AD #4346 – Tesla Denies China Business Sale Plan Report; Zoox Wins Approval for Paid Robotaxi Rides; U.S. Lacks Key Battery Manufacturing Tech

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

TESLA DENIES RUMORED CHINA BUSINESS SALE PLAN
Would Tesla sell off its China operations to help facilitate a merger with SpaceX? The Wall Street Journal broke that story and it’s all over the media today. There’s been a lot of speculation that the two companies will merge, and the Journal reports that Tesla executives have been told to prepare for a potential separation of its China business to help make the merger possible. If that happens it would generate a lot of scrutiny, especially in China, because SpaceX is a major U.S. defense contractor involved in national defense and satellites. So, separating Tesla’s China business could help address any conflicts. However, Elon Musk denied the report, saying it has never discussed separating its China business and called it “absurdly fake news.”

ANALYST PREDICTS BIG STOCK RALLY FOR FORD
Ford’s stock is up 13% so far this year because investors are bullish about it entering the energy storage business. And while most investors are skeptical about Ford, one Citi analyst believes the automaker can continue its momentum. Ford’s stock closed at $14.83 yesterday and the average analyst price target is just below $16. But Citi analyst Michael Ward raised his price target for Ford to $20 a share. In addition to its energy business, Ward expects a 28% boost in F-Series production in the second-half will increase earnings. While Ward is bullish about Ford, only 28% of analysts tracked by Bloomberg rate the stock a buy.

TOYOTA CREATES NEW UNITS TO FAST-TRACK REFORMS
Toyota is the biggest and most profitable car company in the world. But its profits are slipping and the company is very bureaucratic and slow to move. So its new CEO, Kenta Kon, is pushing to get the company up to China speed. He’s forming two new units that will be focused on business reform, and they’ll report directly to the company’s top executives. One unit, called the BR Administration Reform Group with the BR standing for ‘business reform,’ will tackle administration policies. It will concentrate on how to speed up making decisions about what policies or programs to stop or change, and will use AI and other digital technologies to go faster. The other unit, called the BR Corporate Communication Reform Group, will work on getting more accurate and timely information about what’s going on inside the company to its stakeholders. Toyota has been under unprecedented shareholder pressure and at last month’s annual shareholder meeting Kenta Kon promised to get the company back on a sustainable growth path.    

 

CHINESE AUTOMAKERS CAPTURE 23% OF BRAZIL MARKET
Yesterday, we reported how Chinese automakers are starting to take over Australia’s car market. But that’s not the only country where they’re seeing big growth. According to Gasgoo, Chinese brands sold just under 50,000 vehicles in Brazil in June, which is up 10% from a year ago, accounting for 23% of the overall market. And BYD was fourth overall in sales among all brands. It sold more than 21,000 vehicles in June with three models cracking the top 10. However, that was half as many as Volkswagen, which was number one with more than 42,000 sales.

ZOOX WINS APPROVAL FOR PAID DRIVERLESS ROBOTAXI RIDES
Earlier this year U.S. regulators said they wanted to help streamline the process for deploying robotaxis, even those without a steering wheel and pedals. Yesterday Zoox announced that it’s the first company to receive an exemption from NHTSA allowing it to charge for rides in its robo-shuttle, which has no driver controls. Those paid rides start in Las Vegas next month and then will expand to California. Zoox says it’s also working with U.S. regulators to make official updates to the Federal Motor Vehicle Safety Standards for autonomous vehicles. 

MOMENTA GETS GERMANY APPROVAL FOR L4 TESTING
In another self-driving first, but across the Atlantic, in Germany, Momenta is the first Chinese company to get approval from the country’s Federal Motor Transport Authority to test Level 4 autonomous cars nationwide. We think Momenta’s partnerships with Mercedes, BMW and the Volkswagen Group helped pave the way for that approval. 

OVER 70% OF CHINESE CARS FEATURE ADAS
Most new vehicles in China now come with advanced driver assistance tech. So far this year just over 70% of new passenger models are equipped with L2 combined driver assistance systems and more than 34% feature Navigation on Autopilot or Navigation-based hands-free capabilities. Intelligent connected vehicles like these have now racked up over 220 million kilometers or nearly 137 million miles of testing in China. 

CHINA FACES SEVERE TALENT SHORTAGE FOR AV ENGINEERS
But the country risks losing its lead in autonomy. According to a report in Gasgoo, the supply demand ratio for autonomous driving engineers is just 0.38, meaning there’s less than 1 qualified person for every open position. Worse, even doubling the salaries is failing to lure in new AV engineers. And in the energy savings and EV sectors the talent gap is expected to reach 1 million people over the next 10 years. Experts say companies need to stop counting on finding new workers and start retraining the ones they’ve already got. 

 

RIVIAN NARROWED LOSSES DESPITE MASSIVE NEGATIVE CASH FLOW
Rivian posted its second quarter numbers and while it’s showing significant improvement, the company still has a long way to go. It sold 12,194 vehicles, up 14% from a year ago, but that was less than it sold in the third quarter last year. Its revenues jumped 14% to $1.6 billion, with half a billion of that coming from Volkswagen, which is buying part of Rivian’s tech stack for its cars. And Rivian really needs that revenue. It posted $849 million in negative cash flow, which was double what it was last year. And it posted a net loss of $837 million, but that was much better than the $1.1 billion it lost last year. Investors liked the overall improvements and the stock was up 3% on the news. 

EXPERT WARNS U.S. LACKS KEY BATTERY MANUFACTURING TECH
Yesterday, we had Bob Galyen on Autoline After Hours. We think he’s one of the foremost battery experts in the world, and the conversation turned to the biggest thing that is holding the U.S. back when it comes to making batteries.

Bob: “The biggest hurdle that we’ve got in this country right now isn’t the lack of technology, it’s a lack of manufacturing. We don’t know how to build the machines that build the batteries. And that is a tough thing to crack. So we really have to reestablish manufacturing competency in this country in order for us to have the ability to make batteries ourselves. Today we’re totally reliant on buying equipment from Japan, South Korea or China to build batteries in the United States.” 

John: “Do you see any progress being made in that regard?”

Bob: “Not a lot.”

Ouch! And Bob adds it would probably take a decade or two to build up that manufacturing know-how. And that’s if we start today. Look for Autoline After Hours 801 on our website or YouTube channel if you’d like to catch more of that discussion.

But that brings us to the end of today’s show. Thanks for tuning in and I hope that you have a great weekend.