Joe White Global Autos Correspondent
Greetings from the Motor City!
Following the news from the World of Cars often brings on déjà vu.
U.S. and European politicians are hitting the panic buttons over cars made in Asia washing away their national champion automakers. The costs of buying and owning a car are soaring out of the reach of middle-income buyers. The Motor City Three automakers rely for survival on big, petrol-burning vehicles while rivals work overtime to perfect more energy-efficient technology.
Are you getting one of those flashes we’ve been here before?
You don’t need to have lived through the 1970s to see the rhymes with history. Today’s Auto File has you covered.
One more thing: Next week, the Auto File will take a spring vacation. I’ll be back on April 23 – just in time for earnings season.
Have a great weekend!
Today -
* China’s automakers won’t slow down
* Soaring U.S. auto insurance costs threaten auto sales
* A Modi-Musk Summit
* China’s automakers sail into the storm
Chinese automakers are pushing past warnings from U.S. and European policymakers and accelerating global expansion strategies as their home market economy slumps.
Chinese automakers and their shippers have ordered a record number of car-carrying ships to send vehicles to overseas markets, Reuters reported Wednesday.
The investments in a blue water navy of car carriers come as European and U.S. policymakers – responding to alarms from their big employers - are warning China not to export its clean technology overcapacity problem to their markets.
Chinese officials profess to be shocked, shocked by charges that the world’s biggest auto market harbors too many unproductive auto and clean technology factories.
Plant closures have pushed China’s auto sector capacity utilization to 70%, a senior official of the China Association of Auto Manufacturers said. A top official of another industry trade group made similar comments. (A 70% capacity utilization rate is still less than most automakers consider ideal.)
Breakingviews writes that independent analysts say excess capacity in China’s EV and green energy sectors is real and here to stay.
Chinese automakers argue their success is down to hard work and innovation.
On Friday, Chinese EV startup brand Hyper said it has cracked the code on solid state batteries with longer range and faster charging than current technology. Hyper plans to bring the technology to market in two years - potentially beating Western rivals.
Smartphone maker Xiaomi’s connected, electric car looks like a hit. Xiaomi chose to make the smartphone on wheels Apple did not. Is that wrong?
Here's another lesson from history: Trade barriers did not stop Toyota or Hyundai from becoming global players.
* Essential Reading
* EV sales are up globally, down in the United States.
* Toyota has a super-cheap yen at its back
* California buys a big battery to shore up its grid
* China and Carlos Tavares’ warning for Rome Chinese automakers may be closing plants at home, but they are looking to open new ones abroad – globalizing their manufacturing footprints as the Motor City Three, Toyota and Hyundai have done before. Europe is a top target.
Chinese automaker Chery is negotiating with Spain to take over a former Nissan car factory near Barcelona, with the help of a government subsidy package, Reuters reported. Chery has also talked with Italian government officials, who have put the Open for Business sign out to Chinese automakers to offset job losses at national auto champion Fiat.
Rome’s overtures to China prompted a blunt warning from Carlos Tavares, CEO of Fiat’s parent, Stellantis.
If European-made Chinese cars took sales from Fiat, “then we might not need so many plants as we have now," Tavares said. "We're ready to battle, but in a battle there are casualties."
Nice auto industry you have there, shame if something would happen to it.
* Musk and Modi
Elon Musk and Indian Prime Minister Narendra Modi are expected to meet during the week of April 22, stoking anticipation for a deal to bring a new Tesla factory to the world’s most populous country. India’s EV market is small but expanding five times faster than EV sales globally.
The Modi-Musk summit will give Tesla investors something to talk about instead of the company’s skidding share price or its first quarter numbers, scheduled for release April 23.
Most analysts expect the results will disappoint after first quarter deliveries fell 8.5% from a year ago.
Musk has also directed attention to an event August 8 when he promised to reveal the long-promised Tesla robotaxi.
The timing of an India factory and the robotaxi are uncertain – as is the status of the $25,000 Tesla vehicle that Musk has sidelined, sources told Reuters. Musk has denied this, without giving specifics.
Wedbush analysts Dan Ives said cancelling the Model 2 would be a “debacle negative” for Tesla shareholders.
* Elon Musk’s ambitious timelines
Elon Musk thrives on bold goals, as he illustrated last week during a podcast interview with the head of Norway’s sovereign wealth fund.
In the chat – which you can find here - Musk predicted:
* His X.ai startup’s Grok software will be better than OpenAI’s ChatGPT 4 when it launches in May.
* AI will be smarter than any human by the end of 2025.
* The first SpaceX rockets will land astronauts on the Moon within five years.
* The first SpaceX rockets will land on Mars within five years.
* The first humans will land on Mars within seven to nine years.
* SpaceX will have delivered 1 million or more tons of material for a Mars colony and deployed a fleet of 10,000 Mars rockets within 20 years.
Musk’s least specific prediction had to do with electric cars. “All vehicles will go fully electric. It’s only a matter of time,” he said. “That includes aircraft. It’s not going to be a completely straight up line.”
* Tesla’s Swedish labor storm is not over
Swedish union leaders said their strike against Tesla operations is not over, contradicting Elon Musk’s assertion on the podcast hosted by the head of the Norwegian sovereign wealth fund, a major Tesla shareholder.
Musk told Nicolai Tangen that the “storm has passed” in Sweden, where port workers and other unionized service personnel have refused to handle Tesla business over a wage dispute. The brawl has prompted concern from some Nordic investment funds for Tesla to respect union rights. Norway and other Nordic countries are important markets for Tesla.
KLP, a Norwegian pension fund, said it wants to raise Tesla’s anti-union tactics at the annual shareholders meeting.
Musk is fighting efforts by the United Auto Workers to organize Tesla’s U.S. workers and has clashed with German unions over labor representation at the automaker’s Berlin manufacturing complex.
* Auto insurance threatens Detroit
Speaking of 1970’s flashbacks, the biggest spike in auto insurance premiums in nearly 50 years threatens to crimp new vehicle sales – echoing the role auto insurers played – along with OPEC – in killing off the Motor City Three’s muscle cars.
Auto insurance costs rose by 22% in March compared with a year before according to the Labor Department. The inflation rate for car coverage was more than six times the overall increase in the consumer price index. (See the government data here.)
* Fast Laps
- CarMax shares tanked, falling 9% after the used car retailer’s quarterly profits fell short of expectations. CarMax warned of slower-than-forecast growth over the next six years. Executives blamed higher prices and interest rates for putting even used vehicles out of reach for many less affluent consumers. Shares in rivals Carvana and AutoNation took lesser hits.
- Ford cut prices again for certain versions of its F-150 Lightning electric pickup truck. Ford also said Thursday it will resume shipping Lightnings to dealers this month. Ford is now shipping 144,000 redesigned F-150 and Ranger trucks to North American dealers. The trucks were built in the first quarter but held back for quality checks. The cautious launches are part of an effort to cut warranty costs that hit nearly $4.8 billion last year.
- Volkswagen will invest $2.7 billion to retool a factory in China for production of vehicles co-developed with Xpeng.
- German automakers BMW, Porsche and Mercedes all reported lower sales in China for the first quarter – bad news for companies that rely on the world’s largest car market for profits and revenue growth.
- U.S. safety regulators are investigating a fatal crash involving a Ford Mustang Mach-E that plowed into vehicles stopped on a Philadelphia freeway. Officials said a different electric Mustang SUV involved in a fatal crash in Texas was operating on Ford’s Blue Cruise assisted driving system.
- Vinfast’s troubles pose a threat to its parent, Vietnam’s biggest conglomerate Vingroup, Reuters reported. Shares in Vingroup are down 38% for the year as investors digest Vinfast disclosures that 82% of the EVs it sold went to companies affiliated with Vingroup.
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(Editing by Andrew Heavens)
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