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Runtime: 6:25
0:30 Tesla Pops the Champagne Corks
1:10 Ford Profit Plummets
1:40 Tesla Stock Up, Ford Down
2:32 Consumer Reports Drops Tesla Recommendation
3:16 ADAS Drives Up Repair Costs
4:36 OTA Needed to Boost EV Sales
5:27 Gestamp Opens Factory in Japan
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On today’s show…Tesla stuns its critics and posts a pretty good profit…the AAA says all those safety features on cars are driving up repair costs…and why over-the-air updates can help boost sales of electric cars. All that and more coming right up on Autoline Daily.
This is Autoline Daily the voice of the automotive industry.
TESLA POPS THE CHAMPAGNE CORKS
Just as we predicted in yesterday’s show, Tesla posted impressive 3rd quarter financial numbers. Its revenue shot up 128%. Its car sales shot up a jaw dropping 220%. It posted an operating profit that represents nearly a billion-dollar swing from its loss a year ago. And it posted a net profit that also represents a nearly billion-dollar swing. This is an important milestone for the company, if, if this is a sustainable performance that continues for many quarters to come. If it’s just a flash in the pan, the critics and shorts will have a field day.
| TESLA Q3 2018 EARNINGS | ||
|---|---|---|
| Revenue | $6.8 B | +128% |
| Sales | 83,775 | +220% |
| Operating Profit | $416 M | +$951 M |
| Net Profit | $311 M | +$930 M |
| Source: Tesla | ||
FORD PROFIT PLUMMETS
Meanwhile, Ford also reported its 3rd quarter earnings yesterday and it’s lucky that the media’s attention was focused firmly on Tesla. Revenue rose a bit to just over $37 billion. And yet the company sold 10% fewer vehicles. That shows the kind of pricing power that Ford is getting with its trucks and SUVs. But the company’s operating profit dropped 38% and its net profits plummeted 58%.
| FORD Q3 2018 EARNINGS | ||
|---|---|---|
| Revenue | $37.6 B | +3.3% |
| Sales | 1.3 M | -10% |
| Operating Profit | $1.0 B | -38% |
| Net Profit | $991 M | -58% |
| Source: Ford | ||
TESLA STOCK UP, FORD DOWN
Clearly the stock market is not impressed with Ford’s numbers. The stock closed at $8.18 yesterday and it looks like it could drop to $7. In fact, it’s been dropping now for four straight years. Conversely, the market was clearly impressed with Tesla’s numbers. The stock closed up nearly 10% on the news and at one point was flirting with $300 per share again.
But coming up next, we’ll tell you why Consumer Reports just crucified Tesla.
CONSUMER REPORTS DROPS TESLA RECOMMENDATION
Consumer Reports released its Annual Reliability Survey and 12 models on the list including the Tesla Model S lost their buy recommendation. But on the flip side, 16 models earned a recommendation. The Model S lost its recommendation because of suspension problems cited by CR members in the survey. The company made air suspension and all-wheel-drive standard in 2017. The car’s road test ratings remained high compared to other models but the suspension issues dropped its score. It isn’t the first time the Model S lost its recommendation, doing so back in 2015 but Tesla gained it back the following year.
ADAS DRIVES UP REPAIR COSTS
While advanced driver assistance technology, or ADAS, will help prevent accidents, if your car gets involved in a minor fender bender, you’ll end up with a hefty repair bill. A new study from AAA found that vehicles equipped with ADAS technology that are involved in just minor front or rear collisions, have repair bills as high as $5,300, which is two and a half times larger than vehicles without those systems. While that will put a dent in your wallet, you may remember that it can cost $34,000 to repair the front end of a Kia K900.
A programming note here. There will not be an Autoline After Hours later today, but join us next week when we’ll have the all-new Chevy Silverado in the studio, along with Tim Herrick, the Chief Engineer who will take us through how they developed the truck.
Coming up next, how over-the-air updates can boost sales of electric cars.
OTA NEEDED TO BOOST EV SALES
Electricity is a lot cheaper than gasoline. So electric cars are cheaper to operate. Most people can probably save nearly $700 a year with an EV. So if you keep the car long enough, say 8 to 10 years, you can save thousands—enough to make up for the big sticker price. The problem is, people who buy new cars don’t keep them that long. Typically they keep them 5 years. Then they want a new car with new features. That’s why over-the-air updates are critically important. That allows an automaker to add new features and improve your car while it’s parked in the garage. And that makes owners want to keep it longer. Right now only Tesla can do that. But every car company is going to have to do it to make electric cars competitive.
GESTAMP OPENS FACTORY IN JAPAN
Well here’s an interesting development. The German company Gestamp is opening a stamping plant in Japan that will provide hot-stamped body-in-white panels to Honda. It is almost unheard of for foreign companies to operate automotive factories in Japan, especially involving something as traditional as stamping. Japan has historically been off-limits to this kind of investment. This is a sign of how fast things are changing in the world, especially in the automotive industry, and it’s a very welcome change.
And that brings us to the end of today’s report. Thanks for watching and please join us again tomorrow.
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John McElroy is an influential thought leader in the automotive industry. He is a journalist, lecturer, commentator and entrepreneur. He created “Autoline Daily,” the first industry webcast of industry news and analysis.
