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Runtime: 10:00
0:00 EU Lowers China EV Tariff Again
1:02 BMW Cuts Its Profit Forecast
2:07 Audi’s 1st China-Sourced EV Coming in 2025
2:38 Audi’s Most Aerodynamic Car Ever
2:56 BYD Aiming to Sell 4 Million Units
4:50 GM Ramping Up BrightDrop Production
5:46 Intel Could Sell More of Mobileye
6:33 Rivian Launches 1st Referral Program
7:21 Mercedes SSB Will be Ready Before 2030
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EU LOWERS CHINA EV TARIFF AGAIN
At this point it’s hard to say what the EU’s tariffs on imported Chinese-made EVs will look like when they’re finalized in November because it keeps changing them. It once again lowered the proposed rates for Tesla and Geely. Tesla has now gone from a roughly 21% tariff, to 9% and now to 7.8%. Geely is now at 18.8% and has also dropped two times from a high of 20%. It says it made the adjustments after taking into account additional information provided by the companies. But the European Commission has also faced pushback on the tariffs, not just from automakers and suppliers, but whole countries as well as the Chinese government. Reuters reports that China Ministers offered to negotiate with regulators over the tariffs, which China has called “typical protectionist behavior.”
BMW CUTS ITS PROFIT FORECAST
Germany and its auto industry are the ones probably pushing the hardest against the Chinese import tariffs because they have a lot to lose. Not only do a number of German automakers build and import vehicles from China, but China is also a big source of their sales and revenue. And right now sales of German car brands in China are sliding as customers are choosing domestic automakers more and more. That’s part of the reason BMW just lowered its profit forecast for the year. Not only does it expect a slight decrease in sales, but also an EBIT margin of 6-7%, which is down from 8-10%. It says a recall of a braking system played a role as well, which impacted 1.5 million vehicles and resulted in a delivery stop and additional warranty costs. But BMW’s slide in China is not just limited to cars, its motorcycle sales have been hit as well. It’s also lowering its profit forecast for motorcycles due to more competition in China and the U.S.\
AUDI’S 1ST CHINA-SOURCED EV COMING NEXT YEAR
But in an effort to gain more appeal with Chinese customers, western automakers are adopting Chinese EV platforms. Stellantis has partnered with Leapmotor, VW with XPeng and Audi signed a development cooperation with SAIC. CarNewsChina reports that the head of that Audi-SAIC project says it will unveil its first car in November and it will go on sale in China in the second half of next year. That’s about all we know for now.
AUDI’S MOST AERODYNAMIC CAR EVER
But in one other bit of Audi news, it says the A6 Sportback e-tron is the most aerodynamic vehicle in its history. Its coefficient of drag is rated at 0.21, which is not world beating, but puts it high on the list.
BYD COULD OUTSELL FORD & HONDA
One of those domestic brands that Chinese consumers are choosing more and more is BYD and now Morgan Stanley reports that BYD executives say it’s aiming to sell 4 million vehicles this year, which would have made it the 8th largest automaker in the world last year, behind Ford and Honda. That’s also an increase of 11% from BYD’s own initial sales forecast at the beginning of the year. The jump is mainly coming from plug-in hybrids. Not only does it have a backlog of a couple of models, but it’s also launching its next-gen PHEV technology right now. To hit 4 million vehicles BYD will have to sell nearly 420,000 a month for the rest of the year.
GM RAMPING UP BRIGHTDROP PRODUCTION
Last month, General Motors integrated its electric commercial van company, BrightDrop, into Chevrolet. That allows it to take advantage of Chevy’s large dealership network, which it hopes will help boost sales. And to help meet that expected demand, GM is going to boost production. Canadian union Unifor says the automaker has committed to adding a second shift at its CAMI plant in Ontario in early 2025. But so far it’s been a slow ramp up for the BrightDrop van since it first went into production in late 2022. At one point battery shortages idled production for six months, then production resumed in April but only on one shift. GM and Unifor also began contract talks this week and their current three-year deal expires next week. So by adding another shift at CAMI, GM is likely trying to avoid any labor disputes.
INTEL COULD SELL MORE OF MOBILEYE
Intel is considering selling part of its stake in Mobileye. The company, which makes software for self-driving vehicles, has struggled the last several years due to automakers reducing production. Last month, Mobileye cut its revenue and operating income forecasts and it’s on track to post an annual loss for the third straight year. Shares of Mobileye fell to a record low after news about Intel selling its stake broke. Intel currently owns 88% after offloading part of its stake in Mobileye last year, which raised $1.5 billion. Now it’s considering selling more either on the public market or to a third party. But with Mobileye’s struggles, it could be difficult to sell this time around.
BUY A RIVIAN WITH REFERRALS
EV startup Rivian is launching its first referral program to help boost sales. The company is offering a $750 credit to both the Rivian owner who makes the referral and to the new buyer. The credit can be used to buy products at Rivian’s online store or for a vehicle purchase. Both also receive six months of free charging at Rivian charging sites. And Rivian is offering an “adventure weekend” to the first 100 owners who make 25 referrals. The referral program is only for U.S. customers now but it will be expanded to Canada next year. Tesla and Lucid also have referral programs and analysts say they’re appealing because they’re less expensive than traditional advertising campaigns.
MERCEDES SSB WILL BE READY BEFORE 2030
Two years ago, Mercedes invested in U.S. based battery company Factorial to develop solid-state batteries. And now the companies say they’ll be ready for production by the end of the decade. The new battery, called Solstice, has an energy density of 450 Watt-hours per kilogram, which is 40% higher than its current batteries and is expected to boost an EV’s range about 80% over today’s average. But Mercedes is not alone. Stellantis and Hyundai have also invested in Factorial. They’re interested in solid state batteries because the higher energy density allows them to reduce the size of the battery pack and fire risks are also lower. However, up till this point producing the batteries in volume has been harder than expected.
And that brings us to the end of today’s show. Thanks for tuning in.
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Wow the Chinese are pretty bold to call a 7.8% and 18.8% tariff “typical protectionist behavior.” The country that required all automakers to have a 50% partnership with a domestic manufacturer in order to build cars in the country. They also have currently a 15-25% tariff on all imported vehicles. Plus, a (VAT) Value added tax of 13% of the vehicles value. For years required Imported vehicles to have at least 50% labor content and so vehicles would roll off the assembly line here in the US ship to China and be disassembled only to be reassembled by local labor. And they have the balls to call out other countries for typical protectionist behavior. Well, they would know what it is they have been the leader in protectionist behavior. Amazing!
The Chinese were pretty smart to require the joint ventures for foreign car companies to get into their market. Companies like VW and GM wanted to get into the growing Chinese market, and the joint ventures worked well for them, and other companies, until they didn’t. You have to admit that no one forced GM, VW, or anyone else to enter into the agreements.
Some of China’s other policies have worked less well for them, like the extended Covid shutdowns. Also, the now-ended “one child” policy will come back to bite them, as aging parents need care, in a society much less inclined than in the US to “warehouse” old people in nursing homes. People of a whole generation will have no brothers and sisters to help with caring for aging parents.
Its interesting that Chevy is hoping to boost sales of the Brightdrop vans. Just last year, as they shut down production for six months due to a lack of Ultium batteries, they had this to say.
“the BrightDrop Zevo van series has been well-received by commercial customers, with GM reporting a backlog of approximately four years’ worth of orders on its books.”
It seems natural that they would want to ramp up production with a second shift if they have this kind of backlog, but to say they hope to increase sales and that they are adding another shift to meet that anticipated demand does not make sense. Not if they truly had four years worth of orders in hand.
Audi’s new Q6 e-tron, IMHO, did the right thing in not chasing aerodynamic leadership, as Mercedes did with the EQ series. While beauty is in the eye of the beholder, giving up a few degrees of coefficient of drag, doesnt seem to have had as negative a penalty on the Q6’s styling, as going for the best has done on the EQS (verses the concept EQS). That said, I’m not a fan of the Q6’s body color front “grill” or shield and think something a little closer to the current Q6’s grill would be more appealing to me. Yet, both are far too expensive for my pockets, but I costs me nothing to look.
Kit,
Yesterday I wasn’t saying that hybrids were bad and understand that they are currently the better choice for many buyers, over expensive EVs and ICE vehicles regarding emissions. All I was attempting to say was that, for those point out the negatives of each individual power plant, hybrids and plug in hybrids contain the negative parts of both. When people say that EVs are better for emissions, others point out the supply chain of EVs (the mining for the battery minerals and how the energy that powers the battery is produced [like a coal fired electric plant]), arguing that they are just as ‘dirty’ as ICE vehicles. Hybrids use those same battery materials and while not as much, they don’t use smaller equipment or shelves to mine for it when used for hybrids. They use the same heavy equipment! They same is true with plug in hybrids, while again not as much, they get electric power from the same coal fired energy plant as EVs. If they are going to determine a EVs emissions foot print from by tracking where the batteries minerals come from and are mined, whether it was assembled in a net zero assembly plant, where its electric energy was produced, then they should do the same with ICE vehicles equally and not just at the tail pipe. Even so, while hybrids and plug in hybrids are better then ICE only vehicles, they still contain some of the same elements that some hold against EVs.
PHEVs are the most “it depends” regarding their impact. Some, like Prius Prime get good mpg, even if never plugged in, but others, like Wrangler 4xe does no better on gas than other versions. If you don’t plug it in regularly, a 4xe is clearly a negative for the environment, and for the finances of the buyer. PHEVs have batteries several times the size of those in regular hybrids.
Regarding the EU market, pages 8 and 10 of this exhaustive report are interesting:
https://eupocketbook.org/
I’ve been seeing a noticeable uptick in VW Buzzes here in Switzerland, and most of them are for commercial use. Not astonished gm is predicting better sales of Brightdrop vans, EV fleets can be tailored to their very well-known routes.
GM-Vet I have to really question the integrity and ethics of today’s CEO’s. I’m not sure if they purposely lie to encourage EV adoption, maybe to manipulate the stock value or to make their strategic plan make sense for job security. Or maybe they are on the up and up, and just unable to manage the quickly changing market demand and government mandates.
I truly believe Elon is a master of the stock manipulation with his pre-order nonsense. Allowing people to place a $100 refundable deposit on a vehicle that is so different and new in so many ways that I believe lots of people thought they would buy while demand was high and just resell and make a few grand in the process. With 2 million orders the stock climbed, and news was a buzz and things sounded great for Tesla. Not nearly as many actually wanted the truck they were looking for the quick flip. So as Tesla got closer to production and needed real numbers for equipment planning, they asked for a $1000 non-refundable deposit and all of a sudden Tesla got quiet. No more touting the 2 million reservations. I don’t remember ever hearing a number at all. The 4-5 years of spoken for production was gone and for all intent and purposes it appears if you order a truck, you can likely get one this year and maybe even within months.
So, when GM, Tesla, Ford or actually any of the automakers say they have thousands or millions of EV sales lined up I take it with a grain of salt. We all know GM doesn’t have 4 years of brightdrop production spoken for. It’s all part of the smoke and mirrors to make it sound like there is way more EV demand than there actually is.
The SEC should probably start investigating these claims as they honestly appear to be a method of stock manipulation to me and nothing more.
Sean Wagner
Interesting report. SUVs are taking over the EU market even more than I realized, with nearly half of 2022 sales.
I haven’t seen an ID Buzz yet, here in central Indiana.
The ID Buzz is supposed to be available in the US starting this Fall. I heard it will only be the long wheelbase version though.