AD #3370 – Germany Slashes EV Subsidies; Tesla Charging Fee to Use Nav; GM Q2 Earnings Down Sharply
July 26th, 2022 at 11:55am
Listen to “AD #3370 – Germany Slashes EV Subsidies; Tesla Charging Fee to Use Nav; GM Q2 Earnings Down Sharply” on Spreaker.
Follow us on social media:
Runtime: 10:21
0:07 Germany Slashes EV Subsidies
0:48 Faraday Future Needs More Money
1:17 GM Q2 Earnings Down Sharply
2:42 Detroit 3 Support Chip Act
4:16 Tesla Charging Fee to Use Nav
5:06 Tesla Really Ramps Up Production in China
5:43 Tesla Posts GigaPress Video
6:14 Sono’s BEV Uses Solar Power
8:02 GM Locks Up EV Raw Materials
9:02 VW Starts Making ID.4 in the U.S.
Visit our sponsors to thank them for their support of Autoline Daily: Bridgestone, Intrepid Control Systems, MEDC and Schaeffler.
This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.
GERMANY SLASHES EV SUBSIDIES
In the U.S., Toyota just became the latest automaker to run out of subsidies for EVs and PHEVs. And a bill in Congress to uncap the limit is going nowhere. Now, Germany is cutting subsidies for electric cars and is getting rid of them for hybrids altogether. Buyers who buy an EV that costs 40,000 euros or less currently get a 6,000-euro subsidy but that gets cut to 4,500 euros. EVs that cost up to 65,000 euros get a 3,000-euro incentive but next year that will only apply to car that cost up to 45,000 euros.
FARADAY FUTURE NEEDS MORE MONEY
EV startup Faraday Future is in trouble. It can’t go into production with its FF91 until it gets more money. It originally planned to start selling the vehicle in 2018 but had to delay it several times. The company is looking to raise another $325 million, even though last month it said it didn’t need to raise any more money to bring the FF91 to market.
GM Q2 EARNINGS DOWN SHARPLY
GM reported its second quarter financial earnings and the results are mixed. It sold 1.4 million vehicles worldwide, down 19% from a year ago. Even so, it boosted revenue by 4.6% to $35.7 billion. But the higher cost of raw materials and other factors ate into that revenue, and only $1.6 billion of it dropped to the bottom line. That’s 40% lower than last year. The other factors that dragged down profits included a loss on its China operations. Last year GM’s Chinese automotive partners delivered a tidy profit, this quarter they didn’t deliver anything. Also, GM has 90,000 vehicles in inventory in the U.S. that were built but can’t be delivered to customers because they’re missing chips. GM should be able to deliver those vehicles in the 3rd and 4th quarters, and that should add a nice pop to earnings once customers can take delivery. CEO Mary Barra says GM has modeled many different economic downturn scenarios and is ready to take action no matter which way the economy goes. She also said that by 2030 GM will earn $90 billion a year in revenue from the electric vehicles it sells.
DETROIT THREE SUPPORT CHIP ACT
Speaking of the chip shortage, Congress is expected to take a final vote this week on a $52 billion bill that will provide incentives for semiconductor manufacturing in the U.S. And the Detroit automakers are solidly supporting it. The American Automotive Policy Council, which represents GM, Ford and Stellantis, is urging Congress to pass the legislation. The group says no other supply chain shortage is having as big of an impact on the economy as the chip shortage and it says chips are “essential to a thriving, globally competitive American automotive manufacturing industry.”
TESLA CHARGING FEE TO USE NAV
Tesla is going to start charging a monthly fee for navigation. Its Standard Connectivity package, which includes things like basic apps and navigation, used to be free for the lifetime of the vehicle. But it will start charging a subscription for the service after 8 years from the first day the vehicle was delivered. Tesla did not reveal what it’s going to charge, but its Premium Connectivity package, which has more content, including live traffic, satellite maps and its vehicle monitoring system, called Sentry Mode, costs owners about $10 a month or $99 for the whole year. According to iSeeCars U.S. drivers keep their vehicle for an average of 8.6 years, so this change is most likely going to fall on the shoulders of the second owner.
TESLA REALLY RAMPS UP PRODUCTION IN CHINA
Let’s stay with Tesla for the moment. It’s greatly increasing its production capacity in China. Gasgoo reports that the EV maker is upgrading its manufacturing lines that build the Model 3 and Model Y. The changes will boost Model 3 production to an average of 1,500 to 1,800 cars a day on 3 shifts and Model Y production will reach 2,200 vehicles a day on average next month. That’s as much as 4,000 vehicles a day, which is up from an average of 2,500 before the upgrades.
TESLA POSTS GIGAPRESS VIDEO
One of the technologies that allows Tesla to make vehicles so fast is its huge casting machines. These combine dozens of stampings into one massive casting, which reduces weight, complexity and road noise, while increasing ride quality. And in this video provided by Tesla, you can see how large robots are able to slide in while the casting is still smoking hot to remove it from the mold, so it can continue on to the next phase of production.
SONO’S BEV USES SOLAR POWER
Another solar-panel-equipped car took a step closer to hitting the market. Sono Motors revealed the production design of its Sion vehicle, which it will use for validation, testing and homologation. Its body features 456 solar half-cells that help feed the Sion’s 54 kWh LFP or lithium iron phosphate battery pack. They can add up to 245 kilometers or 152 miles of range per week, but Sono says the average will be more like 112 kilometers or about 70 miles, which works out to about 10 miles or 16 kilometers a day. Even without solar, the Sion will have an estimated 305 kilometers or roughly 190 miles of range. Sono plans to sell in both Europe and the U.S. European prices are estimated to start a little over 25,000 euros. Sono is taking an asset-light approach and Finish contract manufacturer, Valmet, will build the Sion with production planned for the second half of next year.
GM LOCKS UP EV RAW MATERIALS
Earlier in the show we noted that GM’s CEO Mary Barra says they will make $90 billion a year in revenue from EVs by the end of the decade. And it’s locking up the supply chain it needs to make those BEVs. LG Chem is going to supply GM with 950,000 tons of cathode active material, which is enough to make 5 million EVs by 2030. Cathode Active Material, of CAM, accounts for 40% of the cost of a battery cell. GM and LG plan to begin sourcing that material in North America by mid decade.
GM also locked up a deal with a company called Livent to get lithium hydroxide which will also be used in battery cathodes. That contract starts in 2025, and while the lithium hydroxide is sourced from South America, the processing will be done 100% in North America over the course of the contract.
VW STARTS MAKING ID.4 IN U.S.
Volkswagen officially announced the SOP, or start of production, for the ID.4 at its U.S. assembly plant in Chattanooga, Tennessee. It plans to make 7,000 ID.4’s a month there by the 4th quarter, and VW can really use that extra production. Through the first half of this year, sales of the ID.4 in the U.S. are down 29%. VW says dealers simply cannot get their hands on the vehicles. As we have reported, VW does have inventory in the pipeline such as at ports and in marshaling yards, but those EVs are not on dealership lots. So while the numbers say it has a high days’ supply, dealers are in extremely short supply.
But that brings us to the end of today’s show. Thanks for tuning in and we’ll be right back here again tomorrow.
Thanks to our partner for embedding Autoline Daily on its website: WardsAuto.com
Share
Permalink
Comments (14)
July 26th, 2022 at 12:29 pm
I really question if Faraday Future is legit at this point. Or are they so mismanaged that they don’t know how much money they need to launch a vehicle that is now 5 years late. As Sean said they said at one point they didn’t need anymore money and now need 325 Million. I would be concerned if I were an investor.
As the EV subsidies go away it will be interesting to see how that affects sales.
July 26th, 2022 at 1:07 pm
I think EV subsidies are a nice bonus for the purchaser. We got $14,000 rebate from the Ontario government when we bought our Bolt in 2017. Lovely, but ridiculous. We would have bought the Bolt regardless, and I think that’s the point. Subsidies do pivot purchasers to companies that still have them and away from those who have run out, but I believe they don’t increase the overall EV sales.
The much higher cost of EVs means that those who demand a return on investment before purchasing an EV are just using this as an excuse to not go electric.
July 26th, 2022 at 1:33 pm
Because EVs were more expensive than comparably sized ICE vehicles, I think that the subsidies do help some buyers decide to go electric. However, I don’t think they are necessary for EVs over $60k. If you are considering a vehicle in that price range you don’t need the assistance and are more likely buying it for non-utilitarian reasons like styling, exclusivity, etc. Our tax dollars don’t need to help a buyer get into a $70,000 Lyric or a $100,000 Model S.
While prices continue to equalize with ICE models, assisting a family to get into a $45k Blazer, a $48k Mach E or even a Model Y is not such a bad idea. In another couple of years, they won’t be necessary as OEMs launch more EVs with reasonable price tags (like the coming $30k ish Chevy Equinox, among others)
July 26th, 2022 at 1:40 pm
With agreements for Li ion battery secured for GM and Ford (and Tesla) using current tech thru 2030, it really seems solid state tech is out of question for the rest of the decade, at least in significant volumes.
July 26th, 2022 at 1:59 pm
3 The cheapest Model Y is now $65,990 plus $1200 destination fee, ~$22K more than the base Mach-E.
July 26th, 2022 at 2:29 pm
2 I don’t think making the case for a ROI is an excuse to not go electric. Just good economic decision making. When you have two products to choose from and one is significantly more expensive. I expect more out the more expensive version. You get what you pay for right? Either its better quality more features or its name brand which makes sense sometimes. Right now that more expensive version, cost more, does less and has limitations making it inconvenient.
So just looking at it from a practical standpoint or financial decision an EV doesn’t make sense to me. So its not an excuse, I prefer to spend my money wisely.
July 26th, 2022 at 2:54 pm
Silly me for paying nothing for navigation on my phone with live traffic updating.
July 26th, 2022 at 2:57 pm
@5 Oops! Guess I should have said Model 3. Even that may not be a good example much longer at the rate Tesla keeps raising their prices. Sheesh!
July 26th, 2022 at 7:47 pm
IMHO, when it comes to subscription services in vehicles, nothing that is classically associated with driving the vehicle should be apart of a subscription program. A sub for heated seats and steering wheel? Crazy talk! A subscription for free over the air radio? Ridiculous! A sub for navigation? I’m on the fence with that one, but fork to my nose and that is a sub that I could unhappily live with! For unless your traveling all the time, how much would you use it? So it would be something I could live without. The same is true with Tesla’s AutoPilot and FSD, along with GM and Ford’s Super Cruz and Ford Cruse. One classically purchase a vehicle to driver it, so to have it do all the driving is an added service, so I could see that it may come with a nominal monthly cost. Yet, on the other hand, if you charge a sub for these, why not for regular cruse control too? Along with lane keep assist and the feature that allows you to keep a specific distance behind another vehicle?! Where does it all stop? Just as challenging is that huge TV screen in the back seat of the new i7, is a head scratcher. To pay a sub to watch of the air TV is crazy, but to stream TV requires an internet connection, so there is already a cost, then there is the streaming service itself and now a sub from BMW to use the TV too? Seems excessive.
July 26th, 2022 at 9:50 pm
I’m really getting tired of my tax dollars bring spent to entice other people to buy electric vehicles that aren’t really really for full use. Early adopters are going to buy then regardless.
July 26th, 2022 at 11:14 pm
The only car related “subscription” I’ve ever donr is SiriusXM, at $50 for a year. I may, or may not continue, depending on if I can continue for thr same price.
July 27th, 2022 at 3:40 am
The GM/LG Chem deal to procure and refine essential precursors to modern battery cell production is highly significant.
China practically owns that part of the business.
And like with many elements of a sensible industrial policy, it shouldn’t be the unfeasible “attempt to make it all in the US and fail at great cost”, but rather create a global supply chain bypassing China.
Which is why we needed the Trans-Pacific Partnership for Trade. China didn’t wait a second to jump in. Similarly, we never got mirrored tariffs for cars either.
On subsidies, they helped accelerate early adoption, but need to be phased out. And I agree that the early adopters weren’t the ones who required additional incentives.
Here in Switzerland (with admittedly high purchasing power), Tesla has become the second-best selling marque overall (!) as of H1’22 without significant government help.
July 27th, 2022 at 7:06 am
I agree with the many here about purchasing subscriptions, if it’s part of the vehicle and had an upcharge to begin with, no subscription should be tolerated; a service that provides updated content or third party (e.g.,Sirius), then yes, as an option.
July 27th, 2022 at 8:49 am
As with any product, cost is based on what the market will bear. As long as consumers refuse to pay subscription services for vehicle options OEMs will have no choice but to toss this horrible idea out the window. When they incur the cost to place the options on the vehicle and 10% opts to pay for the service they will likely change plans.