AD #3454 – Tesla Slowing Down in China; Faraday May Have No Future; BEV Plants Going Next to ICE Plants
November 22nd, 2022 at 11:58am
Listen to “AD #3454 – Tesla Slowing Down in China; Faraday May Have No Future; BEV Plants Going Next to ICE Plants” on Spreaker.
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Runtime: 9:29
0:00 Tesla Slowing Down in China
0:50 COVID Could Choke China’s Economy
1:45 Faraday May Have No Future
3:06 Speed Costs Money, How Fast Do You Want to Go?
3:46 GM Ramps Up EVs in China
4:39 Wuling Tries New Assembly Technique
6:23 China Allows No Driver in AVs
6:56 Mazda Flies Solo with EVs
7:52 BEV Plants Going Next to ICE Plants
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TESLA SLOWING DOWN IN CHINA
Uh-oh, is Tesla starting to run into sales problems in China? Last month it cut prices there anywhere from 6% to 9%, depending on the model. That didn’t seem to help sales. Then it offered a $1,000 discount on insurance. That didn’t seem to help either as Tesla closed out October with over 16,000 unsold cars in inventory last month, the highest it’s ever had. And so this morning it cut prices in China again, by about $2,000 to $2,500. Delivery times to get cars have fallen dramatically which also suggests that Chinese car buyers are not as enamored with Tesla as they were just a few months ago.
COVID COULD CHOKE CHINA’S ECONOMY
Of course, every automaker in China could be in for a rough ride. At the end of the summer it looked like China would be reopening its economy as COVID cases looked like they might be under control. But now COVID cases are spiking again. Even though the rate of infection is half of what it is in the United States, China’s zero-Covid policy means that more cities face lockdowns. And that will hurt the economy. Volkswagen expected to sell 3.8 million vehicles in China this year, but now it’s knocked half a million vehicles off that forecast. And Berkshire Hathaway, the investment firm run by Warren Buffet, sold off another chunk of stock in BYD. This is the third time it’s sold stock this month. BYD’s stock is down 37% this year, and down 50% from its all-time peak in July.
FARADAY MAY HAVE NO FUTURE
Looks like EV startup Faraday Future could be going from bad to worse. It’s warning investors that it has “substantial doubt” that it can stay in business. It also says it doesn’t know when it can complete deliveries of its FF91 EV, which it planned to start delivering this month. If it can’t sell vehicles, it can’t make money. Faraday says it needs to raise more money from investors, but with EV startups out of favor, who’s going to risk investing in a startup that’s been in business since 2014 but still hasn’t made one vehicle? The company only has 369 pre-orders and only had a little more than $31 million cash on hand at the end of the third quarter.
SPEED COSTS MONEY, HOW FAST DO YOU WANT TO GO?
Would you pay a monthly fee just so your car could go faster? Would you pay $1,200? Mercedes is about to find out. It’s offering an OTA, what it calls an “Acceleration Increase,” for the EQE and EQS. Both the sedan and SUV models. And it significantly boosts performance. We’re talking 8-tenths to a full second faster 0-60. But it’s the cost that’s grabbing headlines. That twelve-hundred bucks is not a one-time fee, that’s per year. So, let us know what you think. Would you be willing to pony up that kind of cash?
GM RAMPS UP EVs IN CHINA
Earlier in the show we reported that things could be slowing down in China, but GM is about to roll out a bunch of EVs there. In fact, it’s accelerating its rollout of electrics and will offer 15 Ultium-based EVs across its brands by 2025. The Cadillac Lyriq is already on sale there and GM’s lifestyle brand, called the Durant Guild, announced the Celesiq as its first import model. Sometime this year, Buick is going to debut its first Ultium-based EV, which is called the Electra E5. The model is said to have a 241 horsepower electric motor, built by GM in China, and a lithium-ion battery pack supplied by CATL, but size is not known at this time. Its styling is very similar to the Electra X concept that debuted in May.
WULING TRIES NEW ASSEMBLY TECHNIQUE
GM is also expanding BEV manufacturing in China. It recently broke ground on a new plant that it says will be the most flexible automotive facility in the world. It adopts what GM calls the Smart Island production method. One main production line handles mass assembly and then little branch lines will do customized sub-assembly of vehicles. One of the vehicles that’s likely to be made there is the Wuling Air EV, which is the version of its popular Hongguang MINI EV that’s sold in Indonesia. But the Air EV will expand to other markets as well. Wuling just started making a left-hand-drive version of the car to go along with the right-hand-drive version. While these are inexpensive entry models, Wuling has plans to move more upscale. It’s coming out with a new model in the first half of next year, called the Bingo. Its styling looks like a Fiat to us, but it features a similar setup to the MINI and Air EVs. It has two power options, either 30 or 50 kW, and an LFP battery. Although, size and range have been revealed yet.
CHINA ALLOWS NO DRIVER IN AVS
Autonomous car companies like Argo are going under, but self-driving vehicles keep making progress. In China, the city of Beijing just let Baidu and Pony.ai use autonomous vehicles without a backup driver on board. The two companies are allowed to deploy a fleet of 10 self-driving vehicles in a 60 square kilometer area of the city. Waymo and GM Cruise already operate driverless AVs in the U.S., and we expect to see other AV companies get the go-ahead to do the same thing.
MAZDA FLIES SOLO WITH EVS
Little old Mazda looks like it’s going into the EV segment all on its own. It’s going to invest $10.6 billion to develop EVs and it’s partnering with several suppliers for EV components. It will roll out electric vehicles in three phases by 2030. In the first phase, Mazda will launch vehicles using its own electric technology. For the second phase, it will introduce a new hybrid system as well as launch BEVs globally. And in the third phase, it will have a full-fledged introduction of BEVs and it will even consider making its own batteries. Mazda says it expects EVs to account for up to 40% of its sales globally by 2030. But what puzzles us is why Mazda didn’t tap into Toyota’s keiretsu supply chain since Toyota owns 5% of the automaker from Hiroshima.
BEV PLANTS GOING NEXT TO ICE PLANTS
Here’s something we want to point out to you. Start paying attention to where legacy automakers are building their battery plants in the U.S. GM has battery plants in Lordstown, Ohio; Lansing, Michigan; Spring Hill, Tennessee, and it’s reportedly going to build one in New Carlisle, Indiana. You know what all those battery plants have in common? They’re right next to or nearby existing factories. Stellantis is building a battery plant in Windsor, Canada and Kokomo, Indiana. Same story: right next to ICE plants. Here’s why. Everyone is running into problems trying to hire people. And when you have to hire thousands of them, it’s even harder. So by building battery plants near existing plants they can start to move people from ICE production to BEV production. Not only does that give the car companies a source of experienced workers, it gives those workers job security, and it gives the communities where those plants are located a steady tax base. And we think we’re going to see even more battery plants get built where legacy automakers have legacy operations.
But that’s it for today, thanks for watching.
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Comments (27)
November 22nd, 2022 at 12:06 pm
I wouldn’t pay extra for 1 second quicker 0-60 time, but I might avoid buying a car from a company that would have the gall to try to charge $1200 a year extra for what is already part of the car.
November 22nd, 2022 at 12:13 pm
1, Couldn’t say it better myself.
Good on manufacturer’s building near existing plants; giving people with ICE jobs a little more security that they, in all likelihood, won’t need to look for another job if the plant closes or changes operations.
November 22nd, 2022 at 12:15 pm
Tesla may need to back off of some of their price increases in the U.S. too. There is actual inventory at the store near me, and their web site shows “Est. Delivery: Nov – Dec 2022″ for most models.
November 22nd, 2022 at 12:35 pm
Mercedes simply follows the Euro brand’s craving for subscription based services, which frankly are repellant.
November 22nd, 2022 at 12:41 pm
I don’t have a problem paying for a performance upgrade- once! If I’ve paid for the vehicle then it’s mine, in my view, so this subscription nonsense to use the the thing I’ve paid for is just that, nonsense.
November 22nd, 2022 at 12:51 pm
I would consider paying extra for improved performance as part of the initial vehicle purchase price (I would view it as an option I could purchase or skip), however, paying extra as an ongoing annual fee – No way.
If fee covered extended warranty along with improved performance, it could sway decision.
November 22nd, 2022 at 1:01 pm
We keep hearing lots of excuses about why EV sales might be slowing in China and yet no mention that just maybe the folks that want EVs have them. Maybe the demand isnt 100% of the population and maybe the demand wont continue to be there as predicted.
China will cut there own throat with another shutdown. So much evidence has come to light that the shutdowns did little if anything to help that if they do it again its by their own stupidity.
Farewell future which some here said was a ponzi scheme all along. I mean if you cant get your car into production after 8 years then you cant blame investors for bailing.
No one should give MB a dime for more speed and send a clear message that we are not going to sign up for annual fees on a car we own. Making it a standard practice. Sadly some fools with more money than brains wont care and will gladly commit to this but with any luck its very few.
November 22nd, 2022 at 1:04 pm
This works out to $3 a day, assuming you stomp on it every day.
What happens when that cement mixer is bearing down on you and your Mercedes can’t get out of its way in time? The plaintiff attorneys could have a field day with this.
November 22nd, 2022 at 1:13 pm
I agree with #1 Kit’s comment, as that is a decision I’d make at purchase time. Yet, I can understand a buyer of my used vehicle may have other priorities and may want to make a one-time payment for an OTA of different attributes. Monthly or yearly… no way.
November 22nd, 2022 at 1:54 pm
Building battery plants next to ICE engine plants makes a lot of sense. It allows OEMs to move their work force back to ICE engine plants in the future if for some reason they switch to hydrogen or a combination of both. Keeps their workforce very flexible in an unknown future.
November 22nd, 2022 at 2:02 pm
The performance I’ve recently paid extra for, once, is fuel efficiency with a Camry and Highlander hybrid.
Generally, I haven’t paid extra for more speed in many years. My Cayman is a base car. I had no desire to pay ~$12K extra for the S, with an extra 50 hp, and maybe a half second quicker than the already quick 0-60 time. For $27K extra for the GTS 4.0, you get 94 extra hp, and more importantly, two extra cylinders, but with the GTS, the car, with a few options, is $100K, too much money for that car.
As far as “performance subscriptions,” Porsche doesn’t seem to be doing that, but you can sure run the price up with a few regular options.
November 22nd, 2022 at 2:06 pm
Maybe there will be “hackers” that will get you the extra performance from the Benzes for a one time charge of about $100.
November 22nd, 2022 at 2:11 pm
I believe in many areas in China, the government severely restricts ICE sales but allows EVs because of their incredible air pollution problems. So I don’t think Tesla EV sales drops are because people are tired of EVs, I think it’s because there are over 100 EV manufacturers, many supported by local and regional governments, many with half decent product at much lower cost than Tesla.
If China develops a “buy local” attitude similar to “buy American”, Tesla will have even more problems.
November 22nd, 2022 at 2:18 pm
11. If people would pay ~$12k for 50 more horsepower, that’s just pre-paying a 10 year fee. Keeping the car for less saves money. Of course resale value needs to be considered.
November 22nd, 2022 at 2:19 pm
I don’t believe there is a single car on sale in North America currently that is unsafe because of lack of power. We just rented a Kona and it was slow but perfectly capable of getting up to speed (if the idiot in front of us wouldn’t daudle on the on-ramp).
November 22nd, 2022 at 3:51 pm
15 Even the VW 1.9 TDI I had years ago had adequate power for all normal driving, even though it was probably slower than the slowest of today’s cars. It probably took 12-15 seconds 0-60, but a fully loaded tractor trailer takes about 100 seconds, and they go down the road pretty well.
November 22nd, 2022 at 3:54 pm
14 Yeah, resale is definitely a factor. I suspect the 6 cylinder 718 Caymans and Boxsters will hold their value very well, and maybe even the S models would hold most of the $12K extra.
November 22nd, 2022 at 4:34 pm
It looks like Tesla will not have a fan base in China like it has in the USA. I always thought Tesla cars were overhype the USA….like to the point, no one else was smart enough to equal them. The Chinese will not overhype a product that is not worthy.
November 22nd, 2022 at 5:53 pm
The current ICE Buicks look so good and the BEV Chevy Blazer, it was a real let down to see the Chinese Buick version of the EVs that will be coming here! I don’t understand how the styling has changed so much what Buick now offers, to what we see here as the E5?! While Buicks aren’t my cup of tea, one can not help but see their current crop of crossovers are the best styled versions of the vehicle that they replaced! I would go as far as to say, as GM’s premium brand, they look better and have much better styling then GM’s Cadillac luxury brand. To just go back to being Ho-hum, is very, very disappointing. Especially, after the amazing concepts that Buick has shown off lately, many of which were designed at GM’s China design studio. The current Envision and smaller crossovers were styled at that design house, buy now the E5 is the best that they can come up with? SMH!
When Mercedes introduced the EQS and E, many were let down by who far off the AMG versions were, when compared to the high power versions of the Model S and Air. Now we know why! I see to lines of though on this approach. With so many OEMs so set on creating subscription services into the vehicle purchase, it seems that some are throwing different things under that banner and waiting to see what stick! Second, as those of a certain age, age out of the new car market, and younger buyer come of age, these newer customers may take a different view to in-car-subscription-service. I do not stream music in my vehicle, but others stream music, podcasts and other this in their vehicle and gladly pay a fee for that type of enjoyment! Consider this, a person leases an EQ with the amenities that come with that Class and package. When the lease is up, that trade it in and a another customer buys it second hand as a “Certified Per-Owned” vehicle. Because they got it for such a nice price, maybe they might splurge for the extra power subscription service? Or maybe another customer get a deal on a demo (if there even is such a thing, in this pre-order world we now live in), and decides to get the power subscription upgrade? Me, personally, feel that a buyer should not pay more to unlock and use, tech that they already paid for when they bought the vehicle!
Looks like someone may be able to get the intellectual property of Faraday Future for a song! They would not be the first company founded on a good idea, that could not make the business side of things work out for them, sadly. Maybe if Mazda was to hold out for a little bit longer, maybe they could purchase FF hard and software, at a price that would be cheaper then using the tech supplied by tier one suppliers?! This way they could own and develop the tech as they see fit, while not having to have spun a lions share on research and development as many other OEMs have done on EV tech?
November 22nd, 2022 at 6:45 pm
@13 – You’ll have to go back a few generations to find any significant Buy American sentiment. Sure, a few pockets exist, but just a quick look at vehicles on the road, clothing, electronics, basic smaller goods, etc. tells the story. That “revelation” hit hard during COVID when a worried population learned critical PPE had been outsourced.
November 22nd, 2022 at 7:44 pm
#12 Sounds like a good side-hustle, Kit. Though, I’m sure M.B. would find a way to tell if the limiter had been breached when it comes time to honor a drivetrain warranty issue.
November 22nd, 2022 at 8:29 pm
21 Yeah, you probably wouldn’t want to do a rogue software enhancement while on warranty. You’d barely notice the difference anyway, and most people would rarely use it. I rarely “floor it” in my fast cars, or even my slow one.
November 22nd, 2022 at 9:48 pm
20 It seems that “buy American” sentiment, and brand loyalty are at their peak with pickup trucks in the U.S. Most buyers probably don’t even know, or care where their vehicles came from, whether a Toyota made in Kentucky, or a Buick made in China.
November 23rd, 2022 at 5:59 am
I just saw an article from GM Authority that reported on some of GM’s China strategy that a new XT5 would be a China only model. If Tesla’s sales continue to dip and not just an anomaly, what that might say about the continuation of ICE models (for a little longer). Link: https://gmauthority.com/blog/2022/11/next-gen-cadillac-xt5-to-be-exclusive-to-china/
Perhaps Cadillac needs to ease on their all-electric mantra or at least continue to keep ICE viable (instead of their seemingly all or nothing approach).
November 23rd, 2022 at 8:07 am
23 The “buy American” sentiment is still somewhat strong in the midwest. So many generations of families were involved in the big 3 automotive either directly or with supplier jobs and as with anything were taught the strong union mentality that the UAW promoted for years and still does.
To your point the “Domestic” lines have been blurred much more in the last couple decades. Foreign manufacturers have set up shop here in the states and much of the domestic cars parts have been outsourced to foreign suppliers. Almost every vehicle is a globally sourced combination of parts. So to say, “buy American” now has a real fuzzy definition. Its difficult to push a hardline agenda when the definition of that line is so blurry anymore. It just doesnt have the same meaning it did back in the day.
I agree with 13 Albemarle that Tesla sales are probably down more in China not because of competition more than anything. Tesla is more expensive than many more options available to buyers there and much like here in the states I’m not sure if the company being American or Chinese makes that much difference. Its what everyone has predicted for years.
Tesla undoubtably conquered the EV market. They had the right combination that appealed to buyers and did outstanding. However thats while EVs accounted for 3% of the global market. As everyone starts kicking out EVs and some that are cheaper or even better Tesla has no where to go but down. Its hard to get on top. Its even harder to stay on top. Things mentioned in todays show like a dealer network and service will start to make a difference. Tesla has a cult like following and was basically the main event. They could get away with the poor body fit and sub-par assembly and not having a traditional dealer network. But now they will start to see where as costly as that maybe it too helps sells cars. Tesla had better adapt quickly to the changing market or their day on top will be short lived. Thankfully folks like Larry are no longer on this site cause I’m not saying I want to see Tesla fall from grace. But being the leader of a segment that is only 3% of the big picture vs the leader of the over-all picture is two totally different things. Good luck Tesla.
P.S. I dont foresee EVs being 100% of the market anytime soon. So that big picture might only be 50% of global sales. But still much more than currently.
November 23rd, 2022 at 8:12 am
Correction 25.I agree with 13 Albemarle that Tesla sales are probably down more in China because of competition.. Not sure how the NOT got in there.
November 28th, 2022 at 12:03 pm
…BEV production beside existing plants also means you don’t have to truck batteries and motors from Nevada to Fremont through mountains in winter.