Auto Roundup: Big EV Battery Bets by HMC and TM Draw Most Attention
Last week, a number of automakers released their vehicle sales data in the United States for August. Industrywide, sales of light vehicles increased 4.8% in August, marking the first monthly year-over-year gain since summer 2021. While Toyota TM and Honda HMC recorded sales decline, deliveries rose by double-digit percentage points for Ford F, Hyundai and Kia. Per LMC Automotive, the seasonally adjusted annualized rate (SAAR) for August was 13.2 million units. Having said that, the industry is still struggling with low inventory. For the 10th consecutive month, the retail inventory closed below 900,000 vehicles.
On the news front, Japanese auto biggies Honda and Toyota announced massive spending plans to spur their battery production game, in another indication of a new wave of investment related to EV battery production that is underway. The battery plants will serve a pivotal role in TM and HMC’s efforts toward a fully electrified future and will help them meet their carbon neutrality targets.
Meanwhile, the U.S. legacy automaker Ford issued a recall of more than 277K vehicles in the United States. The vehicles impacted by the recall have a 360-degree camera system. The company is of the opinion that the anti-reflective lens on the cameras can degrade, which can result in a cloudy image.
Leading truck engine maker, Cummins CMI demonstrated its commitment to decarbonization as it joined forces with Buhler Industries and Transport Enterprise. Finally, Mercedes-Benz Group AG MBGAF also made noise as it is set to roll out a bunch of new EQ vehicles. The year 2023 may prove to be the year of the EQ as the Germany-based luxury automaker intensively grows its EQ range to aim for zero-combustion as the end goal.
Last Week’s Top Stories
Honda and LG Energy announced their plans to invest $4.4 billion to build a new battery production plant in the United States. The location of the factory hasn’t been announced yet. The mass production of lithium battery cells is set to begin by the mid-decade end. The plant aims to have an annual production capacity of approximately 40 GWh. Honda currently does not have an EV offering for the U.S. market but plans to launch an all-electric Prologue SUV in 2024. The company intends to sell only electric vehicles in North America by 2040.
In other news, American Honda — a subsidiary of Honda — sold 71,461 vehicles last month. The sales dropped 37.7% year over year. While car sales totaled 21,534 units, truck sales summed 49,927 units. Notably, Accord Hybrid posted the best-ever August sales, which topped 3,000 units. The all-new Acura Integra sales crossed 1,500 units in August, marking the best month since its launch. The company currently carries a Zacks Rank #3 (Hold).
Toyota announced that it intends to invest another $2.5 billion in its Toyota Battery Manufacturing North Carolina (TBMNC) facility to enhance the production of battery electric vehicles. In December 2021, Toyota had announced plans to set up a new battery plant in North Carolina worth $1.29 billion to expand its EV efforts. With the latest announcement, TBMNC’s total investment is $3.8 billion. The plant is scheduled to commence production in 2025. Last year, the auto giant earmarked a global investment of nearly $70 billion for electrification efforts. With the current development, it looks like the automaker is quite determined in its mission.
In other news, Toyota announced that it sold 169,626 vehicles in the United States in August. Sales declined 9.8% year over year. While sales from the Toyota division contracted 8.1% year over year to 147,873 vehicles, Lexus unit sales declined 20.1% year over year to 21,573 vehicles. The company currently carries a Zacks Rank #4 (Sell).
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Ford recalled 277,040 passenger cars and pickup trucks in the United States on the grounds that there are chances of the rearview camera lens getting cloudy and reducing visibility for the driver. The recall covers certain F-Series trucks, namely F-250, 350 and 450 trucks, and the Lincoln Continental, all belonging to the 2017 through 2020 model years. More than 8,800 warranty reports have cropped up in the United States due to the problem. Dealers have been asked to replace the camera free of cost to owners. Ford will notify owners by letter starting Sep 12.
Meanwhile, Ford unveiled its sales report for August.The automaker reported sales of 158,088 new vehicles for the month, marking a 27.3% increase year over year. Sales of the namesake brand totaled 151,695 vehicles, up 27.5%, while Lincoln sales increased 24% to 6,393 vehicles. The Ford Mustang Mach-E August sales volume of 3,120 units shot up 115% year over year. F-Series was featured as America’s best-selling truck, best-selling hybrid truck and best-selling electric truck in the month. The company currently carries a Zacks Rank #3.
Cummins signed a letter of intent with Buhler Industries, a leading tractor manufacturer under the Versatile brand. Both companies plan to integrate the Cummins 15-liter hydrogen engines into Versatile’s equipment to drive efforts in de-carbonizing the agriculture market. Hydrogen combustion engines provide a cost-effective zero-carbon fueled solution for high load factor and high utilization applications. The technology brings the benefits of a more-timely solution to reduce carbon emissions without compromising on productivity. The companies’ shared commitment to technology will allow both to leverage each other’s strengths to breed new opportunities.
CMI and Transport Enterprise also struck a pact wherein the latter intends to purchase CMI’s 15-L hydrogen internal combustion engines. Transport Enterprise seeks to deploy Cummins’ X15H hydrogen engines into its heavy-duty trucks. Cummins appears enthusiastic about the adoption of hydrogen engines and aims to make carbon-neutral commercial transportation economically feasible for customers. The company currently carries a Zacks Rank #3.
Mercedes-Benz announced that it started production of its first battery-electric SUV—the EQS model—for the U.S market. The EQS will be followed by the manufacture of the EQE SUV later this year. The auto magnate has announced a range of EQ lineup of electric vehicles for the U.S. market. Two versions of the EQS sedan have already reached the U.S. market and will soon be followed by two versions of a smaller EQE. In a statement, it shared details of the new versions of EQS and EQE for 2023. The new addition will cover an EQS 450 4MATIC, which will join the current 450+ and 580 4MATIC, as well as a 350 4MATIC version of the EQE, which will join the previously announced 350+ and 500 4MATIC models.
Mercedes announced that the 2023 model year will include an AMG version of the EQE sedan, in line with the previously announced AMG EQS. The AMG EQE Sedan has impressive driving dynamics and a powerful high-performance drive battery that uses the latest lithium-ion technology. The entire range of 2023 EQ vehicles will arrive by late 2022. No information on pricing has been released yet, though the SUV is expected to cost more than the EQS 450, priced at $103,360 or the EQS 580, priced at $126,950. The company currently carries a Zacks Rank #2 (Buy).
Price Performance
The following table shows the price movement of some of the major auto players over the last week and six-month period.
Image Source: Zacks Investment Research
What’s Next in the Auto Space?
Industry watchers will track China vehicle sales data for August 2022, likely to be released by the China Association of Automobile Manufacturers soon. Also, stay tuned for any updates on how automakers will tackle the semiconductor shortage and make changes in their business operations.
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Ford Motor Company (F) : Free Stock Analysis Report
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