EV launch costs are skyrocketing, Elon Musk is set to stand trial over paying Tesla, and the chip shortage may begin to ease. All that and more in The Morning Shift for Friday 11th November 2022.
Who would have thought that precious metals, which are used to build batteries, were so dangerous precious? It’s that time of year again for automakers to report their Q3 bottom line, but costs have skyrocketed for 2022 — and small EV makers are hit hardest. From Reuters:
Every time Lucid Group Inc (LCID.O) or Rivian Automotive Inc (RIVN.O) sells an electric car, they lose hundreds of thousands of dollars due to the huge raw material and production costs, their latest earnings reports showed.
Quarterly reports from electric vehicle (EV) manufacturers over the past two weeks show they are struggling to meet delivery targets and are burning up money quickly.
Lucid’s cost of sales rose to $492.5 million in the July-September quarter from $3.3 million a year earlier, and losses widened as customers canceled orders over fears of long waits.
Canoo Inc (GOEV.O) said in May it had “significant doubts” about the company’s going concern. At the end of September, it had $6.8 million in cash and cash equivalents, down sharply from $415 million a year earlier.
Rivian, which is backed by Amazon.com (AMZN.O) and Ford Motor (FN), had $13.8 billion in cash on hand at the end of September. It also has a deal to supply 100,000 electric delivery trucks to Amazon. But the cost of goods sold was about $220,000 per car versus an average selling price of $81,000 for the quarter, CFRA estimated.
According to Rivian’s most recent SEC filings, the company’s third-quarter costs jumped from $83 million in 2021 to nearly $1.5 billion in 2022. That’s an absurd jump in costs, but not an incredible one — lithium prices Are blown up like an earthbound asteroid.
Elon Musk makes big money from Tesla. Too much, according to at least one major investor — who has asked a court to force Musk to return the money. Perhaps the Twitter buyout raised questions about how Musk really spent his time behind that CEO desk. From Reuters:
Tesla CEO Elon Musk is expected to take a stand this week to defend his $56 billion salary package against shareholders’ claims that it was rigged with simple performance targets and that investors were tricked into approving it.
A Tesla (TSLA.O) shareholder is hoping to prove during the five-day trial that Musk used his dominance on the electric vehicle maker’s board to dictate the terms of the 2018 package, which didn’t even require him to be full-time at Tesla worked. Tesla CEO Elon Musk is expected to take a stand this week to defend his $56 billion salary package against shareholders’ claims that it was rigged with simple performance targets and that investors were tricked into approving it.
A Tesla (TSLA.O) shareholder is hoping to prove during the five-day trial that Musk used his dominance on the electric vehicle maker’s board to dictate the terms of the 2018 package, which didn’t even require him to be full-time at Tesla worked.
Shareholder Richard Tornetta has asked the court in Wilmington, Delaware, to overturn the pay package, which Equilar’s Amit Batish says is six times the salaries of the top 200 CEOs combined in 2021.
The directors of Musk and Tesla, who are also defendants, have denied the allegations. They argued that the pay package did what it intended — ensuring the entrepreneur successfully guided Tesla through a critical period, which helped push the stock 10-fold.
$56 billion is a truly incredible sum. But Musk needed credit and other support to spend $44 billion on Twitter — what happened to all the billions he “earned”?
Ah, microchips, our old friend. Inventories have been tight for years, prompting automakers to scale back production and ration parts. Now, however, it appears automakers are cutting fewer models — suggesting an increase in chip supply. Out of Automotive News:
The estimated number of vehicles pulled from automakers’ production schedules this year because of a shortage of microchips fell slightly last week.
In its latest estimate, AutoForecast Solutions said 3.9 million vehicles were cut by automakers worldwide this year, a slight improvement from the 3.93 million units it reported a week earlier.
The numbers are a welcome respite for the industry. Looking ahead, microchip availability could improve next year as demand in other sectors slacks, said Sam Fiorani, AFS vice president of global vehicle forecasting.
Tracking chip shortages by looking at “unproduced cars” is a bit backward-looking, but perhaps the best way to show its impact on the auto market. Hopefully this trend continues – and deliveries are starting to return to normal.
The past few years have not been perfect for automakers. Production limitations, constant lockdowns, and ever-changing customer demands have made cars difficult to build and sell easily. But through that pressure, Honda and Nissan claim to have become diamonds. Out of Automotive News:
Two major Japanese automakers sound upbeat as they upgrade full-year earnings forecasts, citing progress in addressing semiconductor shortages and improving profitability.
Honda Motor Co. says the worst of the microchip crisis is over, while Nissan Motor Co. says an onslaught of new products has underpinned a healthier model mix and lower incentives.
Both companies gave their estimates last week while also announcing second-quarter results. Citing a brisk tailwind from favorable exchange rates, the companies also upgraded earnings outlooks for the current fiscal year ending March 31, 2023 as revenue surges.
As chip shipments begin to recover, automakers are unlikely to flood the market with pre-pandemic car numbers. But they can potentially start to actually meet customer demand — and squeeze out enough supply that retailers can no longer justify those markups.
EVs are the future of the automotive world, but so far they haven’t proven to be a viable future. Cost is high, production is low and customers have yet to be convinced of the idea of an electric vehicle over an ICE vehicle. But over the next few years, GM sees that all starting to change. Out of Automotive News:
General Motors plans to tell investors that the company expects its electric vehicle program to be profitable in 2025, the same year it aims to sell 1 million battery-powered cars, people familiar with the matter told Bloomberg.
CEO Mary Barra will outline a plan at GM’s Investor Day on November 17 to show how the automaker can cover battery plant and assembly investments and build margins on its Ultium battery program EVs this year in the US — at a loss — one of the country’s biggest EV makers to become profitable, said people, who asked not to be named because the presentation wasn’t released.
After years of development, GM is signaling that it’s finally ready to begin producing electric vehicles in sufficient volume — with a new battery pack — to boost sales and reduce costs. The push into electric vehicles is expected to start in earnest next year, when its mass-market brand Chevrolet begins selling a battery-powered Silverado pickup and the more affordable Blazer and Equinox electric crossovers.
Last week, Volvo made a similar announcement, looking to 2025 as the point at which electric vehicles will become price-competitive with internal combustion engines. If several car manufacturers agree, the signs are set to “Yes”.
Herman Melville releases “Moby Dick”
I’m going to visit my family for Thanksgiving next week, but I’m still undecided on how to go about it. On the one hand, I could spend $20 on a train ticket. On the other hand, I could get a full set of heated motorcycle gear and ride my little GS in 50 degrees. One of them is definitely safer and cheaper, but the other might make a better blog. Which option would you choose?
TV on Radio – Happy Idiot (Official)
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