AD #3496 – Tesla Eyes New Plants in Indonesia, Mexico; Lyriq Deliveries Higher in China; Chery Offers Lifetime Warranty

This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.

BOA: TESLA PRICE CUTS MAKE NO SENSE AT ALL
Tesla and Ford’s EV price cuts make no sense at all. That’s according to analysts at the Bank of America. They say that “cutting prices would be a direct hit to the bottom line today and unnecessarily degrades future earnings power.” In Tesla’s case, it will still hold a near-term advantage. But for Ford, the analysts say these cuts mean it’s going to have to sell 33% more vehicles to make up for the drop-in profit margins. While these cuts seem like they could spark an EV price war, Bank of America says that’s unlikely to happen. And maybe they’re right. General Motors and Volkswagen say they have no plans to cut the prices of their EVs.

NIO, XPENG SALES PLUMMET
Maybe those price cuts make no sense to the Bank of America, but they sure are hurting some of Tesla’s competitors in China. NIO saw its sales drop nearly 12% last month, and Xpeng was down 60%. NIO only sold 8,500 cars while XPeng only sold 5,200. Both companies have refused to cut prices so far, but with sales falling fast we wouldn’t be surprised to see them change their minds. While Tesla doesn’t report monthly sales, reports in China suggest they jumped well over 70% after the company announced its price cuts.

CADILLAC LYRIQ DELIVERIES MUCH HIGHER IN CHINA
Speaking of China, General Motors is doing a much better job of delivering the Cadillac Lyriq to customers in China than in the United States. Last year Cadillac only delivered 122 Lyriqs to customers in the U.S., but it delivered 2,400 to customers in China. Both versions launched at about the same time. Maybe it’s easier for GM to get batteries in China, or maybe it has some other issues at its plant in Spring Hill in Tennessee. But GM’s plant in Yantai, China is cranking them out a lot faster than the plant in Spring Hill.

GERMAN AUTO INDUSTRY CREATES MARKETPLACE APP
It’s not often you see collaboration like this. Pretty much the entire German auto industry, including BASF, BMW Group, Henkel, Mercedes-Benz, SAP, Schaeffler, Siemens, T-Systems, Volkswagen and ZF, have come together to found a new operating company, called Cofinity-X. Its aim is to build an open marketplace for apps that provide products and services for its users. They’ll then be able to access these apps to do things like track their entire carbon footprint, which could lead to improvements, as well as trace parts and components down to the raw materials or look at their condition for possible recycling. Users will have a much better idea of their entire automotive operations and can share this data securely, either with individual parties or the entire group. So, for example, an automaker might realize it’s about to run out of a part, see who has that part available and reach out to the supplier. Cofinity-X is expected to be up and running by April of this year.

CHERY GOES WITH LIFETIME WARRANTY
Vehicle warranties used to be 3 years/36,000 miles. Then they went to 5 years/50,000 miles. And then Hyundai/Kia set the new benchmark with 10 years/100,000 miles. Or did it set a benchmark? Chinese automaker Chery announced it will offer a lifetime warranty for all of its brands. But the offer is only available to the first owner and they have to agree to only use Chery dealerships for service. A life-long warranty does sound a bit crazy, but Chery must have some confidence because it previously offered a lifetime warranty for all of its engines. This is an interesting approach and we wonder if you would sign up for a lifetime warranty if you had to go to the dealer for all of your maintenance? 

MAZDA UNVEILS ALL-NEW CX-90
Mazda pulled the wraps off its all new CX-90 yesterday, which comes standard with all-wheel drive. The 3-row SUV offers a PHEV version powered by a 2.5 liter, that in combination with an electric motor, provides a total output of 323 horsepower and 369 pound-feet of torque. It uses a 17.8 kWh battery, and while Mazda did not provide an EV driving range, we expect it to be around 30-40 miles. The standard engine is a 3.3 liter turbocharged in-line 6 that develops 340 horsepower and 369 pound-feet. It’s also a mild hybrid that provides some electric boost at low speeds. The CX-90 sits on an all new platform and is aimed at premium buyers. Some design features include a fast backlite instead of the upright rear window found on most SUVs. It comes with 21” wheels, genuine maple trim on the console and doors, and what Mazda calls a handing stitch on the dashboard. Obviously, this reveal was just a tease and we’ll have to wait for Mazda to give us more specifics like what it’s going to cost.

POLESTAR CREATING CLIMATE NEUTRAL SUPPLY CHAIN
In 2021, Polestar launched a project to create a truly climate-neutral car by 2030. And it just lined up eight more partners to be part of its supply chain. The goal is to eliminate all sources of CO2e throughout the supply chain, from extracting raw materials, to producing vehicles and parts, and delivery and end of life of the vehicle. And it wants to do that “without relying on misleading offsetting schemes.” In other words, it’s not going to plant trees to hit its goal. While it’s making progress, Polestar says it still needs more partners to hit its goal.

TESLA EYES NEW PLANTS IN INDONESIA, MEXICO
Elon Musk says one day Tesla will sell 20 million cars a year. But that means it needs more assembly plants. And it looks like the next two could get built in Mexico and Indonesia. Tesla is reportedly going to open a factory in Mexico City, near a new airport. And apparently, Tesla plans to export cars by air. Meanwhile, in Indonesia, the president of the country says he’s “confident” that Tesla will open a plant in the country. Indonesia has been trying to lure Tesla since 2020 and offered it a number of incentives, including tax breaks and access to mine nickel in the country. Analysts say Tesla will need to open seven or eight more plants to be able to make 20 million vehicles a year.

U.S. INFLATION TO DROP, CAR SALES TO GROW
Inflation in the US will drop to about 3% this year and below 3% next year. That’s according to Fitch Ratings. It says commodity costs will go down, there will be fewer logistics constraints and while the shortage of chips for cars will ease up, supply will still not match demand. Even so, it predicts that global car sales will grow by 5% this year, though they will not return to pre-pandemic levels for another 3 to 5 years.

VOLVO TRUCK LAUNCHES BIO-GAS TRUCK
EVs don’t look like a solution for long-haul trucking yet, so Volvo trucks is launching a new engine for two of its big rigs that runs on liquefied biogas or what’s referred to as bio-LNG. It already has versions that generate 420 horsepower and 460 horsepower, but the new engine makes 500 horsepower and thanks to upgrades is also 4% more efficient. Those upgrades include new injectors, pistons for lowered friction, turbo and oil pump. Add in a 10% larger gas tank and the trucks powered by the new engine will have a range of up to 1,000 kilometers or 620 miles. Europe currently has more than 600 LNG and bio-LNG stations and has a goal to increase biogas production tenfold by 2030.

And that brings us to the end of today’s show. Thanks for joining us.