Good morning! It’s Friday, November 3, 2023, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
1st Gear: VW Kills A Fourth Battery Plant In Europe
Sales of electric cars seem to have the industry worried right now. Ford has cut a shift at its F-150 Lightning plant due to dwindling demand, General Motors has pushed back its EV targets and now Volkswagen has killed plans for a fourth battery plant in Europe because of “sluggish” demand.
The Audi and Porsche owner backtracked on plans to open a new battery factory in Europe this week, where it had been eyeing up locations in the Czech Republic, Hungary, Poland or Slovakia. The company will now “not make a decision” on where it will open a fourth plant as demand for EVs in Europe is “lagging,” reports Reuters. According to the news outlet:
Volkswagen has already selected sites for battery cell production in Salzgitter (Germany), Valencia (Spain), and St. Thomas (Canada), which it said had combined production potential of up to 200 gigawatt-hours (GWh) per year.
“Based on market conditions, including the sluggish ramp up of the BEV (battery electric vehicle) market in Europe… there is for the time being no business rationale for deciding on further sites,” [Chairman Oliver] Blume said in a statement provided by Volkswagen’s Czech unit Skoda Auto.
The German automaker’s backtrack follows its comments last week that demand for EVs in Europe and around the world was “not developing as expected.” VW reported that its orders for electric models had halved in Europe, with just 150,000 on order compared with 300,000 in 2022.
However, the company will be hoping for a turnaround in fortunes as new models launch. The VW ID Buzz electric van will launch in America next year and the company is also preparing to launch the ID 7 electric sedan in the coming months. On top of that, it also has a tie-in with Ford that will see it build electric cars for the American automaker.
2nd Gear: BMW Won’t Play The Pricing Game
While VW is struggling to sell EVs, German counterpart BMW doesn’t seem to be having the same problems. The company says its order book is full and there’s no need to cut costs and enter the tumultuous pricing war that was started by Tesla.
BMW revealed this week that sales of EVs were “on track” to make up 15 percent of new cars sold by the end of 2023, according to Reuters. As such, the automaker said its order book is full into early 2024 meaning there’s no need to begin cutting costs for its cars. Reuters reports:
Pressed on whether BMW felt the need to cut prices to boost electric vehicle demand, particularly in China where a battle for market share has raged this year, Chief Executive Oliver Zipse said this approach was not in BMW’s playbook.
“We have no interest in sinking prices to gain market share. That’s not our strategy. And as you can see, we are managing to grow substantially even with very acceptable prices,” he said.
As it stands, BMW’s most affordable EV is the electric i4, which starts at $52,200. At the other end of the spectrum, the new i7 retails from $105,700 here in America.
Despite their high prices, BMW’s EVs have been selling well, with the company reporting that it delivered 31,043 battery electric vehicles in the U.S. so far this year. That figure means that EVs now account for more that 12 percent of its volume sales across America.
3rd Gear: Chinese EV Makers Are Killing It
In China, car companies are also managing to sell electric cars, but in much, much greater volumes than BMW. Companies like Xpeng, Nio, Li Auto and BYD have all reported bumper sales in recent months, with BYD even threatening to overtake Tesla as the world’s largest EV seller.
BYD is clearly the star of Chinese automakers right now, as it shifted 165,505 pure battery-powered passenger cars in October alone, CNBC reports. However, the successes its seeing are spreading, and all the major Chinese EV players saw growing sales last month. CNBC reports:
Xpeng said it delivered 20,002 cars last month. That’s a marked pickup from lackluster figures earlier in the year. Just under half of deliveries in October were of Xpeng’s G6 coupe SUV, launched in late June.
Li Auto’s monthly deliveries remained far ahead of its immediate peers at 40,422 cars in October. The company’s currently available cars are not purely battery-powered since they come with a fuel tank for extending the battery’s driving range.
Nio said it delivered 16,074 cars in October, up slightly from the prior month but below the 20,462 vehicle deliveries reported for July.
As a result of the growing sales for each company, they all saw stock prices rise overnight off the back of the news. That came in stark contrast to the $145 billion that Tesla wiped off its valuation in less than two weeks.
4th Gear: Carvana’s Fortunes Are Picking Up
Last year was a year of reckoning for struggling auto dealer Carvana, which posted loss after loss, scandal after scandal and ban on sales after ban on sales. Then, at the start of the new year, it pledged to clean up its act and become profitable, and now there’s signs of progress for the struggling company.
According to its latest results, Carvana improved its net income in the third quarter and extinguished more than $800 million in debt, according to Automotive News. After a troubling 12 months in 2022, Carvana posted a “record” net income for the three months to the end of September 2023, as Automotive News explains:
The Tempe, Ariz., online used-vehicle retailer reported net income of $741 million, a record for the quarter, compared with a $508 million net loss in the year- earlier quarter. Its third-quarter net income was significantly aided by a nonrecurring $878 million gain on debt extinguishment from a corporate debt exchange. Revenue fell 18 percent to $2.8 billion.
Carvana reported $148 million in adjusted earnings before interest, taxes, depreciation and amortization, which included $40 million in nonrecurring benefits.
While things are looking up for the car retailer, there are still worrying signs when you look at the number of cars it sold. In the three month period, sales at Carvana were down 21 percent versus the same period last year.