AD #2703 – Ford & Tesla Q3 Earnings, GM Cruise Could Get Green Light in 2020, Key Bollinger Details Revealed

This is Autoline Daily reporting on all aspects of the global automotive industry.

TESLA PROFIT SURPRISES
We start out today with a couple of third quarter financial reports from Ford and Tesla. Automotive analysts were worried that Tesla would earn less revenue in the third quarter, because even though Model 3 sales are strong, sales of the Model X and S are falling, and they bring in more revenue per unit than Model 3s. The analysts were right. Tesla’s revenue dropped 7% to $6.3 billion. But Tesla was able to cut its operating expenses by more than 14%, and that resulted in a profit. Not much of a profit, only $143 million, a weak 2% margin, and a 54% drop from a year ago. But no one was expecting any kind of profit and upside surprises always bring out the bulls. In pre-market trading Tesla’s stock shot up $46 a share. We can only imagine that short sellers are not happy.

FORD EARNINGS LOOK GRIM
Meanwhile, the numbers at Ford look pretty grim. The company sold 1.2 million vehicles, down 8%. Revenue dropped 2% to just under $37 billion, and expenses rose to over $37 billion so Ford posted an operating loss of $261 million. Thanks to a tax adjustment Ford managed to post a net profit of $425 million but that was a 57% drop from a year ago. In pre-market trading the stock was down 4% and was below $9 a share. Worse still, Ford is shaving half a billion dollars off its profit guidance for the year, and it now risks another credit downgrade, putting it just one level about junk status.

UAW STRIKE CRAWLING TO A CLOSE
The UAW strike at General Motors looks like it might be crawling to a close. So far 60% of the UAW workers who voted approved the contract. But a lot of UAW workers haven’t voted yet, so the outcome is not definite. We’ll get official results late tomorrow afternoon.

GM CRUISE COULD GET GREEN LIGHT NEXT YEAR
GM Cruise postponed the launch of an autonomous ride hailing service because it needed more time to develop the autonomous technology. The service was supposed to launch this year, presumably in San Francisco, but it looks like it might get the green light next year. Autoforecast Solutions reports that GM’s Orion assembly plant in Michigan will start making autonomous cars next March. Internal documents refer to it as the AV1. But Autoforecast warns us that the production date has moved several times and says it would not be surprised if it gets moved again.

TOYOTA TO GIVE LEVEL 4 AV RIDES
And speaking of AVs, Toyota announced it will offer rides on public roads in SAE Level 4 self-driving cars in Japan for a limited time next year. The rides will take place in Tokyo’s busy Odaiba district and will be available from July to September of 2020 in its P4 autonomous vehicle, which is a modified Lexus LS. A safety driver will be behind the wheel to take over if necessary.

ANIMAL ACCIDENTS RATCHET UP IN NOVEMBER
November is right around the corner and that means you need to pay extra attention for deer while out on the road. According to the Highway Loss Data Institute, insurance claims for animal related accidents in November, is more than twice as frequent compared to the yearly average. It looked at claims from 2006 to 2018 and found that the average cost of claims in November was $3,500 compared to $2,800 in February, the month with the fewest animal related crashes. While the data doesn’t include the types of animals involved in accidents, the timing and the damage caused suggest the collisions mostly involve deer. As you can see from this chart, claims rise fast in October, peak in November and start to level off after that. And with more technology and components being added to cars, it’s becoming more expensive to repair vehicles. In 2006, the average cost of an animal strike claim was $2,400 but last year that number jumped to nearly $3,900. So keep your eyes peeled!

BREMBO WORRIED ITS BRAKES ARE TOO LOUD
EVs are much quieter than vehicles with a piston engine and Brembo is worried that people will eventually become annoyed with the sounds that brakes make. So, it’s working to make its braking systems increasingly quiet over time. Since electric motors can aid in slowing a vehicle down through regenerative braking, Brembo is developing lighter systems as well as brake-by-wire mechanisms that don’t use hydraulics. And while Brembo doesn’t think the need for brakes will ever go away, it is concerned the market will shrink. So, it’s also looking to expand into areas like the interiors of vehicles, comfort items and infotainment.

NISSAN TO AXE DATSUN
A few years back, Nissan revived Datsun as a low-cost brand for emerging markets. But in an effort to cut costs, Reuters reports that the company will axe Datsun. Under former CEO Carlos Ghosn, Nissan went through a big expansion in an effort to boost market share. But the company’s new executives want to reign in that growth to get its finances back in order. Other cost cutting measures include, likely getting rid of several variants of the Titan pickup, like single-cab and diesel models, because they’re unprofitable. And the company is also considering closing assembly lines at some of its plants around the world. As we’ve reported, the global auto industry is slowing down, so companies are starting to batten down the hatches.

KEY DETAILS OF BOLLINGER’S TRUCKS
Bollinger Motors announced the price of its electric trucks. Both the sport utility and pickup versions have a base price of $125,000. They are equipped with a 120 kilowatt hour battery that will deliver 200 miles of driving range, have a 5,000 pound payload capability and 15 inches of ground clearance. The vehicles are set to go into production next year and deliveries should start in 2021. The company is also taking $1,000 refundable deposits right now. And if you want to learn more about Robert Bollinger, his company and these trucks, check out the Autoline After Hours show that we did with him back in April.

Speaking of After Hours be sure to tune in later this afternoon, when the Autoextremist Peter DeLorenzo will be on the show. So will Ted West, long-time automotive journalist and the author of the novel Closing Speed which is really about the 1970 world sportscar championship. Be sure to join John and Gary for some of the best gearhead talk in the industry.

But that wraps up today’s show, thanks for watching and we’ll see you again tomorrow.