AD #2943 – Tesla Reports Strong Q3 Earnings; GM Still Backs Nikola Deal; ZF Improves Its Rear Wheel Steering System
October 22nd, 2020 at 11:56am
Listen to “AD #2943 – Tesla Reports Strong Q3 Earnings; GM Still Backs Nikola Deal; ZF Improves Its Rear Wheel Steering System” on Spreaker.
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Runtime: 10:31
0:07 Tesla Reports Strong Q3 Earnings
1:39 More Tesla FSD Details
2:40 GM’s Cruise Wants Vehicles Without Pedals or Steering Wheel
3:24 U.S. Vehicle Registrations Correction
4:25 Why Off-Roading is Becoming More Popular
5:36 More GMC Hummer EV Details
7:45 GM Still Backs Deal with Nikola
8:14 ZF Improves Its Rear Wheel Steering System
9:01 JLR Using Aerospace Sensors to Test Parts
9:40 Ford Mondeo Going Hybrid Only
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TESLA REPORTS STRONG Q3 EARNINGS
Tesla reported its third quarter earnings yesterday and the numbers look really good–with one caveat. Tesla sold almost 140,000 cars, up 44% compared to a year ago. It brought in $8.7 billion in revenue, up almost 40%. It posted an operating profit of $2 billion, up a whopping 200%. And it put $369 million on the bottom line, up 146%. Investors loved these numbers and the stock was up more than 20% in after hours trading. Critics will point out that the only reason why Tesla made a profit is that it earned $397 million from selling ZEV credits to other automakers. Sure enough, if not for those credits, Tesla would have lost money. And that means it still can not turn a profit on its basic car-making operations. But here’s our Autoline Insight. Selling ZEV credits was always part of Tesla’s business plan, so we’re not going to criticize it for selling so many of them. By the way, most of that money probably came from Fiat-Chrysler. The critics have a legitimate point, but here’s a number we can’t overlook. Tesla dramatically increased its pile of cash, which grew more than 170% to over $14 billion. That dramatically boosted Tesla’s balance sheet and provides it with a hell of a war chest to invest in new products and services.
| Tesla Q3, 2020 Earnings | ||
|---|---|---|
| Sales | 139,593 | +44% |
| Revenue | $8.7 Billion | +39% |
| Operating Profit | $2.0 Billion | +209% |
| Net Profit | $369 Million | +146% |
MORE TESLA FSD DETAILS
And in other Tesla news, we’ve got more info about its Full Self Driving Beta update. The system is combined with Navigate on Autopilot, which enables it to drive on main roads and highways. But Tesla warns drivers they must keep their hands on the wheel at all times and it can be dangerous if they’re not constantly paying attention. Some other features the update enables include making lane changes off highway, selecting forks to follow your navigation route, maneuvering around other vehicles and objects, and making left and right turns. And as we said yesterday, the beta version is currently only available to a select number of owners. But if you want to see it in action, some of them have already posted videos on social media. But it’s about to cost owners even more. Elon Musk tweeted that starting on Monday, Full Self Driving will go up by an extra $2,000, that applies to both new vehicles and upgrades. With that increase the system now costs $10,000.
GM’S CRUISE WANTS VEHICLES WITHOUT STEERING WHEEL OR PEDALS
And speaking of self-driving vehicles, GM’s autonomous unit, Cruise, is seeking regulatory approval from the U.S. government to operate vehicles on public roads without a steering wheel or pedals. The company wants to deploy a limited number of its Origin shuttles, which it revealed earlier in the year, in the next couple of months. At the same time, Cruise is withdrawing a petition it filed with NHTSA in 2018 to operate autonomous Chevy Bolts without certain safety features. Last week, California granted Cruise permission to operate vehicles without a safety rider on board in San Francisco. The company plans to begin building the Origin at the end of next year or in early 2022.
U.S. REGISTERED VEHICLES CORRECTION
A quick correction from yesterday’s show. We said there are 111 million registered vehicles in the U.S. That of course is way off. There are over 280 million cars, trucks and busses registered in the U.S.
WHY OFF-ROADING IS BECOMING MORE POPULAR
Even though it’s been around for decades, off-roading is becoming more popular around the world lately. So why the surge in popularity? Recently on Autoline This Week, Bob Pyle, the President of Light Vehicle Systems at the supplier Dana, which provides components for off-road beasts like the Wrangler and Bronco, shared his insight.
Bob Pyle, President, Light Vehicle Systems Dana
“I just think the younger generation are more focused on experiences then necessarily acquiring material goods. And off-roading and outdoor lifestyle is becoming increasingly popular around the world. I even think candidly what we’ve been going through with the COVID-19 pandemic is causing people to allocate their dollars differently. And spending time outdoors, off-roading, camping and doing those kinds of things is seeing a surge. I also think we can look to the biggest auto market in the world, China, and see that off-roading and that kind of lifestyle is really taking off there as well. And with the number of consumers in China, when that really gets going, it’s going to be a very, very big phenomenon.”
MORE GMC HUMMER EV DETAILS
And the all-new Hummer EV will be part of that phenomenon. It ought to be with 11,500 lb-ft of torque, but let’s pump the brake on that figure a little bit. As a few commenters pointed out yesterday, that is the at-wheel torque number when multiplied through the front and rear drive unit gear ratios, not the drive units themselves. The Edition 1 version of the Hummer EV, which is already sold out, will feature three drive motors. One is mounted up front and sends power through a locking differential with a fixed ratio of 13.3:1. There are two motors in the rear that are integrated into one unit and they can be spun independently of each other or sync up to simulate a locking differential. The final drive ratio at the rear is a fixed 10.5:1. Now let’s move on to the battery. While GM has not revealed how many kWh it is, it did say that there will be two layers of vertically stacked pouch cells per battery module and that 24 modules will make up the entire pack. The cell chemistry is made up of nickel, cobalt, manganese and aluminum. And charging up of the battery is an interesting process. The pack is able to switch from its native 400-volts to 800-volts during charging. GM says that “a disconnect unit and mechanization within the pack enables the battery to switch from” a parallel to series setup. It sounds like instead of trying to charge the whole pack at the same time, it can break it up into two sections. As we know, charging slows down when the battery reaches a higher state of charge. By breaking the pack into sections, when the charge rate slows down in one half, it can switch to the other and speed up the entire process.
GM SAYS IT’S STILL COMMITTED TO NIKOLA
Looks like GM could still go through with its deal with Nikola. Yesterday, GM president Mark Reuss said they’re still going forward with the deal, though nothing final was announced. GM is going to get 11% of Nikola’s stock, which was up 8% on Mark Reuss’s comments. That stock price is about half of what it was when company chairman Trevor Milton was accused of misleading investors. But if and when GM announces a final deal, we would expect the price to go up higher.
ZF IMPROVES ITS REAR WHEEL STEERING SYSTEM
All-wheel steering offers a number of benefits, like a better turning radius and improved stability at higher speeds. Now the supplier ZF is improving its rear axle steering system. The previous system was able to turn the wheels up to 4.5-degrees but this new unit takes that to 10-degrees, which is a massive increase. With the market for EVs and AVs growing, ZF also added a steer-by-wire function and increased the actuating force so it could be used on heavier vehicles. ZF says the system will be used on an upcoming luxury model this December. We can pretty much guarantee you it’s the new Mercedes S-Class. In that vehicle, the new system reduces the turning radius by 2 meters compared to the previous model.
JLR USING AEROSPACE SENSOR TO TEST PARTS
Jaguar Land Rover is turning to the aerospace industry to test and develop new metals and composites. It’s taking part in a two-year project that will use technology developed for aerospace to better understand how materials respond to different weather and terrains. The tests will occur in North America over 400,000 kilometers or nearly 250,000 miles. Samples of new metals and composites will be built into aerospace sensors, which monitor the performance of the materials during tests. That data will then be used to develop more durable, lightweight materials for future models.
FORD MONDEO WILL BE HYBRID ONLY
Ford continues its electrification push in Europe. The automaker announced it will no longer offer a gasoline-only version of the Mondeo. It’s now only going to produce full hybrid powertrains for that model.
And don’t forget to tune into Autoline After Hours this afternoon. Our guest is industry expert and consultant Paul Eichenberg, also joining us is Doron Levin from Seeking Alpha. So join John and Gary at 3PM eastern time today for some of the best insider discussion in the industry.
But that’s it for today, thank you for watching.
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Comments (33)
October 22nd, 2020 at 12:13 pm
A small correction about charging the Hummer at 800V. What I suspect is happening is that the system has essentially two 400V packs that normally run the vehicle in parallel. For fast charging it seems they can connect the packs in series for charging. Currents get very high which becomes the limiter to charging speed. By connecting in series this doubles the voltage and power without current that would require huge cables and cooling.
October 22nd, 2020 at 12:20 pm
@Cycles – Hey, thanks for the feedback.
October 22nd, 2020 at 12:36 pm
So is this the GMC HUMMER GM’s direct and indirect response to the Raptor and TREX? LOL Three things are for certain:
1.) They will sale everyone they make and will have trouble meeting demand.
2.) Dealer mark-up will be through the roof!
3.) Unlike the Bolt/Volt, GM will make money on each one they sale.
Anyway, it’s nice to hear that Tesla has such a robust financial war chest, but how much will they use to significantly update the styling of the Model S and X, and when?
October 22nd, 2020 at 12:55 pm
FYI Tesla stock wasn’t up 20% but 2% in after hours trading.
October 22nd, 2020 at 1:06 pm
#4. When we were preparing the show today Tesla was up 20% and later dropped.
October 22nd, 2020 at 1:41 pm
In case anyone is interested I found this article on ZEV credits. https://www.ucsusa.org/resources/what-zev
Explains how a Tesla model S gets 3.3. ZEV credits vs a Leaf that only gets a 1.8 ZEV credits per vehicle sold. The range contributes to the credits and as of 2019 in states like Cali the percentage was 7% meaning for every 100k vehicles they sold the needed to have 7000 ZEV credits.
What I found interesting is the ICE vehicles are not given a ZEV score similar to what they do with the BEVs. So you can sell a 45 mpg Civic or a 15 mpg SUV and they equally account as a singular vehicle requiring 7% ZEV credits.
October 22nd, 2020 at 1:47 pm
I guess I enjoy driving too much. 10K for self driving makes this an option I would not even consider. I don’t find driving difficult or tiresome and if I have to pay attention and have my hands on the wheel anyway I might as well just drive..
Seems like buying a ticket to Disneyland for $100 and for an additional $20 they will have someone else ride the rides for you.
October 22nd, 2020 at 2:17 pm
Couldn’t agree more Lambo. I would much rather spend some cash on a 4 wheel steering system, and pocket the leftover funds to spend on road trips, or to buy more Workhorse and Nikola stock!
October 22nd, 2020 at 2:27 pm
That Mondeo hybrid wagon might be nice, but we’ll never see it in the US.
I’m with others about the self driving. What’s the ppint, if you have to stay awake and have your hands on the steering wheel?
October 22nd, 2020 at 2:28 pm
8 HAHAHAH… buy… Nikola stock? Why don’t you just throw your meager savings in the ocean?
Apparently those who worked for BANKRUPT GM learned NOTHING from their very painful experience. GM should be FAR FAR FAR more careful in choosing its partners.
Remember the deal GM had with FIAT? I think that was before the bankruptcy. It was an IDIOTIC idea, and when FINALLY the idiot CEOS realized it, and opted out, there was a clause in the agreement that forced GM to PAY FIAT TWO BILLION US Dollars. In total, the IDIOTIC deal cost GM $4 billion.
Apparently some learned NOTHING from this very painful experience.
Nikola is a CRIMINAL ENTERPRISE. I am not saying that for OTHER outfits i Despise, like VOLVO-GEELY or Ford or Hyundai or Genesis, because I don’t have any evidence for fraud, just stupidity and incopmpetence.
GM AGAIN and very foolishly, forced by the STELLAR success of TESLA, thought it should disguise its BEVs under a Tesla-like name, and what more obvious than NIKOLA, Tesla’s first name? TOo bad it turned out to be a bunch of CRIMINALS.
Cut your losses and get out. You will thank me later.
October 22nd, 2020 at 2:30 pm
9 I agree with the self driving 100%, but it may have its use when I’m 95, IF I am impaired and I don’t want to be driven around by a human driver, I could use the help and it may even be worth the $10k, IF you use it for several years.
October 22nd, 2020 at 2:40 pm
When the Toyota-Hino, Kenworth and Hyundai fuel cell semi trucks are fueling up at the Nikola hydrogen stations and the Nikola plant is running permanent overtime to fulfill their order backlog, I will be smiling as I spend my stock windfall on a new vehicle with 4-wheel steering.
October 22nd, 2020 at 3:02 pm
Those Q3 145,000 and 140,000 Tesla production and deliveries, were they just for the US or do they include deliveries and production in China, Europe and all the rest of the world?
Whatever they are, that’s an annualized 560,000-580,000 units.
Compare this to the 50,000 or so VOlvos sold in the US every year.. and VOlvo had man more models than Tesla. And not one was a pure BEV.
October 22nd, 2020 at 3:10 pm
11) That is the problem with FSD. It is not autonomous driving like you and millions of others think. It is augmented driving. At 95 years old you better be prepared to operate the steering wheel and brakes at a split second notice. If you are impaired and unable to drive normally you will not be able to use FSD.
October 22nd, 2020 at 3:38 pm
Those are worldwide sales and delivery figures, the only kind Tesla publishes. So, when you do an apples to apples comparison, Volvo still outsells Tesla, as I mentioned last week here. And the model count is pretty close. I believe Volvo has five and Tesla has four. Oh yeah, and Volvo makes a real profit.
October 22nd, 2020 at 4:07 pm
15 Damn you GM vet spilling real facts.
The interesting thing about ZEV credits was it was an incentive for automakers to build Zero emission vehicles. For a number of ICEs they had to also build a % of ZEVs. Doesn’t seem to make sense for companies like Tesla or any other pure BEV manufacturer to even get ZEV credits as they don’t build any ICE vehicles.
They just keep building ICE vehicles and buying credits from companies that don’t. So again the consumer is paying more to subsidize Tesla even when you don’t buy a Tesla. I percentage of your ICE cost was probably buying credits from Tesla.
October 22nd, 2020 at 4:45 pm
Very good point Lambo. I had not thought of it that way before.
October 22nd, 2020 at 7:50 pm
Is the Mondeo the Fusion wagon that Ford was going to produce to compete with the Outback. Or is that “kaput?”
October 22nd, 2020 at 7:53 pm
Is the Mondeo the wagon that was rumored to be produced to compete with the Outback? Or is that “kaput?”
October 22nd, 2020 at 8:54 pm
18 I think it’s kaput. I think they were also talking about a Outbackized Focus, which won’t happen. It’s looks like Ford is nothing but trucks for the foreseeable future, except Mustang, and soon the e-thing.
October 23rd, 2020 at 2:28 am
According to the web link:
“chief engineer Al Oppenheiser admitted:”
“Interestingly enough, we don’t have a vehicle yet. We’re building our first test vehicle as we speak; the vehicle you see in the video is our display vehicle.”
I’m reminded of Nikola and the down hill coasting truck.
October 23rd, 2020 at 4:36 am
A preview of Friday’s show:
This may remind you of the late, failed Saturn initial marketing gimmick, the famed “no haggle price”? GM has resurrected it for the most unlikely product, the $113k “Hummer” BEV that does not look one bit like the REAL Hummer H1, not even like its copycat H2 and H3 lesser siblings
Do you think this will really work? Saturns initially were little econoboxes with prices around $10k.
I know of NO buyer of any luxury car, and I assume it is true of even this non[-luxurious atrocity the $113 silly toy, who will accept to buy it at that price, (make it 133k with options). Instead he or she will ask for a big discount and if they get it they will feel smart, regardless that they sure are not, nor do they have even elementary GOOD TASTE.
October 23rd, 2020 at 4:53 am
15, 16 and similar posts.
Now I know why Barnum said, ‘a sucker is born every minute’.
ANd in the case of bankrupt GM there is REALLY NO EXCUSE to carelessly partner with 100% (THIS is a fact, Lambo, NOT the PIE IN THE SKY of GM VET you WRONGLY and FOOLISHLY think is fact), CRIMINAL Trevor Milton.
Not after the schysters at FIAT robbed it, LEGALLY, of $4 billion, when GM wanted out of the SILLY agreement it signed with the maker of CHEAP and 100% UNreliable JUNK in Europe.
October 23rd, 2020 at 6:54 am
Volvo of course is a long-established brand and was turned around rather recently, to great success, and astonishingly quickly.
The new Chinese owner left the Swedes to do their thing under then new CEO Håkan Samuelsson, and he’s quite proud of their collective performance.
I also remember the sniping of (ex) Opel people about Detroit constantly stymieing independent decision-making.
ZEV credits also are meant to be a disincentive for legacy manufacturers to continue on as before. It’s about speeding up the transformation.
Tesla actually had operating cash flow less capex (free cash flow) of $1.4B in Q3. The margins on the cars they build is comfortably positive.
October 23rd, 2020 at 8:31 am
https://europe.autonews.com/automakers/fiat-releases-italian-pricing-battery-powered-500?utm_source=daily&utm_medium=email&utm_campaign=20201023&utm_content=article3-image
Ιn Italy, the E 500 goes for barely over 20k EUros, but this base version has a pitiful range of about 115 miles. Still, this is even more than the range of the E Mini.
AND in Italy you get 4,000 Euros from the Govt if you scrap an old car to get the E 500. So one can go buy a worthless beater that can;t even drive for $50, and make 3,950 Euros (close to $5,000). So after the scrap benefit, you pay 16,000 for the base model. THis makes it almost half-price compared to the E-MINI in the US.
If you like the retro styling (better than your average Hyundai at the same price) and don’t mind the joke of a rear seat and the limited cargo space, this would be a great little car to go shopping with, and parallel parking would be a breeze in tight places.
And being a BEV, I expect the reliabiity to NOT be as atrocious as in FIAT-ALfa dirty ICE’s.
October 23rd, 2020 at 8:35 am
24 You use the word “VOlvo” (chinese owned by Geely) and the words… “great success” in the same sentence?
VOlvo has done TERRIBLY in the US market in recent years. Its market share is 0.5% on average. THis is FOUR times smaller than TESLA, even tho Tesla has much fewer models, and even tho none of the VOlvos so far is a PURE BEV (much harder to sell for everybody except Tesla!). And 8 times smaller than even SUBARU>
So I am very puzzled. WHat little success, let alone ‘great’, are you talking about? It has been a big FAILURE in the US market.
October 23rd, 2020 at 10:05 am
22 Hey Larry maybe you haven’t heard but this non[-luxurious atrocity $113k silly toy you speak of no one willing to buy without haggling has its first year of production already reserved. So suck on that fact that you again are very wrong about.
October 23rd, 2020 at 10:24 am
24 If ZEV credits were meant to speed up the transformation then giving them to pure BEV manufacturers does just the opposite. It does allow traditional manufacturers to conduct business as usual, building the cars people actually want but now they have to add a cost to buy ZEV credits from manufacturers like Tesla. If they truly wanted to speed things up only providing ZEV credits to manufacturers that built ICE vehicles would have forced them to build more ZEVs and not just buy credits. Also credits would have been even more valuable due to the scarcity of them.
So basically what it does is allow BEV companies to be subsidized by all the other ICE manufacturers. Not saying its wrong cause it does help push toward a cleaner environment but I find it hilarious that folks like Larry think Tesla could survive without ZEV credits and subsides. Governments around the world are pushing EVs and without their assistance Tesla’s business model would be shot. Good for them this assistance is available for now.
October 23rd, 2020 at 10:37 am
25 Larry, you still don’t seem to understand that most EVs, even Teslas, with the “supercharger network,” are usually 2nd or 3rd cars, and are used mainly as commuter cars. For people with home charging, huge range doesn’t matter for this use. When you were writing about your trip to China a while back, you mentioned in positive ways the use of short range EVs for commuting.
October 23rd, 2020 at 1:42 pm
28 Seriously, I don’t seem to understand the obvious? ANd you are quoting me WRONG, the cars in CHina I mentioned were NOT pure BEVs but PLUG-INs and they got the same benefits and breaks as the pure BEVs.
October 23rd, 2020 at 1:43 pm
30 29, not 28.
October 23rd, 2020 at 2:06 pm
Tesla booked 397 million USD from “regulatory credits” in Q3 2020 (see https://ir.tesla.com/). That compares to automotive revenues of 7.6b USD and an automotive gross profit of 2.1b USD.
Does anyone know if that includes European payouts, say by FCA?
I think what such an instrument of changing penalties/boosters provides is elasticity – compared say to a mandatory number like China’s 25% by 2025 (which amounts to over 6 million EVs going by 2019 numbers).
Similarly, it would have changed calculations if the US federal tax credit for EVs was based on one common “bucket” rather than allowing every manufacturer (plus fudges) to move 200’000 eligible cars.
Be that as it may, the point for these “accelerators” is that there’s a sunset.
October 23rd, 2020 at 2:22 pm
24 Larry
Volvo has come a long way in a very short time. Did you even read my comment in its entirety?
I heard Hakan Samuelson speak in Geneva, where one does have somewhat more of a European and global perspective.
Volvo was always a niche brand, but they were circling the drain before Geely came along.
I think that they’ve made enormous strides since then (not long ago!) – while their EVs fall short of Teslas in practicality and price, they have a character that will appeal to some.
It’s not realistic to think one enterprise’s prodcuts will be everyone’s choice.