Tesla believes it will finish the year strong, Volkswagen is turning to new benefactors to spin off Porsche on the stock market, and automakers are finally starting to understand how the silicon business works. All this and more in The morning shift for Friday, August 5, 2022
1st gear: one tenth of 20 million
Tesla built one million cars in all its factories last year. He wants to build 20 million by 2030. This seems, frankly, ridiculous, but CEO Elon Musk believes that with 10 to 12 “gigafactory” (currently there are five, and one of them just makes home solar panels), can achieve this goal. It is expected to reach 2 million by the end of this year, and is now just 500,000 shy. from Automotive News:
Tesla’s total production in 2021 was just over 1 million cars, but Musk said Thursday that the current production rate is 1.5 million cars from four factories: Fremont, Calif.; Shanghai; Berlin-Brandenburg, Germany; and Austin, Texas.
“If everything goes according to plan, we’ll come out of 2022 with 2 million annual mileage,” Musk said, adding that production at Tesla’s two newest factories, in Germany and Texas, faces “10,000” small problems , which are solved “one by one.”
Musk added that Tesla could announce a new Gigafactory location before the year is out, and that the Cybertruck will begin production in mid-2023. By the time that happens — assuming the timeframe is accurate — there will be range of alternative battery-electric pickups on sale from any American brand. The Cybertruck will be popular because it’s a Tesla, but how will it compare in terms of quality? That’s the question in my mind though.
2nd gear: The mythical Porsche IPO
Volkswagen really, really wants to pull off a Porsche IPO, but it happened takes longer than expected. The company has reportedly turned to government investment in the Middle East to ease things. from Bloomberg:
Porsche is trying to secure steady investment from some of the Middle East’s biggest sovereign wealth funds as the iconic sports car maker seeks one of Europe’s biggest listings amid market headwinds and valuation concerns, they said people familiar with the matter.
Mubadala Investment Co. and Abu Dhabi’s ADQ are among those considering funding the listing of the Volkswagen AG unit, according to the people, who spoke on condition of anonymity to discuss confidential information. State-owned enterprises in other Gulf markets, including Saudi Arabia, are also exploring investments, they said.
This is getting a bit desperate for Volkswagen, which has long announced its desire to launch Porsche, but had to shelve the plan late last year. Word on the street at the time was that the German automaker was seeking a €90 billion IPO. That target appears to have softened along with the cooling of the stock market:
Securing more major backers would be a vote of confidence as the German automaker looks to command a premium valuation for Porsche. The German state of Lower Saxony, another Volkswagen shareholder, and the controlling Porsche-Piech family are seeking a valuation of no less than 60 billion euros ($62 billion), the people said.
And investors still have plenty of questions, particularly how independent Porsche could be in such a scheme:
In early meetings with portfolio managers, the IPO was presented as a chance to invest in a company that combines the best of automotive rivals such as Ferrari NV and luxury brands such as Louis Vuitton. But some investors are concerned about a listing structure that fails to make Porsche more independent from its parent, as well as headwinds in the IPO market, people familiar with the matter previously said.
Last month’s decision to appoint Porsche CEO Oliver Blum to lead parent company Volkswagen also caught the eye of investors. In a survey by Bernstein & Co. among 58 fund managers, 71% said Blume’s dual role was a clear negative for the IPO.
The plan is looking less and less appealing to everyone by the day, but Volkswagen has apparently decided that this is Porsche’s fate.
3rd Gear: Speaking of…
July was far from a remarkable month for car sales in Germany, as consumers bought 13 percent fewer cars compared to June. Automotive News reports:
Electric car maker Tesla was the biggest monthly gainer with registrations up 142 percent for a 0.6 percent market share.
Total sales of battery electric vehicles rose 13% to 28,815 for a 14% market share.
Other monthly winners included Land Rover, up 62 percent; Dacia with a growth of 24 percent; Seat, with 9 percent; Porsche with growth of 5 percent; and Toyota with growth of 3.9%.
German premium brands had a bad month with Mercedes-Benz down 23 percent; BMW down 15 percent; and Audi down 7 percent.
The VW brand, the German market leader, saw registrations drop 20 percent, while Ford saw a 30 percent drop and Opel volumes fell 12 percent.
So far, 2022 has seen the fewest new car registrations in Germany in three decades – even worse than the first seven months of the COVID-19 pandemic in 2020.
4th gear: Carmakers cower to chipmakers
The global semiconductor shortage is easing — you can now buy a graphics card for something close to MSRP, for example — but automakers are understandably spooked. And even after supplies return to where they were before 2020, the relationship between automakers and silicon suppliers won’t go back, as an illuminating report courtesy of Reuters tell us:
CC Wei, chief executive of the world’s largest chip maker Taiwan Semiconductor Manufacturing Co, said he had never had an auto industry executive call him – until the shortage became desperate.
“For the past two years, they’ve been calling me and treating me like my best friend,” he told a laughing crowd of TSMC partners and customers in Silicon Valley recently. One automaker called to urgently request 25 wafers, said Wei, who is used to sending orders for 25,000 wafers. “No wonder you can’t get the support.”
Thomas Caulfield, chief executive of GlobalFoundries Inc, said the auto industry understands it can no longer leave the risk of building billion-dollar chip factories to chipmakers.
“One element of the industry cannot carry the water for the rest of the industry,” he told Reuters. “We will not use capacity unless that customer is committed to it and has ownership status in that capacity.”
Car companies use older, custom components that are obsolete as far as the consumer electronics industry is concerned. Automakers are just one class of customer for manufacturers like TSMC, which also supply products to the likes of Apple and Samsung.
Meanwhile, automakers have desperately tried to rebrand themselves as tech companies in the public eye over the past decade, envious of Apple’s attention — while taking no steps to actually to be done technology companies and take a more hands-on approach to chip sourcing and manufacturing. The supply chain shortfall showed them where they stood. They seem to get it now.
“We realized we were part of the semiconductor industry,” said Volkswagen Group’s Berthold Hellenthal, senior manager for semiconductor management. “We now have people dedicated solely to the strategic management of semiconductors.”
5th gear: BMW hasn’t given up on hydrogen yet
The Neue Klasse platform will form the basis for BMW’s EV future. But the automaker isn’t ruling out hydrogen fuel cell technology entirely, either, as the company’s CEO believes it still has relevance in some markets. from Automotive News:
“In our view, hydrogen is the missing piece of the puzzle that can fill in the places for electromobility where battery electric drives can’t get traction,” Zips said on the company’s earnings call Wednesday.
The first cars of new class platform are expected in 2025 and will initially include a sedan similar in size to the 3-Series midsize car and a “sporty SUV,” Zipse said on the call. “We can also imagine a hydrogen drive for this new generation of cars,” he added.
BMW will begin limited production at the end of the year of a hydrogen fuel cell version of the large X5 crossover, called the iX5 Hydrogen. “We’re already thinking about a possible next generation,” Zips said.
There are arguments for hydrogen in the commercial sector. But with most hydrogen coming from fossil fuels anyway and the eternal scramble for infrastructure, the case never seems to get more compelling.
Flipside: Before that, they were literally lit with gas
On this day 108 years ago, someone said to himself “I think I can beat him” as he stared into light for the first time:
Okay, no really — the first traffic light with a yellow light was deployed six years later. Then we really started to tempt fate.
Neutral: What should I do?
…to have the newly revealed Honda Fit RS in my life? (I know the answer to that question and, Unfortunately, the naturalization process for many countries is long and difficult.)