Investment Fund, which owns about 60% of Lucid, for it to purchase $750 million of the EV startup’s stock and for it to provide Lucid with another $750 million line of credit. Lucid will use the infusion to help launch the Gravity SUV by the end of this year and it also gives it enough assets to last until the fourth quarter of next year. But Lucid plans to launch more models with a starting price under $50,000 in 2026, so it will need even more money. However, CEO Peter Rawlinson recently said that the Saudi PIF would remain a long-term partner and so far has invested $8 billion into Lucid.
CONTINENTAL WANTS TO SPIN OFF AUTOMOTIVE OPERATIONS
The giant German supplier Continental is considering spinning off its automotive operations “due to the increasingly dynamic markets in the… industry.” It says the board will come to a decision by the end of this year and, if approved, which it sounds like it will be, will be put to a vote by shareholders in April of next year. If that’s approved, it hopes to complete the spin-off by the end of 2025 and it says it’s already preparing for that to happen. The automotive division makes things like brakes, comfort systems, sensors, displays, software platforms and driver assistance systems. Conti says the move will allow it to adjust to changes in the market easier, to focus more on software-driven tech and “harness its full potential for creating value.” Last year its automotive operations generated sales of 20.3 billion euros and employed about 100,000. The tire division and ContiTech, which is a plastics and materials company, will remain under the Continental umbrella and they make about the same amount of money and employ about the same amount of people as the automotive operations.
NISSAN OFFERS BUYOUTS TO U.S. SALARIED EMPLOYEES
After poor results in America last quarter, Nissan is offering buyouts to salaried employees in the U.S. It says they were offered to some white-collar workers who are at least 52 years old and that it only accounted for a “small percentage” of the roughly 12,000 non-hourly workers it employs. But if Nissan continues to perform like it has in the U.S. those buyouts could turn into layoffs. Sales were down over 3% last quarter, its inventory was over 100 days supply at the end of February, versus an average of 76 days, and it offered the highest purchase incentives of any full-line brand in March, at over $3,700 per vehicle.
SPECIAL PAINT KEEPS CARS COOLER
And in other Nissan news, the automaker is testing paint that’s designed to keep a vehicle’s interior cooler and reduce energy usage. The automaker partnered with Radi-Cool, a company that specializes in radiative cooling products, to create the paint. The companies are testing it on a NV100 small van that’s operating as a service vehicle at an airport in Japan. Initial tests show that the paint reduced the vehicle’s surface temperature up to 12 degrees Celsius and it’s interior up to 5 degrees Celsius compared to traditional paint. Nissan’s cool paint incorporates metamaterial and synthetic composite materials that redirect the sun’s rays away from the vehicle. But the paint is thicker than traditional automotive paint, so Nissan is still working on a process to apply it that meets its quality standards. But it says it sees strong potential for the paint, especially for light commercial vehicles that spend most of the day driving.
EVs & ICEs COULD REACH BREAKEVEN POINT NEXT YEAR
EV prices are on track to breakeven with ICE vehicles as early as next year in the U.S. A study from Goldman Sachs says falling battery prices, due to a 70% plunge in lithium prices, will make EVs more affordable. According to Kelley Blue Book, the average cost of a new EV in June was more than $56,000 compared to just over $48,000 for an ICE vehicle. But battery costs are expected to go from $151 per kilowatt hour in 2023 to $91 per kWh in 2025, a nearly 40% drop. So, Goldman Sachs predicts the breakeven point between EVs and ICEs will be achieved sometime between 2025 and 2026. Its cost of ownership includes the price of the vehicle, fuel or battery recharging, repairs and maintenance over the lifetime of the car. But it doesn’t factor in government subsidies for purchasing an EV.
DONGFENG CLOSE TO PLANT DEAL IN ITALY
Chinese automaker Dongfeng is closing in on a deal to build vehicles in Italy. Reuters reports that talks between the Italian government and the automaker are in an advanced stage to build a car plant in the country. The Italian government could take a minority stake in the investment and it could also include investment from other Italian suppliers. Stellantis is currently the only major automaker that builds cars in Italy. But Italy is aiming to boost production in the country from 800,000 in 2023 to 1.3 million units. So, it’s looking for anyone to help hit that target.
MERCEDES EQS GETS MORE CHINESE COMPETITION
The first vehicle from the joint venture between Chinese tech giant Huawei and car company BAIC was just unveiled. Called the Stelato S9, the electric luxury sedan is aimed at competing with vehicles like the Mercedes EQS, but with a much lower price. Single motor versions feature 227-kW of power while dual-motor comes with 385-kW. Both are equipped with a 100-kWh battery, which offers 816 kilometers or 507 miles of range on single motor models and the dual motor is rated at 721 km or 448 miles of range. And that’s based on the Chinese test cycle. In addition to a 15.6-inch touchscreen up front, the rear features a 13.2-inch tablet in the center armrest and a giant 32-inch projector screen between the seats. It’s also available with several driver assistance features, including hands-free driving capability. The Stelato S9 is priced between $55,900 and $62,900.
ROBOTS BEING TRAINED TO MAKE CARS
Humanoid robots are on their way to replacing actual humans on the production line. A Chinese robotics company we’ve reported on a few times, called UBTECH, is teaming up to expand the automotive capabilities of its robots, currently called Walker S. They’ve already started tests at NIO and ZEEKR factories, doing things like inspecting seatbelts and body panels, so they can’t do everything yet. But now UBTECH is working with Geely, parent company to ZEEKR, to find even more applications for Walker S in manufacturing. And it’s working with another company to collect data on production lines that use robots and to come up with plant designs that are better suited for robots. UBTECH has also collaborated with Dongfeng and FAW-Volkswagen.
But that brings us to the end of today’s show. Thanks for making Autoline a part of your day.
Thanks to our partner for embedding Autoline Daily on its website: WardsAuto.com
I was going to watch the show in any case but wondered why the deceptive title of ICE/EV’s hit breakeven point (by 2025), when with the addition of one-word: “breakeven PRICE point” would have been a lot more descriptive and less click-bait.
You should change the name to Autoline EV. It would be more appropriate to content.
I question the “breakeven point” when they use average transaction prices considering the large segment of SUV and trucks that push the average transaction price up. Meanwhile many of the EVs are still sedans and small CUVs. The breakeven point comes when you can buy an equivalent size and equipped EV for the same price as a similar ICE. Even at that point you likely won’t have equal range per fill up. So, I doubt they hit price parity in 2025 without this creative accounting stats.
The first I had heard of Continental was when my parents’ 1965 VW came with Continental tires. Were tires their only business at that time?
That Stelato S9 seems to be borrowing heavily several aesthetic components (but, no surprise there – China). For instance, that front end looks lifted straight from the Porsche Taycan. And one of those grilles smacks of Maserati.
I often wonder about the depth of analysis from “headline grabbers.” Goldman sites the sharp cost drop of lithium. Much of that drop was related the supply-demand imbalance when EV sales/production eased while mining increased. When sales/production return to the regulatory-driven targets, the higher demand for battery and electric motor raw materials will temper the recent cost drops.
This instability of material costs is mostly due to western governments’ policy instability.
I am interested to see how this Italy situation pans out. The government wants more cars built there because of the employment and the associated businesses and economic boost. No mention yet of the very strong unions that are protected and nurtured by the government. I don’t think the Chinese are going to like the prevailing wage rates, benefits and work rules they will have to accept. Also, I wonder if the government made any effort to get the Chinese to renovate an existing plant versus building a new one. Stellantis may have one they would like to unload. And then there are the EU government and the governments of other European countries that take a dim view of this developing situation and may enact some tariffs on vehicles built in Italy. Its going to be very interesting to hear the final details of this deal, assuming they actually strike one.
If I was the Italian government, I’d look for some employment commitments in that deal with Chinese OEMs. Without that commitment, and given Italian union wage rates and work ethic, Italy might end up with the first fully robot ‘manned’ factory in Europe.
Aren’t actual pay plus benefits costs lower in the EU than in the US UAW plants, since EU countries have actual health care systems, and expensive medical insurance is not part of the cost of hiring employees?
@MJB on Stelato S9 design: I agree with you, albeit that I thought of a blend of the LUCID Air and the Mercedes EQS.
Material costs for batteries are mainly driven by Chinese demand for EVs and plug-in hybrids. Their combined market share in China was 38% in ’23, 22% in the EU, 18% worldwide, and 10% in the US. And China is the largest market by far.
@Kit Regarding ‘Conti’, AFAIK it was mainly a tire supplier for a long time. But they invested in R&D and smart acquisitions, and grew globally in lockstep with the German automotive industry’s successes.
Of the global top ten automotive suppliers, only one is American. Bosch, the number one, is privately held.
Rivian turned in quite a large loss last quarter. With that capital burn rate, even VAG’s investment won’t last beyond next year. I hope the marque doesn’t disappear – the cars clearly are desirable, but production costs must come down. Tesla shows it’s possible.
Maybe Ford shouldn’t have divested its stake, but taken on a more active, supporting role in the company? There’s a lot to like. The software, the in-house motors, and the clearly defined, well-executed design, including functional aspects of it. Plus global appeal.
There’s no reason US automotive companies should take a back seat, and leave the rich pickings available across the world to savvy competitors. Cadillac’s electric foray will hopefully pick up, er, steam!
Continental is probably making the right choice to avoid the craziness of automotive industry for the next couple of years. I think many OEMs and suppliers are going to struggle to support the EV transition. The balance between demand and mandates makes forecasts very difficult and often times at a huge loss. Lots of money has been spent to buy up any small company that might have an advantage in battery technology or EV and AV technology. Lots of money was thrown at joint ventures and with minimal benefits. I’m still not exactly sure why EV and AV tech seems to have to go hand in hand and manufacturers can’t just focus on building a good affordable EV you drive. The company I work for has built an entire plant to expand for awarded business on a EV only to have it delayed three times now and volumes dropped to the point we are placing something completely different in the new plant. That should have been up and running already but is empty. Those types of deals are expensive and wasteful so Continental may avoid some huge losses by just bowing out for a while. Certainly when things are so hectic some people will win, and some will lose. Just picking the winner is going to be a lot harder for a while. We could see the end of some big names like Chrysler or maybe even bigger.