AD #4340 – Tesla Burns Through Cash; Ford & Geely Partner in Europe; U.S. Likely to Modify Bill That Would Ban Mercedes

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TESLA BURNS THROUGH CASH
Tesla reported its Q2 results and it sold more cars, which brought in more money, but it also continues to burn through that cash. The EV maker delivered a little over 480,000 vehicles in the second quarter, a jump of 25%. That pushed revenue up 26% to $28 billion. But Tesla is spending a lot of that money on AI, robotics and autonomy, which impacted its bottom line. Its Q2 net income fell 5% to $1.1 billion. Tesla is also seeing far less income from other automakers buying emission credits now that most fines for missing targets have rolled back or paused. Revenue from credits was $146 million, down 67% from the second quarter of last year and even far behind the $380 million it made in Q1.

HYUNDAI’S EARNINGS IMPACTED BY HIGHER COSTS
Hyundai also reported its second quarter earnings. The automaker sold more than 990,000 vehicles in Q2, down nearly 7% from last year. While its revenue was up 2% to $33 billion, its operating profit of $1.9 billion was a drop of 21% and its net profit slid 11% to $2 billion. Hyundai says its profits were impacted by supplier disruptions, higher raw material costs and intensifying global competition. Despite its struggles, Hyundai says it’s sticking to its annual targets and expects an operating margin between 6.3 and 7.3% and annual sales of 4.1 million vehicles.

EVs DRIVE SALES GROWTH IN EUROPE
Car sales in Europe were strong in June thanks to electrified vehicles. According to the European Automobile Manufacturers’ Association, automakers sold more than 1.4 million vehicles across the region last month, which was up 13% compared to a year ago. That’s the largest year-over-year gain in Europe since 2023. Battery electric vehicles soared 51%, plug-in hybrid sales jumped about 23% and hybrids were up 17%. Electrified vehicles accounted for 71% of sales in June, with BEVs alone accounting for 25% of the market. Meanwhile, sales of gas-powered cars dropped 12% and diesels tumbled by 17%. Overall, sales are going well so far this year in Europe. Automakers have sold more than 7.2 million vehicles in the first six months of the year, which is up 6% from a year ago.

FORD & GEELY PARTNER IN EUROPE
In February we started seeing reports about a possible tie-up between Ford and Geely in Spain and now the two automakers have made it official. They’re forming a manufacturing joint venture in which Ford will own 66% and Geely the remaining 34%. It will require retooling Ford’s Valencia plant, which currently only builds the Kuga, so it can make models for both automakers. The Kuga, which is Europe’s version of the Escape, will continue to roll down the line, but the facility will also start building a new version of the Bronco, a new multi-energy Ford crossover that’s based on a Geely platform and two electric SUVs from Geely. All the models go into production in 2028 and will be sold across Europe. Before this move the Valencia plant was in trouble. It was tooled to make 400,000 vehicles a year, but sales of the Kuga have dropped below 100,000 units. However, now it can retain jobs and the upgrades will allow the companies to use more of the plant, with the potential to make 500,000 vehicles a year.

U.S. LIKELY TO MODIFY BILL THAT WOULD BAN MERCEDES
Here’s a followup to Tuesday’s report on Mercedes. A panel in the U.S. Senate did vote to send a bill to the full Senate floor that would ban the sale of connected vehicles by automakers that are more than 15% owned by Chinese entities. That’s bad news for Mercedes because it meets that threshold since BAIC owns 10% of the company and Geely chairman Li Shufu also has 10% stake. If the bill passes as is, Mercedes would have until 2030 to come under compliance. But the good news for Mercedes is, the legislation will likely be modified before it becomes law. Senator Ted Cruz, criticized the 15% rule and called for more qualitative assessments of national security risks. And Senator Bernie Moreno said companies can seek a waiver if they don’t meet the bill’s requirements. So, it looks like Mercedes can breathe a sigh of relief.

CHINA’S SEES 7 NEW REVEALS IN 1 DAY
We recently reported how the Chinese market has seen 650 new and refreshed models launched so far this year, which works out to 4 a day. But that’s just the average. Gasgoo reports that in a span of two and a half hours 7 new models were revealed last Thursday. Li Auto, XPENG, IM, Wuling, Leapmotor, and WEY all introduced new vehicles, ranging in price from about $13,000 to $51,500. However, this isn’t really a sign of a healthy market. New car sales are down 20% so far this year in China. Right now massive amounts of exports are propping the industry up, but China could be in a real crisis if anything slows those exports down.

 

NISSAN LAUNCHES NISMO LEAF
Nissan launched a Nismo version of the Leaf in Japan. It has the same batteries and motors as the standard version. Either a 52-kWh battery with a 130-kW motor or a 75-kWh battery with a 160-kW motor. While the total outputs are the same, the Nismo version’s initial acceleration is about 20% stronger and it sustains acceleration longer at higher speeds. In addition to that, the model gets an upgraded suspension with dedicated springs, as well as stabilizers and bushings to improve rigidity and steering response. Pricing starts at $40,600 in Japan, which is about $6,000 more than a standard Leaf. Nissan also plans to sell the model in the U.S. and Europe but it didn’t say when it will launch in those markets.

And before we go, just a reminder to tune into Autoline After Hours today at 3PM EST. That’s a wrap for this show. Thanks for tuning in.