AD #3973 – BYD Sitting on A Mountain of Hidden Debt; Canoo Files for Bankruptcy; Ram Axes Long-Range Electric Truck

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

SCOUT BATTLES CALIFORNIA CAR DEALERS OVER DIRECT SALES
As we reported earlier this month, there’s a legal battle brewing between car dealers and Scout Motors over the automaker’s plan to sell directly to customers in the U.S. Car dealers say the brand must sell vehicles through Volkswagen dealerships since Scout is part of the VW Group and U.S. franchise laws state that if a car company has used franchised dealers in the past, it can’t drop them to sell direct. However, Scout says its independent from VW, which is what it says allows it to sell directly to customers. And now car dealers in California are threatening to take legal action against Scout and says the brand’s sales plan violates state law. In response, Scout sent a letter to California’s new car dealer association reiterating that it’s independent from the VW Group and that VW dealers don’t have the right to sell Scout vehicles.

AUTO GROUP FILES SUIT TO STOP AEB MANDATE
Automakers are challenging a requirement for advanced automatic emergency braking systems. Last April, NHTSA finalized a rule that mandates that all new cars and trucks must have the technology by 2029. The tech is meant to stop or mitigate a vehicle from hitting a vehicle in front of them at speeds up to 62 MPH. NHTSA says the mandate will save 360 lives and prevent 24,000 injuries annually. But the Alliance for Automotive Innovation, a group that represents most major automakers in the U.S., says the requirement is “practically impossible with available technology.” So it filed a lawsuit last Friday, asking an appeals court to overturn the rule. 

BYD LAUNCHES ANOTHER EV WITH 2 CHARGING PORTS
BYD is an amazing story. It’s now the biggest automaker in China. It built a fleet of the biggest car hauling ships for export, like the Sealion 7 electric SUV that it just launched in Mexico last week. It sells more EVs in Japan than Toyota does. It’s building assembly plants all over the world and says it will complete a $1 billion facility in Indonesia by the end of the year. One of its sedans, the $41,000 Han L gets two charging outlets. Yes, you can plug in two chargers at the same time. And it only takes 10 minutes to charge from 16% to 80% at -30° Celsius, which is -22° Fahrenheit. 

BYD SITTING ON A MOUNTAIN OF HIDDEN DEBT
And yet, GMT research, which is based in Hong Kong, says BYD is sitting on a mountain of hidden debt. In fact, it says BYD is addicted to debt. While BYD’s annual report says it has 
$3.7 billion of debt, GMT says the real number is more like $44 billion. And it says BYD is using financial sleight of hand to hide that debt. GMT says the ballooning debt comes from BYD providing financing for its supply chain. But the terms of that financing can be harsh. BYD took an average of 273 days to pay its suppliers in 2023. While suppliers can borrow money from other sources, by using their money BYD owes them as collateral, it still drives up their cost of doing business. BYD will probably continue its success story, but if what GMT reports is true, shareholders should be aware that the risk of their investment is a lot higher than they realized.

VW & RIVIAN DEVELOPING ELECTRONIC ARCHITECTURE
The $5.8 billion partnership between VW and Rivian goes deeper than we realized and it could get even bigger. According to German publication Spiegel, both companies are working to build an electronic architecture that’s based around the one Rivian currently uses in the new R1T and R1S. It will control everything from infotainment to driver assistance and one big benefit is it’s expected to have around 7 control units, compared to the roughly 100 that VW typically uses. A luxury 7-seat SUV from Porsche, an all-electric successor to the VW Golf and the pickup and SUV from Scout are said to be the first models that will use the new architecture. But Spiegel also spoke to VW CEO Oliver Blume who said that the two companies could expand their partnership even further. He said “For example, we are thinking about sharing modules and bundling purchasing volumes.” Blume believes the size of the VW Group offers great opportunities for a smaller brand like Rivian. 

CANOO FILES FOR BANKRUPTCY, CEASES OPERATIONS
EV startup Canoo is no more. The company announced it filed for Chapter 7 bankruptcy and will immediately cease operations. Canoo had partnerships with NASA, the Defense Department, the postal service and Walmart to supply them with cargo vehicles. Canoo started producing the vehicles in Oklahoma at the end of 2023 but the company was never able to turn a profit and as a result it’s ceasing operations.

RAM AXES LONG-RANGE ELECTRIC TRUCK
Speaking of EVs getting the axe, Ram has cancelled plans for the long-range version of its all-electric pickup truck, which is called the REV. MoparInsiders confirmed with Stellantis that the decision was made when Ram made the move to first come out with the range-extended version of its truck, called the Ramcharger, before the REV. The Ramcharger now launches sometime this year and then the REV follows in 2026. But instead of being available with a larger 229 kWh battery pack that was supposed to return around 500 miles of range, it will now come with the standard-range pack that’s 168 kWh and provides around 350 miles of range. No doubt the move also frees up battery cells to go into other EVs and cuts down on Ram’s build costs as well. And remember with Chrysler putting its next-gen EV development on hold, I think we could be seeing Stellantis rethink its EV strategy for North America in real-time as it transitions away from former CEO Carlos Tavares. 

CHEVY OFFERS DEAL FOR EQUINOX & BLAZER EVs
Chevy is offering new financing deals on the Equinox and Blazer EVs. According to CarsDirect, they’re now available with 0% APR financing for 60 months, 0.9% APR for 72 months and 2.9% for 84 months. If you apply that to a 7-year loan for about the starting prices of the electric SUVs, you’d save roughly $5,000 compared to the previous financing rates. On top of that Chevy is also giving up to $1,000 off for trade-ins. So all together, it’s a pretty significant discount. 

But that brings us to the end of today’s show. Thanks for tuning in.