Automotive Ventures Weekly Intel Report | Apr 8 2024
Intel Report: The Weekly Mobility News That Matters
BY AUTOMOTIVE VENTURES | APR 8 2024 | VIEW ONLINE
The Automotive News 2024 Top 150 Dealership Groups is available. | Automotive News
What We're Reading
Automotive
You know the market has slowed down when we need dealer-facing "stair step" incentives to help move the best-selling vehicle in the U.S. (the Ford F-150 pickup truck). | Automotive News ($)
Budget cars and compact SUVs made eye-popping share gains in the first quarter, with sedan growth matching SUVs at Toyota. Large pickup trucks – one of the industry’s priciest segments – lost ground in January and February. Several brands, including Jeep, Tesla and Ford Motor Company, reduced prices to win back inflation-weary consumers and spur demand in the sluggish electric vehicle market. | Bloomberg ($)
Toyota and Lexus dealers captured 29% of the industry’s total new car gross margin in February, despite their combined dealer network representing only 9% of the nation’s dealerships. This math helps explain why the average Lexus dealer blue sky valuation from Haig Partners is 8-10x earnings, and Toyota’s is 7-8x earnings, both best in class for luxury and non-luxury franchises. | Cox Automotive
BYD, China's biggest electric vehicle maker, reported first-quarter sales fell 43% compared with the fourth quarter of 2023, handing back the title of the world's biggest EV seller to Tesla after winning it last year. | Automotive News ($)
BYD and Tesla, the world’s top two electric vehicle makers, have a lot in common these days—except in terms of market value, where the U.S. company is roughly seven times as big. It takes a lot of faith in Tesla Chief Executive Elon Musk’s promise of autonomy to rationalize the difference. | The Wall Street Journal ($)
After a period of rapid expansion, Tesla has seen its sales fall and its once-enviable margins shrink. For the first time in years, the biggest question for Tesla is not whether it will be able to make enough cars, but whether people will buy them. The company’s stock, down 34% this year, has been the worst performer in the S&P 500 index. While Tesla remains the world’s most valuable automaker by a wide margin, its market capitalization has tumbled by more than half since it peaked in 2021. Consumer appetite for electric vehicles is cooling. The core of Tesla’s lineup is dated. The company has been cutting prices to spur demand. Big, moonshot bets have not panned out as Musk predicted—at least not yet. And Chinese carmakers are now the ones that look like nimble, tech-savvy upstarts. | The Wall Street Journal ($)
Tesla has canceled the long-promised inexpensive car that investors have been counting on to drive its growth into a mass-market automaker. The decision represents an abandonment of a longstanding goal that Tesla CEO Elon Musk has often characterized as its primary mission: affordable electric cars for the masses. | Automotive News ($)
Elon Musk denied a report saying the carmaker had called off plans for a less-expensive vehicle. “Reuters is lying,” Musk wrote on X, without offering specifics. | Bloomberg ($)
Tesla reported first-quarter global deliveries of 386,810 for an 8.5% decrease from the same period last year, as the automaker faced fierce competition and softening electric vehicle demand in major markets, including the U.S. | Automotive News ($)
Tesla delivered just 386,810 vehicles in the first three months of the year, missing Bloomberg’s average estimate by the biggest margin ever in data going back seven years. Tesla’s shares fell 4.9%, extending their 2024 slide to 33%, the second-worst showing in the S&P 500 Index. | Bloomberg ($)
The ranks of would-be Tesla buyers in the U.S. are shrinking, according to a survey by market intelligence firm Caliber, which attributed the drop in part to CEO Elon Musk's polarizing persona. Caliber's "consideration score" for Tesla fell to 31% in February, less than half its high of 70% in November 2021 when it started tracking consumer interest in the brand. | Reuters ($)
It might be hard to remember, but Tesla was supposed to become the market. The Cybertruck maker as recently as 2022 anticipated 50% annual growth in auto sales until reaching 20 million, twice as many as world-leader Toyota. Those days are over, evidenced by recent sales figures along with broader industry trends and Elon Musk’s behavior. | Reuters ($)
According to stock analyst David Kuo, EVs are analogous to other consumer electronics like laptops and cell phones in that they tend to lose value and relevance quickly after being sold. Kuo further argued that the software and computing capabilities of used EVs may become outdated and incompatible with updates by the time they are sold or even beforehand. | CNBC
Two Wall Street veterans bought 100,000 Teslas to turn around Hertz. Their timing couldn’t have been worse. Here’s the story on how hubris doomed a massive gamble on EVs. | Bloomberg ($)
Global Data Service Organisation for Tyres and Automotive components (GDSO) has developed a platform to allow tire data sharing that starts from a serialized tire’s identity —using RFID or other technologies that allow the identification of every single tire produced around the world. | Digital Dealer
There is a phenomenon producing simmering rage among drivers across the nation, on dark country roads, busy city streets and state highways: Car headlights have gotten too bright. The number of cars with LED headlights has been steadily rising in recent years and with it, frustration among drivers. In 2020, 54% of new cars in the U.S. had LED lights. By 2023, it had grown to 76%. | The Wall Street Journal ($)
Connectivity
In an era where each new EV model contains proprietary software, company failure and insolvency have grave implications for vehicle functionality. Gone are the days of mechanics swapping carburetors and other parts between brands and relying on aftermarket providers. The age of the increasingly software-defined vehicle leaves software updates and patches out of reach for third parties, and automotive manufacturers that no longer exist cannot be compelled to fix software issues that are critical for safety, even if NHTSA issues a recall, experts say. Many new vehicles, including electric ones, employ software to control all or most of their operations, including managing the powertrain, powering infotainment and underpinning advanced driver-assist functions. | Automotive News ($)
️Electrification
When the automotive industry started looking toward an electrified future, Detroit automakers decided to throw their hat in the ring with what they do best: pickup trucks. The first entrants to the electric pickup market enjoyed some early success, particularly in the Ford F-150 Lightning. But sudden changes to the electric-car-shopper demographic mean that for the second time in the past 20 years, Detroit finds itself selling big, expensive cars nobody really wants. Behemoths like the GMC Hummer EV and Lightning, with price tags that can reach six figures, aren't resonating with EV shoppers who prioritize value and practicality. | Business Insider
By the end of last year, 31 countries had surpassed what’s become a pivotal EV tipping point: when 5% of new car sales are purely electric. This threshold signals the start of mass adoption, after which technological preferences rapidly flip. | Bloomberg ($)
EV sales have slowed in the U.S., with the time it takes for a car to sell once it lands on a dealer’s lot having gone from 25 days at the beginning of 2023 to 72 days just over a year later. That metric, called “days to turn,” is a good measure of popularity. The nearly threefold jump in days to turn for EVs is a stratospheric rise, and it doesn’t match trends for other vehicle categories. | CNBC
Ford announced that the company will delay the release of two highly anticipated electric vehicles: their next-generation electric pickup and its as yet unnamed three-row SUV, originally slated for 2025, are now expected to reach customers in 2026 and 2027, respectively. Ford also announced a new commitment to hybridizing its lineup, with hybrid options for each of its models by 2030. | The Drive
The number of vehicles that can go 300 miles or more on a charge, which many consider the bar for U.S. range convenience, jumped to 30 models at the beginning of 2024, a 500% increase in three years. A dozen more are set to go on sale later in the year. | Bloomberg ($)
Despite billions of dollars of investment, fuel cell cars in the US are disappearing in the rearview mirror, overtaken by battery-electric models (BEVs) and stalled by hydrogen shortages and soaring fuel prices. Last year, drivers bought just 3,143 hydrogen cars in California — the only state that sells them — compared with 380,000 BEVs. | Bloomberg ($)
In the three years since New York City began installing curbside chargers for electric cars, demand for the spaces has boomed — both from EV owners looking for a place to plug in and from gas-engine drivers willing to risk a ticket in exchange for street parking. The 100 chargers are online 99.9% of the time with an average utilization rate of 72% in 2024. That’s an impressive feat, especially since vehicles with internal-combustion engines blocked access to the chargers 20% of the time during the program’s first 18 months. | Bloomberg ($)
The Volta Foundation has released its 2023 Annual Battery Report. This is a "must-read" for anyone in the mobility or broader clean-tech space as a resource on battery technology. | Volta Foundation
In China, The International Council on Clean Transportation found the total cost of ownership (TCO) for battery electric trucks to be 35% less than for diesel trucks. The combination of lower energy prices, lower maintenance costs, purchase subsidies, and tax exemptions led to the better cost performance. | The International Council on Clean Transportation
The European Commission found that for plug-in hybrid electric vehicles (PHEVs), real-world CO2 emissions were on average 3.5 times higher than the laboratory values, which confirms that these vehicles are currently not realizing their potential, largely because they are not being charged and driven fully electrically as frequently as assumed. | European Commission
Climate
Infusing clouds with sulfur dioxide to block the sun. Vacuuming carbon dioxide out of thin air. Adding iron to the ocean to draw greenhouse gases down to the sea floor. As recently as a few years ago, technologies designed to change Earth’s atmosphere — what is broadly known as geoengineering — were considered too impractical, too expensive and too outlandish to be taken seriously. | The New York Times ($)
Rail
Federal officials are planning to impose a mandate that freight railroads operate trains with two-person crews, adopting a policy that railroads have opposed and Congress failed to legislate. | The Wall Street Journal ($)
Micromobility
In Ho Chi Minh City, Vietnam’s most populous city, power outages are quite common. They’re often scheduled or announced ahead of time, but power outages do occur on a weekly basis, in various parts of the city. There’s an active and enterprising community of e-scooter users who are trying to offer a mobile solution to this problem – with the big batteries they carry around in their bikes. | Electrek
Autonomy
In 2023, the Texas Department of Transportation announced it would partner with a company called Cavnue to pilot the country’s first autonomous freight corridor on a stretch of SH 130 north of Austin. Cavnue intends to add sensors alongside the roadway to collect data on road conditions and, eventually, communicate with connected vehicles — cars and trucks that can “talk” to the highway as they speed down it. The ultimate goal? The more information that drivers — computers or humans — have about the road ahead, the safer and more efficient that road will be. | Bloomberg ($)
️Marine
Maritime shipping emits roughly 1 billion tons of carbon dioxide each year, more than Germany, France and Ireland combined. The industry is responsible for about 10% of transportation-related emissions, and as global trade grows, that climate toll is expected to grow with it. The International Maritime Organization is calling on vessel operators to zero out emissions by 2050 and is even considering implementing the first global, mandatory charge on greenhouse gas emissions. Are underwater robots the answer? A growing army of machines is improving ships’ fuel efficiency by scraping algae, seaweed and barnacles off their hulls. | Bloomberg ($)
Aviation
The Biden administration is looking to the skies for government revenue, scrutinizing corporate jets as it tries to get big companies to pay more in taxes and to crack down on rich tax evaders. Treasury Secretary Janet L. Yellen praised the Internal Revenue Service for embarking on a “new initiative to end abuse of corporate jet write-offs.” | The New York Times ($)
Car of the Week
We have a new "Car of the Week": a 1977 Tyrrell P34 Formula 1 Car. | The Drive
Have a great week,
Steve Greenfield
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Notable & New
Steve is excited to be the opening keynote speaker at the Autonomous e-Mobility Forum in Doha, Qatar next month. | Autonomous e-Mobility Forum
Jim Roche from Automotive Ventures portfolio company WarrCloud: "The rise of EVs translates to a surge in demand for repairs and maintenance within dealership service departments. While EVs boast fewer moving parts compared to internal-combustion-engine vehicles, the complexity and cost of these components can be substantial." | Wards Auto
Automotive Ventures portfolio company Recurrent has released its latest Market Report. | Recurrent
Steve can't wait for the rematch with Scott Case from Recurrent. | Auto Intel Summit
On this week's Future of Automotive segment on CBT News, we report on auto dealership profit margins coming down from their COVID-19 highs. | CBT News ($)
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Companies to Watch
Botdoc provides the first ever easy, remote, real-time, digital, secure file transport service that works via text messaging and email with end-to-end encryption. | Botdoc
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