Photo: Sure
The collapse in Tesla’s stock price has almost entirely overshadowed the sharp falls in Lucid and Rivian, Toyota is preparing for a production comeback after a series of cuts, and a parts shortage means an Italian Stellantis plant is set to grind to a halt. All that and more in The Morning Shift for Friday 20th January 2023.
1st Gear: Lucid and Rivian have their own stock collapse
There goes Tesla and steals all the limelight! While its own epic stock meltdown dominated the headlines over the past year, smaller EV makers like Rivian and Lucid fared even worse.
These two companies have lost 90 percent of their stock value since their highs. That number makes the 69 percent decline Tesla suffered a little more palatable. The two companies reportedly struggled to ramp up vehicle production, in part due to supply chain issues. Investors are uncomfortable with highly valued 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 manufacturing issues have weighed as well,” said George Gianarikas, an analyst at Canaccord Genuity. From Bloomberg:
The stunning 740% surge in Tesla shares in 2020 helped fuel investor euphoria in the industry. EV stocks of all kinds — whether the companies made passenger cars, commercial vehicles, buses, or niche cars — also exploded, with even the smallest names reaching multi-billion dollar values. Rivian and Lucid were touted as potential “next Teslas,” with valuations higher than those of century-old automakers.
Lucid began trading in July 2021 and its share value peaked at $91 billion in November of the same year. Rivian’s shares peaked just days after its November 2021 IPO, valuing the company at $153 billion — more than Volkswagen AG, even though Rivian had no earnings at the time.
Rising interest rates over the past year and fears of a recession have stunted investors’ risk appetite, causing them to flee unprofitable companies with high growth expectations. Rivian is now worth $14.8 billion, while Lucid is worth $13.7 billion. Even Tesla, which is profitable, plummeted, casting a shadow over the rest of the industry.
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Both Lucid and Rivian missed their 2022 production targets. Lucid built just 7,180 Air sedans out of the 20,000 it forecast earlier this year. Rivian just missed its goal of building 25,000 cars.
That said, Rivian is actually in worse shape than almost everyone else when it comes to a sell-off. Bloomberg reports that not only is it underperforming Tesla and Lucid, but other EV makers like Nikola, Fisker, Polestar, WorkhorseGroup, and Lordstown Motors are doing as well.
2nd gear: Toyota is planning its series comeback
After a rough 2022 production year, Toyota’s global production is set to be back with a vengeance in 2023. The Japanese automaker said global vehicle production could reach a record 10.6 million vehicles this year.
This new target is reportedly quite a jump from the record 9.05 million vehicles it set in 2019 before everything went wrong in the world. From automotive news:
Toyota has gradually strengthened production plans by seeking alternative semiconductor sourcing, establishing direct links with chipmakers and communicating more closely with suppliers.
The company produced 8.58 million vehicles worldwide in 2021.
We don’t have results for 2022 yet. They’re due out later this month, but through November, global production by Toyota and Lexus rose seven percent to 8.33 million vehicles.
Boosting production to over 10 million vehicles would be a significant achievement for Toyota as it scrambles to recoup lost production and replenish reduced inventories. It had hoped to gain ground in 2022 but suffered repeated setbacks from the semiconductor crisis, pandemic lockdowns and even natural disasters.
[…]
But Toyota’s latest outlook also includes a big caveat in the form of a 10 percent downside potential — an acknowledgment of the ongoing risk of ongoing disruptions from microchips and pandemics.
Toyota decided to offer a benchmark in a range rather than a single target. That means the company expects production of around 9.5 million vehicles to 10.6 million at best with worsening supply shortages.
Toyota was transparent when it came to communicating production targets and revisions. For February, global production is expected to be 750,000 units. The company is notoriously conservative when it comes to such estimates.
3rd Gear: Stellantis Van Factory stopped for missing parts
Stellantis is halting production at its Atessa van factory in Italy next week due to a parts shortage, according to its union. The shutdown will affect most workers at the plant, three unions representing people working there said in a statement.
The parts shortages are reportedly affecting – you guessed it – components used to make microchips, among a few other smaller things. From Portal:
With over 5,000 employees and an annual production capacity of more than 300,000 units, the Atessa plant in the central Italian region of Abruzzo is the largest delivery van plant in Europe.
It manufactures light commercial vehicles under the brands Fiat, Peugeot, Citroen and Toyota.
A spokesman for the automaker said the group has been making plant-to-plant operational decisions on a daily basis since the start of the Covid pandemic in 2020.
4th gear: BMW wants to accelerate solid-state battery development
BMW is trying to accelerate solid-state battery development by manufacturing prototype cells through a new partnership with Solid Power Inc. at its R&D facility in Munich.
The automaker will reportedly start producing cells in the first half of this year. The ultimate 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., who are also investors. If its technology meets certain performance targets, it could be considered for automotive supply deals.
Solid Power is one of dozens of companies trying to achieve the “holy grail” of battery innovation: a solid-state battery that can offer longer range, faster charge times, reduced fire risk, and lower cost. Automakers and battery companies are betting they can make such a breakthrough by the end of the decade, but they still face major hurdles to proving lab discoveries can be manufactured at scale.
“We have good teams on the Solid Power side and on the BMW side,” Lamp told Bloomberg. “When we move forward separately, it’s not as fast as joining forces.”
The company is based in Louisville, Colorado (a real place) and went public in 2021 via a reserve merger.
5th gear: AI is coming to the auto loan industry
Upstart, an auto refinance and digital auto retail platform, will begin expanding its direct lending business to dealerships across the country.
It will also allow dealerships using their Upstart Auto Retail platform to provide auto loans to their customers and even complete a purchase entirely online. From automotive news:
Currently, only about 30 of Upstart’s nearly 800 merchant customers have been able to use Upstart’s artificial intelligence-based, highly automated indirect lending system to find loans for their customers. According to Upstart Auto Retail vice president and general manager Alex Rouse, the feature was only available in-store, not for online retail.
[…]
The company’s partner lenders capture 24 percent of merchant-issued loans, Upstart spokesman Tom Brennan said. For 70 percent of the loans, Upstart was the only lender willing to fund the vehicle buyer, Rouse said.
[…]
Upstart uses AI and more data than typical lending decisions to dig deeper into a borrower’s true risk and connect customers with lenders who believe in their underwriting ratings.
[A spokesperson] said the company’s AI has resulted in approving clients who the market misperceived as too risky and avoiding loans that clients misperceived as safe. This increased accuracy has caused approval rates in the company’s personal loan business to increase by 43 percent and interest rates to decrease by 43 percent, according to Upstart.
According to Upstart CEO Dave Girouard, Upstart automates all of its credit decisions but may still need to validate customer information. While AI helps here, too, according to Rouse, only about a third of indirect car loans are truly automated without additional customer stopping activities. But he said that share could grow, noting that Upstart’s personal loans were fully automated 75 percent of the time.
The AI revolution is here folks, for better or for worse. All you have to do is hope that the computer deems you worthy of a loan.
Back: Obama’s inauguration reminds us how terrible the passage of time is
Neutral: I have no idea
Who is to say that?
On the radio: Culture Club – “Karma Chameleon
Culture Club – Karma Chameleon (Official Music Video)
I hate this goddamn viral marketing flash dance video so much.