AD #3930 – Toyota’s Unique Inventory Strategy; Trump’s Likely Impact on Auto Industry; Xpeng Develops New EREV System

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

TRUMP’S POTENTIAL IMPACT ON AUTO INDUSTRY
Donald Trump was re-elected as president of the United States and it could have a major impact on the automotive industry. Let’s start with EVs. Trump has promised to stop sales subsidies on electric cars and he could potentially tell the EPA to drop the waiver that it provides to the California Air Resources Board allowing it to set its own emissions standards. He’s promising to raise tariffs across the board on imported cars, possibly including cars from Mexico and Europe. And there’s even talk of the Republican party rescinding the Chips Act which provides subsidies to make computer chips in the U.S., including ones used by the auto industry. It looks like Elon Musk is likely to be an advisor to Trump, or could even end up as a member of the President’s cabinet, so that could result in some favorable policies for BEVs. In fact, Tesla stock was up 12% on the news.

BMW & PORSCHE EARNINGS DOWN SHARPLY
But that was Tesla. The shares of German automakers dropped an average of 5% over fears of higher tariffs on the cars they export to the U.S. Of course, their stock prices didn’t just drop because Trump got re-elected. BMW and Porsche reported third quarter earnings yesterday that were downright dismal. BMW saw a sharp drop in sales that led to a 61% decline in its EBIT. And Porsche saw a nearly 27% drop. 

TOYOTA’S NET PROFIT PLUNGES 55%
And it wasn’t just the Germans reporting weak earnings. So did the two largest Japanese automakers. Toyota reported its net profit dropped 55% last quarter as sales of its cars and trucks fell nearly 4% despite its success in selling hybrids.

  

HONDA REPORTS WEAK EARNINGS
And Honda reported that its net profit dropped nearly 20% in the first half of its fiscal year, as its car sales fell 8%, mainly from a drop in China. Honda also warned that any tariffs added to cars imported to the U.S. from Mexico could hurt its sales even more. 

TRUMP LIKELY TO KEEP EV BATTERY PLANT SUBSIDIES
OK, back to the U.S. for a moment. Automakers and suppliers will be scrambling to figure out how far and how fast the Trump Administration will push to raise tariffs and cut EV subsidies. The thinking now is that Trump will probably get rid of EV sales subsidies but will keep the subsidies to build battery plants. For one thing, those new plants will create new jobs. But they’re also mostly being built in red states, so Trump probably won’t want to pull the plug on them. And if it’s like his last presidency, we’re probably not going to have to wait long for answers.

HARLEY’S LIVEWIRE TO LAUNCH ELECTRIC SCOOTERS
Livewire, the EV motorcycle business spun off from Harley-Davidson, is coming out with a couple of scooters. But these aren’t your typical putt-putt urban scooters, they’re based on the same platform as Livewire’s current electric bikes, so they’re bigger and more powerful. It says it hopes to launch them in the first half of 2026 and will expand its partnership with KYMCO, which is a Taiwanese motorcycle company that owns about 4% of Livewire and helps it with engineering, manufacturing and distribution. KYMCO will also make its own electric motorcycle, called the RevoNEX, off of Livewire’s current platform that it hopes to launch right after the scooters.

XPENG DEVELOPS NEW EREV SYSTEM
Chinese automaker Xpeng is switching up its powertrain strategy. It currently only sells pure electrics but the company’s CEO announced it’s developing a new extended range EV or EREV. Xpeng is aiming for an all-electric range of 430 kilometers or 267 miles, a total range of 1,400 kilometers or 870 miles and a charging time from 10-80% in just 12 minutes. To help provide a better driving experience, it’s aiming to only increase the engine’s noise level by 1 decibel when it’s used as a generator. And will also use AI to optimize the system under certain road conditions. For example, if you’re driving in the mountains and the vehicle is running out of charge, the engine will warm up sooner. The powertrain will be available in global markets but Xpeng did not say when it will launch.

TOYOTA’S UNIQUE INVENTORY STRATEGY
Toyota’s idea of an ideal amount of vehicles in inventory is a lot different than most automakers. It depends on the model and the season of the year, but a normal level of inventory is considered to be about 60 days’ supply. However, when Toyota reached 47 days’ supply in the U.S. in 2019 and 46 days’ in 2020 it felt like its inventories were too high and started offering sales incentives to help sell cars. The 3 days’ supply it had during the chip shortage was too low for comfort, but it sounds like Toyota is more comfortable with where it’s been able to get to in the last two years, which was 11 days’ supply in 2023 and 7 days’ this year. As an extreme example the other way, Ram let inventory get out of hand, especially at the end of last year and the beginning of this year, reaching up around 180 days’ supply. It’s also resorting to sales incentives as well as fresh marketing, which has gotten inventory back around 120-130 days’. 

EV STARTUP NETA IDLES PRODUCTION & CUTS SALARIES
Chinese EV maker Neta is struggling. Back in 2022, the brand sold more than 150,000 vehicles, more than Li Auto, Nio and Xpeng. But through the first nine months of this year, Neta has only sold about 54,000. And that’s due to a shift in strategy. The EV maker was founded in 2018 by Hozon Auto as an affordable mainstream brand. But two years ago, Neta decided to go up market with higher priced models and that hasn’t worked. So, it has halted production at its main plant in China, which has an annual capacity of 200,000 units. The company has also cut salaries of some employees by up to 30%. And while it looks like it’s in trouble in China, Neta is hoping to off-set the decline by expanding overseas.

FORD F-150 LIGHTNING LEASE CHEAPER THAN MAVERICK HYBRID
Ford is hitting a bit of a rough patch with the F-150 Lightning. Sales were down nearly 50% in the U.S. last month and the company is idling production until early next year, likely because it has too much inventory. So, to help get them off dealer lots, Ford has slashed the lease price. A lease for a 2024 XLT Standard Range model is $339 a month for 36 months with about $6,600 due at signing. Last month, it was $700 per month. The new price is about the same as a Mustang Mach-E and it’s less than a hybrid Maverick, which costs about $400 a month to lease, however the Maverick has a lower down payment. The offer for the Lightning only lasts until January 1.

KIA REVEALS SEMA CONCEPTS
If you build it, he will come. That he is me. And that it is the Kia WKNDR Concept, which is based on the automaker’s upcoming electric commercial van the PV5. For a quick little refresher, Kia revealed a lineup of commercial vans at CES this year, from small to large, all with the name PV and a number. The PV5 will be the first to launch and the WKNDR is a concept version it’s showing off at SEMA. I think this thing is sweet and hope someone is crazy enough to make a conversion kit. Kia also showed off a pretty cool off-road concept version of the EV9, called the ADVNTR.

But that’s all for today’s show. Thanks for tuning in.