Intel Report: The Weekly Mobility News That Matters

BY AUTOMOTIVE VENTURES | FEB 19 2024 | VIEW ONLINE

What We're Reading

President Joe Biden has spent years implementing programs to fight climate change by advancing renewable energy and imposing tougher regulations on fossil fuels. Much of that work could go up in smoke if Donald Trump beats him at the polls in November. | Reuters ($)

In a concession to automakers and labor unions, the Biden administration intends to relax elements of one of its most ambitious strategies to combat climate change: limits on tailpipe emissions that are designed to get Americans to switch from gas-powered cars to electric vehicles. | The New York Times ($)

The Biden administration is considering restrictions on imports of Chinese “smart cars” and related components that would go beyond tariffs. The measures would apply to electric vehicles and parts originating from China, no matter where they’re finally assembled, to prevent Chinese makers from moving cars and components into American markets through third countries like Mexico. | Automotive News ($)

Chinese electric vehicle (EV) makers that enjoyed years of explosive growth now face a slowdown in domestic demand, spurring them to push overseas and challenge global auto giants already struggling with a transition to battery-powered cars. A deceleration in the China market has fueled a fierce price war embroiling dozens of EV startups and foreign players such as Tesla. Many Chinese EV makers burned through cash to chase a share of the growing market. Many are yet to turn a profit despite rising sales, leaving some at risk of going bust or needing injections of capital. Slower growth also leaves an industry geared up to make millions more cars than it can sell domestically in the next few years. China’s government has acknowledged overcapacity and underused factories, and is pushing automakers to expand overseas. Analysts say that trend could lead to oversupply at home and abroad. | The Wall Street Journal ($)

Mexico is on the verge of becoming a key manufacturing hub for major EV makers, and BYD is considering setting up a plant there as the automaker seeks to establish an export hub to the U.S. The biggest advantage from locating capacity in Mexico involves lower export costs into the U.S. | NIKKEI Asia ($)

Chinese automaker BYD has set its sights on Mexico as its quest for global expansion turns toward North America. The Shenzhen-based car company, whose rapid growth has made it one of the world’s largest electric-vehicle sellers, is scouting locations in the country for a factory, from which it would consider exporting cars to the U.S. | The Wall Street Journal ($)

BYD passed Tesla in worldwide sales of fully electric cars late last year. BYD’s sales, over 80 percent of them in China, have grown by about a million cars in each of the past two years. The last automaker to accomplish that in even one year in the American market was General Motors — and that was in 1946, after GM had suspended passenger car sales during the four preceding years because of World War II. | The New York Times ($)

Several U.S. auto retailers reported dour fourth-quarter profits as price cuts and incentives to lure in buyers in a turbulent economy put a strain on new-vehicle margins. Higher vehicle production, which has eased supply, has also trimmed dealer margins. | Reuters ($)

Global electric vehicle sales jumped 69% in January from a year earlier but were down 26% from December, reflecting subsidy cuts or tighter rules in Germany and France and seasonally weaker sales in China. | Reuters ($)

As recently as a year ago, automakers were struggling to meet the hot demand for electric vehicles. In a span of months, though, the dynamic flipped, leaving them hitting the brakes on what for many had been an all-out push toward an electric transformation. A confluence of factors had led many auto executives to see the potential for a dramatic societal shift to electric cars: government regulations, corporate climate goals, the rise of Chinese EV makers, and Tesla’s stock valuation, which, at roughly $600 billion, still towers over the legacy car companies. But the push overlooked an important constituency: consumer demand. | The Wall Street Journal ($)

For the first time in more than a decade, California electric vehicle (EV) sales dropped significantly in the last half of 2023. It’s unclear whether the declines are a mere blip or the beginning of a downward trend, but the news is already raising questions about California’s ability to meet its ambitious climate goals, including a pledge to ban the sale of new gasoline- and diesel-powered cars and light trucks by 2035. | Los Angeles Times ($)

Cox Automotive reports that for many EV models, incentives have jumped more than three-fold in the past year. | Cox Automotive

According to Experian Automotive, there were only 220,700 used electric vehicle (EV) sales in the U.S. last year. | Automotive News ($)

Ford sees low-cost Chinese electric vehicles as a “colossal strategic threat” that will ultimately arrive on US shores, adding to the challenges for an automaker already confronting shaky consumer demand for plug-in cars. | Bloomberg ($)

The CEOs of Ford and GM would consider partnerships to cut electric vehicle technology costs as Chinese rivals move into the U.S. and European markets. | Reuters ($)

Suddenly faced with a new era of uncertainty as automakers switch up their EV plans, ZF Group, the world's third-largest by annual sales to automakers, intends to make its manufacturing sites more flexible, able to easily and quickly shift production between internal combustion engine vehicle parts and components for EVs or hybrids. | Automotive News ($)

Stellantis, with 61 billion euros in liquidity and strong cash flows, will keep "eyes open" for potential acquisitions and merger opportunities, the automaker's chief financial officer said. "We intend to be one of the consolidators." | Reuters ($)

A joint venture set up by Sony and Honda will introduce three electric vehicles by the second half of this decade. | Automotive News ($)

Ford Motor Company's Ford Pro division is made up of the automaker’s traditional fleet and commercial businesses as well as emerging telematics, logistics and other connective operations for business customers – ranging from local plumbers and electricians to massive corporations. It also includes parts and services for businesses. Ford expects the Pro unit’s pretax earnings to increase to between $8 billion and $9 billion this year. That compares with earnings expectations for the company’s “Blue” traditional business of about $7 billion to $7.5 billion and projected losses in its Model e EV business of $5 billion to $5.5 billion. | CNBC

Public EV chargers are becoming more reliable, but charger availability is worsening, according to new J.D. Power data. 18% of public charging attempts failed in the fourth quarter. That's a three-point improvement from the previous nine months. Charging station outages and malfunctions remain the biggest pain points, comprising 71% of failed visits in the quarter. But lack of charger availability or long wait times made up a growing percentage of problems. They represent 20% of failed charging attempts, up from 10% in the fourth quarter of 2021. | Automotive News ($)

Stellantis, the parent company to Chrysler, Jeep, Ram, and Dodge, said it will adopt Tesla’s NACS electric vehicle charging plug for its future EVs — becoming the last major car company to do so. | The Verge

A handy infographic from Richard Smith tracking which automakers have adopted the Tesla NACS EV charger standard. | @_Richard_Smith7

CoMotion documents five obstacles facing the Mobility space. | CoMotion News

The cost of car ownership continues to skyrocket. Car insurance premiums rose 20.6% in January from a year earlier. A trip to the mechanic, the price of a parking space, and highway tolls are also up, offsetting the savings from one of the big exceptions, falling gas prices. In the fourth quarter of last year, 7.7% of auto loans transitioned to delinquency on an annualized basis, the highest rate in 13 years. The total annual cost of owning a new car, including expenses such as gas and insurance, climbed to $12,182 in 2023, up from $10,728 in 2022, according to the latest estimates from AAA. | The Wall Street Journal ($)

The double trouble of slowing EV demand and shaky AI credentials make it hard for investors to swallow Tesla’s sky-high valuation. Even with this year’s selloff, the stock trades at over 60 times forward earnings. The second-most expensive Magnificent Seven stock is NVIDIA at around 36 times forward earnings, while the rest trade between the low twenties and low thirties. | Bloomberg ($)

39% of BEV owners said they had to replace their tires at least once in the past 12 months, compared to just 20% of gas car owners admitting the same. EVs are also generally heavier than gas cars due to hefty batteries that demand higher tire weight ratings. The instant torque from the electric motors, a trademark feature of EVs that many enthusiasts love, also leads to more tire wear. | Inside EVs

It looks like the first Tesla CyberTruck has been resold for $249,999. In the Cybertruck’s order agreement terms, Tesla states: “You understand and acknowledge that the Cybertruck will first be released in limited quantity. You agree that you will not sell or otherwise attempt to sell the Vehicle within the first year following your Vehicle’s delivery date.” The company goes on to list the penalty of up to $50,000 if the purchaser of the new Cybertruck is in breach of the resale terms. | The Driven

The Tesla Cybertruck has a stainless steel body. The biggest drawback? It has a massive surface of bare metal fully exposed to the elements, creating a unique rusting risk. At least two Cybertruck owners have already reported rusting issues on an enthusiast forum. | Road & Track

Shell has shut down almost all of its hydrogen fueling station network for light-duty vehicles in California. The closed Shell stations accounted for seven of the 59 public hydrogen fueling stations in the United States, about 12%. Their closures may hinder broader efforts to make hydrogen fuel cells an alternative and complement to battery electric vehicles. | Automotive News ($)

Why did predictions of getting to full autonomy fail? The technology, while incredibly effective at getting us most of the way there, stumbled as it got closer to the finish line. In the AV world, this is called the “long tail of 9s.” It’s the idea that you can get a vehicle that is 99.9 percent as good as a human driver, but you never actually get to 100 percent. | The Verge

Self-driving car company Waymo issued its first-ever recall over a software issue after two of its cars in Phoenix collided with a pickup truck being towed backward. | The Wall Street Journal ($)

GM CEO Mary Barra said that the automaker was looking at the best path to unlock value at its self-driving unit Cruise. Cruise is an "incredibly valuable asset", Barra said. Barra's comments come one month after GM said it would cut spending by about $1 billion at the money-losing robotaxi unit in 2024. It had said earlier in December that it would slash 24% of its workforce at Cruise. | Reuters ($)

Bologna, Italy became the first major Italian city to impose a speed limit of 30 kilometers (20 miles) an hour. Bologna is the first major Italian city to join a growing group of municipalities, including Amsterdam; Bilbao, Spain; Brussels; and Lyon, France, that have lowered speed limits from 50 kilometers per hour (about 30 miles per hour) in the belief that the change will lead to safer, healthier and more livable cities. | The New York Times ($)

Rising electricity use, the digitization of the economy and the complete overhaul of grids taking place across the country amid the energy transition are stressing the electric system to an extreme, making it harder to control power quality and ensure its reliability. Volatile weather also adds to the pressure. And because of a lack of large-scale energy storage, the supply being pumped out of power plants has to be kept in balance with households and businesses every minute of the day. | Bloomberg ($)

For decades, the U.S. has built and expanded a 220,000-mile network of state and interstate highways, easing cross-country travel while dividing cities and boosting suburban sprawl. Even now, with many of the nation’s highways in disrepair, about 20 to 30 percent of all public highway spending goes to expansion, rather than programs to fix and repair existing roads. | The Washington Post ($)

The Boston City Council is considering a proposal to reduce traffic and raise money for underserved communities by making drivers pay ‘congestion pricing’ when coming into the city. Other states, including New York and New Jersey are looking into enacting congestion pricing. | 7 News Boston

The French government has suspended an electric car leasing scheme after only six weeks following a surge in demand that more than doubled the number of vehicles required. Officials said the scheme, launched in December to help low-income households and cut carbon emissions, would be relaunched next year. Originally, 25,000 European-built electric cars were to be offered to lease from €100 (£85) a month, but this was doubled after massive demand. The government said it had received more than 90,000 applications by the end of January. | The Guardian

Sam Altman from OpenAI is in talks with investors including the United Arab Emirates government to raise funds for a wildly ambitious tech initiative that would boost the world’s chip-building capacity and expand its ability to power AI. The project could require raising as much as $5 trillion to $7 trillion. The fundraising plans, which face significant obstacles, are aimed at solving constraints to OpenAI’s growth, including the scarcity of the pricey AI chips required to train large language models behind AI systems such as ChatGPT. | The Wall Street Journal ($)

Dumping chemicals in the ocean? Spraying saltwater into clouds? Injecting reflective particles into the sky? Scientists are resorting to once unthinkable techniques to cool the planet because global efforts to check greenhouse gas emissions are failing. These geoengineering approaches were once considered taboo by scientists and regulators who feared that tinkering with the environment could have unintended consequences, but now researchers are receiving taxpayer funds and private investments to get out of the lab and test these methods outdoors. | The Wall Street Journal ($)

Until recently, tech workers have bristled at applying the fast and nimble start-up ethos to fashion deadly weapons. When Google signed a Pentagon contract to develop AI to target drone strikes, thousands petitioned its CEO in 2018 to cancel it. Such protests spread during the Trump administration, with workers railing against plans to sell augmented-reality headsets to U.S. troops and facial recognition tools to immigration officials at the Southern border. But after a decade of pushing a utopian vision of the future, tech’s most optimistic pitch is a return to America’s past. Connecting the world is out. Rearming the arsenal of democracy is in. | The Washington Post ($)

China’s shipyards are ready for a protracted war. America’s aren’t. While Chinese shipyards are thriving and primed to build at wartime rates, U.S. shipbuilding is in disarray. | The Wall Street Journal ($)

UP.Partners' The Moving World Report 2024 is out, and it's a must-read for anyone in the Mobility space. | UP.Partners

Have a great week,
Steve Greenfield

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Notable & New

On this week's "Future of Automotive" segment on CBT News, we discuss how Tesla continues to realize billions of dollars in regulatory credit revenue from competitor automakers. | CBT News ($)

Thanks to EarlyNode for interviewing Bhaskar Deol, co-founder of Automotive Ventures portfolio company eDRV. | EarlyNode

What is the difference between the health and life of an EV battery? C.J. Moore interviews Scott Case from Automotive Ventures portfolio company Recurrent to find out. | Automotive News ($)

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