Auto File: Toyota outshines Tesla
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March 26 -
Joe White
Global Autos Correspondent
Greetings from the Motor City!
Anticipation is the word of the day this morning, and not just for kids waiting for Easter chocolates. We are speeding toward days of reckoning in the World of Cars as the quarter closes.
The Auto File will take Good Friday off along with the New York financial markets, and when we meet again on April 2, it is possible that Tesla will have disclosed its first quarter deliveries. Those are numbers that investors and automakers everywhere are keen to know – because they might not look that good.
Tesla is acting like a company that is not having a great 2024.
By contrast, Toyota and the Motor City Three seem to be doing fine right now in the electric vehicle slow lane.
We’ll look at the state of Tesla, assess the divergent fortunes of two struggling EV startups and check in on Chinese automakers storming the Bangkok Auto Show. Here we go -
Today –
* Tesla’s sales stress
* Fisker and Lucid at the crossroads
* Chinese EV makers drive into Southeast Asia
Tesla sputters, Toyota cruises Tesla is offering free one-month trials of its “Full Self Driving” software – which does not fully automate driving. FSD normally costs $12,000 – but the share of Tesla buyers signing up is dropping as the delivery date for actual autonomous driving capability keeps slipping, analysts said.
Tesla’s FSD sales gimmick is the latest sign that EV demand has hit a rut. Here’s another: World EV sales leader BYD earlier today reported an 18.6% increase in quarterly profits – but that was the slowest growth rate since early 2022 as price cuts and slower demand took a toll.
Tesla shares rose Tuesday, but they have slumped 30% since Jan. 1. Tesla remains the world’s most valuable automaker, but Toyota is now just $207 billion behind, not $600 billion or more.
Elon Musk and Tesla executives have twisted dials all year to stabilize demand. Tesla has cut prices, then warned customers prices will go back up if they do not order right away!
The automaker that once rejected advertising is now promoting its vehicles on various platforms and peppering would-be buyers with promotional emails.
Tesla cut production in China as growth in EV demand decelerated in the world’s largest market. The company took downtime at its German factory earlier in the year, blaming Red Sea shipping disruptions. Then Tesla lost a week’s worth of output after an arson attack took out the Berlin plant’s power supply.
Wall Street analysts are slicing their forecasts for Tesla’s Q1 deliveries ahead of the expected release April 1 or 2. Tesla data-wonks who post production estimates on Elon Musk’s X.com are even more bearish.
Meanwhile, shares in the anti-Tesla, Toyota, have soared by 50% since Jan. 1 – adding the value of three Fords, as Morgan Stanley put it in a note.
Remember when investors were frustrated by Toyota’s go-slow strategy on EVs? Now they are cheering it as more wreckage builds up in the EV fast lane (see below.)
Toyota has benefited from a weak yen, to be sure. But Akio Toyoda’s bet that mainstream consumers – especially in the United States - would be more comfortable buying hybrids than fully electric vehicles is paying off.
Toyota stands to be a beneficiary of the Biden Administration’s decision to open a wide lane for hybrids in its most recent vehicle CO2 standards.
The contest among Tesla, BYD and Toyota to set the pace for the global auto industry is far from over. But investors have decided that for this quarter, Toyota has the right formula.
Essential Reading
* China attacks Biden’s EV subsidies
* Baltimore’s deadly bridge collapse could hit automakers
* Tangled laws leave America’s lithium miners in limbo
All’s well in Motown! The Chief Financial Officers of General Motors and Ford today delivered reassuring messages to Wall Street at a conference ahead of the New York Auto Show.
GM CFO Paul Jacobson said the company is on track to deliver 200,000 to 300,000 EVs this year – that’s the level at which the automaker could start to break even on a cash basis, Jacobson said earlier this year. It’s short of the 400,000 EVs GM once projected it could build from 2022 through 2024. (Jacobson’s remarks at the Bank of America conference should be here.)
Ford CFO John Lawler reaffirmed earlier projections that the company can earn $10 billion to $12 billion this year before taxes and generate $6 billion to $7 billion in free cash flow. Investors like free cash flow because Ford has promised to return 40-50% of it to shareholders. (Lawler’s webcast remarks should be here.)
Both companies have shifted EV programs into lower gear and are focusing on delivering profits from combustion trucks. That change in emphasis has been well received on Wall Street.
GM shares are up 21% for the year and are cruising near a 52-week high. Ford shares are up a more modest 7.4% - but that’s still better than Tesla.
Lucid: EVs funded by oil wells Money-losing luxury EV maker Lucid got a $1 billion lifeline from a unit of Saudi Arabia’s sovereign wealth fund to cover its mounting losses and help fund the launch of its Gravity SUV lineup later this year.
The investment underscores a key advantage Lucid and CEO Peter Rawlinson have in the race to survive the EV industry shakeout: The kingdom’s determination to diversify its economy beyond pumping oil.
The Saudi Arabian government has invested billions in Lucid via the PIF, committed to buying 100,000 Lucid vehicles, and is helping the company launch a factory in Saudi Arabia.
The Saudi public investment fund, or PIF, owns 60% of Lucid, according to data from LSEG Workspace. The PIF could own more if the convertible debt issued Monday is converted to Lucid shares – which could happen if the shares hit $5.50. (See Lucid’s disclosure here.) That price is roughly double Lucid’s closing price last week, but a long way from the peak of $55 back in 2021.
Fisker on the brink
EV startup Fisker is veering toward a cliff after the company said talks with a large automaker toward a potential alliance have collapsed, putting the cash-burning company’s future in doubt.
The New York Stock Exchange halted trading in the company’s shares on Monday after they fell below 9 cents a share. With no rescuer coming over the hill, the NYSE said it could delist Fisker entirely. The company said that could result in lenders calling in debts it cannot currently pay.
Fisker said it is evaluating alternatives, including “in or out of court restructurings” – legalese for a debt restructuring or a potential Ch. 11 bankruptcy filing. (Fisker’s SEC filing is here.)
Fisker last week missed an interest payment on certain debt, but said it was in talks to raise $150 million that could bridge the gap while it pursued an alliance with an unnamed major automaker. Reuters had reported that automaker was Nissan.
The scuttling of the alliance talks means the $150 million financing deal is off unless the investor, a Polish investment fund, agrees to new terms, Fisker said in an SEC filing.
Meanwhile, Fisker has roughly 4,700 unsold Ocean electric SUVs in storage. Whether those are worth the $200 million the company estimated earlier this month is an open question given the scathing reviews for the early versions.
Chinese EV brands swarm Bangkok’s auto show Watch out Toyota. Chinese EV brands used this week’s Bangkok Auto Show to accelerate their drive into Southeast Asia.
Auto shows may be fading away in Western markets, but they’re alive and well in Thailand, China and other Asian markets. The Bangkok Show dramatizes the battle shaping up between Chinese and Japanese automakers in the region.
Chinese EV makers are investing more than $1.4 billion to establish production in Thailand, which has long been a production hub for Japanese and Western automakers such as Ford.
But Toyota and other Japanese brands plan a $4.3 billion investment blitz of their own to counter the challenge.
GM does a privacy U-turn GM said it will no longer sell customer driving data collected from vehicles via its OnStar telematics service to information brokers that supply auto insurers with the ammunition to raise drivers’ coverage premiums.
GM’s decision to stop selling data to LexisNexis and Verisk came after the New York Times published an article on how the data was used to jack up insurance premiums, and how little GM customers knew about how GM’s OnStar Smart Driver system worked. Times reporter Kashmir Hill’s story was widely recirculated.
This is not the first time GM and OnStar have gotten in trouble for harvesting customer data.
The latest controversy underscores the risks automakers face as they try to make money from the streams of data pouring off connected cars – especially when the vehicles are owned by individuals who expect privacy in cars and trucks they own.
Commercial fleets can and do make acceptance of in-vehicle data collection a condition of employment.
“We are actively evaluating our privacy processes and policies,” GM said in a statement replying to a question about whether it will change the way it asks customers for permission to share vehicle data.
Fast Laps
Nissan has a new
turnaround plan designed to increase sales by 1 million vehicles by 2027. The No. 3 Japanese automaker by sales will rely on a mix of EVs and hybrids, but still plans to internal combustion models to account for 60% of sales by 2027.
Jeep showed off four one-off concept models at its annual Easter Jeep Safari in Moab, Utah. The Jeep brand needs a shot of something new – or perhaps, something old as represented by the vintage vibe of the latest show vehicles. (Is turquoise green making a comeback as a vehicle color?) Jeep’s overall U.S. sales fell 6% last year under pressure from Ford’s Bronco lineup.
Australia emulated the United States with new vehicle CO2 emissions standards that gave a break to popular pickup truck models.
Renault is in talks with potential partners to recycle EV batteries and reuse lithium and other metals inside.
Horizon Robotics, a Chinese autonomous vehicle startup, has filed to sell shares in Hong Kong, bucking the chill in AV and EV valuations.
Ford and Allegro will collaborate to build out fast chargers at Ford’s European dealerships.
Fisker said it is evaluating alternatives, including “in or out of court restructurings” – legalese for a debt restructuring or a potential Ch. 11 bankruptcy filing. (Fisker’s SEC filing is here.) Fisker last week missed an interest payment on certain debt, but said it was in talks to raise $150 million that could bridge the gap while it pursued an alliance with an unnamed major automaker. Reuters had reported that automaker was Nissan. The scuttling of the alliance talks means the $150 million financing deal is off unless the investor, a Polish investment fund, agrees to new terms, Fisker said in an SEC filing. Meanwhile, Fisker has roughly 4,700 unsold Ocean electric SUVs in storage. Whether those are worth the $200 million the company estimated earlier this month is an open question given the scathing reviews for the early versions.
Chinese EV brands swarm Bangkok’s auto show Watch out Toyota. Chinese EV brands used this week’s Bangkok Auto Show to accelerate their drive into Southeast Asia. Auto shows may be fading away in Western markets, but they’re alive and well in Thailand, China and other Asian markets. The Bangkok Show dramatizes the battle shaping up between Chinese and Japanese automakers in the region. Chinese EV makers are investing more than $1.4 billion to establish production in Thailand, which has long been a production hub for Japanese and Western automakers such as Ford. But Toyota and other Japanese brands plan a $4.3 billion investment blitz of their own to counter the challenge.
GM does a privacy U-turn GM said it will no longer sell customer driving data collected from vehicles via its OnStar telematics service to information brokers that supply auto insurers with the ammunition to raise drivers’ coverage premiums. GM’s decision to stop selling data to LexisNexis and Verisk came after the New York Times published an article on how the data was used to jack up insurance premiums, and how little GM customers knew about how GM’s OnStar Smart Driver system worked. Times reporter Kashmir Hill’s story was widely recirculated. This is not the first time GM and OnStar have gotten in trouble for harvesting customer data. The latest controversy underscores the risks automakers face as they try to make money from the streams of data pouring off connected cars – especially when the vehicles are owned by individuals who expect privacy in cars and trucks they own.
Commercial fleets can and do make acceptance of in-vehicle data collection a condition of employment. “We are actively evaluating our privacy processes and policies,” GM said in a statement replying to a question about whether it will change the way it asks customers for permission to share vehicle data.
Fast Laps
Nissan has a new
turnaround plan designed to increase sales by 1 million vehicles by 2027. The No. 3 Japanese automaker by sales will rely on a mix of EVs and hybrids, but still plans to internal combustion models to account for 60% of sales by 2027. Jeep showed off four one-off concept models at its annual Easter Jeep Safari in Moab, Utah. The Jeep brand needs a shot of something new – or perhaps, something old as represented by the vintage vibe of the latest show vehicles. (Is turquoise green making a comeback as a vehicle color?) Jeep’s overall U.S. sales fell 6% last year under pressure from Ford’s Bronco lineup.
Australia emulated the United States with new vehicle CO2 emissions standards that gave a break to popular pickup truck models.
Renault is in talks with potential partners to recycle EV batteries and reuse lithium and other metals inside.
Horizon Robotics, a Chinese autonomous vehicle startup, has filed to sell shares in Hong Kong, bucking the chill in AV and EV valuations.
Ford and Allegro will collaborate to build out fast chargers at Ford’s European dealerships.
(Editing by Bernadette Baum)
