Auto Industry Briefing — week ending 23rd August 2020
Daimler: connecting people; learning to love battery swapping; and giving investors what they want. Please enjoy our auto industry and mobility briefing for 17th August to 23rd August 2020. A PDF version can be found here.
Before you read the detail, what were my favourite stories of the past week…?
- You Can’t Make Old Friends — Mercedes has connected 500,000 older cars by fitting adaptors to the vehicle’s OBD port. The scheme has been going for several years and there are plenty of similar aftermarket products, but Mercedes is pushing the idea far further than most rival OEMs. It isn’t clear why it is such an outlier. In a world where OEMs drool over the potential of mystical “big data”, why haven’t they taken the opportunity to (cheaply) glean more information from vehicles that are already on the road?
- Wind Of Change — Nio plans to offer a battery subscription service. It isn’t cheap (about $140 per month) but users get a hefty discount to the list price. More interestingly, it combines battery rental with battery swapping — the first real attempt since Project Better Place (which used smaller batteries). Even more interestingly, if the scheme works well in China, Nio will bring it to the West, giving European and American consumers a first taste of battery swapping. How will others react if the scheme takes off?
- Easy Lover — Rumours persist that GM might spin off its electric vehicle business to cash in on investor appetite for pure electric plays. The operational issues with splitting out a subset of a business which spans many brands makes my brain ache. But why try so hard? If Fisker — who plan to make an electric car using olde worlde VW’s electric vehicle platform — can raise loads of money by simply putting new sheet metal on top, why don’t GM just (1) resurrect Saturn, (2) make it electric-only, (3) sign a technology licencing agreement and (4) release it into the ether, pocketing a couple of billion dollars for their trouble? For that matter, why not Ford with Mercury and FCA with Plymouth?
News is arranged by company and topic. Stories that apply to more than one company or topic are duplicated.
Find our archive here.
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News about the major automakers
- Rolls-Royce claim that their initial attempts at reduce NVH in the cabin of the new Ghost were too successful and engineers had to add some noise back in to prevent the experience being too eery. (Rolls-Royce)
- Has now updated 500,000 older vehicles with retrofit adaptors that give limited connected features. (Daimler)
- Significance: Although the modems are unable to offer read/write functionality, the user benefit and data gathering potential at a relatively low cost (c. $50 / unit) make the Mercedes Me scheme worthwhile.
- Rejected a proposal by German unions to move workers onto a four day week that would have protected jobs but harmed productivity. Unions remain open to fewer hours with a partial reduction in net pay. (Manager Magazin)
- The French government are reportedly suspicious about Ineos’s proposed takeover of the Hambach, France, factory and have commissioned consultants Roland Berger to review the plans. (Consultancy.eu)
- Recalling around 132,000 cars because component position sensors in the engine might stop working properly and cause the engine to stall. (FCA)
Ferrari
- Signed a new agreement with F1 governing the commercial rights and revenues between 2021 – 2025. (Ferrari)
Geely (includes Volvo) (history)
- Kandi is exploring options for a North American plant. (Kandi)
- Said that 40% of forthcoming GM products for China will be electrified, and all will be locally built. GM is excited by the potential for complexity reduction (such as 500 ICE engine and transmission combinations down to 19 – although it isn’t clear if this spans the same portfolio size the directional saving is real). (GM)
- Appears committed to making owners pay for long term use of the “Super Cruise” driver assistance suite, but has yet to decide how much it will cost. Owners of older vehicles were granted an additional year of the technology at no cost to give executives breathing room. (Motor1)
- Further rumours that GM could spin off its electric car business rallied shares. (Bloomberg)
- Significance: Given that GM has no specific all-electric brands, the rationale for, and operational execution of, a divestment remains unclear — apart from tapping into the market’s appetite for electrified vehicle assets. This week’s tech day where it was clearly demonstrated that electric vehicles underpin the medium-term business plan in China. A potential motivation could be to create a GM “good bank” of assets considered undervalued by the markets and leave a rump GM saddled with legacy technologies and obligations; pretty much a repeat of GM’s Chapter 11 bankruptcy…
- Reportedly planning a new factory in Singapore to make electric vehicles. (Straits Times)
- JLR is looking at ways to include more recycled content in the aluminium used in car bodies, saying that production CO2 emission savings of 26% are on offer if they succeed. (JLR)
- Despite recent moves by others, notably Daimler but not BMW, away from using the technology in passenger cars, JLR believes that hydrogen power has a “key place” in the portfolio. (Autocar)
- After last week denying that it was about to sell part of the passenger car division, Tata had to deny that it was looking to sell part of JLR. (Tata)
- Will use Amazon’s cloud computing services to run some of Toyota’s mobility services. (Toyota)
- Agreed to increase the pay of Mexican workers by 5.5%. (Reuters)
- Started production of the ID4 all-electric crossover. (VW)
- Porsche is reportedly reviewing past models for potential problems with engine emissions. (Reuters)
Other
- Indian start-up EVage hopes to launch an all-electric delivery van, and then move on to products as varied as a city car and SUV built from the same architecture. (Economic Times of India)
- Canoo plans to list via a merger with a special purpose vehicle that will see the firm valued at $2.4 billion. (Canoo)
- A US importer is reportedly on the verge of making a takeover offer for Mahindra’s Ssangyong. (Yonhap)
- Bollinger announced a new headquarters and plans to grow the organisation. (Bollinger)
- Electric commercial vehicle firm XOS Trucks (originally Thor) raised $20 million from investors including supplier Metalsa’s parent. (XOS)
- Nio plans to offer a battery leasing service, complete with battery swapping, enabling customers to reduce the upfront cost of their vehicle. (Nio) If the scheme is successful, Nio hopes to expand outside China. (AP)
News about other companies and trends
Suppliers
- UK tuning business Mountune appears to be up for sale. (Autocar)
- Valmet will start low volume contract manufacturing in Germany in 2021. (Valmet)
- US president Trump called for a boycott of Goodyear after the company said workers would not be allowed to wear baseball caps supporting his campaign (or any other, but that was beside the point). (MarketWatch)
Dealers
- Indian online used car marketplace CarDekho plans to open 1,000 physical sites by 2022. (Deal Street Asia)
Ride-Hailing, Car Sharing & Rental (history)
- A Californian court ruled that people driving for ride hailing services such as Uber and Lyft were employees rather than contractors. As a result, Uber and Lyft said they would suspend services in the state, but then backtracked after being told the ruling wouldn’t be immediately implemented and should be decided in a referendum instead. (Lyft)
- Multimodal travel start-up Omio raised $100 million. (TechCrunch)
Driverless / Autonomy (history)
- Lidar developer Luminar agreed to list via a merger with a special purpose vehicle that will have a market capitalisation of around $3.4 billion, and over $500 million in cash. (Luminar)
- Aurora’s boss shrugged off suggestions that the firm needs to have large OEMs signed up as partners, after seeing collaborations with several OEMs dissolve. He says the company has more than enough money and is confident that his team will do a better job than rivals of developing self-driving technologies. (FT)
- Former employees of Zoox are trying to sue the company, saying that it should have sold itself to GM’s Cruise unit, rather than Amazon who offered more money overall, but less for executives. (Reuters)
- Ibeo says its new lidar sensor has a 260m range and is ready for production in a ZF-owned plant. (Ibeo)
- GM appears committed to making owners pay for long term use of the “Super Cruise” driver assistance suite, but has yet to decide how much it will cost. Owners of older vehicles were granted an additional year of the technology at no cost to give executives breathing room. (Motor1)
- Nio plans to offer a battery leasing service, complete with battery swapping, enabling customers to reduce the upfront cost of their vehicle. (Nio) If the scheme is successful, Nio hopes to expand outside China. (AP)
Other
- The Williams F1 team has been sold to an investment firm. (The Guardian)
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Auto Industry Briefing — fortnight ending 16th August 2020
Honda’s splendid isolation; putting fleet sales in context; and lithium companies playing hardball. Please enjoy our auto industry and mobility briefing for 3rd August to 16th August 2020. A PDF version can be found here.
Before you read the detail, what were my favourite stories of the past week…?
- Don’t Marry Her — The Japanese government reportedly tried to matchmake Nissan and Honda, only for the latter to swiftly rebuff the idea. They shouldn’t have been surprised, Honda’s approach to M&A ever since missing out on Rover in the 1990’s has been splendid isolation. Did officials think there was something enticing about the prospect that Honda are missing? Why not simply let Toyota step in, as they have done for practically all Japanese marques, Honda, Nissan and Mitsubishi aside?
- Drop It Like It’s Hot — There was a lot of excitement about Nikola sealing a deal for 2,500 refuse lorries. It isn’t to be sniffed at, but a single contract hardly confirms the company as the future. Piaggio announced a deal to sell 5,000 scooters to the Italian post office but no one seemed to be raving about that. What are the chances investors are suffering from confirmation bias when it comes to companies touting new powertrain technologies?
- Make You Mine — The CEO of lithium mining company Livent says car makers are being too stingy and he won’t invest in capacity at the low prices they are willing to pay, so they won’t have enough raw materials to make all the cars they want in the next few years. The thing is, batteries are still too expensive for mainstream consumers. Everyone assumes electric vehicle mix is going to rise rapidly, but that is driven by a commonly-held assumption that battery prices will drop low enough to make them affordable. Could higher lithium prices spur more innovative thinking about reducing average battery sizes including (gasp) battery swapping?
News is arranged by company and topic. Stories that apply to more than one company or topic are duplicated.
Find our archive here.
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News about the major automakers
- Reported Q2 2020 revenue of €20 billion, down (22)% versus prior year and an EBIT loss of €(666) million compared to a €2.2 billion profit in Q2 2019. BMW tried to stay positive by expressing confidence in complying with 2020 CO2 regulations in Europe and sees the full year automotive EBIT margin between 0% – 3%. (BMW)
- The Free Now ride hailing joint venture between BMW and Daimler is profitable in major European markets, including the UK, according to the boss of UK operations. (Business Insider)
- Says that online tools for customers are going great guns, with increased use of chatbots and 98% of Chinese customers completing their finance contracts via the internet rather than in person. (Daimler)
- Gave an overview of the MO360 software system that Daimler uses to link its factories. Mainly Daimler simply stated the obvious about how different elements of the factory are linked but they also revealed that each factory can saves 10 tonnes of paper per year by going paperless. (Daimler)
- Settled claims covering diesel emissions in 250,000 US vehicles in a class action lawsuit and agreed the level of fines it must pay the authorities. The total bill will be around $3 billion ($2.2 billion in fines and compensation plus an undetermined amount to ensure compliance). (Daimler)
- Mercedes and CATL will collaborate on new battery technology. Mercedes is calling its approach to future vehicles “electric first”, perhaps inspired by the 2018 E-FIRST (electric first) paper written by Evercore ISI and Ad Punctum, which first coined the phrase? (Daimler)
- The Free Now ride hailing joint venture between BMW and Daimler is profitable in major European markets, including the UK, according to the boss of UK operations. (Business Insider)
- Contemplating a recall of 1 million SUVs with engines that have excessive tailpipe emissions. (Detroit Free Press)
Ferrari
- Ferrari reported Q2 2020 sales of 1,389 cars, down (48)% on a year-over-year basis. Revenue of $571 million fell (42)% whilst adjusted EBIT of $23 million fell (90)% versus 2019. The company assumes revenue and adjusted EBIT in the full year will be at the bottom end of expectations. (Ferrari)
- Announced the retirement of CEO Hackett and widely predicted promotion of COO Farley. The changes are effective 1st October but Hackett will remain on the payroll until 2021. (Ford) External reception to Farley’s appointment was mixed. Whilst some media reported glowing praise from peers and industry experts, others – claiming to represent the views of company insiders – saw the move as a mistake.
- Put a sales stop on PHEV Kugas and told owners who have taken delivery of cars not to charge them. (Autocar)
- Recalling 558,000 Edge and MKX SUVs because the brake hoses could leak. (Detroit News)
- Gave a presentation to investors about opportunities in the European business, where the prepared materials focused almost entirely on improving the commercial vehicle unit. During the introduction, the head of IR was at pains to recognise the presence of Henry Ford III (a member of her team), despite him having no active role in the presentation. In the Q&A, the regional CEO said the Kuga PHEV makes up 50% of the vehicle’s sales. He declined to say that electric vehicles would be profitable, even from the product shared with VW, instead preferring to commit to profitability from the overall business during the transition phase. The profit goal remains 6% margin with a commitment to reach the target even with lower volumes. (Ford)
- Ford now claims over 165,000 orders for the Bronco. (Ford)
Geely (includes Volvo) (history)
- Geely’s first half 2020 revenue was 36.8 billion RMB (about $5.3 billion), down (23)% on a year-over-year basis. The net profit was 2.3 billion RMB (about $330 million), down (43)%. (Geely)
- Geely unveiled the Preface, a sedan that sits on the same platform used for Volvo’s XC40. (Geely)
- Sharing the CMA platform with Geely and Lynk&Co has helped Volvo double the purchasing scale compared with building the vehicle alone (with manufacturing in different regions, some parts will be dual sourced). (Volvo)
- Kandi Technologies reported Q2 2020 revenue of $19 million and net income of $4 million. (Kandi)
- CFO Suryadevara left to work in the finance industry. An interim CFO was appointed, (John Stapleton, the regional finance chief for North America) whilst the company searches for a successor. (GM)
- Has almost fulfilled the ventilator manufacturing contract imposed on the company by the US government, although Ventec, GM’s partner, will continue to make them at GM’s factory. (Detroit Free Press)
- Unveiled the Cadillac Lyriq, the brand’s first all-electric car. (GM)
- Reported Q2 2020 (Honda’s fiscal Q1) revenue of 2.1 trillion JPY (about $20 billion), down (47)% on a year-over-year basis. The operating loss was (114) billion (about $1 billion), down from a profit of around $2 billion in the prior year. Although motorcycles and financial services were profitable and other businesses were near breakeven, the automotive arm lost 195 billion JPY (about $1.8 billion). In the full year, Honda hopes to make a profit of around 200 billion JPY (about $1.8 billion). (Honda)
- The Japanese government reportedly tried to matchmake Honda and Nissan, but Honda rejected the approach. (FT)
- Recalling 1.6 million US vehicles to fix several problems including faulty sensor readouts on the instrument panel; rear cameras that don’t turn on or suffer water damage; and sliding doors that won’t close properly when it gets too cold. (Detroit News)
- Aptiv and Hyundai-Kia’s autonomous technology joint venture will be called Motional. (Motional)
- Kia unveiled the Sonet, a small value crossover that will be produced in India and exported globally. (Kia)
- Kia showed off the facelifted Stinger. (Kia)
- Hyundai will use “Ioniq”, hitherto a vehicle name, as a sub-brand for all-electric cars. The first two models, Ioniq 5 and Ioniq 6, will based off the 45 and Prophecy concept cars respectively. (Hyundai)
Nissan and Mitsubishi (history)
- Carlos Ghosn says he will release a tell-all book at the end of the year. (Car Advice)
- The Japanese government reportedly tried to matchmake Honda and Nissan, but Honda rejected the approach. (FT)
- The chairman of Mitsubishi Motors is stepping down. (Nikkei)
- Granted workers at the Barcelona, Spain factory cluster a temporary reprieve. The plant will now close at the end of 2021, one year later than planned. (Nissan)
- The head of the Free2Move mobility unit said that external investment might be welcomed in future, but at present the focus is on getting the organisation running properly. (Reuters)
Subaru
- Reported Q2 2020 financial results (fiscal year Q1). Revenue of 457 billion JPY (about $4.3 billion) fell (45)%, driven by volume halving from the previous year. An operating loss of 16 billion JPY (about $150 million) compared to a healthy profit in Q2 2019. (Subaru) The firm has now provided full year guidance, expecting full year revenue of 2.9 trillion JPY (about $27.5 billion) and operating profit of 80 billion JPY (about $760 million). (Subaru)
- Jaguar’s classic department is making (via restoration) a special edition E-Type that matches the original 1966 Geneva Motor Show cars. Taking a leaf out of Aston Martin’s book, you can only buy a double pack of a coupe and a convertible. (JLR)
- Tata Motors denied that it was looking to offload 49% of the passenger car business saying that although the unit had been structured in a way to allow external investment, no immediate changes are on the horizon. (Tata)
- A German case where a driver changing the windscreen wiper settings using the central screen was penalised under the rules designed for using mobile phones whilst driving received broad attention. Although the menu complexity was cited as an issue, the court put the onus on the driver to only adjust settings when it was safe to do so. (BBC)
- Started offering an in-house wrapping service at Chinese dealerships. (Electrek)
- Announced a 5:1 stock split, the main benefit of which is lowering the stock price for a single share for retail investors. (TechCrunch)
- CEO Musk said that if it turns out people don’t like the real life Cybertruck, Tesla can just build a more conventional looking one on the same running gear. (Business Insider)
- Reported Q2 2020 (Toyota’s fiscal Q1) revenue of 4.6 trillion JPY (about $43.5 billion), down (40)% on a year-over-year basis. Operating income of 13.9 billion JPY (about $130 million) as losses in North America and Europe were just offset by profitability in Japan and Asia. The full year forecast is revenue of 24 trillion JPY (about $227 billion) and operating income of 500 billion JPY (about $4.7 billion) from sales of 9.1 million vehicles, (13)% lower than 2019/20. (Toyota)
- Porsche SE invested in connected car software firm Aurora Labs. (Porsche SE)
- An employee reportedly at the centre of an investigation into spying on VW purchasing negotiations was found dead in suspicious circumstances. (Manager Magazin)
- Porsche is reportedly planning a new plant in Slovakia to create car bodies. (Reuters)
Other
- Gordon Murray took the covers off the T50 hypercar. (Gordon Murray)
- Hyperion unveiled the XP1, a hydrogen powered supercar with a 2.2 second 0 – 60 mph time, that the firm hopes to have in production by 2022. (Hyperion)
- Nio reported Q2 2020 sales of 10,331 cars, the company’s best ever quarter. Revenues of 3.5 billion RMB (about $500 million) rose 147% on a year-over-year basis. However the company continued to make an operating loss, of (1.16) billion RMB (about $164 million). (Nio)
- XPeng filed documents for an IPO. (SEC)
- Ineos said that although it hasn’t finalised a deal to take over Daimler’s Hambach, France, plant, it is no longer planning to create new factories in Wales and Portugal to build the Grenadier. (Business Live) Jaguar Land Rover lost a court case to stop production of the Grenadier on the basis it was too similar to the Defender. (Car and Driver)
- Fisker says that Magna will build the company’s forthcoming Ocean SUV. (Reuters)
- Lucid’s CEO says he won’t share the firm’s technology with any other business. (Green Car Reports)
- One of Faraday Future’s early prototypes will go to auction. (TechCrunch)
- Nikola reported a Q2 2020 loss of $(87) million. The company isn’t yet making any revenue. (Nikola) The company confirmed that it was interested in sharing technology with Hyundai, but the South Korean company was yet to reciprocate. (Reuters) Investors were massively cheered by an order for 2,500 refuse lorries. (Reuters)
- Significance: Investor interest in individual orders seems unpredictable. Whilst Nikola’s order for rubbish trucks was applauded, no one seemed to care that Piaggio won a contract for 5,000 scooters from the Italian post office. What do these numbers prove?
- Mullen Technologies will list via a merger with special purpose vehicle Net Element. (Net Element)
- Workhorse reported Q2 2020 financial results. Revenue was $92,000 and the net loss was $(131) million, mainly blamed on non-cash interest costs. The company hopes that the merger of Lordstown and DiamondPeak will value its 10% Lordstown stake at $160 million. (Workhorse)
- Faraday Future plan to offer a version of the FF91 all-electric car with a spa mode that features lie flat seats and a massive screen that flips down from the ceiling. (Faraday Future)
- Online sleuths reckon there are about 30,000 orders for Rivian’s debut pickup truck. (Inside EVs)
- Electromobility Poland revealed the two all-electric cars it plans to build under the Izera brand. (Izera)
News about other companies and trends
Economic / Political News
- US light vehicle SAAR in July of 14.52 million units was (14)% lower than prior year. (Wards)
- German passenger car registrations in July of 314,938 units fell (5.4)% versus prior year. (KBA)
- French passenger car registrations of 178,982 units in July rose 3.9% versus 2019, with fewer selling days. (CCFA)
- Passenger car registrations in Spain during July of 117,929 units rose 1.1% versus 2019. (ANFAC)
- July saw 136,455 passenger cars registered in Italy, down (11)% on July 2019. (UNRAE)
- July UK passenger car registrations of 174,887 grew 11.3% versus July 2019. (SMMT)
Suppliers
- Continental reported Q2 2020 revenue of €6.6 billion and EBIT of €(829) million. (Continental) Continental formed a joint venture for fluid connectors with smaller specialist firm aft Automotive. (Continental)
- Veoneer completed the sale of its US brakes business to ZF. (Veoneer)
- Adient reported Q2 2020 revenue of $1.6 billion and EBIT of $(269) million. (Adient)
- BorgWarner reported Q2 2020 revenue of $1.4 billion and an operating loss of $(78) million. (BorgWarner)
- Delphi (soon to merge with BorgWarner) reported Q2 2020 revenue of $628 million and an operating loss of $(60) million. (Delphi)
- Bridgestone’s Q2 2020 revenue was 603 billion JPY (about $5.7 billion) and adjusted operating loss was (1.5) billion JPY (about $15 million). (Bridgestone)
- Lear reported Q2 2020 revenue of $2.4 billion and a net loss of $(294) million. (Lear)
- Kongsberg reported Q2 2020 revenue of €154 million and adjusted EBIT of €(33) million. (Kongsberg)
- Allison Transmission reported Q2 2020 sales of $377 million and net income of $23 million. (Allison)
- Grammer’s Q2 2020 revenue was €281 million, EBIT was €(22) million. (Grammer)
- Martinrea reported Q2 2020 revenue of $461 million and a net loss of $(147) million. Despite the loss the company plans to pay a dividend. (Martinrea)
- China Automotive Systems reported Q2 2020 sales of $83 million and an operating loss of $(5) million. (CAAS)
- Schaeffler reported Q2 2020 revenue of €2.3 billion and EBIT of €(150) million. (Schaeffler)
- Magna reported Q2 2020 revenue of $4.3 billion and an operating loss of $(789) million. The company will still pay a dividend. (Magna)
Dealers
- Used car marketplace Spinny acquired Truebil. (Deal Street Asia)
- Used car marketplace Carro raised an additional $11 million. (Deal Street Asia)
- CarParts.com hopes to raised $52 million through a rights issue. (CarParts.com)
Ride-Hailing, Car Sharing & Rental (history)
- Uber reported Q2 2020 revenues of $2.2 billion, a (29)% drop on a year-over-year basis. As revenues from ride hailing dropped (67)%, delivery rose 103%, and at $1.2 billion accounted for more than half of the company’s revenues, overtaking ride hailing for the first time. The company’s preferred adjusted EBITDA was a loss of $(837) million. (Uber)
- Lyft reported Q2 2020 revenue of $339 million, down (61)% versus prior year reflecting a (60)% drop in active riders. The net loss was $(437) million. (Lyft)
- Uber acquired taxi software maker Autocab. The plan is to use Autocab’s platform to get taxi companies to bid on trips for Uber customers, in markets where Uber isn’t active. (Autocab)
- Grab reportedly raised $200 million. (Bloomberg)
- Ride hailing service TADA’s owner raised $5 million. (Deal Street Asia)
- Specialist ride hailing insurance start-up Buckle raised $31 million. (Buckle)
- Hertz’s revenues fell (70)% in Q2 2020 versus prior year, even as the US fleet size remained steady. (Hertz)
- The Free Now ride hailing joint venture between BMW and Daimler is profitable in major European markets, including the UK, according to the boss of UK operations. (Business Insider)
Driverless / Autonomy (history)
- Anthony Levandowski, the engineer at the centre of an intellectual property theft case that Uber lost to Google, was sentenced to 18 months in prison. The judge said he wanted to make an example of him. (BBC)
- Michigan plans to create a 40 mile stretch of road with a lane dedicated to self-driving vehicles. (Detroit Free Press)
- Aptiv and Hyundai-Kia’s autonomous technology joint venture will be called Motional. (Motional)
- Electric charging operator ChargePoint raised $127 million. (TechCrunch)
- The CEO of lithium supplier Livent called for automakers to offer lucrative longer term contracts to encourage investment in mining capacity. Although he called hopes for lower prices when capacity investments are required “voodoo economics”, he didn’t offer an opinion on the effect of higher prices on demand. (Reuters)
- Battery materials developer Coreshell Technologies raised $4 million. (Reuters)
Other
- Electric scooter manufacturer Veo started fitting indicators to its products. (Veo)
- Cocoa Motors launched a four wheeled balance board that the firm calls a “car in a bag”. (Cocoa Motors)
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Auto Industry Briefing — week ending 2nd August 2020
Big order numbers for Bronco; in search of working capital; and the French love E-FIRST. Please enjoy our auto industry and mobility briefing for 27th July to 2nd August 2020. A PDF version can be found here.
Before you read the detail, what were my favourite stories of the past week…?
- Mr. Writer — 150,000 customers have placed orders for the new Ford Bronco. Hooray! This is the first time we’ve seen anyone quickly rack up a serious six digit pre-order number that merits mention in the same sentence as Tesla Model 3 or Cybertruck. But is talking about it off the cuff in an earnings call, as opposed to social media manipulation, the right way to build buzz?
- Shout — Workhorse published their IPO prospectus this week. The firm hopes to raise $675 million to move its truck from the prototype stage into production. Slide 23 illustrates some of the problems in the maths for start-ups… even though the company plans to build lots of expensive trucks, there isn’t anything in there for working capital — potentially a three digit million sum for the initial inventory — although there is a healthy “contingency” pot. Is this an oversight or have they invented a way to get negative working capital?
- This Is What You Came For — After 2025, PSA says fully electric is the way forward. They showed off a new midsize car platform they’ve designed to have a big battery in the middle. If you don’t want (or can’t afford) a fully electric model, you can fit a hybrid in the front and reduce the battery size. It all sounds very like the E-FIRST proposal Ad Punctum and Evercore ISI made in late 2018: put the compromise on the internal combustion engine, not the electric bit. Coming in the same week as Renault’s new CEO sang the praises of the E-Tech motor-as-generator cars he has been driving, should other brands revisit their architectures?
News is arranged by company and topic. Stories that apply to more than one company or topic are duplicated.
Find our archive here.
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News about the major automakers
- BMW iVentures invested in connected technology company GenXComm. (BMW)
- When the Citan’s successor launches in 2022, there will be a more carlike version called T-Class. (Daimler)
- Agreed a series of cost saving measures with German unions. Most employees will work two hours less per week, without sacrificing any pay and bonuses will be either dropped or converted into time off. Union officials conceded that redundancies had not be avoided, but that packages would be voluntary. (Daimler)
- Reported Q2 2020 revenue of €11.7 billion, down (56)% versus prior year. Adjusted EBIT of €(928) million fell from a €1.5 billion profit in the prior year. Analysts were impressed that the North American unit made a small profit despite a (62)% drop in shipments. (FCA)
- CEO Manley said that the trend for OEMs to progressively outsource component manufacture was “dangerous” and he expects competitors to get more involved in battery manufacture than they are today. (Seeking Alpha)
- CEO Manley believes that GM and Ford have been too quick to develop all-electric pickup trucks but implied that the Ram brand will be able to quickly react if the forthcoming GM and Ford trucks are a hit. (Detroit News)
- Ford’s Q2 revenue of $19.4 billion, (50)% down on 2019, and adjusted EBIT loss of $(1.9) billion cheered investors who had been primed to expect a loss of closer to $(5) billion. Ford is now forecasting a full year loss, because of continued weakness and the cost of launching F-150. Whilst the all-electric Mustang Mach-E will launch this year, shipments won’t be significant enough to move the needle on revenue or profit. (Ford)
- 150,000 customers have put down refundable $100 deposits for Ford Broncos. (Ford – Earnings transcript p4)
- Significance: Bronco’s reservation numbers are the first to hold a candle to Tesla (admittedly the Model 3 heyday had a $1,000 tag, so there could be some price elasticity). The financial value of the deposits matters far less than the ethereal buzz such numbers attract.
- Ford says that using legged robots, rather than static laser scanners, to survey a plant takes about half the time. There is also a potential to use airborne drones which are already used for mapping outdoors. (Ford)
- Will commence fully online sales in the UK later this year, although the level of involvement from a human dealer in completing the transactions remains unclear. Ford’s top UK salesman admitted that the move could lead to job losses in dealerships. (Auto Express)
- Reported Q2 2020 revenue of $16.8 billion, down (53)% versus prior year, and a $(536) million loss (on an adjusted basis). GM lost $(101) million in North America and continued to splash out on autonomous vehicles, albeit lopping almost one third of 2019’s spending level. GM was happy to talk about a scenario where profit recovered in the second half, but stressed that this was not the same as guidance. (GM)
- CEO Barra refuses to rule out anything that might increase shareholder value — including renaming the company or spinning off the electric vehicle unit. (Seeking Alpha)
- Significance: Talking about spin-offs in concept is all very well, but GM’s portfolio is defined by brand, no powertrain choice. How would an exercise to spin off electric vehicles be organised when there is no electric-only brand?
- Partnering with the EVGo network in the USA (Nissan’s partner) to offer widespread fast charging. (GM)
- Although the unveiling of the all-electric GMC Hummer truck has been delayed (from May), the start of production still seems to be on track for late 2021. (GM)
- Wants to take over the former GM site in St Petersburg, Russia. (Business Korea)
Mazda
- Reported Q2 2020 sales of 244,148 cars, down (31)% on prior year. (Mazda)
- In Q2 2020 (fiscal Q1), Mazda’s revenue of 377 billion JPY (about $3.6 billion), down (56)% on a year-over-year basis. The operating loss was (45) billion JPY (about $(430) million) — but this excluded the full impact of the factory shutdowns, which Mazda classed as a special item. By the end of the fiscal year (March 2021), Mazda expects sales to have recovered such that the year over year drop is only (8)%, with improvements in China partially offsetting a (14)% drop in other regions. The company expects to about breakeven in the next three quarters. (Mazda)
Nissan and Mitsubishi (history)
- Nissan’s Q2 2020 (fiscal Q1) sales of 1.17 trillion JPY (about $11.1 billion) fell (51)% versus prior year. Operating income of (154) billion JPY (about $(1.5) billion) fell from a modest profit in Q2 2010, and excluded the cost of coronavirus shutdowns. In the full fiscal year (to March 2021), Nissan expects volumes to be (16)% lower than in the prior year, with the proviso that no second wave is assumed. (Nissan)
- Reckons that 500km is the minimum range for a large all-electric vehicle. (Autocar)
- Piloting a scheme for users to pay for parking by plugging in their electric cars and allowing to be discharged. (Nissan)
- Significance: Paying for parking via allowing power to be drawn from the battery could be a successful entry route for broader vehicle to grid (V2G) schemes.
- Mitsubishi produced 106,820 vehicles in Q2 2020, a drop of (66)% from prior year. (Mitsubishi)
- Nissan and Mitsubishi are considering building an all-electric kei car together, which would leave Suzuki (Nissan’s historic partner) in the lurch. (Mitsubishi)
- Reported first half revenue of €25.1 billion, a drop of (34)% versus prior year. Operating income of €482 million fell (81)%. The firm made €820 million of cost reductions versus 2019 1st half. (PSA)
- Announced that it has been working on an electrified platform, called eVMP, that focuses on packing as much battery into the centre of the cabin as possible. The platform is totally optimised for electric vehicles, but will be flexible for hybrid versions too. (PSA)
- Opel has given up its national sales company and turned to an importer model in Romania. (Opel)
- Faurecia reported first half 2020 revenue of €6.2 billion, down (31)% on a year over year basis and an operating loss of €(114) million, down from a €645 million profit in the prior year. (Faurecia)
- Separating the Free2Move mobility organisation so that, whilst it remains 100% owned by PSA, decisions can be made without reference to what the car business needs. (PSA)
- Renault reported first half revenue pf €18.4 billion, down (34)% from prior year. An EBIT loss of €(2) billion fell from a €1.5 billion profit in the prior year. (Renault)
- Renault’s new CEO says that in the four weeks he has been on board the company has taken as many product decisions as in the preceding two years. He believes that the Renault brand needs to become less reliant of smaller city cars and move into the C or C+ segment (an area where Renault has ceded ground in recent years). He implied a product onslaught around 2023 / 2024 would improve things. He also believes that Renault’s E-Tech hybrid (a motor as generator set up without a conventional gearbox) is the right way for hybrids in Europe. (Seeking Alpha)
Subaru
- Produced 92,927 cars in Q2 2020, a drop of (65)% from the prior year. (Subaru)
Suzuki
- Reported Q2 2020 (fiscal Q1) sales of 425 billion JPY (about $4 billion), down (53)% on a year-over-year basis. Operating income of 1.3 billion JPY (about $12 million) fell (98)%. The company refused to give full year guidance, citing the continued spread of coronavirus in India. (Suzuki)
- Reported Q2 2020 (fiscal Q1) revenue of 31,983 Cr INR (about $4.3 billion), down (48)% on a year-over-year basis. JLR’s revenue (included in the prior number was £2.9 billion, down (44)% YoY. There was a before tax loss of (6,184) Cr INR (about $(820) million), of which £(413) million was attributable to JLR. (Tata)
- JLR’s new CEO is ex-Renault boss Thierry Bolloré. He will start in September. (JLR)
- Sold 1.85 million vehicles in Q2 2020, down (31)% on the prior year. Sales in China were up versus 2019. (Toyota)
- Toyota’s automated driving unit will split into two divisions. One will concentrate on self-driving vehicles whilst the other will work on infrastructure technologies and business models that extend beyond making and selling vehicles. Both will be branded as “Woven City”. (Toyota)
- Taking a stake in electric drive maker BluE Nexus (a joint venture between Denso and Aisin Seiki). (Toyota)
- VW Group’s Q2 2020 revenue was €41.1 billion, a fall of (37)% versus prior year. Operating profit was €(2.4) billion, down from over €5 billion in 2019. VW blamed the entire drop on volume and mix, exchange and poor performance in the non-car making arms. The firm still aims to be profitable in the full year and pay a dividend in 2020, albeit less than was originally planned. (VW)
Other
- Aston Martin Q2 2020 revenue of £67 million, dropped (68)% on a year-over-year basis. The operating loss of £(83) million fell from a £(36) million loss in the prior year. The firm disclosed a restatement to prior year financials that reduced 2019 EBIT. Aston Martin said revenues were in down partly because of de-stocking – dealer inventory now sits at about three months of sales. Although the DBX is in production, the sportscar factory won’t restart until the end of August. (Aston Martin)
- McLaren is now financially secure, according to the F1 team’s boss. (Motorsport.com)
- Chinese all-electric vehicle company XPeng has reportedly raised $300 million, on top of the $500 million the firm recently announced. (CNBC)
- Fisker didn’t finalise a deal to use VW’s MEB platform by the end of July as planned but the firm remains upbeat, hoping that an agreement will be reached by September. Fisker believes it has credible back-up options should the talks with VW fail. (Reuters)
- Lucid’s self-driving suite will be branded DreamDrive. The company says that the hardware (including lidar) will be capable of SAE L3 driving, and over time the software will be too. (Lucid)
- Lordstown plans to list via a merger with a special purpose vehicle called DiamondPeak. (Lordstown)
- Significance: Lordstown’s plan calls for $675 million to get the vehicle into production and achieve a cash flow positive condition. $320 million of this is reserved for unforeseen contingencies. Missing from the plan appears to be working capital, which could easily reach three digits if sales aren’t immediate.
News about other companies and trends
Economic / Political News
- European manufacturers association ACEA published a new data book. (ACEA)
Suppliers
- ZF is merging its electric powertrain division with the unit that makes traditional drivetrains and says it will no longer develop parts for vehicles that exclusively use internal combustion engines. (ZF)
- Toyoda Gosei will offer in-car wireless charging using technology supplied by Ossia. The companies claim that devices can be charged even if they are several feet from the power source. (Toyoda Gosei)
- Faurecia is buying into a seating joint venture with BAIC by taking over the DAS Group’s stake. (Faurecia)
- Alfa is divesting its stake in Nemak, which will become separately listed. (Alfa)
- Dana reported Q2 2020 revenue of $1.1 billion (down (53)% YoY) and a net loss of $(173) million. (Dana)
- Aptiv reported Q2 2020 revenue of $2 billion (down (46)% YoY) and a net loss of $(369) million. (Aptiv)
- American Axle’s Q2 2020 sales were $515 million (down (70)% YoY), with a net loss of $(213) million. (AAM)
- Visteon reported Q2 2020 sales of $371 million (down (48)% YoY), with a net loss of $(45) million. (Visteon)
- Meritor reported Q2 2020 sales of $514 million (down (56)% YoY) and a net loss of $(36) million. (Meritor)
- Goodyear reported Q2 2020 sales of $2.1 billion (down (41)% YoY) and a net loss of $(696) million. (Goodyear)
- Michelin saw a (33)% drop in tyre shipments during Q2 2020. 1st half light vehicle revenues fell (24)% compared to prior year. Light vehicle revenue of €4.4 billion and operating income was €(35) million. (Michelin)
- Stoneridge’s Q2 2020 sales were $100 million (down (55)% YoY) and a net loss of $(22) million. (Stoneridge)
- Faurecia reported first half 2020 revenue of €6.2 billion, down (31)% on a year over year basis and an operating loss of €(114) million, down from a €645 million profit in the prior year. (Faurecia)
- Continental claims to have the most powerful supercomputer in the automotive industry. (Continental)
Dealers
- Online used car seller Auto1 raised €255 million. (Reuters)
- Classifieds company Auto Trader acquired AutoConvert, which helps dealers offer financing. (Motor Trader)
Driverless / Autonomy (history)
- Toyota’s automated driving unit will split into two divisions. One will concentrate on self-driving vehicles whilst the other will work on infrastructure technologies and business models that extend beyond making and selling vehicles. Both will be branded as “Woven City”. (Toyota)
- Nissan is piloting a scheme for users to pay for parking by plugging in their electric cars and allowing to be discharged. (Nissan)
Connectivity
- Cybersecurity firm Cybellum raised $12 million. (Cybellum)
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