AD #4024 – China Could Merge State-Owned Automakers; Hydrogen Truck Companies Going Bankrupt; Tesla’s Stock Shrugs Off Bad News

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

TESLA SALES CONTINUE EU DROP
It may be April Fool’s Day, but what’s happening to Tesla in Europe is no joke. Early reports show March is shaping up to be another disaster for the company. Sales in France were down nearly 37%, 65% in Denmark, almost 64% in Sweden and they were down 61% in the Netherlands. But not everywhere was terrible. Sales were only down 1% in Norway and they were actually up 2% in Portugal. Tesla’s Q1 numbers are likely going to look terrible, but we think to really evaluate what’s happening at the company we’re going to have to wait until the end of the second quarter to cancel out the effects of production downtime and change-over for the new Model Y.

TESLA STOCK SHRUGS OFF THE BAD NEWS
In the meantime, there may be a glimmer of hope for Tesla. Its stock price started to nosedive in the middle of December and plummeted 54% before bottoming out on March 10. But since then, it’s gained 16.6% despite all the news swirling around Elon Musk and the automaker’s declining sales. That’s a lot to shrug off, but it shows surprising underlying strength for the stock. Or, at least it does at this snapshot in time.

CHINA TO RESTRUCTURE ITS AUTO INDUSTRY
We could be at the start of the great shakeout in the Chinese auto industry. China has too many car companies making too many models, and the industry is swimming in overcapacity. So the government is going to do something about it. Bloomberg reports that the Chinese government could restructure all the state-owned automakers, which includes BAIC, Changan, Chery, Dongfeng, FAW, GAC, JAC and SAIC. Those efforts would involve a lot more integration between the companies, especially around core technologies, which is meant to make them more competitive. But the government also welcomes cooperation with private companies. Analysts believe this could lead to mergers between the automakers and maybe even clearing out a number of models and brands. It looks to us like the Chinese government is not waiting for the “magic hand” of the market to sort this all out. It wants to control the process of rationalizing the industry. But that could turn out to be very difficult. The state-owned automakers mainly exist to create jobs. And any effort to right-size the industry could eliminate tens of thousands of workers. So that could pit the national government against the provinces and big cities that own some of those automakers. And it will be fascinating to see how this gets resolved.

 

TOYOTA TO BUY LG BATTERIES FROM EX-GM PLANT
General Motors is backing out of its EV battery joint venture in Michigan with LG Energy Solution, which it announced it would do several months ago. LG will officially buy all the assets held by its Michigan EV battery joint-venture with General Motors for $2 billion. And you may remember that Toyota is riding to the rescue, agreeing to transfer its order for LG’s batteries to that Michigan plant. And GM isn’t exactly giving up on LG Energy either. The two of them still operate two other battery plants in Ohio and Tennessee.

STELLA STUMBLES ON HYBRID PRODUCTION IN EU
Stellantis is running into significant production delays in Europe as it switches from EVs to hybrids. Right now it simply can’t get hybrid parts fast enough. Suppliers can’t handle the sudden demand for more components, especially for electric dual-clutch transmissions and the right kinds of tires. The head of Stellantis’ European operations said it built 20,000 fewer vehicles in March because of the parts shortages. And as we reported yesterday, Toyota is facing a similar issue due to high demand for its hybrids around the world. Customers are waiting months for their vehicles in some cases because Toyota can’t get the parts to build them.

HYUNDAI’S WILD INSTEROID CONCEPT
Hyundai officially revealed that wild, video-game-inspired version of the Inster EV, called the Insteroid, that it first teased a week ago. The one-off concept will make its public debut at the Seoul Mobility Show in South Korea in two days and then tour other major events around the world. It’s meant to help boost customer interest in the Inster, which is expanding to new markets in Asia-Pacific, the Middle East, and Central and South America.

HYUNDAI VAN HINTS AT GM JV PROJECT
And speaking of Hyundai, the automaker is testing a new wheelchair accessible van in South Korea. Over the next five months users can take advantage of the on-demand service through an app, which sends one of Hyundai’s new purpose-built vans to their location. Called the R1, the vans are based on the automaker’s electric light commercial vehicle platform that it first showed off about a year ago. At that time it revealed the chassis-cab version with a cargo box on the back and since then Hyundai has formed a partnership to brand a version of that cargo van as eMoovy for IVECO. It’s also possible this is the platform that Hyundai and GM will use for their joint commercial van project.

CHEVY OFFERS MASSIVE DISCOUNT ON BRIGHTDROP VANS
Another possibility could be GM’s BrightDrop van, but it only sold about 1,500 units last year and there’s reports of models piling up in storage lots. And that’s even with massive deals. GM Authority points out that Chevy has been offering a $25,500 cash discount since the beginning of March, which goes until the end of June. Then throw in the $7,500 federal EV discount, plus a $3,000 incentive for Costco Auto members and it’s possible to get over $36,000 off a BrightDrop van, which would bring the starting price of all versions down to around $45,000.

HYDROGEN TRUCK COMPANIES GO BANKRUPT
They say that hydrogen fuel cells are the future, but that future is proving to be increasingly elusive. So far, virtually all the startups that tried to create a viable business around hydrogen trucks have gone bankrupt. Bloomberg reports that in the last six months, Nikola, Hyzon Motors, Quantron and Hyvia, have all gone under or ceased operations. The problem? They were unable to scale up and cover costs. Nikola for example lost more than $900,000 per truck sold. The lack of a hydrogen infrastructure and the high cost of hydrogen itself are a real problem. Even in China, which has massive subsidies for fuel cell trucks, sales are minimal. Last year, 3,900 medium and heavy-duty hydrogen trucks were sold in China compared to 75,000 battery-powered ones.

AUTOLINE POLL ON TREVOR MILTON
In yesterday’s poll we asked what you thought of President Trump’s pardon of Trevor Milton, the founder of Nikola who was convicted of securities and wire fraud and sentenced to four years in prison. 79% of you thought this reflected corruption in the Trump White House, likely since Trevor Milton donated $1.8 million to Trump’s re-election campaign. 3% of you said the pardon was completely justified, while 13% of you didn’t care one way or another. 4% of you said none of the above. Over 1,200 of you voted in the poll and you had a lot to say. We got some great feedback, including:
@jaybradford1311 who said, “I love your polls, but could I ask a favor? When you preview them on Autoline daily, please don’t show the current results. I think it skews results and I like the surprise of finding out the answer after I take the poll, not before.”

Jay, that’s how YouTube does polls, but we can show the poll on Autoline Daily without any responses that may have already come in.

@WilliamPozo didn’t like the poll at all. “Your poll is quite clearly politically motivated. You are also playing nasty politics evidenced with the options themselves.”

@danharold3087 said, “Your choices are too simplistic.”

And MERKUR DRIVER said, “I’m #3 on the Trevor Milton poll. I don’t care and it does not matter what happens to Trevor Milton. His CEO career is done for, as nobody in their right mind would ever hire him.”

We appreciate all of your comments, including the critiques, and we’ll use that feedback to make improvements.

And that brings us to the end of today’s report. Thanks for watching Autoline Daily