AD #3987 – Trump Axes NEVI Program; Two Chinese OEMs Adopt DeepSeek AI; Porsche Adds More ICE Cars To Lineup

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

TWO CHINESE OEMS ADOPT DEEPSEEK AI
We start out today in China where it’s investing in three significant technologies that could make its auto industry even more competitive than it already is. Barely two weeks ago, DeepSeek, a Chinese startup in generative AI stunned the tech world with a genAI program that is far cheaper to operate than Open AI’s Chat GPT and it runs on lower tech chips. And yesterday two Chinese automakers announced they’re already integrating DeepSeek AI into their cars. Dongfeng says it will be the first automaker in the world to use DeepSeek’s AI in an SUV called the Courage that’s part of its Voyah brand. One week from today, owners will be able to add it to their cars via an over-the-air update. Dongfeng says it will make its smart cockpit experience to be the best in the industry. Geely is also going to use DeepSeek in an effort to redefine the interface between humans and computers in its cars. And it is stunning to see how fast these two Chinese automakers have moved to integrate DeepSeek into their vehicles.

BYD CHALLENGES TESLA FSD
And BYD is in a race to see who will achieve true autonomy first. BYD’s shares jumped 21% to its highest level since 2020 because investors are enthusiastic over its smart-driving technology. The automaker is expected to detail progress about its autonomous system and other intelligent features for its low-cost cars at an event on Monday. Automakers in China are investing heavily into developing assisted driving features because it’s becoming a major selling point for customers and a differentiator for some brands 

XPENG TO MAKE ITS OWN CHIPS
The CEO of Chinese automaker XPeng believes that autonomous driving will transform the Chinese auto industry over the next five years in the same way that NEVs have transformed the market. He says more buyers are putting AV features in their top 3 reasons for purchasing a new EV. So, XPeng is going to invest an additional $1.3 billion into its R&D activities, nearly half of which will go towards AI projects. It also plans to start mass producing its own in-house developed computer chips this year, which XPeng claims has more capability than NVIDIA or Tesla FSD chips. And these moves are what will allow it to expand its autonomous driving system that’s called XPILOT. All of its models have Level 2 capability and it says it will launch a Level 3 version in the second half of this year. And on top of AVs, XPeng plans to use its chips and software tech in VTOLs and humanoid robots. 

TRUMP AXES NEVI PROGRAM
The Trump Administration just dealt a big blow to EV advocates. The Federal Highway Administration is ordering all states to suspend all EV charging infrastructure spending under the $5 billion National Electric Vehicle Infrastructure or NEVI program. The Biden Administration already approved state funding through the first four years of the five-year plan. But not all of that money has been spent and the Federal Highway Administration is now telling states they can’t use funds for new projects. However, funds that were already committed won’t be affected. The NEVI program was approved by Congress and it likely can’t be wiped away by a single memo from the Federal Highway Administration. So, this will probably come down to court battles, which will cause more delays in the EV charging infrastructure. 

TESLA ADDS $5,000 TO MODEL X PRICE
Tesla raised the price of the Model X in the U.S. by $5,000. The all-wheel drive version now costs $84,990 and the Plaid model now starts at $94,990. Tesla also raised the price of the Model S by $5,000 in December. The company didn’t reveal why it raised prices but we wonder if it’s because Tesla doesn’t feel like sales will be hurt by the price increase.

TESLA CHINA SALES DOWN IN JANUARY 
And in other Tesla news, sales of the automaker’s China-made vehicles fell 11.5% last month to just over 63,000 units compared to a year ago and they were down 32% from December. But that drop could be attributed to the Chinese New Year holiday in January, which also led to a drop in sales for other EV makers.

MAZDA’S NET PROFIT DROPS 45%
Mazda reported its results for the first nine months of its current fiscal year and sales were down in pretty much every major market in the world, but thanks to a strong surge in North America it was actually up overall. The company sold 966,000 vehicles worldwide, which was up by 4%. Those sales brought in just over $24 billion in revenue, up 3%. But due to increased material and logistics costs as well as higher incentive spending, Mazda’s operating income was down 26% and its net income dropped by 45%. The company plans to reel in those incentives for the rest of the fiscal year, which have averaged over $3,000 and that will also contribute to an overall goal of cutting more than $635 million in expenses. For the full year, Mazda expects to sell about 1.33 million vehicles worldwide, which would be an increase of about 7%.

PORSCHE ADDS MORE ICE CARS TO LINEUP
Porsche has been on a tear for nearly 30 years, but it’s stumbled badly when it comes to electric vehicles. Part of the problem is that it over invested in electric models that haven’t sold very well. The company’s profit margin of 10% is half of what it was just a few years ago, and its market cap has been cut in half to €50 billion. To try and turn things around it wants to get rid of its CFO and head of sales. It’s also going to spend €800 million this year to add more ICE and PHEV cars to its lineup. And the German media is speculating that Oliver Blume, who runs both Porsche and the Volkswagen Group, will probably have to give up his CEO position at Porsche to concentrate full time on trying to save VW.

LEAR TO LAY OFF 15,0000
But if you think automakers have it tough, you should see what’s going on in the supplier industry. Lear Corporation, the giant seat manufacturer, is going to lay off around 15,000 employees this year. Keep in mind that last year Lear laid off 15,000 people. It also closed 13 factories and will close another 5 this year. The problem is that new car sales are not growing in most markets around the world. And costs continue to rise. Lear also won major contracts for EV programs that were delayed or cancelled outright. So it’s going to invest heavily in automation and robots to make its plants more efficient. 

LINAMAR SELLS GIGACASTING FACTORY
Talk about betting big on EV programs that failed to happen, Linamar, the Canadian supplier is selling a factory it built last year to make gigacastings. The 300,000-square foot plant was going to have three giant casting machines to make large parts for an unknown EV program and it was supposed to start operating this month. Instead, Linamar has the plant up for sale, and it’s yet another casualty of EV investments that have failed to pay off.

ALPINE A110 MUSCLES UP
Ahead of the all-electric version that’s supposed to launch late this year, Alpine set out to create the ultimate road-going version of A110 and came up with this, the A110 R Ultime. Its chassis is made entirely from aluminum to save weight, it gets wider wheels and tires, the braking system was improved, aerodynamic tweaks added 160 kilograms or about 350 pounds of downforce, forged pistons and connecting rods as well as turbo optimization boosts engine output to 345 horsepower and it’s all fed through a new 6-speed DCT. The A110 R Ultime will do 0-100 km/h in 3.8 seconds and it laps the Nurburgring 20 seconds faster than the A110 R. But Alpine is only building 110 examples. 

But that brings us to the end of today’s show. Thanks for making Autoline a part of your day and I hope that you have a great weekend.