shinymetalboxes

Cars, culture & contingent considerations

Speed of Change in the Global Industry: Blink and You May Miss It

Posted on July 31, 2023 by shinymetalboxes

By Gary S. Vasilash

The first thing to acknowledge is that the auto industry today is characterized by various forms of partnerships and alliances, whether they are codified like the Renault Nissan Mitsubishi Alliance or looser-but-still actionable work being done on things from entire vehicles to propulsion systems by General Motors and Honda.

Last week Volkswagen brand and XPENG and Audi and SAIC announced that there will be “strategic co-operations” for, initially, products for China that will carry the badges of the German companies, with XPENG supporting VW and SAIC Audi.

The cooperation isn’t particularly surprising. That’s just happening.

What is:

VW will build electric vehicles on an XPENG platform. Yes, there is still the VW MEB platform. But somehow it seems that’s not getting it done in China.

Audi will work with SAIC on developing electric vehicles for the China market in categories that it currently doesn’t have offerings. You’d imagine that the people in Ingolstadt would be up to the challenge, but evidently there is something that needs to be supplemented.

It wasn’t all that long ago that Chinese OEMs had partnerships with Western OEMs with the latter having the engineering and development chops and the former the production resources.

In the current case, it seems that the Chinese companies have the tech and know-how being sought by the German brands. And undoubtedly the production facilities to build the vehicles to be developed, too.

Things are moving far more rapidly than might have been expected even 10 years ago.

GM Making Money—Thanks to Trucks

Posted on July 25, 2023 by shinymetalboxes

By Gary S. Vasilash

General Motors reported exceedingly good earnings for Q2: non-adjusted net income attributed to stockholders of $2.57 billion. It was $1.69 billion last year.

The company thinks it will make a lot more this year than it previously expected:

$9.3 billion to $10.7 billion is the new target
$8.4 billion to $9.9 billion was the previous target

Getting Deluxe for Bucks

A big part of this: full-size truck and SUV sales, especially the high-trim trucks.

At GMC 70% of Sierra HD trucks were lux. Some 50% of Sierra light-duty trucks were. And 74% of Canyons were loaded.
At Chevy, about 75% were top trim models.

Nine Chevy SUVs—One Economical

Of course, GM points out that the Chevy Trax, an “affordable SUV” (starts at $20,400) had an increase in sales of 115%. (Last year it sold a total of 26,597 Trax models so if the sales were to double this year compared to last, it would still be fewer than Blazer 2022 sales, 67,246.)

Where’s the Money Going?

And regarding trucks, GM noted it is investing to “strengthen our industry-leading full-size truck and SUV business.”

With:

$1-billion invested in a plant in Flint, Michigan for next-gen heavy-duty trucks
$0.5-billion in Arlington, Texas for next-gen full-size SUVs
$0.6-billion for next-gen light-duty trucks

Maybe not the crazy money being thrown at electric vehicles, but clearly there are plans in place for next-gen trucks and SUVs that will continue to haul in the money.

EV Issues

As for EVs, the company built 50,000 in the first half and plans to build 100,000 in the second.

What’s interesting is that in Q2 it sold 15,700 EVs, which is down from the 20,700 it sold in Q1 ’23 and the 16,300 it sold in Q4 2022.

Clearly, not the right direction.

In terms of EV sales, the Chevy Bolt has been making the biggest difference. Through the first half there were 33,659 sold.

The Bolt Will Be Back

However, GM had announced that the Bolt, which doesn’t use the company’s Ultium battery technology, was going out of production. . .until today, when it announced there will be the development of a new Bolt, that will use the battery tech.

GM chair and CEO Mary Barra said, “Our customer’s love today’s Bolt. It has been delivering record sales and some of the highest customer satisfaction and loyalty scores in the industry.”

Starting at $26,500, it is also one of the most cost-competitive EVs in the market, which undoubtedly accounts for more than a slight amount of that popularity.

As long as GM can keep the price low, the Bolt should continue to do well.

If GM ups the price significantly, then its EV sales numbers will grow, but at an anemic pace.

Tesla & Scale

Posted on July 20, 2023 by shinymetalboxes

By Gary S. Vasilash

During yesterday’s Telsa Q2 earnings call, there was, not surprisingly, a whole lot of discussion of COGS, or cost-of-goods-sold. (There was seemingly an equal amount of time talking about the Dojo supercomputer that the company has built and is using in its pursuit of full self-driving vehicles, including its, in Elon Musk’s words, “our sort of future robotaxi products,” which essentially got no attention.)

Anyway, the issue for the investors is to make sure that costs are at the least kept under control, if not cut, so that there will be more goods sold.

(And on the subject of “more,” Musk, understandably proudly, noted at the top of his comments “Model Y because the bestselling vehicle of any kind globally in Q1, surpassing the likes of Corolla and Golf. So, it was the number one vehicle of any kind, including vehicles that are sold at a far lower price.”)

Karn Budhiraj, vp of Supply Chain at Tesla, made an interesting comment that was essentially overwhelmed by the other observations made by Musk and his colleagues:

“And there’s also the unit economics improve as volumes grow. That’s the other thing we’re seeing. As we’re becoming a bigger and better part of a lot of suppliers, the economies of scale come into play.”

Yes, the size of Tesla’s marketshare will decrease as other OEMs’ EVs begin to populate showrooms, but given its massive scale predicated on sales, those others still have a steep challenge ahead of them.

Ford F-150 Lightning & the Potential of Scale

Posted on July 17, 2023 by shinymetalboxes

By Gary S. Vasilash

As is widely known, there is a pricing benefit when lots of something is made.

The technical term is “economies of scale.”

Companies get to buy components in bulk and, like a giant pack of paper towel or a vat of peanut butter from Costco, the prices are consequently reduced.

That said, Ford announced today that it is cutting the prices for F-150 Lightning models. The Pro model on Saturday had an MSRP of $59,974. Now it is $49,995. A reduction of $9,979. Some 16% off.

And probably figuring those who would buy a Platinum Extended Range wouldn’t need to have as great a reduction, today the MSRP is $91,995, or $6,079 less than it was Saturday.

In announcing the price reductions, Marin Gjaja, chief customer officer, Ford Model e (the electric vehicle part of the company), said, “Shortly after launching the F-150 Lightning, rapidly rising material costs, supply constraints and other factors drove up the cost of the EV truck for Ford and our customers.”

That was a situation where economies of scale were not working.

Gjaja continued, “We’ve continued to work in the background to improve accessibility and affordability to help to lower prices for our customers and shorten the wait times for their new F-150 Lightning.”

Arguably they are getting better scale.

But there could be something else at play here.

Through the first half, Ford delivered 8,757 Lightnings.

As of this fall it will have the ability at the Rouge Electric Vehicle Center to produce 150,000 per year.

At the current rate, it would take a long time to get to 150,000.

An Unusual Audi

Posted on July 10, 2023 by shinymetalboxes

Odds are that when you think of Audi–electric or otherwise–you don’t think of somthing that looks, well, like this:

That is the Audi S1 e-tron quattro Hoonitron.

While it had been developed for the rally driver extraordinaire Ken Block, who died earlier this year, the car, which was built at Audi Sport HQ in Neckarsulm, it will be driven at the Goodwood hillclimb by Tom Kristensen. Kristensen is an “Audi ambassador.” He also happens to be a six-time Le Mans winner, so he knows more than a bit about performance driving.

The vehicle has electric motors on each axle that produce about 2,212 lb-ft of torque each, which will cetainly propel it up the hill.

Mercedes Goes NACS: Another OEM Takes the Short-Term Gain

Posted on July 9, 2023 by shinymetalboxes

“To accelerate the shift to electric vehicles, we are dedicated to elevating the entire EV-experience for our customers – including fast, convenient, and reliable charging solutions wherever their Mercedes-Benz takes them. That’s why we are committed to building our global Mercedes-Benz High-Power Charging Network, with the first sites opening this year.”

So said Ola Källenius, Chairman of the Board of Management Mercedes-Benz Group AG.

Mercedes will be opening in North America a “High-Power Charging Network” that will include more than 400 charging hubs and more than 2,500 high-power chargers.

This won’t all be up and running until the end of the decade. Some will open this year.

Källenius went on to say, “In parallel, we are also implementing NACS in our vehicles, allowing drivers to access an expansive network of high-quality charging offerings in North America.”

Yes, Mercedes is signing on to the Tesla Supercharger network—more than 12,000 Superchargers (considerably more than the 2,500 Mercedes plans to have in some six years). Starting next year, they’ll be equipping their vehicles with the socket and software to take the Tesla juice.

So now there are Ford, General Motors, Volvo, Rivian, Mercedes, and probably more by the time you read this all planning on having their vehicles charging at the network created by what is arguably the world’s most desirable electric vehicle company (how else to explain the market dominance it continues to have—and when you hear about how its market share is declining, realize that the market is getting bigger, so while its slice may be smaller from a percentage standpoint, the real thing to pay attention to is the number of vehicle it is selling vis-à-vis the other companies).

This strikes me as something analogous to Apple in its early days saying that it would offer Windows as the operating system and then trying to persuade users to switch to its OS.

What would be the point?

These OEMs are taking a short-term gain and will experience a long-term disadvantage.

If someone buys a Mercedes rather than a Tesla it is probably because they think the Mercedes is a superior vehicle.

And there’s Mercedes saying, “Yes, our vehicle is great but our charging system isn’t, so go use the system from the other brand.”

Isn’t that admitting that the other brand is technologically more capable?

General Motors: About Those EV Sales. . .

Posted on July 7, 2023 by shinymetalboxes

By Gary S. Vasilash

General Motors was rather chuffed with its U.S. sales results for Q2 2023 as well as for the first half of the year.

It delivered 691,978 vehicles in Q2, up 18.8% from the same period last year. And for the first half it has delivered 1,295,186, or 18.3% more than in the first half of 2022.

Drilling into the electric vehicle space, the company sold in Q2 13,959 Chevy Bolt EV/Bolt EUV models, up an impressive 101%. Even more impressive, with Bolt sales of 33,659 for the first half, that’s a 360.9% increase. However, due to a problem with battery fires that occurred in the summer of 2022 General Motors stopped production of the vehicles as it handled a recall, so there were fewer vehicles available last year. What’s more, when it brought the vehicles back on the market it did so making the pricing exceedingly attractive—even for people who otherwise wouldn’t have considered an EV.

Then there are two other EVs in the GM portfolio:

Cadillac Lyriq
Hummer EV

As for Cadillac, it delivered 1,348 Lyriqs in Q2 and a total of 2,316 during the first half. The vehicle wasn’t available during the first half of 2022 so there is no comparison.

As for the Hummer EV, there were 47 deliveries in Q2 and a total of 49 for the first half. Yes, two were delivered in Q1 2023. Those numbers are down 82.7 and 86.8%, respectively. There were 185 days between January 1 and June 30. 49 Lyriqs.

All in, General Motors sold 36,024 electric vehicles during the first half of 2023.

To put that number in perspective, know that it sold 78,169 Chevy Malibus during the same period, and while nary a word is pronounced about the importance of that midsize sedan to its future portfolio, for the past few years there have been more pronouncements about how EVs are going to be transformative to the company’s fortunes than mere mortals can imagine.

Of course, “Past performance is no guarantee of future results.”

But there are two factors that need to be kept in mind.

GM has announced Bolt production will end in November. On the Chevrolet shopping site it is able to proclaim that the Bolt is “America’s Most Affordable EV.” Strike that from the books.
When the Chevy Silverado EV was first announced the company talked about the WT (as in “work truck”) trim starting at about $39,900. However, it recently said that when the first WTs roll off the line, they will be 4WT trim, capable of 450 miles and featuring AWD, for a price of . . .$79,800

Hard to see how the company is going to have sustainably large EV sales numbers as it goes into the future.

It may have the capacity–lots of capacity–but there are another two factors that come into play:

Execution
Market demand for vehicles that aren’t necessarily leading in affordability.

Sockets and Chargers & The Technical Surrender of the OEMs

Posted on July 3, 2023 by shinymetalboxes

By Gary S. Vasilash

Thomas Edison patented the incandescent light bulb in 1880. By 1890 the screw-type base—like the one you can see on a light bulb right now—had about 70% of the market.

There was something to be said for standardization.

As light bulbs were the dominant type of electrical object back then, electrical sockets took that form factor.

When companies (including, no surprise, General Electric) began to make electrical household appliances, they put an Edison socket on the end of the power wire. While that seemed sensible, there was the issue of where the power outlets were located for purposes on lighting: in places like ceilings.

So not only was it a bit tricky screwing in that toaster or iron, but in the event that the appliance was accidentally knocked off the counter or ironing board, there was likely to be a ripped cord and a possible electrical short.

An inventor named Harvey Hubbell came up with another idea. He came up with the two-pronged plug that you are also familiar with today (some outlets have the third opening for the ground).

The device he patented in 1904 still used the screw-in socket for the receptacle and there was a two-pronged plug attached to the appliance cord. (The screw-in receptacle can still be found in hardware stores today.)

While it probably seemed to the people in the late 19^th/early 20^th century that Thomas Edison was nonpareil when it came to things electric, clearly that wasn’t the case.

Which brings me to the Tesla charging connector, the NACS.

That stands for “North American Charging Standard.”

Standards are usually created by independent organizations, not companies.

Tesla simply named its connector and port a standard. Voila!

Ford, General Motors, Rivian, Volvo, and undoubtedly others by the time you read this have signed on to the standard.

As is widely known, the Tesla Supercharger network is superior to all other charging networks—because it works. The other networks are hit-and-miss. If you have a vehicle that needs a charge, do you really want to take your chances on pulling up to a charger that may be down for an array of reasons?

Thomas Edison’s company came up with the socket. It worked. Appliance manufacturers followed Edison’s lead.

Then Harvey Hubbell came up with an alternative. A better idea.

You would think that there’s a Hubbell working at Ford, GM, Rivian, Volvo, etc.

These massive organizations can’t come up with better system than that which Tesla developed in 2012?

People want reliability and consistency.

If they associate those characteristics with the name “Tesla,” what does that say about the other companies?

Sure, as the EV market grows and there are more alternatives from the other companies, Tesla’s share of market will shrink.

But as those other companies use Tesla’s equipment and further underscore the viability of that brand, Elon Musk will be to EV charging what Thomas Edison was to what you find at the base of incandescent light bulbs today.

No Canada: Consumers & EVs

Posted on June 30, 2023 by shinymetalboxes

By Gary S. Vasilash

Although there seems to be something of a bandwagon effect in the U.S. when it comes to EVs—one led by the government rolling out cash for EV consumers and cash for companies that are producing batteries (there is a part of the IRA that provides up to $45 per kilowatt hour for battery cell and module production and covers 10% of the critical mineral costs: wonder why there are all those battery plant announcements?)—consumers in Canada, well, let’s quote J.D. Ney, director of the automotive practice at J.D. Power Canada:

“Despite current legislation that is pushing hard for EV adoption, consumers in Canada are still not sold on the idea of automotive electrification. Growing concerns about affordability and infrastructure (both from charging and electrical grid perspectives), have caused a significant decline in the number of consumers who see themselves in the market for an EV anytime soon.”

That is, the 2023 J.D. Power Canada Electric Vehicle Consideration (EVC) Study finds that 66% of those surveyed are “very unlikely” or “somewhat unlikely” to consider an EV as their next vehicle purchase.

Consider. Not buy. Think about. Ponder.

That is a 13% increase in those who are in the unlikely camp from last year’s EVC Study.

Reasons for the lack of interest?

63% say limited range
59% are unhappy with the price of the vehicles
55% cite lack of charging infrastructure

The Canadian government does have a program that provides up to $5,000 for the purchase or lease of EVs or PHEVs, so perhaps this indifference is predicated on practicality.

Let’s face it: unless you get an expensive EV, you are going to have comparatively limited range, and if you have limited range you’re going to want to have charging capability readily at hand. . .

EV Trucks & Three-Card Monte

Posted on June 28, 2023 by shinymetalboxes

By Gary S. Vasilash

When Chevrolet announced the Silverado EV last year, it said that the price for the initial work truck version would have an “Estimated MSRP staring around $39,900.”

That was for the work truck version. Get the contractors in and those who are simply looking to look cool will follow. Possibly in droves.

What does the Silverado EV 4WT work truck, which is presently in production, cost?

$79,800.

There is a forthcoming 3WT version with a decreased range from the 4WT. The 4WT has an EPA rating of 450 miles per charge.

The 3WT will be tagged at $74,800.

What is shocking is that people aren’t more shocked by this estimation being off by some 50%.

When the 2024 Chevy Equinox EV was introduced last fall, the claim Chevy made was “a starting price of around $30,000.”

Mary Barra, GM chair and CEO, said, “With the flexibility of GM’s Ultium Platform, we are bringing to market vehicles at nearly every price point and for every purpose.”

Really?

The Cadillac Lyriq is on the Ultium platform. It starts at $58,590.

The GMC Hummer EV uses it, too, and good luck finding a price for it on gmc.com. The 2022 Edition 1 model started at $112,595, and while the subsequent models are less expensive, odds are that’s a relative reduction.

Every price point for Thurston Howell III, perhaps.

Kelley Blue Book has it that the average transaction price for an electric vehicle in May was down $9,370 from the price paid in May 2022. Now it is $55,488, or a 14% decrease.

There’s the Silverado EV 4WT 50% increase.

And what expectation should there be that there will be a $30K Equinox, and if there is a $30,000 Equinox will there be a sufficient number such that it won’t be like sightings of the Loch Ness Monster (“I think I saw one. . .”)?

This just isn’t a GM phenomenon.

Ford launched the F-150 Lightning Pro in May 2022 with a starting MSRP of $39,975. By August it was $55,974. At ford.com right now it starts at $59,974.

Of course, at the top of the page for the Lightning it says in a bright blue box:

“Select Models Currently Eligible for $7,500 in Potential Federal Tax Credits.”

Let Uncle Sam mitigate the price increases.