Joe White Global Autos Correspondent
Greetings from the Motor City!
Winter arrived late in the Midwest, but the past week’s bitter cold and snow more than made up for a green Christmas. As such, it’s been a great week for four-wheel-drive SUVs, not so good for electric vehicles.
Tales of Tesla owners with bricked cars shivering in lines at Superchargers in Chicago went viral this week. Ford on Friday dropped news that it will slash production of its F-150 Lightning electric truck to one shift and add a third shift of production at the Michigan factory that builds gas-fueled Broncos and Ranger pickups.
EV startup Fisker’s share price dropping below $1 – and shares of Rivian and Lucid slumping into the new year – are sprinkles on top for EV skeptics.
I spent Wednesday and Thursday at a conference hosted by the Chicago Federal Reserve where auto industry experts delivered a sobering outlook for Western legacy automakers. We’ve got highlights from the sessions below and a video replay should be here soon.
One more thing: The Auto File covers U.S. election year politics only when it affects the auto sector - and don’t worry, it will.
But Reuters has a team of reporters, editors, photographers, video journalists and data specialists sorting through the static. Stay up to speed on all the developments in the contest to set the direction for the world's largest economy by signing up here for the new weekly newsletter, On the Campaign Trail.
Have a great weekend! On with the show –
Today –
* More red flags for EVs
* Chinese automakers are on the move
* U.S. auto industry’s challenging outlook
* EVs catch cold
Electric vehicle demand rose in the United States and Europe last year and EV market share is projected to keep growing. However, there are new red flags flying over the pace of EV sales growth, and whether automakers can expand EV sales more rapidly and still turn a profit.
Ford on Friday said it will slash production of its F-150 Lightning electric pickup to one shift, and redeploy workers to add a third shift of gasoline Bronco SUV production.
The retreat underscores Ford’s decision to pull back from a deeply unprofitable EV strategy – despite the bad optics inherent in conceding that a marquee product endorsed by U.S. President Joe Biden has fallen short with customers.
The Biden administration, meanwhile, responded to concerns about inadequate EV charging infrastructure by announcing another $325 million in government funds to repair or replace EV charging stations and cut battery costs. The announcement came after the media uproar over stranded Tesla owners in Chicago’s deep freeze.
Competition in the U.S. EV market will not get easier. As Ford cuts electric truck output, Tesla is ramping up production of its Cybertruck. General Motors aims to increase production of its Cadillac Lyriq electric SUV after a disappointing launch last year.
Stellantis unveiled details of an EV program aimed at delivering electrified Jeeps, Dodge muscle cars and other models to North America and Europe.
The EV transition is hitting bumps in Europe. Tesla this week slashed prices in Europe for its best-selling Model 3 and Model Y, after shutting its Berlin factory for two weeks. Tesla blamed the production halt on Red Sea supply chain problems.
The price cuts came as German EV sales in December collapsed after the government eliminated subsidies. Volkswagen is now the top-selling EV brand in Germany. Chinese EV makers are stepping up shipments of EVs to Europe as well.
Stellantis CEO Carlos Tavares warned that automakers risk a “blood bath” if they engage in an EV price war that outruns their ability to lower EV production costs.
Amid all this, Elon Musk is provoking a potential governance crisis with a demand that Tesla’s board boost his voting control of the automaker to 25%.
* Essential Reading
* Fire trucks and America’s manufacturing divide
* Red Sea bottlenecks could have a lasting impact
* Lithium miner Albemarle cuts back
* China’s automakers won’t let up
Policymakers in Europe and the United States are sending a message to China’s EV manufacturers: Slow down your efforts to dominate the EV industry. That message is not getting through.
Global EV sales leader BYD and state-owned Chinese automaker SAIC hit the accelerator on their export strategies. BYD is sending a ship loaded with 5,000 EVs to Europe even as EU trade officials launch an investigation into whether BYD improperly benefits from government subsidies.
* A sobering view of the road ahead China’s comprehensive EV strategy was topic A among economists, trade experts and industry executives gathered in Detroit for a conference hosted by the Chicago branch of the Federal Reserve Bank.
Here are some of points raised over two days:
* U.S. vehicle sales have recovered to 90% of pre-pandemic levels, but capacity utilization remains well below the 2015-2019 average – Fed adviser Kristin Dzizcek
* The average vehicle from a new Chinese EV brand has been on the market for 1.3 years, compared with legacy models that are more than four years old. “These were designed when Baby Yoda was a thing.” – Mark Wakefield of AlixPartners
* “Every day that goes by we see more Chinese investment in Mexico” that could eventually allow Chinese automakers in to the U.S. market – Mary Lovely, Peterson Institute.
* “You are seeing a greater push toward hybrids, especially in the U.S.,” Jeff Hemphill, Schaeffler Group
* Tesla’s plan for an “unboxed” manufacturing system that breaks EV assembly into chunks could cut manufacturing costs by 30% - Mathew Vachaparampil, CEO, Caresoft Global.
* “A lot of the things we need to do for the clean energy transition rely on help from countries that are not in our circle of friends right now.” – Christine McDaniel, George Mason University
* Fast Laps
- Northvolt wants to buy cobalt from the Democratic Republic of Congo, betting it can resolve concern about abuses of mine workers to secure “affordable” battery materials.
- Goodyear named former Stellantis COO Mark Stewart as its new CEO.
- TuSimple, the robo-trucking startup, will delist from NASDAQ.
- EV registrations fell by 48% in Germany during December after the government ended EV subsidies. Overall, EV sales across the EU rose in 2023 to capture 48% of the market.
- EU lawmakers agreed on rules to cut heavy truck emissions by 90% by 2040.
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(Editing by Andrew Heavens)
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