AD #3347 – EV Profits Being Wiped Out by Material Costs; GM to Sell 400,000 EVs in 2023; Don’t Compare ADAS Accidents
June 16th, 2022 at 12:00pm
Listen to “AD #3347 – EV Profits Being Wiped Out by Material Costs; GM to Sell 400,000 EVs in 2023; Don't Compare ADAS Accidents” on Spreaker.
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Runtime: 11:41
0:07 Tesla Raises Prices… Again
1:16 NHTSA Warns: Don’t Compare ADAS Accidents
2:30 Honda & Sony Officially Start New Company
3:04 Ford Launches C-V2X in China
4:30 Cadillac Celestiq Limited to 400 Units/Year
5:29 NIO Launches ES7 Electric SUV
6:33 Audi Files Lawsuit Against NIO
6:59 Honda Civic Type R Rips Up the Nurburgring
7:59 GM to Sell 400,000 EVs in 2023
9:15 Mach-E Profits Wiped Out by Raw Material Prices
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TESLA RAISES PRICES… AGAIN
Elon Musk said earlier this year that when Rivian raised its prices it will “reduce the number of people who can afford the vehicles exponentially.” Well, Tesla just boosted its prices once again and it’s pretty significant in some instances. The Model 3 Long Range now costs just under $58,000, an increase of $2,500. The Model Y Long Range is $3,000 more expensive and now starts at about $66,000. The Model S Dual Motor All-Wheel-Drive Long Range now costs around $105,000, which is a $5,000 increase on top of another $5,000 increase from just a few months ago. And finally, the Model X saw the biggest jump and is now $6,000 more expensive. The All-Wheel-Drive Long Range version now costs more than $120,000. That’s $16,000 more expensive than back in March. Tesla didn’t reveal why it increased prices but it likely has to do with soaring raw material prices.
NHTSA WARNS: DON’T COMPARE ADAS ACCIDENTS
And speaking of Tesla, the National Highway Traffic Safety Administration released its crash data involving advanced driver assistance systems. There have been nearly 400 accidents since last July with Level 2 ADAS systems among all automakers and Tesla leads the list with 273 crashes, Honda is next at 90. And there were 130 accidents involving Level 3-5 ADAS systems and Waymo has the most with 62, followed by Transdev and Cruise. However, NHTSA admits you have to take these numbers with a grain of salt. That’s because it doesn’t factor in the number of vehicles on the road with ADAS or the number of miles driven on ADAS plus automakers collect data differently. So NHTSA says it’s “inadequate to draw conclusions” on the raw numbers alone. I’d also like to take a minute and correct a statement I made yesterday. I said some safety experts have criticized Tesla for not using a driver monitoring system, but Tesla did enable it on models with a driver-facing cabin camera.
HONDA & SONY OFFICIALLY START NEW COMPANY
Well, it’s officially official. Honda and Sony signed an agreement to establish a new mobility company after signing a memorandum of understanding back in March. Called Sony Honda Mobility, the 50-50 joint venture will sell “high-value-added electric vehicles and provide services for mobility” starting in 2025. The two companies didn’t provide many other details but the deal still needs regulatory approval.
FORD LAUNCHES C-V2X IN CHINA
Ford is expanding its connected car capabilities in China. The automaker announced it deployed its C-V2X system in the city of Xi’an, the fourth city in the country to adopt the technology. C-V2X connects the vehicle to the city’s infrastructure and alerts drivers about when traffic lights will change and other road information. Ford offers C-V2X in six vehicles in China, including the Mondeo, F-150 Raptor, EVOS, Mustang Mach-E, Edge and Explorer.
CADILLAC CELSTIQ LIMITED TO 400 CARS/YEAR
Cadillac might be charging a lot more money for the Celestiq than we thought. According to Autoforecast Solutions, production of the hand-built EV will be limited to around 400 units a year. That puts it more in Bentley and Rolls-Royce territory. GM is investing $81 million in its Global Tech Center, which was first opened in 1956, to build the Celestiq. The EV rides on the company’s Ultium Platform and features more than 100 3D printed parts, which include structural and cosmetic and plastic and metal pieces. Other highlights include a tintable glass roof with a separate quadrant for each passenger and a pillar-to-pillar display screen. Cadillac says we’re going to get a few more teasers before the show car debuts in late July. We’re still trying to guess what it will charge for the car. What do you think it’s going to cost?
NIO LAUNCHES ES7
And speaking of new EVs, NIO revealed its all-new ES7 SUV. It calls this a mid-large vehicle and it will slot between its other SUVs, the ES6 and ES8. And more on those models in a minute. But the ES7 carries a design theme more similar to its new sedans and the interior is highlighted by an S-shaped dash with floating digital screens for the driver and infotainment. Brembo 4-piston front calipers and air suspension are also standard. There’s three battery packs available; 75-, 100- and 150 kWh, which provide between 485 to 850 kilometers or 301 to 528 miles of range, based on the Chinese test cycle. Prices range from about $70,000 up to nearly $79,000. But if you lease the battery from NIO you can knock about $10,000 off the price.
AUDI SUES NIO
Now back to NIO’s other SUVs, the ES6 and ES8. Turns out Audi thinks those names are too close to its S6 and S8 models, so it filed a lawsuit in Germany for trademark infringement. While NIO sells most of its models in China, it launched in the Netherlands last year and has plans to expand more in Europe this year, including into Germany.
HONDA CIVIC TYPE R RIPS UP THE NURBURGRING
Honda is getting closer to unveiling the all-new Civic Type R and to celebrate it released a video of the performance model ripping up the Nurburgring. It sounds pretty good from the three centrally located exhaust tips, from what we can tell, and you can also see it has some pretty big brakes and a pretty robust chassis and suspension system. The new Civic Type R will be revealed this summer.
GM TO SELL 400,000 EVS NEXT YEAR
There was a very interesting conference in Detroit yesterday run by Deutsche Bank. Two of the speakers there were the Chief Financial Officers from General Motors and Ford, and here are some of the key points they talked about. Here’s what GM’s CFO, Paul Jacobson said:
- GM has lined up all the raw materials and components it needs to build 400,000 EVs next year and 1 million in North America by 2025, and that 40% to 50% of its sales in 2030 will be electrics.
- Even though profit margins on EVs will be lower than ICE vehicles for now, GM thinks it can make up that difference by selling software subscriptions and commercial fleet services that will offset those lower margins, thanks to its Ultify software system.
- GM was able to cut the price of the Bolt EV by $6,000 by cutting its incentives by a similar amount, which neutralized the impact of the price cut.
- And finally, GM has spent $2.5 billion more on materials and components this year due to inflation, but some commodity prices have peaked and are starting to come down.
MACH E PROFIT WIPED OUT BY RAW MATERIAL PRICES
Ford’s CFO John Lawler also spoke at the Deutsche Bank conference and here are some of his key points:
- When Ford launched the Mach-E it was actually profitable, but soaring raw material costs wiped that out.
- Starting in the first quarter next year, Ford will break out the EBIT profit and margins for its EV business, it’s ICE business, as well as Ford Pro, and Ford Next, which includes autonomous vehicles, and of course Ford Credit.
- Ford’s ICE business, called Ford Blue, has to cut costs by $3 billion by 2026. A lot of that will come from reducing build complexity. Ford will get rid of 80% to 90% of the options packages on its ICE vehicles.
- On the EV side, called Ford Model E, they are going to slash advertising and promotions. In fact, CEO Jim Farley has said, “If you see us advertising our EVs, sell the stock.”
- Ford plans to sell 600,000 EVs by the end of 2023 and has fully sourced all the materials and components it needs to build them. It will ramp that up to 1 million EVs by 2026, and it still needs to lock up those resources, but is confident it’s going to get them.
One more item before we go, be sure to join John and Gary on Autoline After Hours. With ELMS liquidating and other EV startups looking financially shaky, they’re going to dive into whether or not the automotive industry is too expensive for startups. Product analyst Jack Keebler will be joining them, as well as Rich Nesbitt from Bosch, who says that the brakes on future cars will actually be connected to the internet.
But that’s a wrap for today’s show. Thanks for tuning in.
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Comments (27)
June 16th, 2022 at 12:07 pm
In future, if not already done, would be nice to see an Autoline episode discussing the impact that rapidly multiplying subscription fees will have on auto ownership (will Apple’s “Subscribe to Drive” become the standard ?).
June 16th, 2022 at 12:11 pm
$250,000 for the Celestiq? At least that much. GM wants to push Cadillac upmarket.
June 16th, 2022 at 12:27 pm
For years, cost of lithium batteries was rapidly decreasing. Was that entirely because of better manufacturing efficiencies, or were materials for batteries getting cheaper, until now?
June 16th, 2022 at 12:33 pm
I suspect Tesla raised prices because they can get by with it and still sell as many cars as they can build, for now. With more and better competition hitting the market, that could change.
June 16th, 2022 at 12:44 pm
I would have predicted a Celestiq starting price in the $160k range, but if they are making only 400 a year, it makes me up my prediction to $190k. It may be vastly superior, but public perception will determine what price it can demand. ELR?
June 16th, 2022 at 12:47 pm
It looks like a big Tesla advantage is they have production volume where others are waiting on chips. So they can get the price increases for now. When others get chips and production, they can always lower prices. In the meantime they laugh all the way to the bank.
June 16th, 2022 at 12:53 pm
In California today it cost me $6.00 a gallon to put gas into my Honda Accord Hybrid. That works out to 13 cents per mile ($6/45mpg= 13.3). Electricity cost me 31.5 cents per kWh. If I had a Chevy Bolt which is one of the more efficient EV’s on the market, it would cost me 9 cents per mile (.31.5 x 28kWh per 100miles = $8.82/100=.0882 ~ .09). So, it is currently cheaper to drive an EV.
But here is the problem. The cost of electricity is going up much faster than than inflation because of our aggressive move to renewable energy. There are several more rate increases already scheduled this year. I have seen projections that in a few years we will be at 50 cent a kWh. (.50 x 28kWh per 100miles = $14.00/100=.14). As we all know the price of gasoline goes up and down based on world events, so next year it should be back to 4 or 5 dollars. If I use $5 a gallon ($5/45mpg = 11.1) that works out to 11 cents per mile. It’s going to cost more to drive an EV on top of paying more to buy the EV. Try selling an EV to people who don’t want one, plus the argument that EV’s are cheaper to drive just fell apart.
June 16th, 2022 at 12:55 pm
5, I think that Cadillac should show a premium price but with the failure of the XLR (Corvette based sports car) and the ELR (Chevy Volt clone), unless they bring loads of innovation to the Celestiq (something not available anywhere else), I hope they learned a lesson and price the introduction; as premium but reasonable.
June 16th, 2022 at 1:21 pm
@George
CA in 2020 generated 48% of its electric power from natural gas, and 33% from renewables.
The price of NatGas has nearly tripled (!) from a year ago.
I’d like to link to my government sources, but autoline has always censored that. Not a critique, just a heads up.
June 16th, 2022 at 1:26 pm
As for the Celestiq, I predict it won’t do a thing for Cadillac unless they manage to design a stunner inside out and place it in two top-grossing movies including China. Shades of the Allante, actually a nice car.
June 16th, 2022 at 1:29 pm
9. Sean Wagner
You left out the fact that California buys 1/3 of all its electricity from out of state. The majority of the power is from coal and natual gas.
June 16th, 2022 at 2:00 pm
9 George – I’m very cognizant of the facts. A lot of the imported electricity is from solar and wind – a very sound investment for land owners in the plains states.
State Wind Electricity Generation (Terawatt hours) Wind’s Share of Net Electricity Generation
Texas 92.9 TWh 20%
Iowa 34.1 TWh 58%
Oklahoma 29.6 TWh 35%
Kansas 23.5 TWh 43%
Illinois 17.1 TWh 10%
California 13.6 TWh 7%
North Dakota 13.2 TWh 31%
Colorado 12.7 TWh 23%
Minnesota 12.2 TWh 22%
Nebraska 8.7 TWh 24%
Data from Feb 2020-Feb 2021
Source: EIA
June 16th, 2022 at 2:05 pm
7 Where I am in Indiana, the rates are much lower than yours, and they incentivize using more power. The rate is ~15 cents/kWh for the first 300 kWh, and then it goes down to ~11 cents/kWh. The utility is seeking rate hikes, but I don’t know how much.
June 16th, 2022 at 2:20 pm
Thank you for adding the NHTSA correction. It is why I follow Autoline.TV.
June 16th, 2022 at 2:37 pm
9. Sean Wagner
California does not buy from most of the states you listed, just ones close by. So, it does no good to tell us how much wind each state produces.
Here is what I paid for natual gas, January 2020: 1.61890 per Therm, June 2021: $1.41797 per Therm, January 2022 $2.09927 per Therm, June 2020: $2.02247 per Therm. So, I don’t see where you came up with natual gas tripling in price, but that is NOT what we are paying in California.
June 16th, 2022 at 2:45 pm
13. Hopefully your state will not make all the mistakes that California has made by rushing the transition to renewables.
June 16th, 2022 at 2:47 pm
Is Mr Farley aware that his company is currently running ads featuring the Lightning? And I have seen several ads in the recent past featuring the Mach E. He needs to check with his team before going off in front of the mic.
June 16th, 2022 at 2:48 pm
15 George – Thank you, I appreciate data. I’ll try to post a link to
Natural gas Henry Hub spot prices:
http://www.eia.gov/todayinenergy/detail.php?id=52698
So grab what you can. Here in Europe, Russia is up to a new round of shenanigans, and NatGas prices have surged again.
June 16th, 2022 at 2:49 pm
So, the infamous $35,000 Model 3 now starts at $58,000? Wow, Musk also needs to think before he opens his mouth.
My theory is that Musk is attempting to pool some additional cash to help pay for Twitter.
June 16th, 2022 at 2:49 pm
@15 it is irrelevant what you as a consumer pay for natural gas. What matters is the price a large scale utility companies which operate gas-fired power plants pay.
June 16th, 2022 at 2:49 pm
@15 it is irrelevant what you as a consumer pay for natural gas. What matters is the price a large scale utility companies which operate gas-fired power plants pay.
June 16th, 2022 at 2:51 pm
@21 “… the price large scale …” instead of “… the price a large scale …”
June 16th, 2022 at 2:52 pm
Let’s hope GM and Cadillac have learned from their many past missteps and the Celestiq will be a great car, with many unique features, a killer warranty and some unique and pampering owner benefits, and all at a price that makes the supercars and ultra high-end luxury cars look like price gougers.
But, I am going to wait and see. And, hope that this latest moonshot attempt from Cadillac is not another mistaq!
June 16th, 2022 at 2:53 pm
As for renewables, the percentages I referenced for California are correct and include imports (as per the original table). While in TX, renewables have kept the state chugging along during the recent surge in demand.
There’s also ample investment lined up to continue the build-out of renewables across the US, as well as transmission where it’s not religiously obstructed. The cost delta only favors them more now.
June 16th, 2022 at 3:04 pm
19 For only ~$3K more, you can get a new Corvette, buy might have to wait a year or two.
June 17th, 2022 at 7:11 am
@George & Wim – Vastly differing transactions in volume & duration.
CA is probably enacting quite a few measures that will drive up the price of electricity, at least temporarily. Two I can think of is investing a lot in battery storage, and (still) planning to shut down the Diablo Canyon nuclear power plant (hope that will be pushed out).
But modern wind and photovoltaic generation at utility scale drives prices down.
Here in Europe, Russia now is slowly cutting of NatGas supply to France and Germany, after having already done so for smaller countries.
June 17th, 2022 at 9:47 am
26 Where is Europe getting gas to replace what they were getting from Russia?