AD #3489 – Tesla’s Eye Popping Profit Margins; Gasoline Demand Peaked, Now Falling; Pickup Owners Shift to SUVs
January 23rd, 2023 at 11:44am
Listen to “AD #3489 – Tesla’s Eye Popping Profit Margins; Gasoline Demand Peaked, Now Falling; Pickup Owners Shift to SUVs” on Spreaker.
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Runtime: 9:46
0:08 Gasoline Demand Peaked, Now Falling
1:03 Unions Tell Biden To Keep “Made in USA” As Part of IRA
1:58 GM Funds V8s, Quits Battery Plant with LG
3:42 BMW Moves Forward with Solid State Batteries
4:36 Tesla’s Eye Popping Profit Margins
5:47 Aptera Unveils Launch Edition
7:20 Pickup Owners Shift to SUVs
8:09 NHTSA Finds No Defect in Ford Explorers
8:52 Geely Teases Sleek Electric
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GASOLINE DEMAND PEAKED, NOW FALLING
Well, we knew this day was coming and now it looks like it’s here. Gasoline demand in the United States has peaked and will not rebound to pre-pandemic levels, ever. The Energy Information Administration says demand will fall less than 1% this year to 8.74 million barrels a day. But between 2022 and 2027, demand is expected to drop 15%, for a total decline of 1.4 million barrels a day. You can thank electric cars and trucks for that. And while that’s good news for the environment, it’s going to cause gasoline shortages and price spikes. That’s because oil refiners are cutting back on production due to the drop-in demand. Last year, they cut capacity by more than 1 million barrels a day. But when supply and demand even out, it should keep costs in check.
UNIONS TELL BIDEN TO KEEP “MADE IN USA” AS PART OF IRA
President Biden is under pressure from allies like Germany, Japan and South Korea to grant them exemptions to the Inflation Reduction Act. The IRA cuts out sales subsidies for EVs and batteries made outside of North America. But Reuters reports that the Administration is under pressure from unions and environmental groups to not make any concessions. Several unions sent a letter to the White House urging it to keep the bill intact. They say that the law doesn’t violate World Trade Organization or free trade rules. The Administration has already made one exemption. Last month, the Treasury Department said it would allow consumers who lease an EV built outside North America to qualify for up to $7,500 in commercial green tax credits. But it’s unclear if that exemption is even going to stick.
GM FUNDS V8s, QUITS BATTERY PLANT WITH LG
Something weird is going on at General Motors. So let’s connect the dots. The company that says it’s “all in” when it comes to EVs just announced it’s investing $854 million for a new generation of V8 engines. That makes sense. GM needs the profits from its full-size pickups and SUVs to pay the bills for its investments in electric vehicles. But the same day that GM made that announcement, the Wall Street Journal broke the story that LG was canceling plans to build a 4th battery plant with GM. The Journal says GM is talking to another battery maker to build that plant, which reportedly would get built in Indiana. Meanwhile GM’s ramp up of EVs that use Ultium batteries that are made by LG is going slow as molasses. Last quarter GM only sold 86 Cadillac Lyriqs and only 72 Hummer EVs. Likely there’s a problem building those batteries and maybe that’s one of the reasons why the deal with LG to build another plant was canceled.
BMW MOVES FORWARD WITH SOLID STATE BATTERIES
BMW says it’s going to start testing solid-state batteries for electric vehicles this year. But don’t get too excited, they’re still years away from production. BMW formed a partnership with solid-state battery maker Solid Power, where BMW could copy Solid Power’s production line at its own facility in Germany to make prototype cells. Now BMW officially has a license to use Solid Power’s technology to speed up installation of that prototype line. The next step will be for BMW to work with Solid Power to optimize the manufacturing process. BMW plans to get cells for testing from Solid Power this year, and it plans to come out with a demonstration vehicle with a solid-state battery before 2025. But that means volume production will be later in this decade at the earliest.
TESLA’S EYE POPPING PROFIT MARGINS
Tesla is currently earning more than twice as much as traditional automakers for every vehicle it sells. According to Reuters, the EV maker earned over $15,600 in gross profit margin per vehicle in the third quarter of last year. VW is the closest of the traditional automakers at a little over $6,800 in gross profit margin. Interestingly, BYD is hot on Tesla’s heals at nearly $15,000. But Tesla still earns more than 4 times Ford and 5 times more than GM. Tesla’s manufacturing methods, like using large castings and structural battery packs, are a few of the reasons it holds an advantage over the other automakers. Also remember Tesla is playing hardball with its prices right now and we’ve already seen a number of its competitors cut prices too. But as we warned last week, Tesla can afford to cut its prices and still earn money. Now we just have a figure to put on it. So, the competition faces a tough choice; lose money or lose sales.
APTERA UNVEILS LAUNCH EDITION
Is Aptera finally going to get going? The 3-wheel, 2-passenger electric car was first unveiled in 2005–that’s 18 years ago, and it’s still not in production. The company has gone through multiple management changes and the car has gone through several redesigns, but even though Aptera has 40,000 orders for the car it just doesn’t have enough money to start them rolling down the assembly line. But maybe it’s getting close. It just unveiled the launch edition which it hopes to start building sometime this year. The car is said to have a 400-mile range, as well as a solar roof that can deliver up to 40 miles a day. It uses three in-wheel motors for all-wheel-drive, it offers over 32 feet of cargo space, and it uses Tesla’s charge port, so it can get access to Tesla’s Supercharger network. Originally the car was supposed to be priced at $26,000, but we don’t know if the company is holding to that number.
PICKUP OWNERS SHIFT TO SUVs
Big shift taking place in the American market. More and more pickup buyers are shifting to SUVs. S&P Global Mobility says that light-duty full-size half-ton pickup sales have been declining for more than two years. In the third quarter last year, the segment’s retail share was 7.8%, the lowest it’s been since Q3 2012. And alarmingly for Ford, GM and Stellantis, S&P found that half-ton F-150, Silverado and Ram owners have become less loyal to the pickup body style over the last year, with more saying they prefer SUVs. But while half-ton sales are falling, the share of three-quarter and one-ton pickups have remained steady.
NHTSA FINDS NO DEFECT IN FORD EXPLORERS
Ford just won a big victory. The National Highway Traffic Safety Administration closed an investigation into complaints that exhaust fumes would leak into the Ford Explorer. NHTSA started investigating these complaints in 2016, and Ford did agree to do some service work such as reapplying sealant and reprogramming the climate control, but it did not do a recall. Now NHTSA says the leaks were caused by upfitters who drilled holes in the body of the vehicles, mainly on police cars. The leaks were also caused by rear end damage on Explorers that caused the seals in the body to break. But NHTSA could not find anything wrong with the Explorer.
GEELY TEASES SLEEK ELECTRIC
Geely is planning a sleek, new electric sedan. It teased this vehicle, which shows a fastback rear end and suicide doors. It’s said to ride on the SEA platform, which is used by a number of brands Geely owns, including Lotus, Polestar and Zeekr. The car is supposed to make its debut sometime this year and will be followed by a new series of NEVs that are priced in the middle- to high-end of the market.
But that brings us to the end of today’s show. Thanks for making Autoline a part of your day.
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Comments (39)
January 23rd, 2023 at 12:10 pm
GM/Ford/Ram went on price palooza during the pandemic as they prioritized chips to favor their highest priced truck trims. It is any wonder people decided to switch to cheaper SUVs?
January 23rd, 2023 at 12:26 pm
GM = Gotion!
January 23rd, 2023 at 12:28 pm
Trucks have become more and more SUV like as the beds keep shrinking and cabin size grows. It’s not that common for them to have only a 5.5 ft bed. Plus, as mentioned above the price has become even closer to a full-size SUV. The mid-size and small trucks like the Santa Cruz its even worse with not even a 4 ft bed.
If you’re not hauling dirt or a fridge, the SUV can work just as well and if you buy a trailer, then you can still haul everything the truck can and have room for 6-7 people. With seatbelt laws and child seats being so large the third-row vehicles will always be needed for families with 3 or more kids.
Plus you never know how many friends you have until you own a truck.
January 23rd, 2023 at 12:32 pm
I’m surprised that there will be another generation of Chevy V8. The first generation small block lasted almost 40 years, but there have already been 4 more generations over the subsequent 30 years. I suppose the upcoming one will be a little more efficient, a little lighter, and maybe a little more powerful, but can it be that much better than the current one?
January 23rd, 2023 at 12:39 pm
To work under a cloud for years only for Ford to learn it’s others drilling holes and mounting stuff that is the problem. These specialty companies certainly know how to charge for their work; too bad they are not competent at sealing up the holes they drill.
January 23rd, 2023 at 12:40 pm
So either GM was just supporting the environmental agenda with some off the hip news, when they announced they would not be developing anymore new gas engines back in 2020 or they are just realizing that’s not very realistic.
I hear this is for a new small block V8 which is slated to be built in Flint. Considering the amount of people running out to buy Lyriqs and Hummers this is probably a good move.
January 23rd, 2023 at 12:46 pm
5 Yeah what a mess. Who would have guessed that if you drill holes or get in a crash that affects the rear seal you might get a leak? I hope Ford charges back NHTSA all the time and money wasted on this including money for the bad press..
Seems like someone didn’t due even the slightest due diligence before raising a flag.
January 23rd, 2023 at 1:01 pm
7 NHTSA did the investigation as a result of 6,500 consumer complaints. They didn’t just decide to investigate Explorers for the fun of it. Yeah, maybe they should have figured things out quicker, or maybe those 6500 customers should have known something, since they were the ones who hired the holes to be drilled.
January 23rd, 2023 at 1:07 pm
I only took one pickup truck for me to determine that they don’t make much sense for a lot of us. I bought one, mainly to “see what I was missing,” because so many people around me had them. I found that I wasn’t missing very much, by not having a pickup. When I need a new refrigerator, about every 35 years, I just have it delivered. I have a 4×8 tilt trailer for the rare occasions that I need to move a lawn tractor, etc.
January 23rd, 2023 at 1:18 pm
8 Yeah NHTSA did the investigation but Ford did agree to do some service work such as reapplying sealant and reprogramming the climate control system. So no doubt they were working on their own within Ford end to find the culprit. They dont just sit back and wait for NHTSA’s findings.
January 23rd, 2023 at 1:20 pm
6) gm stated that they would be “electrified” not full BEV. Everyone misconstrues the word “electification”/”electrified” with BEV including most major auto journalists. Electrified simply means that there will be some form of hybrid to augment ICE all the way to a full BEV. Expect to read that these new V8s will be paired with a hybrid technology whether it is P1, P2, P3, or P4. FYI the E-Ray corvette is a P4 hybrid for reference and is considered “electrified”.
January 23rd, 2023 at 1:21 pm
@Lambo #6 – It’s not a demand issue for the Lyriq and Hummer. Combined they had well over 100,000 reservations.
January 23rd, 2023 at 1:28 pm
10) I was at the dealership when this was all going on. There were many consumer vehicles that complained about this. It was not just upfitted vehicles. Those persons complained even after the “fixes” were completed. No complaints have been made on the new explorer with the ranger based platform whether it is upfitted or not. Also, lots of Tahoes/Suburbans were upfitted during this time period using the same methods, and zero complaints.
The truth will never be known, but it is not an upfitter problem to me. They are being blamed, but for my money and family, I just wouldn’t buy that model of explorer. Those model years of Explorers are kind of junky anyhow. So that helps in making sure that I would not buy one.
January 23rd, 2023 at 1:58 pm
@13. The Explorer has not been on a Ranger platform since 2003.
The vast majority of the exhaust fume complaints came from unfitted vehicles in Texas. The TV mag rags added to the hysteria, triggering every hypochondriac and nervous mother of a newborn to question the quality of their new vehicle. TV mag rags shoot first with assumptive questions.
January 23rd, 2023 at 1:58 pm
@13. The Explorer has not been on a Ranger platform since 2003.
The vast majority of the exhaust fume complaints came from unfitted vehicles in Texas. The TV mag rags added to the hysteria, triggering every hypochondriac and nervous mother of a newborn to question the quality of their new vehicle. TV mag rags shoot first with assumptive questions.
January 23rd, 2023 at 2:01 pm
13 Could there have been exhaust leaking under the hood, getting sucked into the cowl vent?
January 23rd, 2023 at 2:09 pm
6,12 I saw an article that said Lyriq deliveries were delayed due to quality holds, and these were coming to a close. Over at the Cadillac forum I frequent there are a lot buyers waiting for their deliveries. There is very good demand for both Lyric and Hummer.
January 23rd, 2023 at 2:17 pm
There may be a different headline on gasoline consumption in the next couple of years. Think about how many large and gas thirsty SUVs and pickups have been sold over the last five years, especially during the chip shortage. Now, think about how many fuel efficient compacts, hatchbacks and midsize sedans that were discontinued during that same period. As older vehicles are retired, the mix of vehicles on the road will lean more in the direction of those less-efficient large vehicles. Even with some EVs displacing some ICE vehicle sales going forward, this vehicle mix situation could lead to an increase in gas consumption, even if only for a couple of years.
January 23rd, 2023 at 2:21 pm
Just wanted to point out that the Reuters chart of EV profitability really shows VW’s gross profit moving from $6800 to $6000 since 2020 and BYD moving from $15000 to $5000. The color of the dots and numbers shows the year. It’s confusing .
January 23rd, 2023 at 2:28 pm
Tesla’s recent price cuts, ranging from $6,000 to $13,000, will certainly bring their profit per vehicle back down to earth. They are now officially feeling the effects of competition in the EV market segment, one they have had mostly to themselves here in the US until now.
January 23rd, 2023 at 2:42 pm
@11: sorry for what shows my lack of knowledge, but what does P1, P2, P3, or P4 stand for?
January 23rd, 2023 at 2:47 pm
4 I’m excited to hear more v8′s are coming. They keep make more power,use less fuel and are cleaner at the tail pipe,so why not?
January 23rd, 2023 at 3:25 pm
21 I was wondering the same thing and found this. It’s pretty long and seems to assume front drive with 2wd, but it explains the different Ps.
https://x-engineer.org/mild-hybrid-electric-vehicles-mhev-types/
January 23rd, 2023 at 3:35 pm
@23 thanks, Kit. I am afraid that is above my pay grade
January 23rd, 2023 at 3:41 pm
11 Yes GM stated a push to electrification and thats different than what my comment was about. Back around 2020 Ford and GM both announced they had no plans for any future Gas engines. Basically were stating they would let what they already developed run its course and make improvements but would not spend money on any more development of gas engines. Sean even reported that here. Not sure on the exact date. But many here pointed out then it seemed a bit premature to not plan for any gas engines. So here we are maybe 2 years later and they are going to dump 600+ million into development of a new gas small block V8. Just shows they were saying what people wanted to hear but realize they need some new engines to get to 2035. Which is great.
January 23rd, 2023 at 4:31 pm
Aptera – although super exciting to see it closer to finish line, the launch edition will not be Tesla supercharger compatible since it’s not DC fast charge capable. Max charge speed will be 50 some miles per hour, level 2. Bummer but I’m sticking with it regardless.
January 23rd, 2023 at 4:49 pm
I’m wondering how the new Chevy V8 will be different. Everything I find mentions it only being used for trucks, not Corvettes. Camaro is going away, probably before the new engine is ready.
January 23rd, 2023 at 5:06 pm
I just wonder if Tesla wonder better off if Mr.Musk appointed some one else to be CEO, to run the company, but he remained chairman of Tesla’s board of directors. I don’t know if this would make a difference or if this is not already the case. Right now, Elon is recognize the individual running Tesla, but it has seem that his attention is directed in a hundred different directions. Tesla is doing great now, but I can’t help but wonder how much more it could be doing, in the one in charged making all or most of the decisions had doing just that, as their full time job! Tesla is by far the tip of the arrow on the BEV front and have made a LOT of money doing so. Yet, while they have made considerable more money then Ford, GM, the VW Group and others, when you look at what each of these three OEMs, for example, have had to manage from a operations standpoint (all the new products [from the designing, engineering, r&d of the different platforms and architectures, not to mention the engines, transmissions, wiring harness and basic safety and emissions systems, along with the ever evolving infotainment systems], updating of existing product, having manufacturing operations all over the world [with some units having very little in common with those assembled in other regions], dealing with differing rules and laws regarding manufacturing, emissions, active and passive safety requirements from various regions and parts of the world, offering vehicles of every size in permutation, from super mini, all the way up to heavy duty), Tesla only has 5 vehicles on the market. The Model S, after 10+ years, it was updated. The semi, while now on the road, it, the Cybertruck and the sports car have been delayed for several years. Yet, with the type of capital that Tesla has, or has had, again, I wonder how much farther the company would be, if they had some one putting the interest of Tesla first, as their full time occupation. Don’t get me wrong, Tesla is hear today as a result of what Elon and others had done! Yet, it can not be denied that Mr. Musk has a lot of his plate from SpaceX, his train and now Twitters!
January 23rd, 2023 at 5:38 pm
“If it ain’t broke, don’t fix it.” Musk and his hobbies are doing just fine.
January 23rd, 2023 at 6:17 pm
Confession: I am not a battery scientist. Why is it taking so long for solid state batteries to get into the testing phase, let alone production? I had read at one point solid state batteries held a charge but when quick charged would overheat. Can anyone shed light on what challenges they are facing?
January 23rd, 2023 at 7:36 pm
Three wheeled cars? What happened to the Elio three wheel car company that developed their own new engine and has shown prototypes several times? They took deposites and actually sold places in line for complete cars. Any deliveries?
January 23rd, 2023 at 7:38 pm
Just realized the the “new” Kia logo is actually from Star Trek! It is Klingon !!
January 23rd, 2023 at 8:38 pm
Would be great to see an Autoline After Hours devote some time to the new interest GM has in developing and marketing V8 engines. Who will buy them (power hungry Millennials/Gen Z’ers)? How will they affect car pricing? And how long might the “V8 Horsepower Party” continue?
January 23rd, 2023 at 8:52 pm
Tesla’s web sites are very strange, not showing inventory at the store near me. There are several new cars there for sale, but a search for inventory on the Tesla site using my zip code only shows cars in Orlando, ~50 miles away and farther.
January 23rd, 2023 at 9:11 pm
33 The new GM V8 is apparently just to replace the existing one in big pickup trucks and SUVs, unless it is used in Corvette and CT5 V.
“Middle age” people are who buy most V8 powered vehicles. The average age of large pickup and SUV buyers is about 55, from a few articles I found. Here is one about pickups.
https://hedgescompany.com/blog/2018/10/pickup-truck-owner-demographics/
January 24th, 2023 at 8:00 am
31 Phred; Elio was a day late and dollar short. They developed a 80 mpg car when gas was cheap, and electrification was just starting. By the time they garnered enough money to finally produce some prototypes gas was back down to $2 a gallon and EVs were hitting the market. Plus, just like many of the EV start-ups learned, getting into production takes a huge amount of money and they didn’t have enough. They wasted too much money/time trying to develop their own engine and in the end was going to buy one from BMW I believe. By that time, it was too late and if people were going to buy a three wheeled car for fuel economy, they had a half dozen EVs to choose from.
Personally, I liked their design and was hoping they would make it. Not enough to place a deposit (thank goodness) but I really thought they would change it up and go electric and keep the basic design. I don’t know if they even had production tooling made but if so, it would be a great starting point for an EV start-up.
The car was so aerodynamic I bet it would get some good range as an EV.
To answer your question I dont believe they ever made any deliveries. I dont believe they ever made a single production vehicle other than maybe a few for testing but nothing that got sold to the public.
January 24th, 2023 at 8:10 am
36,36 Cont- Sorry I responded from memory and without checking but apparently Elio is going electric. Most recent info on their web site says they are planning to go electric and offer the car for $14,900. I mean they started taking deposits back in 2013 and after so many delays just stopped updating the web site in 2019. I hadnt checked it in a couple years. But I guess Paul Elio is still alive and kicking, and still trying to get a car into production. I would imagine investors will be hard to come by at this point but I hope he pulls it off.
Oh I was wrong I guess the gas version was supposed to be powered by a Geo Metro 3 cyl engine. which they were still planning to try and launch an Elio G (gas and then the Elio E (electric) but have since given up on the G version all together. Either way its gonna be a tough battle and I wish them luck.
January 24th, 2023 at 8:51 am
36,37 Elio had, in fact, originally planned to have a custom 3 cylinder engine designed for them by IAV.
https://www.iav.com/en/future-powertrain/
It never made sense, even if they’d stayed with gas, when there are similar size engines used in small cars, like Suzuki/Geo as you mentioned, and vehicles like CanAm Ryker. One Ryker version uses a 900cc Rotax triple.
January 24th, 2023 at 9:03 am
38 I guess the last update to the Elio web site was Sept of 2021 so maybe not doing so great at getting launched an EV. 15 months and no new news. My guess is they are done. Like I said though, seems like it would be a great opportunity for a start-up to maybe get tools and equipment for pennies on the dollar. Change the name and pick up where they left off and offer a cheap EV.