from Tesla stock price crash has almost completely eclipsed drastic slowdowns in Lucid and Rivian, Toyota is gearing up for a return to production after a number of cuts, and a shortage of parts means an Italian Stellantis factory will shut down. All this and more in The morning shift from Friday 20 January 2023.
1st Gear: Lucid and Rivian have their own stock meltdowns
Here comes Tesla, stealing all the limelight! While its own epic stock market meltdown has has dominated the headlines for the past year, smaller EV makers like Rivian and Lucid have had it even worse.
Both of these companies have lost 90% of their equity value since their highs. This figure makes the 69% drop that Tesla suffered a little more palatable. Both companies have reportedly struggled to ramp up vehicle production in part because of supply chain issues. Investors feel a little uncomfortable with highly rated companies with little or no earnings. I can’t imagine why.
“Tesla’s stock performance has certainly had an impact on the group, and that group’s own production issues have also weighed,” said Canaccord Genuity analyst George Gianarikas. From Bloomberg:
The staggering 740% rise in Tesla shares in 2020 has helped boost investor euphoria in the sector. Stocks of electric vehicles of all kinds – whether companies make passenger cars, utility vehicles, buses or niche cars – have also exploded, with even the smallest names valuing billions of dollars. Rivian and Lucid have been touted as potential “next Teslas,” with valuations higher than century-old automakers.
Lucid started trading in July 2021 and his net worth reached $91 billion in November of the same year. Shares of Rivian peaked just days after its November 2021 IPO, valuing the company at $153 billion – more than Volkswagen AG, despite Rivian having no income at the time.
Rising interest rates over the past year and fears of a recession have dampened investors’ risk appetite, forcing them to flee unprofitable companies with expected high growth. Rivian is now worth $14.8 billion, while Lucid is valued at $13.7 billion. Even Tesla, which is profitable, has taken a dive, casting a shadow over the rest of the industry.
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Lucid and Rivian missed their 2022 production targets. Lucid only built 7,180 Air sedans of the 20,000 projected at the start of the year. Rivian narrowly missed its goal of making 25,000 cars.
Despite this, Rivian is actually in worse shape than everyone else in terms of sales.. Bloomberg reports that it underperforms Tesla and Lucid, but other EV makers like Nikola, Fisker, Polestar, WorkhorseGroup, and Lordstown Motors.
2nd gear: Toyota Is Planning Its production return
After a difficult production in 2022, Toyota’s global production in 2023 would be back in full force. The Japanese automaker said global vehicle production could hit a record high of 10.6 million vehicles this year.
The new target would be a leap from the production record of 9.05 million vehicles it set in 2019 before everything in the world has gone wrong. From Automotive News:
Toyota has gradually bolstered its production plans by fighting alternative semiconductor sourcing, establishing direct ties with chipmakers and communicating more closely with suppliers.
The company produced 8.58 million vehicles worldwide in 2021.
We don’t have the 2022 results yet. They should be released at the end of this month, but through November, global production for Toyota and Lexus rose 7% to 8.33 million vehicles.
Increasing production beyond 10 million vehicles would mark a significant achievement for Toyota as it races to recoup lost production and replenish depleted inventory. It had hoped to catch up in 2022, but repeatedly faced setbacks due to the semiconductor crisis, pandemic shutdowns and even natural disasters.
But Toyota’s latest outlook also comes with a big caveat in the form of a potential 10% downside – an acknowledgment of the lingering risk of continued microchip and pandemic disruptions.
Toyota has decided to offer guidance in a range rather than a single target figure. This means the company expects production to range from around 9.5 million vehicles, under increasing supply constraints, to 10.6 million in the best-case scenario.
Toyota has been transparent when it comes to communicating production goals and revisions. For February, global production is expected to reach 750,000 units. The company is known to be a little conservative when it comes to estimates like these.
3rd gear: Stellantis Van Factory stopped due to lack of parts
Stellantis is halting production at its Atessa van plant in Italy next week due to a shortage of parts, according to its union. The shutdown will impact most of the plant’s workers, three unions that represent the people who work there said in a statement.
The parts shortage would involve – you guessed it – components used to make microchips among a few other more minor things. From Reuters:
With over 5,000 workers and an annual production capacity of over 300,000 units, the Atessa plant in the Abruzzo region of central Italy is the largest van manufacturing plant in Europe. .
It manufactures light commercial vehicles under the Fiat, Peugeot, Citroën and Toyota brands.
A spokesperson for the automaker said the group has been making day-to-day, plant-by-plant operational decisions since the start of the Covid pandemic in 2020.
4th gear: BMW wants to accelerate the Solid State battery development
BMW is trying to accelerate the development of solid-state batteries by manufacturing prototype cells under a new partnership with Solid Power Inc. at its Munich R&D center.
The automaker would start producing cells in the first half of this year. The end goal is to develop battery cells large enough to be tested in vehicles before 2025, according to Peter Lamp, head of battery research and development at BMW. From Bloomberg:
Solid Power has development agreements with BMW and Ford Motor Co., which are also investors. If its technology meets certain performance targets, it could be considered for automotive supply contracts.
Solid Power is one of dozens of companies striving for the “holy grail” of battery innovation: a solid-state battery that can deliver longer runtime, faster charge times , reduced risk of fire and lower cost. Automakers and battery makers are betting they can achieve such a breakthrough by the end of the decade, but they still face significant hurdles in proving that lab discoveries can be manufactured at scale.
“We have good teams on the Solid Power side, on the BMW side,” Lamp told Bloomberg. “If we move forward separately, it’s not at the same speed as if we join forces.”
The company is based in Louisville, Colorado (an actual location) and went public via a stock merger in 2021.
5th Gear: AI is Coming to the Auto Lending Industry
Upstart, an auto refinancer and digital auto retail platform, is set to begin expanding its direct lending business to dealerships across the country.
It will also allow dealerships using its Upstart Auto Retail platform to allow their customers to obtain car loans and even make a purchase entirely online. From Automotive News:
Currently, only about 30 of Upstart’s approximately 800 dealer customers have been able to use Upstart’s highly automated artificial intelligence-based indirect lending system to source loans for their customers. According to Alex Rouse, vice president and general manager of Upstart Auto Retail, this feature is only available in-store, not for online retail.
The company’s partner lenders capture 24% of loans made by dealers, Upstart spokesman Tom Brennan said. For 70% of the loans, Upstart was the only lender willing to finance the vehicle buyer, Rouse said.
Upstart uses AI and more data than in typical credit decisions to dig deeper into a borrower’s true risk and to connect customers with lenders who believe in its underwriting ratings.
[A spokesperson] said the company’s AI led to the approval of customers incorrectly perceived by the market as too risky and the avoidance of loans that customers incorrectly perceived as safe. This increased accuracy led to a 43% increase in approval rates and a 43% drop in interest rates in the company’s personal lending business, according to Upstart.
Upstart automates all of its credit decisions, according to Upstart CEO Dave Girouard, but it may still need to verify customer information. Although AI is helping here as well, only about a third of indirect auto loans are truly automated without any additional customer loan activity, according to Rouse. But he said that proportion could increase, noting that Upstart’s personal loans were fully automated 75% of the time.
The AI revolution is here, folks, for better or for worse. You just have to hope the computer deems you worthy of a loan.
Back: Obama’s Inauguration Reminds Us of How Terrible the Passage of Time Is
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On the radio: Culture Club – “Karma Chameleon
I hate that damn viral marketing flash dance video so much.
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