AD #4404 – GM Wants to Cut Development in Half; Tesla’s Profits Plummet in Q3; Truck Makers Pay For Price Fixing

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

TESLA’S PROFITS PLUMMET IN Q3
Tesla’s profits plummeted in the 3rd quarter, pushing the stock down more than 3% in pre-market trading. Tesla sold over 486,000 cars globally in the last three months, down 2% from a year ago. Revenue was flat at $28 billion, its operating profit dropped 56%, its net profit of only $787 million was down 43% and free cash flow dropped 62% to $1.5 billion. Part of the reason why profits were down is that Tesla boosted its R&D expenses nearly 70%, the cost of running its operations, or its SG&A, was up 29% and it also spent $4.7 billion on capital expenditures, up 110%. The company has a lot coming soon, with the Semi and Cybercab going into production, its energy storage business expanding and humanoid robots getting close to production. That should drive future growth that will keep investors happy. And the company has an impressively strong balance sheet. But there’s no hiding the fact that Tesla’s core automotive business has stalled out, and it needs those other businesses coming on line to maintain its growth story.

ELECTRIC VEHICLES DRIVE GROWTH IN EUROPE
New car sales in Europe were strong last month, mainly driven by sales of EVs, especially from Chinese automakers. Over 1.3 million vehicles were sold, up more than 10% compared to last year. EVs led the way, up almost 60%, with over 416,000 units sold. Buyers purchased 164,000 PHEVs, up 24%. And hybrids are still the largest segment, with 458,000 sold, up 5%. However, sales of gas and diesel cars fell 20% and 28%, respectively. Meanwhile, Chinese automakers are capturing most of the EV growth in Europe. They sold over 224,000 cars last month, capturing 16.4% of the market, which is up a massive 6.6 points of share in just one year. The EU wants to cap sales of Chinese hybrids by the end of the year, and no doubt Chinese automakers want to rack up as many sales before any restrictions take place.

TRUCK MAKERS PAYING FOR PRICE FIXING
Truckmakers Daimler Truck and MAN, which is owned by Volkswagen, have been ordered by a judge in Germany to reimburse customers who were overcharged in a price-fixing cartel, which ran between 1997 and 2009. Back in 2016, the companies, along with other truckmakers who were part of the scheme, agreed to pay EU regulators nearly €3 billion for fixing prices. Now, Daimler and MAN are facing civil claims, many of which have been consolidated with one plaintiff group alone filing for about €2 billion. And this new ruling is expected to become a benchmark across wider litigation.

GM WANTS TO CUT DEVELOPMENT IN HALF
General Motors says it wants to cut its vehicle development time in half. It currently takes GM 4-5 years to develop a vehicle, but it hopes to significantly slash that time by bringing design, engineering and manufacturing together at the start of the project so they can work together, rather than each team waiting for the other to finish its part of the program. GM is also leaning more heavily on AI and virtual testing. For example, it was able to test more than 300,000 different designs for its LMR or lithium manganese rich batteries in the virtual world, which allowed it to go from its first LMR battery pack concept to formal program approval in 1 month. The company is developing a new compute and electrical architecture as well that allows a vehicle to test its electrical connections as it moves down the assembly line, which eliminates the need for a final validation check. This architecture also cuts the amount of wiring by 30% and offers 40-times the processing power. It will debut in the Cadillac Escalade IQ in 2028, but gas-powered full-size SUVs and trucks, three-row crossovers and GM’s fourth-generation EV platform will feature it as well. That new platform will be the first to come with those LMR batteries as well as new e-motors and power electronics that use 40% fewer parts. Going back to Cadillac, the 2027 Lyriq will be the first to get the company’s new in-car AI assistant, which can be activated by saying “Hey OnStar” and will roll out via an OTA update before going to other GM models. That 2028 Escalade IQ will also be the first to launch hands-off and eyes-off autonomous driving on the highway, which will then scale to the rest of GM’s full-size SUVs and light-duty pickup trucks. When added altogether we think this is GM’s effort to operate faster, like the Chinese, while also competing with new technology. Similar to Ford’s skunkworks program.

GOOGLE ADDING AI ASSISTANT TO CARPLAY
Google is adding its Gemini AI voice assistant to Maps in Apple CarPlay, so iPhone users can ask more natural questions about a destination. It also allows users to ask follow up questions, like what’s the weather like at the location or if the venue is crowded. The feature is rolling out now in the U.S. and will soon be available globally as well.

AUDI MAKES LEADERSHIP CHANGES IN CHINA
Like most foreign automakers, Audi is struggling in China. It created a second brand called AUDI specifically for the Chinese market, the one with four letters and no rings, but so far it hasn’t been successful. So now the automaker is shaking up its leadership in the country. Audi’s current head of China is being replaced by a guy who was most recently the VP and CEO of Chinese automaker Chery. He previously worked at Audi China from 2018 to 2020 and he also held leadership positions at Stellantis in Europe and Nissan in both the U.S. and Japan. And Audi’s current head of Audi Sport is being named Chief Operating Officer of Audi China. Both men will also jointly lead the Audi China Board of Management.

             

We’ve been tracking the growing convergence between the auto industry and the military and that’s going to be one of the main topics on Autoline After Hours today. Our guest is Geoff Norman, the senior director of programs at General Dynamics Land Systems. We’ll be talking about what the military wants from the auto industry and how automakers and suppliers should go about getting that business. Breanna Noble from the Detroit News will also be on the show, so join John and Gary when it all goes live at 3 pm eastern.

But that’s a wrap for this show. Thanks for tuning in and I hope to see you later.