Ultimate Resource On Electric Vehicles (Trucks, Vans, Motorcycles,etc.)
A field of electric-vehicle challengers is in hot pursuit of Elon Musk, fueled by funding from Wall Street. It will take skill, guts and good fortune to avoid a crash. Ultimate Resource On Electric Vehicles (Trucks, Vans, Motorcycles,etc.)
The race is on to become the next Tesla Inc. Tens of billions are riding on the outcome.
Investors from Wall Street to the Motor City are betting that a field of electric-car startups can emulate the rise of Elon Musk, who sits at the wheel of a company that is on track to sell 500,000 battery-powered vehicles this year and turn its first-ever annual profit. His Tesla—scheduled to join the S&P 500 next month—is now more valuable than Toyota Motor Corp. , Volkswagen AG , General Motors Co. and Ford Motor Co. combined.
It won’t be a smooth journey either for investors—which include the world’s largest money manager and the second-largest U.S. private- equity firm—or these industry upstarts, which face numerous obstacles. Most haven’t yet successfully built or sold a car. Those that have have struggled to do so profitably. Some are still hiring a workforce or fighting accusations of fraud. One recently posted a loss of $1.6 billion.
Their fate hinges on a number of unanswered questions. Are consumers ready to buy a pricey electric vehicle other than a Tesla? Or is it a safer bet to sell workaday vans and trucks to companies? Is it smarter to build your own cars in your own factory? Or should you rely on outside contractors to produce them?
Does it make more sense to focus on China, home to the world’s largest electric-car market, or stay closer to home? How much pressure will they face from old giants like GM, which said this week it would spend $27 billion through 2025 on the development of electric and driverless vehicles?
At stake is the future of transportation—and who gets to define it. There will be winners. And losers. There will be fortunes won. And lost. Here is our guide to the road ahead.
Rivian Automotive LLC, Irvine, Calif.
CEO: RJ Scaringe
YEAR FOUNDED: 2009
CAPITAL RAISED: $5.35 billion in five funding rounds in the past two years
NOTABLE BACKERS: Ford, Amazon.com Inc., BlackRock Inc.
FIRST MODEL: Well-equipped versions of the R1T, an all-electric pickup, will start around $67,500, before tax incentives. Goes on sale in June 2021.
WHAT EXCITES INVESTORS:Rivian will sell battery-powered pickup and SUVs, targeting buyers with an outdoorsy, off-roading brand. The company also has a contract to build 100,000 electric delivery vans for investor Amazon. Rivian is retooling a former Mitsubishi Motors Corp. factory in Illinois.
WHAT COULD GIVE INVESTORS PAUSE: Rivian has to build both quality cars and its sales and service network. It plans to emulate Tesla’s model and sell directly to consumers, an approach complicated by state franchise laws that protect the traditional dealership model. Then Rivian has to break into some of the toughest markets. Tesla has a commanding share of electric vehicle sales, while the Detroit auto makers dominate in pickup trucks and off-road brands.
Lucid Motors Inc., Newark, Calif.
YEAR FOUNDED: 2007
CAPITAL RAISED: more than $1 billion
NOTABLE BACKERS: Public Investment Fund of Saudi Arabia
FIRST MODEL: The Lucid Air is a battery-powered luxury sedan the company says will be able to drive more than 500 miles on a single charge in some configurations. The first Airs will cost $169,000 before tax incentives when it goes on sale early next year, with less-costly versions to follow—including an entry-level model expected to start at $77,400.
WHAT EXCITES INVESTORS: Lucid is building a factory in Arizona and aiming at the high-end luxury market. Executives hope to take on not only Tesla but Mercedes-Benz and BMW with fully-electric models. The company touts its proprietary battery and motor technology, which it says enables sports car-like performance, the ability to drive further without charging and roomier cabins in a smaller car.
WHAT COULD GIVE INVESTORS PAUSE: Challenges raising money led Lucid to delay the Air multiple times since introducing the concept in 2016. Now, other high-end auto makers like BMW, Mercedes-Benz and Porsche are rolling out their own luxury electric cars. Ultraluxury brand Bentley recently said it would sell only plug-in models by 2026, and others are poised to follow.
Lordstown Motors Corp. , Lordstown, Ohio
YEAR FOUNDED: 2019
MARKET VALUATION: $4.2 billion (as of November 19)
NOTABLE BACKERS: Workhorse Group Inc., Fidelity Investments, GM
FIRST MODEL: The Endurance is a battery-electric pickup truck marketed to commercial fleet operators with a starting price of $52,500 before federal tax incentives.
WHAT EXCITES INVESTORS: Lordstown Motors took over a former GM assembly plant in Ohio planning to build battery-powered pickup trucks for commercial fleets and hoping to start production in September 2021. The company says electric vehicles operate with lower fuel and maintenance costs—especially when compared with gas-guzzling pickup trucks—making them appealing for businesses that use them in fleets.
WHAT COULD GIVE INVESTORS PAUSE: Lordstown Motors says it has to hire more than 1,000 workers and retool a massive plant before entering an increasingly crowded electric truck market. Ford’s F-150 truck is the bestselling vehicle in the U.S., and the company is rolling out an electric version also targeting fleet buyers in 2022.
Nikola Corp. , Phoenix
YEAR FOUNDED: 2015
MARKET VALUATION: $10.1 billion (as of November 19)
NOTABLE BACKERS: German auto supplier Robert Bosch GmbH, heavy machinery giant CNH Industrial NV, hedge-fund investor Jeffrey Ubben
FIRST MODEL: The battery-powered Nikola Tre semi-truck, built with CNH Industrial’s IVECO brand, is set to begin production in late 2021. No pricing information is available yet.
WHAT EXCITES INVESTORS: Nikola is targeting the commercial trucking market. It intends to make big rigs powered by electric batteries and hydrogen fuel cells, along with refueling stations and producing hydrogen fuel. Its business model emphasizes partnerships with other big, established companies to deliver on core parts of its strategy.
WHAT COULD GIVE INVESTORS PAUSE: Nikola has said its refueling network alone could cost it billions of dollars to complete, and its profit potential depends on the company being able to hit ambitious cost projections for making hydrogen. It is also reeling from a report by short seller Hindenburg Research that claimed it misled investors about its technology. Nikola called the report’s accusations false and misleading. Company founder Trevor Milton departed soon after and Nikola’s stock has cratered. The Justice Department and Securities and Exchange Commission have initiated inquiries.
Nikola Touts Truck That Will Run 900 Miles On A Tank Of Hydrogen
Nikola Corp. said that its long-range fuel-cell semi truck will get as much as 900 miles (1450 kilometers) on a tank of hydrogen when it comes out in 2024, as the startup works to bolster its position in the increasingly competitive field of zero-emission freight vehicles.
The company released an update Tuesday after having said that the Nikola Two fuel-cell vehicle would go at least 750 miles on a tank of hydrogen. Nikola also affirmed that its Tre shorter-range fuel-cell truck, which can run 500 miles, remains on schedule to start production in the second half of 2023.
The update is meant to show that Nikola is making progress as rivals muscle in to sell hydrogen freight haulers. Last month, established semi-truck producer Navistar International Corp. said it plans to enter the market in 2023 using a fuel-cell system from Nikola supplier General Motors Co.
Staying on schedule is vital for startups like Nikola. The company has no revenue and relies on investor confidence to raise cash. Shares of a so-called bank-check company that is combining with electric-vehicle maker Lucid Motors Inc. plunged 42% Tuesday morning after the startup said that its battery-powered sedan would be delayed and that it would burn $10 billion in cash by 2024.
Nikola dropped 11% to $18.59 at 9:42 a.m. in New York. The shares had almost doubled in the 12 months through Monday.
Nikola said that the first Tre FCEV prototypes are scheduled to begin assembly in Arizona and Ulm, Germany, in the second quarter of this year and that testing and validation would continue into 2022. The Nikola Two 900-mile truck will have a sleeping cabin for drivers and a new chassis designed for North American highways.
Nikola plans to start production of a battery-electric semi called the Tre next year. It will be built in Ulm, Germany, as part of a joint venture with CNH Industrial NV and based on that company’s Iveco S-way truck platform.
Bloomberg was first to report that the first production versions of fuel-cell trucks would also be based on the S-way platform and could use either GM or Robert Bosch GmbH fuel cells.
Fisker Inc., Los Angeles
CEO: Henrik Fisker
YEAR FOUNDED: 2016
MARKET VALUATION: $4.7 billion (as of November 19)
NOTABLE BACKERS: Apollo Global Management Inc., Magna International Inc., Louis Bacon
FIRST MODEL: The Ocean, a compact SUV made with sustainable materials, is slated to begin production in 2022. Pricing starts at $37,500 before federal tax incentives.
WHAT EXCITES INVESTORS: Much of Fisker’s manufacturing and engineering will be contracted to outside vendors. Auto-parts supplier Magna, which holds a 6% stake in the startup, will build the company’s first model while Fisker focuses on the design and software. Fisker is also developing a flexible lease model that functions more like a monthly subscription. Customers will have the ability to terminate at any point and the company can re-lease the car, creating recurring revenue.
WHAT COULD GIVE INVESTORS PAUSE:This isn’t Henrik Fisker’s first attempt to get an electric-car startup off the ground. In 2007 he founded Fisker Automotive, an early rival to Tesla that ultimately went bankrupt. And his latest venture isn’t without stumbles. The company promised a battery-technology breakthrough before ditching the effort, saying it couldn’t be commercialized. Analysts say Fisker’s contract-manufacturing approach is risky and other car companies have struggled with monthly-subscription plans for vehicles.
Canoo Inc., Torrance, Calif.
YEAR FOUNDED: 2018
OWNERSHIP: private but expected to go public through a reverse merger known as a SPAC by the end of the year
VALUATION: $2.4 billion (valuation estimate at the time reverse merger was announced)
NOTABLE BACKERS: Daniel Hennessy, BlackRock, AFV Partners
FIRST MODEL: A microbus-like all-electric “lifestyle” vehicle the company describes as a “loft on wheels” will be called the Canoo. Pricing for the model, set to hit the road in 2022, hasn’t been announced.
WHAT EXCITES INVESTORS: Canoo’s technology integrates the batteries, chassis, motors and steering components. From that foundation, the company plans to make distinctive “lifestyle” vehicles for consumers available through a monthly subscription starting in 2022, and delivery vehicles starting the following year. The company has also joined with Hyundai Motor Co. to co-develop technology and expects to outsource the manufacturing of its cars.
WHAT COULD GIVE INVESTORS PAUSE: Before finding its merger partner, Canoo spent more than $300 million since inception and last year its auditor warned it was at risk as a going concern. Its first model’s success depends on buyers embracing its subscription service, which is still novel in the car business. Additionally, Canoo has yet to lock-in a deal with a contract manufacturer to build its first vehicles.
NIO, Inc., Shanghai
CEO: William Li
YEAR FOUNDED: 2014
MARKET VALUATION: $66 billion (as of November 19)
NOTABLE BACKERS: Chinese mobile gaming behemoth Tencent Holdings Ltd. , Scottish hedge fund (and major Tesla investor) Baillie Gifford & Co., Chinese state investors
MAIN MODEL: The ES6 is a five-seat SUV with a starting price of roughly 358,000 yuan ($52,000).
WHAT EXCITES INVESTORS: NIO’s stock gains outpaced Tesla’s share-price surge this year, and the company’s market value has eclipsed GM as of Thursday’s close. Sales of its luxury electric SUVs, made and sold in China, are growing. It has also started providing subscription plans for batteries which allow users to buy cars without batteries at a lower price and swap them out for a monthly fee based on their energy needs.
WHAT COULD GIVE INVESTORS PAUSE: Despite a strong 2020, NIO’s future seemed in doubt last year. It posted a net loss of $1.6 billion in 2019 and laid off roughly a fifth of its employees. It got a 7 billion yuan (roughly $1 billion) lifeline from Chinese state investors this spring, but it will need to boost sales and margins to remain competitive with Tesla, which opened its Chinese factory last year.
Li Auto, Inc., Beijing
CEO: Li Xiang
YEAR FOUNDED: 2015
MARKET VALUATION: $30.7 billion (as of November 19)
NOTABLE BACKERS: Chinese e-commerce heavyweight Meituan Dianping, TikTok creator ByteDance Ltd., BlackRock
MAIN MODEL: The Li ONE is a plug-in hybrid luxury SUV that uses a small gasoline engine to generate power for lithium-ion batteries and lists for around 328,000 yuan ($49,500).
WHAT EXCITES INVESTORS: Li Auto can appeal to drivers in parts of China where charging stations are less plentiful while still qualifying for some state subsidies. Li’s hybrids require smaller and cheaper battery packs, saving the company on costs.
WHAT COULD GIVE INVESTORS PAUSE: Li’s focus on hybrids may help it alleviate drivers’ worries about charging in the short-term, but analysts say the company will need to successfully manage an eventual transition to an all-electric future over the longer term. Hybrids also don’t get the same favored treatment that pure battery-electric vehicles do from some local governments.
XPeng, Inc., Guangzhou, China
CEO: He Xiaopeng
YEAR FOUNDED: 2015
MARKET VALUATION: $35.3 billion (as of November 19)
MAJOR BACKERS: Chinese e-commerce giant Alibaba Group Holding Ltd. , Chinese phone company Xiaomi Corp. , Qatar Investment Authority
MAIN MODEL: The P7 is a battery-electric sedan that starts at 250,000 yuan ($37,000).
WHAT EXCITES INVESTORS: Xpeng makes SUVs and sedans that undercut Tesla’s Chinese models on price. The company is also developing its own autonomous-driving software and has an in-car operating system with its own network of apps. Like its Chinese competitors, the company has a deep-pocketed tech backer in Jack Ma’s Alibaba.
WHAT COULD GIVE INVESTORS PAUSE: The Chinese government has helped stimulate electric-car demand with subsidies that are expected to be fully phased out by 2022. XPeng’s software focus is both capital-intensive and highly competitive, and the company has warned in filings its efforts could be hindered by further deterioration of the U.S.-China relationship.
Faraday & Future, Inc., Los Angeles
CEO: Carsten Breitfeld
YEAR FOUNDED: 2014
MAJOR BACKERS: Birch Lake Holdings LP, ATW Partners
FIRST MODEL: The FF91 is a luxury SUV with over 1,000 horsepower and more than 300 miles of range. The company says it can deliver the SUV nine months after raising more funds. Pricing is expected to start at more than $100,000.
WHAT EXCITES INVESTORS: Faraday has tried for years to develop a luxury SUV that will compete directly with Tesla. The company recently secured a bridge loan of $45 million as the company looks to raise more funding to make the FF91. Mr. Breitfeld is known in the auto industry for his development of BMW’s i8 hybrid sports car.
WHAT COULD GIVE INVESTORS PAUSE: Faraday Future has spent more than $2 billion and has yet to sell a single vehicle, after originally targeting 2017 to bring its first model to market. Founder Jia Yuetingdeclared personal bankruptcy last year from personal debts in China and the company is still looking to raise the funds needed to start production.
Arrival Ltd., London
YEAR FOUNDED: 2015
OWNERSHIP: private but expected to go public through a reverse merger known as a SPAC by end of the year
VALUATION: $5.4 billion (valuation estimate at the time reverse merger was announced)
MAJOR BACKERS: Hyundai Motor Co., Kia Motors Corp. , BlackRock, United Parcel Service Inc.
MAIN MODEL: an electric passenger bus expected in the fourth quarter of 2021
WHAT EXCITES INVESTORS: Arrival plans to build electric buses for urban transit or delivery vans at smaller, automation-intensive assembly plants the company calls microfactories. The factories, it says, can be built for tens of millions of dollars, far less than a conventional assembly plant. The company has an order from UPS for 10,000 vans.
WHAT COULD GIVE INVESTORS PAUSE: Many of its prospective customers—cities and transit authorities—are in fiscal trouble due to the pandemic and dropping urban transportation ridership. Arrival also faces a strong set of existing competitors due to widespread acceptance of electric buses in certain parts of the world. Most new buses sold in China are already electric, analysts say.
China’s Kaixin Nears 1000% Annual Gain On Electric Vehicle Rally
A jump in premarket trading for Chinese electric vehicle maker Kaixin Auto Holdings will bring total gains to the stock close to the 1,000% mark as investors’ euphoria with the sector lifted industry shares across the globe.
Kaixin surged 50% in premarket trading Monday after gaining over 963% since the end of September as investor optimism ballooned amid Tesla Inc.’s S&P 500 inclusion last week.
The company also announced a deal earlier this month with China-based car e-tailer Haitaoche would take a controlling interest. Haitaoche is looking to cut deals with electronic vehicle manufacturers in China.
Kaixin’s market valuation has swelled to almost $400 million from about $40 million in September.
Tesla Hits $500 Billion Mark After Soaring 547% This Year
Tesla Inc. is smashing through records as its impending addition to the S&P 500 Index has sparked a buying frenzy among investors, pushing the company’s market valuation over the $500 billion mark for the first time on Tuesday.
Shares of the electric vehicle company have soared this year, rising nearly 550%, with gains accelerating over the past week after S&P Dow Jones Indices last Monday said Tesla will be added to the benchmark. The stock surge helped co-founder Elon Musk add $100.3 billion to his net worth this year and overtake Bill Gates to become the world’s second-richest person.
Tesla shares rose as much as 4.1% in New York in early trading, touching an all-time high of $543.17, and pushing its market capitalization to over $506 billion. Crossing the treshold valuation brings true a prediction from Musk, who is said to have made it 18 months ago in a call with investors.
With Tesla set to join the index on Dec. 21, money managers and investors who closely track the S&P 500 will now have to buy the stock in order to accurately mirror the gauge. Goldman Sachs Group Inc. has said Tesla’s inclusion could result in $8 billion of demand from active U.S. large-cap mutual funds.
Tesla’s ascension and entrance into the group of blue-chip investments is also good news for the broader sector. Nio Inc., Workhorse Group Inc., Nikola Corp., Lordstown Motors Corp., XPeng Inc., Li Auto Inc. and Ayro Inc. have also rallied and some are now trading at new record highs.
Electric-vehicle makers and other related companies across the world have also enjoyed frenzied buying on optimism the auto sector will be dominated by electric-powered cars in the decades ahead. That combined with high valuations for Tesla is pushing investors to lesser known names that can benefit from the sector’s growth opportunities, but with a smaller share price.
Tesla’s Relentless Surge Propels EV Peers Amid Growing Optimism
The rally in electric-vehicle stocks received a fresh boost of confidence on Monday from Wedbush Securities, which said there is now a “major inflection” in EV demand globally.
Wedbush analyst Daniel Ives raised his best-case price target on Tesla to $1,000 from $800, reflecting a 104% premium to Friday’s close. Tesla shares rose as much as 6.7% Monday, touching an all-time high of $522.22. The shares have set fresh records in two of the last three trading days.
Smaller upstarts followed suit, with Nio Inc., Workhorse Group Inc., Nikola Corp., Lordstown Motors Corp., XPeng Inc., Li Auto Inc. and Ayro Inc. all rallying and far outperforming the broader market’s gains. The EV supply chain and other related stocks also benefited, with shares of financial technology firm Ideanomics Inc. jumping as much as 87%. The company’s EV division provides group purchasing discounts on commercial vehicles, and it said Monday morning that it’s increased its stake in e-tractor company Solectrac Inc.
While many electric-vehicle stocks attracted investor attention earlier this year, the rally reached a fever pitch last week after it was announced Tesla will soon become a part of the S&P 500 Index, suggesting index investment is gaining momentum. A strong focus on EV adoption in China and U.S. President-elect Joe Biden’s pledge to develop the industry also helped sentiment, as evident in a surge of new companies trying to enter the public markets.
Tesla’s S&P 500 Debut Is Set To Put $100 Billion In Trades In Motion
Asset managers and trading desks will be scrambling next month to account for the market juggernaut.
Additions and subtractions to the S&P 500 are normally a ho-hum affair. The 509th biggest company in the U.S. might jump to 497th place, and thus into the index. Investors who track it buy the one stock and sell another.
But no one has ever tried to add Tesla Inc., TSLA 2.05% a $555 billion company prone to huge swings in price. That’s happening next month, and it’s causing headaches across Wall Street.
To avoid missteps, S&P polled big investors on whether they would prefer adding Tesla’s weight all at once on Dec. 21 or split over two trading days in December—an unprecedented move for S&P.
Asset managers and trading desks across Wall Street have held virtual summits to debate the matter. The vote from many appears to be for the two-day option, partly because of Tesla’s size, along with the potential for elevated volatility in the stock market.
“If we begin to anticipate a worst-case scenario from what could happen from the Thanksgiving holiday, we could expect greater than usual volatility,” said David Mazza, a managing director and head of product at exchange-traded-fund manager Direxion, referring to a possible further surge in coronavirus cases. He endorses Tesla’s addition to the S&P 500 over two separate trading sessions.
Tesla’s addition to the index is expected to be particularly challenging because the company will be the largest to ever join, and it is expected to make up at least 1% of the gauge. At its current value, it would be the sixth-largest company in the S&P 500, just bigger than Berkshire Hathaway Inc. and smaller than Facebook Inc.
The stock, which has a cultlike investor base, has surged more than 40% to $585.76 since Nov. 16, when S&P announced its intended inclusion, extending its gains for the year to sevenfold. The S&P 500 itself is up 13% in 2020.
The decision rests with S&P, which said it intends to announce results of the consultation on Monday. Regardless of the outcome, investors and traders expect the market for Tesla shares to heat up even further ahead of the inclusion. Goldman Sachs Group Inc. GS -0.48% predicts shares will eventually touch $600, a 2% gain from current levels, by the time Tesla joins the index.
Tesla’s inclusion is expected to put more than $100 billion into motion. Index funds will have to sell smaller stocks already in the S&P 500, somewhere between $60 billion and $80 billion depending on Tesla’s market cap, and use that money to buy shares of the car maker, asset managers and traders said.
Actively managed funds benchmarked to the S&P 500 are projected to buy $8 billion of Tesla shares, Goldman said in a recent note. The move will also spur trading within separately managed accounts that use the S&P 500 as a benchmark, as well as hedging activity by trading firms that buy and sell ETFs.
Those sums are big, but investors say Tesla’s addition to the index would normally be manageable in a single day. Shares of Tesla are widely traded, with daily volumes reaching as high as nearly $65 billion in mid-July, suggesting there is enough liquidity to cover the trade.
The trade date, Dec. 18, coincides with a once-quarterly event known as quadruple witching, the Friday near the end of each calendar quarter on which options and futures on both indexes and stocks expire simultaneously. Volume is usually heavy on those days and would help boost liquidity on the day of Tesla’s inclusion, investors said.
They said the curveball is accounting for other potential volatility in the stock market tied to Covid-19 or signs the economic recovery is faltering. The market has been particularly rocky this year. There have been more single-day stock moves of at least 3% for the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite than in any year since 2008.
Investors who had shared their opinion with S&P have offered another suggestion that appears to have earned broad support: breaking the trades up over two different quarters, according to people familiar with the discussions.
A longer break between the trades would help asset managers digest any sharp moves related to Covid-19 or other news the market doesn’t take well and help keep funds in line with benchmarks, investors said.
“A stepped approach over multiple quarters helps with the liquidity challenges. There’s good precedent for it,” said Chris Johnson, head of ETF capital markets at Charles Schwab Corp. , referring to MSCI’s two-phased inclusion of China A-Shares to its emerging-markets index in 2018.
There are also concerns that the flurry of buying that comes with index inclusion will temporarily drive up Tesla’s share price for firms forced to buy around the addition. That means the stakes are high for S&P and index funds, which account for about 41% of the assets that track the S&P 500.
“The people who will pay the price if S&P screws up are the investors in passive S&P” funds, said Ben Inker, head of asset allocation at investment manager GMO, which oversees about $60 billion in assets.
If the huge burst of demand ahead of inclusion disappears, Tesla’s shares could fall dramatically after they join the gauge, he added.
Timing is hard for investors and indexers alike. Yahoo’s market capitalization peaked less than a month after it was added to the S&P 500 in December 1999—just before the burst of the dot-com bubble. Qwest Communications’ market cap peaked the same day it was added to the index in July 2000. Neither stock trades today.
“Why am I the sucker who has to buy it after the stock is up fivefold?” is what one might wonder if forced to buy Tesla shares after such a tremendous run-up, said Mike Bailey, director of research at FBB Capital Partners, which oversees some Tesla shares.
Elon Musk’s $139 Billion Fortune Leads Massive EV Wealth Gains
Elon Musk’s dizzying ascent in 2020 hit a new peak this week as he’s about to become the head of an S&P 500 Index company. That’s just days after surging to the second-richest person on the planet with a $139 billion fortune.
But the Tesla Inc. chief executive officer isn’t the only electric-vehicle entrepreneur to have turned fabulously wealthy this year. Some rivals are growing their net worths at an even quicker rate, according to the Bloomberg Billionaires Index.
Nio Inc. founder William Li has gotten 12 times richer in 2020 through his holding in the U.S.-listed carmaker, the fastest pace of gains among the world’s 500 richest people. The net worth of He Xiaopeng, chairman of XPeng Inc., has jumped more than 600%. Overall, fortunes of the handful of people tracked by the Bloomberg index in the EV industry have increased by more than $140 billion — including Musk’s $111 billion surge.
That doesn’t take into account the ancillary parts required for electric cars. The top shareholders of battery maker Contemporary Amperex Technology Co., for example, are worth $40 billion collectively, up about $23 billion this year.
“The No. 1 technology in vehicles in the future is software, and the chips that you have,” Henrik Fisker, co-founder of electric-vehicle maker Fisker Inc., said in a recent webcast. “So it’s not anymore who makes the axles of a car or who stamps this piece of metal.”
Traditional automakers and parts manufacturers are mostly playing catch up. Ford Motor Co., Volkswagen AG, Continental AG and Toyota Motor Corp. — all down or barely up this year — are among those seeking to shift their business to comply with stricter emission rules. One exception has been General Motors Co., whose ambitious goal of rolling out 30 new EVs by 2025 has helped buoy its shares to a three-year high.
The pandemic has sharpened the focus on the future of transportation, with experts confident that EVs will dominate the global auto market. Joe Biden’s win in the U.S. presidential election and China announcing plans recently to keep bolstering the industry have also raised expectations. That’s even as some of the companies have yet to report profits, with some market watchers questioning whether this is a bubble.
“Major countries around the world have been encouraging EV development as their main measure to cut carbon emissions, especially after the pandemic,” said Andy Wong, a fund manager at LW Asset Management in Hong Kong. “Tesla, Nio and XPeng saw improvements in autonomous driving recently, and it also helps lift their valuations.”
Musk’s rivals may be growing their wealth faster, but he’s sitting on the biggest total gains this year thanks to a 580% rally in Tesla shares. After Musk, the second-richest person among EV makers is Wang Chuan-Fu, founder of BYD Co., whose net worth has more than tripled to $14 billion.
In addition to Tesla and its bigger rivals, investors have also bet on newer firms in the sector with potential for rapid growth, creating another wave of self-made fortunes.
Fisker and Lordstown Motors Corp. founder Steve Burns have both become billionaires after taking their companies public this year through special-purpose acquisition vehicles, according to data compiled by Bloomberg. The firms’ U.S.-traded stocks jumped more than 85% last month, bolstered by the announcement of Tesla joining the S&P 500.
Representatives for XPeng and Lordstown Motors declined to comment, while a BYD spokeswoman said China’s recent plan adds potential to the industry. A Fisker spokesman said the company is focused on its first vehicle, the Ocean SUV, which is scheduled to go into production in 2022. A representative for Nio didn’t respond to a request for comment.
“The size of the EV market seems to have gotten much bigger, creating an opportunity even for newer, smaller players to vie for a piece of that pie,” said Bloomberg Intelligence analyst Steve Man.
Tesla-Style Rally Puts Chinese Electric-Vehicle Makers On Par With GM, Ford
Chinese EV companies—most of them unprofitable—have seen their valuations soar to levels similar to those of the American auto giants.
China’s electric-vehicle makers have surged in value, boosted by bold national green-energy targets and individual investors hoping for a repeat of Tesla Inc.’s stunning performance.
American depositary receipts in NIO Inc.,the best known Chinese company focused solely on electric vehicles, have jumped roughly 11-fold this year, lifting its market value to nearly $70 billion as of Wednesday, according to FactSet. In Hong Kong, shares of Warren Buffett -backed BYD Co., which produces hybrid electric- and gasoline-powered cars, as well as batteries, have more than quadrupled, valuing it at $69 billion.
The meteoric rises put these companies in line with large traditional car makers, such as General Motors Co. and Ford Motor Co. , which had market values of $59 billion and $36 billion, respectively, on a fully diluted basis.
For now, though, most Chinese upstarts are unprofitable—and they are also selling far fewer vehicles than major automobile groups. Xpeng Inc., for example, delivered more than 14,000 cars in the first three quarters of 2020. By comparison, GM sold more than 1.9 million cars in China during the same period.
Tesla’s success has fed investor enthusiasm, as has China’s pledge to become carbon-neutral by 2060, said Elizabeth Kwik, investment manager for Asian equities at Aberdeen Standard Investments. “China is very serious about achieving this goal,” she said, citing President Xi Jinping’s personal endorsement.
To help cut carbon emissions, China aims for electric vehicles to make up 20% of car sales by 2025, and 50% by 2035. According to Principal Global Equities, those goals imply annual growth of 30% to 35% through 2025 in unit sales for what China calls new-energy vehicles, a category that includes hybrids, as well as battery- and fuel-cell-powered electric cars.
While the sector once relied heavily on subsidies to boost sales, investors and analysts say prospective buyers are now more focused on other issues, as cars have become cheaper and energy costs have come down. Tax breaks, longer driving ranges, and easier access to license plates—which can be hard to get in the major cities—have also helped stoke demand. The government has cut the scope of an earlier subsidy scheme, but extended it for two years.
Drivers appear ready to go along. A recent CLSA survey of Chinese consumers found more than half of those planning to buy a new car would prefer to go electric, thanks to falling prices and improving quality, up from one-third of respondents in a 2018 poll.
As with Tesla, individual investors have helped fuel the rally. Thirty-four year-old Dennis Coyle, from Morris County, N.J., has bought more than $50,000 worth of stock in NIO since June, and said he has almost quadrupled his money. “There’s not much that would get me to sell right now,” said Mr. Coyle, who runs a landscaping business.
Ashar Qureshi, a 27-year-old product manager in Toronto, has bet on both NIO and Xpeng in recent months. His bets using options have netted him tens of thousands of dollars, and he holds close to $100,000 worth of stock in NIO, he said.
The run-up means Chinese EV stocks trade at high valuations, compared with near-term expectations for sales and profits. Li Auto Inc., for example, trades at an enterprise value—a measure that includes both debt and equity—of about 7.7 times expected sales in the next 12 months, according to FactSet, versus 1.1 times for GM.
For those lofty values to be justified, the companies will have to maintain rapid growth, while competing effectively with Tesla and big car manufacturers, both domestic and foreign. Principal Global said while the new-energy specialists would keep growing, valuations are already very generous, and likely factor in future expectations.
CLSA’s polling shows while Tesla’s Model 3 is popular in China, many prospective Chinese car-buyers favor domestic brands. “The local makers have a clear advantage in terms of producing relatively cheap and value-for-money cars compared to foreign brands,” said Ken Shin, the broker’s head of Asia energy research.
Fast take-up of electric cars in China made it a good time to consider investing, said Winnie Chwang, a portfolio manager at Matthews Asia. Still, she said the firm was mindful of intensifying competition, as conventional car makers broaden their electric offering. Xpeng was a Top 10 holding for the company’s Asia Growth Fund as of end-November.
Mr. Qureshi, the individual investor in Toronto, said he was reminded of dizzying price moves in cryptocurrencies.
“I feel like I’m still trading crypto,” he said, “just because of the returns.”
As with digital currencies previously, he said he saw signs of froth in electric-vehicle stocks, and was intending to use put options to hedge against potential losses. “I think it’s gotten a little bit out of hand,” Mr. Qureshi said.
Tesla Upgraded by S&P After Cash Levels Soar To Record High
Tesla Inc. was upgraded by S&P Global Ratings — putting the company two steps from investment-grade — after a recent share sale boosted its cash to record levels.
The rater raised Tesla one notch to BB, in line with that of Moody’s Investors Service. S&P assigned a positive outlook, saying there is at least a 33% chance that Tesla could be upgraded again in the next year if its competitive advantage “strengthens meaningfully,” analysts Lawrence Orlowski and Nishit Madlani said in a report Thursday.
Tesla raised $5 billion in an equity sale earlier this month to capitalize on a surge in its shares that pushed the company into the S&P 500. It’s had five consecutive quarters of profit and a growing recognition on Wall Street that battery-powered electric vehicles are here to stay. The Palo Alto, California-based company aims to deliver 500,000 cars this year, which would be a huge milestone for the 17-year-old company led by Chief Executive Officer Elon Musk.
This is Tesla’s third upgrade during the pandemic, a feat “almost unheard of in the sector,” according to Bloomberg Intelligence analyst Joel Levington.
Tesla Joins The S&P 500: Five Things To Watch
Traders are bracing for big swings in stock, options markets ahead of electric-car maker’s addition to index Monday.
Tesla Inc. will officially join the S&P 500 Monday, likely precipitating a frenzied Friday afternoon in markets.
The electric-car maker will be by far the largest firm by market value ever to join the S&P, the most widely tracked stock index. Tesla’s inclusion will prompt the dozens of index funds that track the S&P to seek to purchase tens of billions of dollars of stock at Friday’s closing price, in a bid to track the index as closely as possible. Because of the firm’s size and the volatility of its shares, Tesla’s addition may ripple through the market in additional, unpredictable ways, traders said.
A spokesman for S&P Dow Jones Indices, which oversees the S&P 500, said the company consulted with market participants and communicated the addition to the market “far in advance of typical index changes.”
Here Are Five Things To Watch:
1. Quadruple Witching
Tesla’s addition to the S&P 500 coincides with quadruple witching, which occurs four times a year and refers to the day that options and futures on both indexes and stocks expire simultaneously. These heavy volumes will boost liquidity and will likely help smooth the addition of Tesla to the S&P, traders have said.
Tesla will be the sixth-biggest company in the index, worth $622 billion, after soaring almost 700% this year. RBC Capital Markets estimates that about 3% of the roughly $4.7 trillion in assets that passively track the S&P will trade Friday. That is more than triple the figure at the last S&P rebalancing in September.
Traders say the heavy activity could stoke big moves across the market, as shares of companies across the index will have to be bought and sold to accommodate Tesla’s roughly 1% index weighting. The real-estate investment trust Apartment Investment & Management Co. , for example, will be dropped from the index. RBC estimates shares of companies like Xerox Holdings Corp. , Berkshire Hathaway Inc. and Intel Corp. could face selling pressure, reflecting considerations such as index weightings and other factors.
Tesla’s ascension will also affect the S&P Completion Index, which tracks all U.S. stocks except those in the S&P 500. Other indexes such as the S&P 400 and S&P 600, which track midsize and small-cap companies, and the Nasdaq-100 will also readjust their holdings.
2. Tracking Errors
Index funds tracking the S&P 500 have a small window Friday to buy a lot of Tesla stock. If they end up with too much or too little, or can’t get the closing price, the difference will register as a so-called tracking error, reflecting the price gap between a fund’s purchases and those of the index it tracks. Fund managers don’t like those because they make it harder for them to match their benchmark.
Index funds are planning to do most, if not all, of their buying of Tesla at the close on Friday to match S&P’s price, several traders and investors said. But expectations of heavy demand may make that difficult, traders added. In recent weeks, some investors have questioned whether enough sellers will come to the table, given Tesla’s famously passionate fan base and the sheer amount of buying passive investors must do.
All this could stoke big swings in shares of Tesla. Exchange operator Nasdaq Inc., where Tesla shares are listed, and regulators discussed increasing price limits on the stock to allow it to move more than the maximum 10% currently allowed before a pause in trading, said a person familiar with the matter. The limits haven’t been changed.
3. Last 30 Minutes of Trading
Tesla’s addition stands to add to the importance of the closing auction that determines end-of-day prices for thousands of stocks. Nasdaq will accept so-called market-on-close orders throughout the day. At 3:50 p.m. EST the exchange operator will start disseminating information on market imbalances, or outsize demand to buy or sell Tesla. At that point, traders will step in, likely vaulting an already crazy day to new heights.
“A few minutes before the close, when the imbalance feeds come out, a ton of algos will start pairing off imbalances or positioning their trades,” said Shishir Gupta, global index strategist at RBC Capital Markets.
4. Derivatives Market
Traders are also watching how the giant addition will ripple through the derivatives market. Tesla shares are nearly three times as volatile as the S&P this year, averaging a 4.1% daily move vs. the index’s 1.4%. Volatility is a key input to options pricing, meaning Tesla’s addition may influence prices of options contracts tied to the S&P 500 alongside other derivatives measures, traders and analysts said. The exact impact is unclear, and will depend on how volatile Tesla continues to be as well as how correlated it is to the rest of the index constituents, traders said.
“You have a much more volatile member—at a significant scale—joining an index and no real proof or historical precedent for it,” said Cem Karsan, a senior managing partner at volatility hedge fund Aegea Capital Management LLC, who has been trading Tesla options. “They have to affect each other.”
5. Smaller Stocks
Tesla’s addition could also drive moves in smaller-capitalization stocks that will be sold to make room for it, traders said. A bout of selling could lead to a liquidity crunch, potentially driving prices of some shares sharply lower.
Elon Musk Has Made Millionaires Out of His Most Loyal Fans
They bought Tesla shares early and kept the faith. After a dizzying year, is it time to cash in?
Brandon Smith does not own one of Tesla Inc.’s sleek electric cars. In the small town south of Milwaukee where he lives, even seeing one on the road is rare.
But in late June 2017, Smith poured $10,000 of savings into Tesla’s stock. He said it was the first time he’d ever invested in a company. That was just the start. Each paycheck, Smith, a video producer, would pay his bills and then buy additional shares with the rest.
“I don’t make six figures, and I don’t know anything about puts and options,” Smith, 32, said in a phone interview. “I’ve just bought and held the entire time. I’ve never sold a single share.”
Now Smith has joined the ranks of the “Teslanaires,” as some of the company’s investors call themselves, with a holding that he says has ballooned to over $1 million, fueled by a rally of nearly 684% this year as of Thursday’s close.
On Monday, Tesla will join the S&P 500 Index, a huge milestone for Elon Musk and the company he’s led as chief executive officer since 2008. It’s also a big day for the legions of retail investors who flocked to Tesla’s clean-energy mission and rode out numerous storms — production misses, Elon’s tweets and even the pandemic market crash.
Those who held on have been handsomely rewarded: Tesla’s shares have soared this year after five consecutive quarters of profits and growing sentiment on Wall Street that the shift toward electric vehicles is accelerating.
Where the stock heads from here is up for intense debate. To begin with, investors and analysts still wrangle over what Tesla is: A car company? A clean-energy behemoth? A technology company? There’s also disagreement over how it should be valued. Goldman Sachs has a price target of $780, while JPMorgan Chase’s is down at $90.
You don’t have to work on Wall Street to get deeply into the weeds on Tesla’s operations and finances. A dense, sprawling ecosystem of podcasts, Reddit threads and YouTube channels dedicated to nearly every facet of Tesla makes it possible to learn about the company without ever reading an analyst report.
There are countless forums and regional owners’ clubs that gather on Zoom or meet up to check out Tesla’s latest Supercharger station. Ryan McCaffrey’s weekly “Ride the Lightning” podcast is in its fifth year, and Rob Maurer’s “Tesla Daily” drops every weekday. Smith said he probably spends two to three hours a day learning about Tesla, often scrolling through the forums on his lunch hour.
Tesla has fully embraced retail investors like no other publicly traded company. Its quarterly earnings calls regularly feature crowd-sourced questions. During a contentious earnings call in May 2018, Musk chided Wall Street analysts for asking dry and “boring, bonehead” questions. “We’re going to go to YouTube,” he said, and then allowed Gali Russell, the host of a financial talk show geared toward millennials, to ask questions for 23 minutes.
On a January earnings call, Musk said he thinks retail investors have “deeper and more accurate insights” than many institutional investors and analysts.
Laura Goldman, 62, says New York-based analysts missed how much appeal the company holds for a younger generation that’s deeply worried about the climate crisis. Goldman, a former stockbroker, doesn’t even own a car — let alone a Tesla. She bought 300 of the company’s shares in the fall of 2010, a few months after its IPO, and picked up more stock over time.
All the while, Goldman says that legacy automakers like General Motors Co. and Ford Motor Co. appeared to sit on the sidelines as the electrified future arrived. “I have rich Republican friends,” she said. “When they started buying Tesla cars, that convinced me to hold onto the stock.”
As of Thursday, she was close to joining the ranks of paper millionaires, saying her Tesla shares were worth nearly $984,000. She notes how Musk is often portrayed as crazy — as if that’s a negative. But the billionaire’s version of crazy is a willingness to push boundaries, she said, and she believes that’s the reason Tesla has succeeded.
Then there are the investors in Tesla’s stock who are also proud owners of the company’s cars.
Basel Termanini, 60, took delivery of his first Tesla — a Model S — on Christmas Eve 2012. He’s owned seven and currently drives a Model Y in Pittsburgh, where he is a doctor. “Driving a Tesla is like the difference between a black-and-white TV and color,” Termanini said in a phone interview. “Once you drive a Tesla, you can’t go back.”
Termanini invested in the company a few months after the June 2010 IPO and says his investment has grown to over $2.5 million, between options and stock. He has traded over the years but he’s not selling now, a decision that’s made easier by the fact that he has a diversified portfolio.
Investing in a single company — particularly one as historically volatile as Tesla — is risky. But the appeal of the sector is easy to understand.
“Electric vehicles are one of the areas of the energy transition that individual people can very much relate to,” said Colin McKerracher, head of transport analysis at BloombergNEF. “Mobility is personal in a way that decarbonizing electricity supply, for example, is not. The way you turn on your lights is still going to be the same whether it was powered by solar or gas and coal in the past. The way you drive looks and feels different in this new era, and I wouldn’t underestimate the excitement that’s creating for investors.”
Holy smoke’s I’m a $TSLA-naire! It was @Gfilche that got me inspired to invest 42 months ago, @truth_tesla‘s deep dives that bolstered my confidence, @TeslaPodcast kept me regularly informed. TY to @Tesla employees & @elonmusk for executing. The journey just started, HODL pic.twitter.com/9jCEFgzcDv
— Brandon Smith (@BLSmith2112) December 8, 2020
The question for many of these Teslanaires is what to do now. Spread some risk into other investments? Sell to pocket some of the gains? Or stick with Musk?
Goldman said she’ll be watching closely to see how the stock trades as part of the S&P 500, since that means Tesla will appear in more mutual funds and large institutional holdings. “The volatility and the fanatics in the stock are part of what made investing in Tesla so fun,” she said. “It was fun to be part of the anti-establishment. It’s not as fun to be part of the S&P.”
Smith doesn’t have an exit strategy for his Tesla investment, though he’s begun thinking of finally building, or buying, his own house. Currently, he and his brother share a house that their grandfather built in Cudahy, Wisconsin. Monday — the day Tesla joins the S&P — is his 33rd birthday. He remains bullish on Tesla’s future, pointing to what he sees as the growth still to come.
“The next big thing is fourth-quarter deliveries, when Tesla could reach 500,000 deliveries for the year,” said Smith, who has a Cybertruck T-shirt and was able to get a bottle of “Teslaquila” before it sold out. “Then you have the new battery production in Texas and the Cybertruck, which doesn’t even need a paint shop. There’s the energy side of the business. I don’t think people realize the scale of Tesla’s ambitions.”
Nikola, Republic Services End Collaboration On Garbage-Truck Development
Longer-than-expected development time and unexpected costs are cited.
Nikola Corp. said Republic Services Inc.,its partner in an effort to develop zero-emissions garbage trucks, has agreed to terminate the collaboration, marking a setback for the electric-truck startup as it tries to re-establish credibility with investors.
The Phoenix-based truck maker said Wednesday the two companies will no longer work together to develop battery-electric garbage trucks, and the move will result in the cancellation of Republic’s order for potentially several thousand vehicles.
In August, Republic revealed the Nikola partnership, saying it would purchase at least 2,500 or as many as 5,000 trucks. Republic also said at the time it expected to begin integrating the trucks, which were meant to have a range of 150 miles, into its fleet beginning in 2023.
In a statement Wednesday, Republic said it remains committed to an electrified future and still plans to work with other manufacturers on electric trucks.
Nikola, which went public in June through a reverse merger, has attracted investor attention with its hopes to transform the trucking industry. But in recent months, the company has struggled with a range of challenges, leading executives to fall short on meeting objectives they set for the year—among them securing a large order for trucks still under development.
Nikola shares fell 9.8% in Wednesday afternoon trading.
In a letter to employees, Nikola CEO Mark Russell said Nikola executives decided to end the Republic collaboration after realizing that fulfilling the order would require Nikola to design an entirely new truck, rather than use designs already in the works.
The five-year-old startup was rocked in September when short seller Hindenburg Research released a lengthy report casting doubt on the company’s ability to deliver on its technology and calling Nikola an “intricate fraud.” Shortly after, Nikola founder Trevor Milton abruptly stepped down, and Steve Girsky, a veteran auto-industry executive, was named chairman.
Nikola has called the report’s claims false and misleading.
More recently, General Motors Co. has pulled back on a plan to take an equity stake in Nikola in exchange for building an electric pickup truck for the company, called the Badger.
After surging this summer, Nikola’s stock has taken a beating in recent months as executives continue to deal with the fallout of the short seller’s report and the scrutiny it has brought to their operations.
Nikola’s shares closed at $16.83 Tuesday, down roughly 60% since the Hindenburg report was published in early September.
Nikola executives have said collaborations like the one struck with Republic are central to its business plan, which aims to build zero-emissions trucks and lease them to fleet operators.
Since Mr. Milton’s departure, they have worked to reorient the business, sharpening its focus on heavy trucks and pivoting away from some projects championed by the founder, such as the Badger pickup truck with GM and a plan to sell zero-emissions personal watercraft.
Analysts said the canceled order was a short-term setback, but it would allow the company to better focus on its core business of semi-trucks for long-haul transportation.
“This is likely the last of the ‘restructuring’ that was required to refocus,” Chris McNally, an analyst at Evercore ISI, wrote in a note Wednesday.
Nikola also said Wednesday that it has laid out a road map that has deliveries of its Tre semi-truck starting in the U.S. next year. It said it is planning to break ground on its first commercial hydrogen fuel station in 2021.
Executives have promoted the Republic order, and another one placed in 2018 by Anheuser-Busch InBev SA’s U.S. subsidiary for as many as 800 hydrogen-electric trucks, as a validation of its strategy, which aims to disrupt the commercial trucking industry—a sector that has long been dependent on fossil fuels.
A spokesperson for AB InBev didn’t respond to a request for comment.
In September, Ingrid De Ryck, the company’s vice president for procurement and sustainability, said AB InBev would continue to work alongside all its partners, including Nikola, to reach its sustainability goals.
Nikola is trying to overcome other challenges as well.
The allegations raised in the short seller’s report have become the subject of investigations by the Justice Department and Securities and Exchange Commission, the company has disclosed in regulatory filings.
Nikola has said it is cooperating with the inquiries. The Justice Department and SEC declined to comment.
The company is also still trying to secure a partner to build a network of hydrogen-fueling stations, another goal executives had hoped to achieve in 2020. Talks with potential partners, including oil giant BP PLC, stalled this fall following the release of the short seller-report, The Wall Street Journal has previously reported.
Mr. Russell said last month Nikola still hoped to conclude a pact with a hydrogen-station partner in 2020, but disruptions caused by the Covid-19 pandemic had slowed progress.
Tesla’s Dominant Position In China Could Be Threatened Next Year
While Tesla regularly topped monthly premium EV sales tallies this year, helped by the sedans churned out from its multibillion-dollar plant opened to much fanfare in Shanghai last December, 2020 was also marked by rivals catching up. In 2021, the breadth of the competitive attack that Tesla faces will be greater than ever.
Whether Tesla can defend its lead in China will be key to its wider growth and earnings trajectory. While still in its infancy, China’s electric-car market dwarfs that of other countries and the government is intent on further expansion amid commitments to reduce fossil-fuel use.
Tesla’s fate in China will also show whether it can grow into a truly global carmaker, an ambition investors are banking on after pushing the company’s shares up almost 700% this year.
A trio of local champions Nio Inc., Xpeng Inc. and Li Auto Inc. has emerged as the front line against the Palo Alto, California-based company.
All traded in the U.S., and enjoying backing from government entities or internet giants, the three startups are quickly winning fans, with sales of their electric SUVs, sedans and crossovers also rising in 2020 and their shares surging on Tesla’s coattails.
“Since June, you’ve seen a steady rise in sales by Nio, Xpeng, and Li,” said Bill Russo, founder and chief executive officer of advisory firm Automobility Ltd. in Shanghai. “Can you stay competitive with these fast-moving, internet-backed, very deep-pocketed companies?”
China is Tesla’s largest market after the U.S., with sales in Asia’s biggest economy topping 120,000 units this year, according to local registration data. And Tesla keeps ramping up production in Shanghai, prompting analysts to forecast that China will account for a bigger slice of its sales and earnings in the years ahead.
The Model 3 sedans Tesla sells in China have higher profit margins than its vehicles in the U.S. and Europe, and China could make up more than 40% of Tesla’s sales by early 2022, Wedbush Securities analyst Dan Ives said in a Dec. 21 research note. That compares with about 20% now.
“China could see eye-popping demand into 2021 and 2022 across the board with Tesla’s flagship giga 3 footprint a major competitive advantage,” he said, referring to the Shanghai plant.
Waiting in the wings for Tesla is the Model Y, which Musk says has the potential to outsell all other vehicles it makes. The crossover is already being built in California, and a Shanghai-assembled version is clearing the final regulatory stages to start selling in China as soon as next year.
Earlier in December, drone footage captured around 40 Model Y vehicles being driven out of the factory and wrapped in protective covers.
“China will continue to fuel Tesla’s global growth in 2021, more so than ever,” Sharon Li, a JL Warren analyst, said in a recent note.
The carmaker is also expanding its geographic footprint, recently opening multiple Tesla centers in China’s lower-tier cities including Weifang and Linyi in northeastern Shandong province. Meanwhile, it’s bolstering its public and government relations teams in smaller hubs including Shijiazhuang and Haikou, in addition to larger cities.
Tesla is starting local production of chargers in Shanghai too, part of an effort to expand its charging network in more cities. The company recently completed its 500th super-charging station, marching toward an annual target of 650.
Trade group China Passenger Car Association predicts that Tesla will sell as many as 280,000 vehicles in the country next year. While that represents impressive growth over 2020, it would still leave more than 80% of the market up for grabs. PCA predicts total sales of 1.7 million new energy vehicles for 2021.
hat means local premium brands Nio, Xpeng and Li are increasingly a threat — combined, the three companies already approach Tesla’s monthly sales tally. SAIC-GM Wuling Automobile Co. and BYD Co., which sell less expensive electric cars, are also gaining momentum.
Nio, the biggest of the Chinese trio, has steadily boosted sales of its electric SUVs that it sells at a price as much as 40% higher than Tesla’s Model 3. The company’s retail strategy includes clubhouses with showrooms, lounges, work spaces, theaters and even camp activities for customers’ children.
A Tesla price cut earlier in the year added some pressure, but a subsequent reduction failed to have a similar impact, Nio CEO William Li said on a recent earnings call.
“We didn’t see any specific impact on our order intake,” Li said. “This proves that we have our own unique advantages.”
Xpeng similarly has seen brisk sales growth, helped by lower prices than Tesla’s. The company, which touts the smart features of its vehicles, raised $2.2 billion this month selling additional stock, capitalizing on a recent share-price surge.
“I would call 2020 Year One of an intelligent electric-vehicle market in China,” Xpeng Vice Chairman Brian Gu said in a phone interview on Nov. 27. “We’re seeing really good sales of many good products.”
But Tesla and its Chinese rivals also face a common threat: conventional carmakers swiftly moving to electrified autos. Volkswagen AG plans to introduce eight ID series electric models in China by 2023, while Daimler AG, the maker of Mercedes-Benz luxury cars, has launched the EQC electric SUV and plans to expand its lineup of purely battery-powered vehicles to at least 10 in coming years.
While their EV volumes in China are still small — they’ve yet to break into the Top 10 — the traditional giants have the advantage of vast dealership, service and supply-chain networks.
China’s government, meanwhile, is doing its best to lure consumers and old-school automakers away from gas guzzlers with subsidies and restrictions. The target is to have NEVs account for 20% of the market by 2025, up from about 5% currently.
Tesla will have its work cut out to ensure it’ll be among the beneficiaries of that push. Lu Bin, a fund manager at HSBC Bank (China) Co. and an early buyer of a China-built Model 3 sedan, said he opted for a roomier Li Auto model when he purchased a new EV in November. The range is better, plus the six-seater is more suitable for families.
“Tesla had the early-mover advantage and has shown the way to consumers,” said Russo. “But now, there are more options.”
Tesla’s Model S Plaid Is Fastest-Accelerating Production Car
Remember when Elon Musk said Tesla only continued to build the Model S and X for sentimental reasons? (during an earnings call, October 2019).
Now we have refreshed, updated ‘Plaid’ versions of each. Tesla has given the cars all-new interiors, with updated screens and climate controls. It’s also redesigned the battery pack and modules in the new cars and has been making upgrades to the plant in Fremont ahead of their launch later this quarter.
The Model S Plaid is quite something. Tesla says it’s capable of 0-60 in less than 2 seconds, claiming in the earnings presentation that it’s the fastest-accelerating production car in the world. It will cost $112,990, including potential incentives.
That will get you 390 miles of range and a top speed of 200 miles per hour. Deliveries will start around March, according to the company’s website.
There’s a higher-spec $132,990 Plaid+ model which has a greater 520-mile range on a single charge. The company estimates it will be set for delivery in late 2021.
The plaid version of the Model X has had a similar makeover and injection of speed and power. In fact, Tesla claim it’s the “highest performing SUV ever built” in terms of power and acceleration, according to its website. Starting at $113,190, inclusive of incentives, it has a maximum range of 340 miles (less than the more standard Long Range model) and can do 0-60 in 2.5 seconds.
Three high-performance motors give the X plaid peak power of 1,020 horsepower. Musk said in the earnings call deliveries of the Model S Plaid will be in February.
For more on Tesla Fourth-Quarter Earnings, click here for our TOPLive blog.
Electric-Car Buzz Pushes Up Shares In Company With Nothing But Cash
Churchill Capital Corp IV’s stock has more than tripled on report it is in talks with Lucid Motors.
When news emerged in December that Churchill Capital Corp CCIV 14.66% IV, a blank-check company with no assets beyond its $2 billion in cash, had made an offer to acquire DirecTV, its stock barely moved.
After a report in January that Churchill was in talks to merge with the buzzy electric-vehicle startup Lucid Motors Inc., it was a different story.
Speculation about the possible combination spread on Reddit and other social-media platforms, fueled by Tesla Inc.’s TSLA 0.26% surge and a bet on a post-gasoline future. Traders sought additional information online and pointed to myriad bits of information to infer a deal was imminent.
One online discussion prompted a trader to drive to an airport to photograph a jet that other traders conjectured was connected to the deal.
The stock has surged more than 220% since the report last month, the biggest-ever stock increase of a special-purpose acquisition company before announcing a merger, according to SPACinsider.com. Talks between the two companies are continuing, though a deal isn’t imminent, according to people familiar with the matter.
Such stock run-ups historically have been uncommon for SPACs, and even after they announce merger targets, their shares rarely jump so significantly. That is because the SPACs are paying what they believe to be a market price for the company they are merging with, so in theory, the shares shouldn’t surge unless they are undervaluing their target company.
Churchill’s experience illustrates the extraordinary appetite among stock-market investors for electric-vehicle startups today, where even the prospect of a merger can send a SPAC stock soaring. The fervor is being fed by the rise in Tesla’s shares, which has pushed the auto maker’s market capitalization to above that of Facebook Inc. as investors bet on a rapid global transition to electric cars and believe the time is ripe to invest in the next growth opportunity.
Tesla has a market value of more than $800 billion, about seven times that of Ford Motor Co. and General Motors Co. combined, though its U.S. market share in 2020 was about 1.2%, according to LMC Automotive.
Churchill said last month in response to unusual trading of its stock that it is “always evaluating a number of potential business combinations.” Lucid declined to comment.
Several companies planning to make electric cars, including Fisker Inc. and Lordstown Motors Corp. , are valued above $4 billion; they haven’t produced any products or revenue.
The clamor has sparked comparisons to the dot-com bubble of 2000, when a similar rapid run-up of stocks with little or no revenue was common. It has led to more voices calling the combined electric-vehicle and SPAC mania unsustainable.
“It has gotten very frothy,” said David Erickson, a senior fellow at University of Pennsylvania’s business school and a former investment banker who took tech companies public in the dot-com boom. The broad SPAC and electric-vehicle frenzy “is gonna end badly—it’s just a question of when and how,” he said.
Churchill IV is headed by Michael Klein, a former star investment banker at Citigroup Inc. and adviser to Saudi Arabia’s sovereign investment fund. Mr. Klein’s Churchill Capital Corp. has created several SPACs, including one that merged with health-care company MultiPlan Inc. in an $11 billion deal last summer.
Churchill IV raised $2 billion in July, making it one of the largest SPACs ever, and began looking for a target company with which to merge.
In December, The Wall Street Journal reported the company was making a bid for DirecTV, a unit of AT&T Inc. Churchill’s stock, which had been hovering around $10 per unit since it went public at that level, rose 0.6% for the day.
On Jan. 11, Bloomberg News reported Churchill was in talks to merge with Lucid, and Churchill’s stock soared 50% to $15. Lucid is backed by $1 billion from Saudi Arabia’s Public Investment Fund and is further along in development than many young rivals in the electric-vehicle space, with plans to start producing cars later this year.
Little is known about the terms of any potential deal or Lucid’s finances, information that would normally be crucial to assessing how a combination should affect Churchill’s stock.
The report spurred users on Reddit, Twitter Inc. and the finance social-media platform StockTwits to point out apparent connections between Churchill and Lucid. There are some factual commonalities, such as an executive who worked with both companies. Other possible links have been more tenuous, and in some instances inspired real-world sleuthing.
One online poster noted a private jet was going on a multi-leg trip from San Jose, Calif., to Phoenix, to Teterboro airport near New York City—all places with operations for Lucid or Churchill. The observation spawned speculation on Twitter and Reddit that the jet was ferrying executives involved in an imminent deal.
One user on StockTwits drove to Teterboro and waited for two hours, photographing the jet upon landing. The user, who declined to be named, said he didn’t think the jet was connected, as it appeared to be a family exiting the aircraft.
The stock soared as high as $27 in January before surging again Tuesday to close above $32. Trading last month was halted multiple times amid volatility.
Buyers include Reddit users like Fred Rosa.
Mr. Rosa, a 21-year-old based in Amsterdam, recently finished college and has been investing for about six months on the side, finding he could make far more trading individual stocks than index funds.
He found out about Churchill, which has the ticker CCIV, by reading a channel on Reddit—a so-called subreddit—devoted to SPACs.
“I just opened Reddit one day and literally every comment on the SPAC subreddit was CCIV,” he said. He knew he was buying on speculation, he said, but “the way it was being framed at the time was it was the trade of a lifetime.”
As days ticked by without an announcement, he grew nervous. Perhaps the commenters were wrong, he thought, realizing he could lose a lot of money if a deal didn’t materialize. He sold, taking a roughly $950 profit on the $3,500 he put in.
“This is a meme market,” he said. “That is just how things are right now.”
Ford’s Electric Truck Passes The ‘Torture Test’ Without A Whimper
There’s no better way to describe the electric F-150 than in the President’s own words: “This sucker’s quick!”
After jouncing through muddy ruts and drifting on gravel trails, we pause in the electric F-150 Lightning pickup among a grove of trees on a rugged off-road course deep inside Ford Motor Co.’s suburban Detroit proving grounds. “Roll down your window and take a listen,” instructs my driver Anthony Magagnoli, a Ford engineer.
The sound we hear is far from silence — birds, a breeze, the buzz of cicadas — but what we don’t hear is the roar of an engine or the rumble of an exhaust pipe. This 3-ton truck has somehow managed to blend into the environment.
Such are the juxtapositions of Ford’s new electric truck. It can handle everything you can throw at it, capable of towing up to five tons, fording streams and bottoming out on stony ground without damaging the big battery beneath and racing from zero to 60 miles per hour in 4.5 seconds— sports car speed. And yet, it doesn’t even purr like a kitten. It’s a silent runner that burns no dinosaur bones.
Since the Lightning was introduced on May 19, Ford has taken more than 100,000 reservations of $100 for the plug-in pickup. Apparently, when you convert the best-selling vehicle in America from guzzling gas to running on electrons — and start prices below $40,000 — that gets people excited.
It’s generated buzz on late-night talk shows and in online chat rooms. And there was the moment nearly all of America saw, when President Joe Biden gave the Lightning the thumbs up — his presidential seal of approval — after a wild ride on a Ford test track last month.
Still, there have been questions about how tough a truck can be if there is no internal combustion engine blazing beneath the hood. Ford saw that coming and put this rig through what it calls “torture testing” that included hauling heavy loads up twisting, deadly mountain roads in Iowa Hill, California, and subjecting it to extreme temperatures as low as 40 below Fahrenheit to make sure the battery would still work. “The truck can thrive even in the toughest driving ordeals,” says Ford.
We’ll see about that.
Actually, we saw about that.
On a hot and sunny day last month, I rode shotgun in the Lightning on three courses designed to test its limits. The truck, which goes on sale next spring, is so new the company would not allow outsiders to drive it, except, of course, for POTUS. Biden was in Detroit visiting the factory where Ford will build the Lightning and managed to squeeze in an unscheduled spin. His review: “ This sucker’s quick!”
If there’s one word to describe my ride in the Lightning, it’s speed. The truck’s chief engineer, Linda Zhang, eased it onto a banked, high-speed oval at Ford’s proving grounds. “Are you ready?,” she asked, and I thought I was — until Zhang floored it.
The G-forces from the instant torque generated by the truck’s two electric motors pressed me deeply into my seat and left my stomach somewhere on the road behind us. I hadn’t felt this kind of queasy since the last time I took hot laps in an actual race car.
The electric drivetrain, powered by a 1,300-pound battery, kicks out 563 horsepower and 775 pound-foot of torque, making it the most powerful F-150 ever. That torque came in handy for our next demo — towing a 6,000-pound trailer up and down a steep and winding road. Torque is what you need most for towing and hauling.
And the electric F-150 can tow up to 10,000 pounds and haul another 2,000 in the bed. Yet as we navigated this undulating course, my driver, Ford engineering manager Dapo Adewusi, never had to raise his voice. There was no clunk or groan coming from the trailer. Just a smooth, quiet ride that seemed as if we weren’t pulling anything.
But it was off-road where the Lightning really proved its mettle. It splashed through muddy bogs and slammed its undercarriage against grassy mounds with nary a nick or scrape. The big battery is safely entombed inside a water-tight metal casing surrounded by crash-absorbing protection.
Ford says the truck’s frame is made from the strongest steel it’s ever employed on an F-150. And the entire electric drivetrain is protected by steel skid-plates running underbody for the full length of the vehicle.
Jostling along those rugged trails felt no different in the electric F-150 than it does in a gas-fired one. The difference came when we parked atop that quiet hill in the woods. “This is what I like the best,” Magagnoli said. “All you hear is nature.”
The $20 Billion Winner Of The American EV Startup Boom: Saudi Arabia
World’s largest exporter of oil made well-timed bet on Lucid Motors.
The single biggest financial beneficiary of the recent U.S. electric-vehicle startup boom is an unlikely candidate: the world’s largest exporter of oil.
The kingdom of Saudi Arabia stands to record a profit of nearly $20 billion on a $2.9 billion investment in Lucid Motors Inc., a San Francisco Bay Area electric-car maker that is set to list publicly after it completes a merger with a special-purpose acquisition company Friday. The Saudi Public Investment Fund will own over 60% of the company, which is expected to have a market capitalization of about $36 billion based on the SPAC’s current share price.
The listing represents the fruits of a well-timed 2018 investment in Lucid when it was struggling for survival. Its Saudi lifeline came thanks to Mohammed bin Salman, the crown prince who was pushing his country’s Public Investment Fund to spend unprecedented sums on startups as part of a bid to diversify the country’s wealth away from oil.
More recently, the Saudi investment in Lucid benefited from the meme stock phenomenon that has reshaped financial markets. A flood of amateur stock traders has pushed up prices of companies merging with SPACs, especially in the electric-vehicle space, as traders bet that startups will emulate Tesla Inc.’s stock market success leveraging the auto industry’s shift away from gasoline engines.
Lucid and the SPAC it is merging with, Churchill Capital Corp. IV, gained a particularly avid following on Reddit and Twitter. After the pending merger of the two companies was reported in January, an online frenzy pushed Churchill’s stock up more than 500% by February before shares retreated significantly.
Lucid’s expected market capitalization is nearly twice the valuation of Nissan Motor Co. and about two-thirds that of Ford Motor Co. , which delivered more than 4 million cars last year. Lucid has yet to sell any cars. It plans to start production later this year.
In all, more than 23 companies making electric vehicles or batteries have struck deals to go public through SPACs in the past year. The deals have raised over $17 billion for the companies, many of which have no revenue and have won over investors with projections of rapid growth. Lucid has said it expects revenue of $22 billion in 2026.
Lucid is substantially more valuable than any of the other U.S. electric-vehicle startups that have gone public recently, and the Saudi gains are far and away the largest by total dollars.
The second-most-valuable U.S. company in the sector to list recently, battery maker QuantumScape Corp. , is valued at around $9 billion. Large shareholder Volkswagen AG has logged a gain of over $1 billion on its $300 million investment in QuantumScape.
Lucid, Churchill and the Saudi Public Investment Fund declined to comment.
Lucid, formed in 2007, initially tried to make batteries before shifting its business model to making cars. For years, electric-vehicle companies weren’t en vogue among venture capitalists, and the company couldn’t find funding to build its factory.
Then Prince Mohammed embarked on a plan to sell some of the country’s state-owned oil company and plow the money into sectors including tech and electric vehicles.
The Saudi fund held early talks about a possible buyout of Tesla in the summer of 2018 before later opting to take majority ownership in the much more nascent Lucid with an initial commitment of $1.3 billion. As part of the deal, Lucid committed to build a factory in Saudi Arabia, according to the company’s securities filings.
Lucid was one of the last major investments by Saudi Arabia before the 2018 murder of Saudi dissident journalist Jamal Khashoggi. Western appetite for Saudi money has remained subdued since then. Earlier this year, the U.S. declassified a report that blames Prince Mohammed for ordering the killing. He has said the killing happened on his watch but denied ordering it.
The Saudi investments in tech startups tended not to entail the levels of diligence or research that other institutional investors often bring to such deals, said Steffen Hertog, a professor at the London School of Economics who has advised the Saudi government.
This approach brought some of the largest checks ever written by a sovereign-wealth fund to Lucid and other startups. These Saudi investments “were driven a lot by personal relationships and tastes” of Prince Mohammed and his deputies rather than an institutionalized investment strategy, he said.
Officials at the Saudi fund have previously said their approach was driven by Vision 2030, the country’s plan for diversifying the economy.
Other bets by the Saudi fund included a $3.5 billion investment in ride-hailing company Uber Technologies Inc. and over $400 million in augmented-reality company Magic Leap. In the single largest move, Prince Mohammed committed $45 billion toward the SoftBank Vision Fund, the biggest check behind the largest private investment fund ever raised.
These investments haven’t fared as well as Lucid.
Shares of Uber, which went public in 2019, are worth 5% less than the price the Saudi fund paid in 2016, in what was one of the largest single investments in a startup at the time. The Nasdaq Composite Index has roughly tripled in the same period.
Magic Leap, once valued at nearly $7 billion, struggled to win over consumers with its AR glasses. Its chief executive and founder left the company last year, it cut a large chunk of its staff and multiple mutual funds that publicly report investments in the private company said its value has fallen by over 80%.
The Vision Fund struggled in 2018 and 2019, hit by high-profile embarrassments including an investment in WeWork, and investor malaise in other areas of the fund’s focus. In the past year, though, it has had huge wins from investments in Korean e-commerce giant Coupang Inc. and U.S. food-delivery company DoorDash Inc.
It is unclear how long the Saudi fund intends to hold on to its investment in Lucid. The fund is restricted from selling shares for 180 days after the deal is complete.
Electric-Vehicle Sales Growth Outpaces Broader Auto Industry
New plug-in models from Tesla, Ford, VW and others helped to boost demand, while hurdles still remain for the technology.
The auto industry’s push into electric vehicles has gained traction this year with sales of these models growing at a faster clip than the broader U.S. car business.
While still a sliver of the overall market, sales of plug-in vehicles more than doubled in the first half of 2021 compared with last year, when the pandemic sapped sales. That far outpaced the 29% rise for total vehicle sales, according to research firm Wards Intelligence.
The biggest factor driving the gains was Tesla Inc.’s continued dominance in electrics. Tesla’s U.S. sales rose 78% through June this year, according to an estimate from research firm Motor Intelligence.
The increase was helped by Tesla’s Model Y crossover SUV, which has quickly become the company’s top seller since being introduced last year. Tesla is scheduled to report second-quarter financial results Monday.
Other new offerings from traditional auto makers, such as Ford Motor Co.’s Mustang Mach-E SUV and Volkswagen AG’s, also helped push sales of plug-in electric vehicles to over 3% of the total U.S. market in May and June, the highest ever recorded, according to industry data.
Auto companies collectively are spending $330 billion over the next five years to bring more plug-in models to showrooms, according to consulting firm AlixPartners LLP.
Now, the big question looming over the car business is whether consumers are ready to buy them.
Longer driving ranges and a wider variety of body styles and price points are helping garner interest in plug-in cars from more car shoppers, dealers and analysts say. But hurdles remain, including higher sticker prices and a deficit of places to charge them.
Auto executives in recent months have said they believe consumer interest in the technology is rising and should help speed the transition.
In the U.S. market—which lags behind Europe and China in electric-vehicle adoption—executives also are encouraged by the Biden administration’s plans to support plug-in cars through charging-station investment and consumer incentives.
Carlos Tavares, chief executive of global auto maker Stellantis, said the pace at which drivers make the switch to electrics will depend on regulations and consumer awareness.
“The more the public opinion becomes sensitive to the global-warming issue and how to fix it, the more we can expect a very strong acceleration,” Mr. Tavares said to journalists this week.
Stellantis, which owns Jeep, Ram and other auto brands, recently joined other global auto makers in outlining big investment plans for electric cars and battery plants. General Motors Co., Ford and BMW AG each have said they are earmarking tens of billions of dollars on the transition during this decade.
On Thursday, Mercedes-Benz said it is preparing to sell only electrics by 2030 but would respond to market demands.
“The EV shift is picking up speed, especially in the luxury segment,” Ola Källenius, CEO of Mercedes owner Daimler AG, said in a statement. “The tipping point is getting closer and we will be ready as markets switch to electric-only.”
Tougher tailpipe-emissions regulations, especially in Europe and China, are driving the plans. But consumers are also warming to the technology, as they are given more options, and car companies step up their promotion of electric vehicles, executives and analysts say.
Results from a consumer survey released in June by UBS showed 37% of U.S. respondents said they were likely to consider an electric vehicle, up from 22% a year earlier. The results concluded that consumers are less worried about the potential drawbacks of electric vehicles than they have been in the past.
“Their key concerns and pushbacks about EVs (high price, limited range and access to charging) are easing,” the bank wrote in a research note.
Mike Sullivan, head of about a dozen dealerships around Santa Monica, Calif., said some Tesla owners come in to test drive new models from the more traditional auto makers, such as Porsche’s Taycan electric sports car. Less-expensive options, such as VW’s ID.4, also are drawing interest from car buyers, he said.
“I’m optimistic because the interest is growing, but to be blunt, it’s also still very small,” Mr. Sullivan said. “If there are 100 steps to this, we’re really on step two or three.”
Solar-Powered 4x4s Are Totally Transforming Safaris
Across Africa, a handful of luxury safari lodges is pioneering the future of emission-free mobility in the bush.
For Sipps Maswanganyi, a safari guide with 20 years of experience in the African bush, it was one memorable sighting that sold him on electric safari vehicles.
“I could hear this buffalo panting heavily deep in the bushes,” recalls Maswanganyi, head guide at Cheetah Plains, a luxury outfit in South Africa’s Sabi Sands Game Reserve. Following those faint sounds, he found a 1,500-pound bovine on its last breaths, being taken down by seven stealthy lionesses. “If I was in a noisy diesel vehicle, I would have driven right past, not hearing a thing, and we would have missed it all.”
Although the diesel-hungry Land Rover chugging noisily across the African savanna is a time-honored trope of the safari industry, it’s an image steadily being replaced by eco-friendly, whisper-quiet vehicles powered by sunshine.
“It was an easy decision,” says Cheetah Plains owner Japie van Niekerk of the decision to offer an all-electric fleet of safari vehicles. “They are silent. They’re low on maintenance. And there are huge logistical benefits, as we don’t have to deliver fuel to the lodge out in the bush. But more than that, it’s the right thing. We are guests in nature, so why leave a footprint when we can be silent and blend in?”
Van Niekerk is just one of roughly a dozen early adopters, who since 2014 have begun ditching diesel engines. Now, with the technology becoming more affordable, and a growing awareness around sustainable travel causing safari outfitters to double down on greening their operations, the trend—which transforms the safari experience for guests, too—is finally gaining traction.
Disrupting The Disruption
Today’s electric safari vehicles (ESVs) are typically rebuilt Land Rovers or Toyota Land Cruisers, the diesel-driven industry standards. Private companies in South Africa and Kenya are responsible for making most conversions, replacing the engine, gearbox, and combustion components with an electric motor, batteries, and control system.
The extensive retrofit often allows for more whimsical upgrades, too, from in-built seat-warmers to USB charge points. The process costs from $35,000 to $45,000 per vehicle.
Although prices have come down, that’s still a substantial investment, even for the largest safari operators in Africa, which explains why the likes of AndBeyond, Singita, and Wilderness Safaris have yet to add ESVs to their fleets.
“In time, we will convert to electric vehicles,” explains Andrea Ferry, Singita’s group sustainability coordinator. “The reason we’re not there yet is simply about priorities. Right now, it’s better to spend our available funds on renewable energy.”
With 67 game vehicles in operation across its lodges in East Africa and Southern Africa, Ferry says that converting Singita’s fleet would cost around $3.5 million dollars.
That’s the equivalent of 1,400 bed nights at current rates, money she argues is better spent on taking lodges off the national grid via solar power. Electric motors capable of driving heavy off-road vehicles draw plenty of power, and the solar roof panels that charge the vehicles’ batteries have only recently become efficient enough to meet those needs.
“There’s no point having an electric vehicle charged by a coal-driven national grid. You need to be on solar and charge the vehicle on solar,” agrees Tony Adams, conservation and community impact director at AndBeyond. “Electric vehicles are phenomenal in terms of guest experience, but our focus is on the work we’re doing in the communities—converting onto solar—and the reduction of our overall carbon footprint.”
The Economic Upside
For lodges with sufficient solar capacity and capital to spare, electric vehicles offer significant economic advantages.
Converting the three Land Cruisers at Emboo River, in Kenya’s culturally rich Maasai Mara National Reserve, cost $105,000, an expense co-founder Valery Super estimates will be recouped in three years, thanks to lowered operational costs.
At Ol Pejeta Bush Camp in a rhino-dense corner of northern Kenya, Asilia Africa is running a trial on a single ESV and already counts savings of around $8,000 per year in fuel and maintenance. And Chobe Game Lodge in northern Botswana has had such success with ESV jeeps that it has also invested in electric boats.
“Since we went electric [in 2014], the vehicles have saved close on 50,000 liters of diesel, and the boats have saved 50,000 liters of petrol,” says Chobe’s marketing manager Andrew Flatt, who estimates that the lodge recouped its initial investment in four years.
Capability isn’t a concern. Electrical components in modified safari vehicles are surprisingly rugged; sealed engines allow guides to ford rivers and wade through deep sand, just as they could with a traditional, combustion-driven vehicle.
“In the beginning, I was worried about torque,” says Maswanganyi from Cheetah Plains. “You wonder if you’re going to get stuck in mud or deep sands, but after three years we’ve never had a problem.”
Super, from Emboo River, goes one further: “We’ve been using these to tow stuck diesel vehicles out of the water,” she laughs.
A Better, Greener Safari
All this means that guests won’t be limited as to where they can go, much less what they can see. While early conversions suffered from range and recharging issues, current ESVs manage around 100 kilometers (62 miles) on a single charge, roughly twice the distance of your average game drive.
And the benefits are tangible. For wildlife enthusiasts, the metallic rattle of a diesel engine may feel exhilarating—proof of adventure—until it spooks the herd of red lechwe that were about to become supper for a lurking leopard.
With the help of electric vehicles, even birders can silently reposition for better views without scaring off a dream sighting. There’s an entire bushveld chorus that most people miss out on.
“Without the noise of a diesel engine, you can really connect to your guests and to nature,” Maswanganyi says.
Even he has been surprised by some of what he’d been missing under the roar of his engine all this time. “You can hear the hyenas call while you’re driving,” he explains. “And on some nights,” he continues, “you can even hear porcupines walking through the bush.”
Our Electric Road-Trip Future Looks A Lot Like Buc-ee’s
The U.S. will need the kind of highway charging stops that make drivers want to hang out for half an hour, and this Texas big-box retail chain may have the right formula.
Automakers are betting tens of billions of dollars on the expanding adoption of electric vehicles in the U.S. But a big hurdle for some consumers is the much longer time it takes to charge an EV than it does to refuel a gasoline-powered car. Buc-ee’s Inc., a Texas-based chain of gas-station convenience stores that’s expanding rapidly in the Southeast, could have the answer.
Buc-ee’s offers the kind of road-trip experience that might convince suburban families they don’t mind waiting a little longer on a highway stop — enough to make the switch to an EV. The key is understanding that a lot more goes into creating an appealing half-hour detour for EV charging than most existing gas stations are able to provide.
If you’re not familiar with Buc-ee’s, it’s the epitome of the “everything’s bigger in Texas” mind-set applied to a gas station with an attached retail store. I stopped at one in Calhoun, Georgia, over the weekend — the chain’s second location in Georgia, which opened last month — and it’s the kind of thing that has to be seen to be believed.
It’s more than 53,000 square feet — close to half the size of a typical Target — and has 120 gas pumps and around 1,000 parking spaces. Inside you’ll find an array of fresh and prepared foods, from brisket sandwiches that you can watch being assembled to a large assortment of beef jerky and candied nuts, plus a variety of T-shirts, toys, home goods and gifts, some made by local craftsmen and artists. Many items are branded with the chain’s cheerful beaver mascot.
Buc-ee’s crown jewel is its bathrooms, which are well-lit, abundant, cleaned around the clock, and by some measures are considered the best bathrooms in America. The chain’s origins and most of its locations are in Texas, but they’ve recently added two locations each in Georgia, Alabama and Florida, with new locations under construction in South Carolina, Tennessee, Kentucky and Mississippi.
As a first-time customer, once you get past the sheer size of a Buc-ee’s, you appreciate the business logic for how the whole operation works. Site selection is key; they’re on major highways along popular travel routes well outside of a metro area’s core to ensure both ample vehicle traffic and cheap land.
Drivers need to stop occasionally to fuel up and use the bathroom, but neither activity is very profitable on its own, which is where the retail store, with its more lucrative consumer goods, comes in. And to offer more than the usual roadside fare — brisket, tacos, fudge and everything else — requires a lot of traffic to cover the higher fixed costs involved, which is where the massive size of the stores comes in.
Buc-ee’s also pays well above market rates — the location I was at started at $15 per hour for more than 200 full-time workers in sparsely populated north Georgia — ensuring a friendly, high-quality staff to serve and get people in and out of the stores.
Mass electric-vehicle adoption requires more than just an ample amount of reliable charging stations around the country; it will also depend on drivers being willing to wait for a charge, a critical consideration when a charging stop might require a minimum of 30 minutes rather than five or 10.
For a family with children from Atlanta on the way to Disney World, waiting half an hour for a volt-up at some small-time gas station that’s been retrofitted with a few chargers is the kind of experience to be avoided at all costs. But if there’s a Buc-ee’s or a retail concept with a similar amount of ambition, it’s a different story. All of a sudden, the charging stop becomes part of the trip to look forward to rather than an irritating chore along the way.
In a future where the majority of people drive electric vehicles, most charging will likely be done near the home or office. Visits to fueling stations will plunge, putting many out of business, like we’ve seen in brick-and-mortar retail over the past 20 years as e-commerce has gained market share.
Highway road trips and vehicles with limited battery ranges mean there will still be a need for fueling stations on the interstates, but it’s a concept ripe for disruption.
Rather than a smattering of gas stations and fast-food restaurants every few exits, we might get large consumption-oriented developments spaced 30 to 50 miles apart anchored by something like a Buc-ee’s.
Rather than waiting until nature calls or passengers get hungry to make a random detour, families would plan out where they’ll stop before they leave home, choosing a location based on the amenities and experience offered. These developments will be expensive to build — an upcoming Buc-ee’s in Mississippi on Interstate 10 has a budget of $50 million — but presumably they’ll be worth it.
Transitioning America’s automobile fleet isn’t just about winning the electric vehicle or battery game; it’s also about which companies create the consumer experiences that make drivers willing to wait for a highway charge. Buc-ee’s is worth following as a model for what that future might look like.
Walmart To Test Self-Driving Delivery Service With Ford And Argo AI
Companies aim to start autonomous-vehicle delivery service in Miami, Washington, D.C., and Austin, Texas.
Walmart Inc. is working with Ford Motor Co. and Argo AI to start testing an autonomous-vehicle delivery service in three U.S. cities as the big-box retailer’s consumers continue to favor deliveries within the same or next day.
The companies on Wednesday said the service will start in Miami, Austin, Texas, and Washington, D.C. The last-mile delivery service, or the leg of an item’s journey to the ultimate destination, will take Walmart orders to customers using Ford self-driving test vehicles equipped with Argo AI’s self-driving system.
The commercial service will be available to Walmart customers within certain areas of the three cities and will expand over time, the companies said. The initial integration testing is set to begin later this year, they added. Argo AI, a self-driving technology company, is backed by Ford and Volkswagen AG.
“This collaboration will further our mission to get products to the homes of our customers with unparalleled speed and ease, and in turn, will continue to pave the way for autonomous delivery,” said Tom Ward, senior vice president of last-mile delivery at Walmart U.S.
Walmart has been delivering products from its stores for several years, using a combination of services such as DoorDash and its own service to recruit drivers to shop in its stores and deliver products. The retailer in 2018 said it was exploring delivery with self-driving cars through a partnership with Ford.
The acceleration of e-commerce delivery has pushed more retailers to look at even speedier delivery options. Amazon.com Inc., for instance, offers same-day delivery on around three million items in select areas. Target Corp.’s Shipt does same-day deliveries from its stores and others. Other companies such as DoorDash Inc., Instacart Inc. and Uber Technologies Inc. use gig workers to fulfill orders for all sorts of merchants.
Last-mile delivery is typically dominated by large networks such as FedEx Corp. , United Parcel Service Inc. and the U.S. Postal Service. Their capabilities in same-day delivery are limited, however, as their models are built around accepting packages into their network and then sending them out.
Ford Doubles Capacity of Plug-In F-150 Plant Before Sales Begin
Ford Motor Co. hasn’t delivered a single F-150 Lightning but already is doubling capacity at the plant that will make the battery-powered pickup.
Citing strong demand, the automaker is spending $250 million to enable the factory to spit out 80,000 trucks annually, according to a statement Thursday. Ford broke ground last year at the Rouge Electric Vehicle Center in Dearborn, Michigan, and said it had expected that the facility would produce 40,000 Lightnings annually.
President Joe Biden visited the Rouge this May and drove a prototype of the Lightning, declaring, “This sucker’s quick.”
Ford on Thursday begins what it calls pre-production of the truck, which is scheduled to go on sale next spring as the company races to get in on what is expected to be booming demand for plug-in pickups.
The company said it already has more than 150,000 reservations for the Lightning, which faces competition from Tesla Inc.’s Cybertruck and the R1T from startup Rivian Automotive Inc., which is due to go on sale this month. Ford is an investor in Rivian.
“A very large percent of our reservations right now are coming from customers who haven’t owned a Ford or an F-150,” Kumar Galhotra, Ford’s president for the Americas and international markets, said on Bloomberg TV. “So it is going to help us expand our customer base quite substantially.”
Ford’s expansion of the Rouge EV center is in addition to the $700 million it invested to build the facility as it seeks to maintain its decades of dominance in the pickup segment. The gasoline-fueled version of the F-Series truck has been the top-selling vehicle in the U.S. for four decades and is Ford’s biggest money maker.
Driverless Cars’ Need For Data Is Sparking A New Space Race
Automakers see satellites as a way to exchange vast quantities of information with self-driving vehicles.
Automakers are looking to the heavens for the next generation of car technology.
Satellites, such as those scattered across the skies by Elon Musk’s SpaceX, are emerging as a key tool to handle the huge amounts of data that cars will need to drive themselves. Autonomous vehicles will generate as much as 40 terabytes of data an hour from cameras, radar, and other sensors—equivalent to an iPhone’s use over 3,000 years—and suck in massive amounts more to navigate roads, according to Morgan Stanley.
Although most new cars come with a modem under the dashboard and receive data via the same towers that serve your cellphone, coverage can be spotty—a no-no for self-driving vehicles. “Only 10% to 15% of the air surface is covered by cellular networks,” says Chris Quilty, founder of Quilty Analytics and a space industry consultant.
“As you move down the road toward autonomous vehicles and the need to constantly update information and have real location accuracy, satellites become a credible technology.”
But it’s not just self-driving that has car executives interested in satellites. Recurring revenue has become the holy grail for automakers looking to break free of the traditional boom-and-bust cycle of vehicle sales.
Ford Motor Co. Chief Executive Officer Jim Farley has said his company’s future depends not on selling cars but on selling car owners a continuous stream of services, from hands-free driving technology to the latest touchscreen infotainment apps. The connected car is central to that strategy.
“There’s always going to be these cellular deserts where I think a satellite option could be really interesting,” says Bryan Salesky, CEO and co-founder of Argo AI, the self-driving startup backed by Ford and Volkswagen AG.
Chinese automaker Zhejiang Geely Holding Group Co. is launching its own constellation of satellites, and Iridium Communications Inc., which has long beamed signals from space to the airline industry and U.S. military, says it’s also hearing from automakers.
Autonomous vehicles will generate as much as 40 terabytes of data an hour from sensors and download more for navigation.
As with electric cars, Tesla Inc. CEO Musk is at the forefront. Through his SpaceX rocket company, he’s deployed more than 1,700 satellites that operate in low-Earth orbit, or LEO, which is about 350 miles from the planet’s surface, compared with about 22,300 miles for traditional satellites.
This relative proximity allows LEO satellites to communicate faster with people and things on Earth, tackling space-based communication’s biggest drawback: signal delay.
Musk asked regulators for permission to use his Starlink satellite network to interact with moving vehicles earlier this year. These receivers will at first be for only trucks or RVs, because the satellite dish—about 20 inches in width—is too large for cars.
Tesla has transmitted software improvements straight into cars for years. Now legacy automakers are following suit. Some software will be optional, such as the hands-free driving systems that Ford and General Motors Co. are offering, but something similar to a patch to fix a glitch in the electronic transmission will be mandatory.
“We’ve gotten a lot of interest on downloading software updates,” says Mark Dankberg, co-founder of Viasat Inc., a provider of satellite broadband. “If you do it by satellite, you can reach enormous numbers of vehicles at one time.”
Still, satellite companies must reduce the time it takes for a signal to travel from space to a car, which is now about 50 milliseconds, vs. 10 milliseconds for a cellular signal—though Musk says Starlink has reduced its signal lag to less than 20 milliseconds.
Automakers are also weighing the benefits of a terrestrial system such as 5G, which builds on existing cellular technology.
Satellites give more comprehensive coverage, but they face challenges not only with speed but also with everyday obstructions—parking garages, for instance, which 5G can navigate.
“It’s a big race called Space 3.0,” says Iridium Communications CEO Matt Desch of the push to commercialize space. “The last thing a car manufacturer really wants is to pick badly.”
Outrider’s Robotic Yard Trucks Are Taking On Dangerous, Dirty Jobs
Automated and electric vehicles are finding uses in agricultural and industrial spaces, where they can don’t have to encounter passengers or pedestrians.
Yard trucks: also known as spotters, shifters, shunt trucks, and terminal tractors, or, for those who prefer zoological nomenclature, yard birds, horses, dogs, or mules. By any name, they are the vehicles that tow semi-trailers from dock to dock and parking spot to spot at warehouses and shipping yards.
Last week, I tried my hand operating one. I’m proud to report that, on my first try, I successfully backed a 53-foot trailer into a dock sandwiched by two other trailers.
Well, more precisely, I sat at a laptop at my dining room table in suburban New Jersey, clicked a few simple commands and then watched online as a yard truck at a warehouse in Brighton, Colorado, drove to a parked trailer, hitched to it, towed it about 150 feet to an empty dock, backed in, and unhitched — all without human intervention.
My debut as a warehouse dispatcher was arranged by Outrider Technologies Inc., a Colorado startup that makes self-driving yard trucks. Outrider is another example of automated and electric vehicles finding uses in agricultural and industrial spaces, where they can do dirty and dangerous jobs without encountering passengers or pedestrians.
“We identified that autonomous vehicles in a private property, low speed application like a distribution center could have a huge impact,” says Outrider CEO Andrew Smith, who founded the company in 2017 and ran it in stealth under the name Azevtec until last year.
There are, Smith estimates, about 50,000 yard trucks in operation in the U.S. at any given moment. Collectively, they make millions of trips every day, usually belching out carbon dioxide as they go.
Annual yard truck sales in the U.S. are about 3,500 and growing, according to Tim Denoyer a senior analyst at ACT Research. Most run on diesel, but, according to Denoyer’s estimates, 10% to 15% of sales this year will be electric. “The yard spotter is one of the first movers to electrify,” he says, “mostly because of the lack of range anxiety and because the fuel efficiency of diesel spotters is awful.”
Driving a yard truck is a repetitive job that takes time to master and usually doesn’t pay as well as long-haul work. Turnover is high. In addition to towing trailers in busy lots and backing them into tight spaces, drivers need to get down from the cab for every hitch to connect a pressurized air hose to the trailer to release its parking brake — a task that Outrider has had to figure out how to automate.
The startup buys electric yard trucks from manufacturers such as Orange EV and outfits them with cameras, radar, and lidar sensors to guide its self-driving software. Earlier this year, the company opened a 350,000 square-foot warehouse and yard in Brighton, north of Denver, to build and test its vehicles.
For most of the day, a handful of AVs tow trailers to and from the site’s 49 dock doors. Outrider has nine pilot customers testing its system, which includes the trucks, dispatch management software, and a help center at its headquarters in Golden.
For now, safety drivers sit behind the wheel of every truck with a big red button that allows them to shut off the robot and take over. Outrider hopes to go fully driverless sometime in 2023.
Last week, when I was the first reporter allowed to test the system, the safety driver didn’t need his button. After a brief tutorial from Outrider’s vice president of product, Peter James, I was able to use the pulldown menu on the online dashboard to instruct a tractor to pick up the trailer from parking spot 38 and drop it at dock 15.
A robotic arm at the back of the truck handled the job of hooking and unhooking the air hose. Altogether, it took about ten minutes, slower than the average human driver could do it, but without flaw. Speed will come later, James says. For now, the focus is on “precision and repeatability of moves” and making the job so easy that a newbie like me can do it.
Why Tesla Hasn’t Entered Formula E
Earlier this month, Tesla Inc. sent its high-end Model S Plaid whooshing around the Nürburgring’s Nordschleife, a brutal racetrack in Germany that’s often a proving ground for automakers testing their latest models and technology.
Driven by a professional racer, the Plaid, which Tesla Chief Executive Officer Elon Musk has been touting as the quickest production car ever made, scorched the twisty 12.9-mile loop in 7 minutes and 35 seconds, scoring a lap record for electric vehicles.
The milestone wasn’t just a personal victory for Musk, who tweeted out the results, but a marketing milestone for Tesla, which has been warring for electric-speed supremacy with rival Porsche Taycan, the Nürburgring’s previous EV record holder.
Yet the showing was a rare official entry for Musk and company, who have generally trumpeted their technical breakthroughs at controlled product events or with splashy YouTube videos. If Tesla’s cars are truly best in class, why doesn’t Musk prove it in Formula E, the all-electric version of Formula One, or other motorsport leagues?
Musk himself gets that question all the time online. Auto brands, after all, from Chevrolet to Ferrari have long benefited from the halo effect of their association with racing. So, as one Twitter user asked last year, would Tesla ever consider building an official racing team? “No, we’re focused on developing new products & scaling production,” Musk responded.
The implication is that an investment in an EV racing program would not translate to better passenger cars or manufacturing improvements, a lack of technology transfer that Audi AG and BMW AG have cited as a rationale for quitting Formula E.
Blake Fuller, a battery developer and professional driver who races Teslas independently, says Musk’s reasoning is likely more complicated.
Despite not having any formal Tesla backing or sponsorship, Fuller has still competitively zoomed up Colorado’s Pikes Peak in a Model 3 and just last month raced a Tesla against Fords, Nissans and Subarus in New Hampshire at Mount Washington’s famous, century-old hill climb.
While he’d love if Musk got into racing, he acknowledges that there are tons of risks associated with “corporate-tied” motorsport, especially for a company under as much public scrutiny as Tesla.
If a Tesla crashed at a high-profile competition and injured the driver or caused the battery to ignite, would their safety credentials come under question? “The biggest concerns come down to the ‘what if’ factors,” Fuller says.
Another reason is that the company already gets endless organic publicity from Tesla enthusiasts, without the risks inherent in corporate sponsorship. Fuller, of course, is a prime example of this dynamic, but social media is full of the Tesla faithful drag-racing against Lamborghinis and other ultra-luxe cars in videos that amass millions of views for free.
As a result, Fuller says, Tesla likely doesn’t need “as much marketing help launching their EVs, because they’re already known to be fast and superior.”
In that sense, perhaps the most obvious reason Musk will not enter Formula E or some formal head-to-head race against the likes of Porsche: He doesn’t want to be in a position to potentially lose. Tesla is already synonymous with speed, whereas other EV newcomers must prove their technical bona fides.
Why would Musk give that chance to Porsche or another archenemy such as Lucid Motors, which supplies batteries to Formula E? Outside Tesla’s strategic sprint at Nürburgring or a few other circuit appearances over the years, the company gets far more mileage out of its in-house, choreographed competitions, like when it held a tug-of-war battle between the new Cybertruck and Ford’s F-150 (which a Ford exec called misleading).
Still, Fuller says official racing could give Tesla more legitimate bragging rights—and he firmly disagrees with the notion that professional competitions wouldn’t enhance their tech performance, citing braking and steering issues he believes require improvements to keep up with Porsche and other rivals.
“Elon can reach out and we can make Track Mode better ‘cause there are things that suck about it,” says Fuller says, laughing, referring to Tesla’s racetrack setting. “But they’re all fixable.”
FedEx, Aurora To Launch Autonomous-Truck Routes In Texas
Fully autonomous trucks — with safety drivers, for now — to shuttle between Dallas and Houston.
FedEx Corp. and self-driving vehicle startup Aurora Innovation Inc. are launching a pilot program for autonomous-truck shipments between Dallas and Houston, with the companies announcing Wednesday what they called a first-of-its-kind partnership involving the two companies and a truck maker.
“This is an exciting, industry-first collaboration that will work toward enhancing the logistics industry through safer, more efficient transportation of goods,” said Rebecca Yeung, vice president of advanced technology and innovation at FedEx, in a news release.
The initial fleet will involve a “modest” number of autonomous trucks and use backup drivers for safety at first, an Aurora spokeswoman said. The trucks will make the nearly 500-mile round-trip along the I-45 corridor multiple times a week, according to FedEx.
“At the end of 2023, we will launch our trucking business and haul loads autonomously between terminals without a safety driver,” Aurora said. The original-equipment manufacturing partner for this pilot is truck maker PACCAR Inc.
It’s just the latest partnership by San Francisco-based Aurora on its road to commercializing its self-driving technology — and going public.
The company this year has said it is working with Toyota Motor North America and parts supplier Denso Corp. on bringing self-driving vehicles to the masses and ride-hailing; unveiled a Toyota Sienna minivan prototype for that effort with Uber Technologies Inc. and is teaming up with Volvo on autonomous trucks.
Last year, Uber transferred its self-driving business Advanced Technologies Group to Aurora in a deal that involved a $400 million investment by the ride-hailing giant into the startup.
Aurora is scheduled to go public this year in a merger with special-purpose acquisition company Reinvent Technology Partners.
Electric-Car Shift Drains Fuel Taxes In Some Countries
Officials in places like Norway and the U.K. are rethinking EV incentives and studying road-pricing systems.
Governments around the world have long encouraged motorists to buy electric cars. Now they are starting to grapple with a consequence of the green drive: dwindling income from fuel taxes.
Several countries have sought to phase out gasoline and diesel cars by offering tax and other incentives to drivers who buy new electric vehicles, part of broader efforts to cut carbon emissions. But in places where more EVs are hitting the road, income from fuel tax, which often accounts for a significant chunk of public revenue, is falling.
In Norway, home to the world’s highest electric-vehicle uptake rate, lawmakers have scrapped tax breaks on electric cars as they try to plug a hole in tax revenue. In the U.K., where fuel taxes account for some 7% of annual income, lawmakers are studying a potential new levy based on how much people drive instead.
Electric-vehicle uptake remains low in all but a few of the world’s wealthiest countries and the tapering of tax income is expected to be gradual. Still, the conundrum highlights the costs and challenges of decarbonizing the wider economy, with cutting emissions from transport seen as key to hitting global climate goals.
How early-adopter countries handle the transition will likely be closely watched in places like the U.S., where lawmakers hope to boost electric-vehicle sales, partly through tax credits.
In Norway, more than two thirds of new cars sold so far this year have been battery or plug-in electric vehicles, according to research group Rho Motion. That compares with just 4.6% of all cars sold globally last year being electric, according to the International Energy Agency.
But a 40% drop in Norway’s revenue from car-related taxes between 2013 and 2021 prompted lawmakers in March to suspend exemptions from the country’s annual motor-vehicle tax for electric-vehicle owners.
The government has also started work on a new, technology-agnostic system of car taxation it wants in place by 2025—the year Oslo aims to end the sale of internal combustion engine vehicles.
“I would definitely advise other countries to look at what’s happening in Norway with quite rapidly falling revenue and to be aware that there might be a consequence of tax incentives,” said Magnus Thue, state secretary in Norway’s finance ministry.
A finance ministry spokesman said the sharp loss in tax revenue was “difficult to foresee” when incentives were introduced in the 1990s and 2000s but that successive governments had kept them in place to reduce emissions. The hole in public finances has been partly filled by higher taxes elsewhere, he added.
Norway’s Labour Party, which is set to lead a new government after winning a national election earlier this month, favors taxing the purchase of emissions-free vehicles over the value of $70,000 and the introduction of GPS-enabled road pricing, its climate spokesman said.
Road pricing, under which drivers pay for the distance they drive depending on the time of day they are behind the wheel, is also being explored as a solution to lower fuel taxes in the U.K. and Australia.
It already exists in several forms, like toll roads, self-declared payments and congestion-charge zones that use cameras to read license plates and charge drivers in cities including London and Stockholm. Singapore recently switched to a satellite-based road-pricing system.
In the U.K., 14% of new vehicles bought so far this year have been battery or plug-in EVs, according to Rho Motion, and the government plans to ban the sale of new gasoline and diesel cars by 2030.
Anticipating a drop in fuel taxes, a parliamentary transport committee is currently running a consultation on how to make up the shortfall.
“A consequence of the transition to electric vehicles is a potential £40 billion [equivalent to $54.47 billion] annual fiscal black hole…something will have to change,” said Huw Merriman, a lawmaker for the governing Conservative party who chairs the transport committee. The committee is set to issue recommendations this year, with the government expected to respond early next year.
All types of road-pricing options are among those under consideration for broader use in the U.K., a transport committee spokeswoman said, adding that lawmakers encourage companies to suggest technological solutions.
Advocates say road pricing reduces congestion and is fairer than current fuel taxes that don’t account for where or when road users are driving. Critics argue that such camera networks aren’t a practical solution across larger areas, and are also unfair to poorer citizens or those in rural areas that are more reliant on driving.
Motor tax changes have often stirred controversy. The British government in 2007 shelved proposals to install satellite receivers in all cars amid public outcry over additional taxation and privacy concerns. In France, a proposed fuel-tax increase in 2018 to combat pollution sparked demonstrations from so-called Yellow Vest protesters.
While the U.S. lags behind some European countries in electric-vehicle uptake—EVs comprise 4% of new vehicles bought this year according to Rho Motion—President Biden signed an executive order this summer calling for sales of electric, fuel-cell and plug-in hybrids to account for 50% of car and light-truck sales by 2030.
Greater adoption of EVs would likely put further pressure on U.S. fuel tax revenues, which the Highway Trust Fund uses to fund America’s roads, and have been falling in real terms for years because of improving fuel efficiency and the fact that fuel taxes aren’t indexed to inflation.
Between 2020 and 2030, the fund is projected to accumulate a funding shortfall of nearly $190 billion, according to New York-based think tank Peter G. Peterson Foundation, which lobbies lawmakers on issues related to deficit spending. Fuel taxes comprised about 1.3% of U.S. total tax revenue last year.
Road pricing has been implemented on a trial basis in the U.S., including a congestion-charge program in Santa Monica, Calif., while a similar program in Manhattan, N.Y., has been delayed because of the pandemic. The infrastructure bill that recently passed the Senate contains a provision that would allow for a national road-pricing pilot scheme.
Analysts say the opposition that per-mile road pricing has faced from privacy activists and tax hawks could prevent its adoption, but say that few alternatives exist.
“Highway-funding frameworks in Europe were working well until technology disrupted them,” said John Larsen, director of the Rhodium Group, a New York-based energy research firm. “Here, it’s already presenting issues and now electrification is going to take off. That will amplify the challenges.”
GM Debuts Midsize Electric Delivery Van With Verizon As Customer
General Motors Co.’s electric van unit plans to build a new midsized cargo hauler called the EV410, and has signed up Verizon Communications Inc. as the first buyer, the company said Tuesday.
GM announced the formation of BrightDrop, a wholly owned subsidiary that supplies battery-powered vans and offers fleet-management services, in January. Since then, the automaker has been gearing up to produce its larger electric van, the EV600, with the first 500 slated to go to FedEx Corp. The company said it’s on track to deliver those vans to FedEx by the end of the year.
BrightDrop Chief Executive Officer Travis Katz has told investors that electric delivery vans will be a $30 billion market by 2025. GM is trying to capitalize on the boom in e-commerce that has sparked demand for delivery vehicles from the likes of Amazon.com Inc., FedEx, and United Parcel Service Inc. BrightDrop is also part of GM’s strategy to accelerate development and deployment of its electric powertrains, the parts — including the motors — that make a vehicle move.
Owners of commercial fleets will be early adopters of battery-powered vehicles because they’re more willing to pay the higher upfront price of an EV in order to save on fuel and maintenance costs over time, according to BloombergNEF.
“We expect to see commercial fleets convert to electrification much faster than other segments,” Katz said on a call with reporters. “They’re really doing the math and they understand the economics.”
Verizon will use the EV410 for its service and maintenance fleets. Both the EV600 and EV410 offer 250 miles of range before they need a recharge, Katz said. GM isn’t disclosing the price of the vans or the number of vehicles Verizon is buying.
GM is far from the only company targeting last-mile delivery. Ford Motor Co., the largest commercial-vehicle maker in the U.S., has said it will start selling its E-Transit van later this year that will go 126 miles on a charge. Amazon-backed Rivian Automotive Inc. is building an electric van for the retail giant, and a slew of other startups are targeting the market, as well.
About a third of the world’s 375 million commercial vehicles will be electric by 2050, compared with just 0.2% in 2020, according to BloombergNEF forecasts. They’ll make up about 10% of U.S. fleets by 2030.
GM is fast-tracking development of the EV600 by setting up low-volume production at a supplier’s facility, said Tushar Porwal, BrightDrop’s head of manufacturing.
Once the manufacturing bugs are worked out, GM will transfer equipment to its plant in Ingersoll, Canada, which will start full-scale production of the EV600 in November 2022. The EV410 will start production in the fall of 2023.
Lucid Jumps As Debut Nears For $169,000, Long-Range EV
Lucid Group Inc. advanced after the carmaker said it has started production of its debut electric sedan, with deliveries to begin at the end of next month.
The company initially will focus on a $169,000, limited-production Dream Edition of the Air sedan, which can run 520 miles (840 kilometers) on a charge. The first battery-electric Air vehicles destined for customers rolled off the factory line in Casa Grande, Arizona, on Tuesday, the company said in a statement.
The startup is considered one of the most-credible challengers to market leader Tesla Inc., in part because Lucid claims world-beating range for its vehicles. Lucid Chief Executive Officer Peter Rawlinson had been chief engineer for Model S sedan, Tesla’s longest-range vehicle, offering up to 405 miles, according to the Environmental Protection Agency.
Versions of the Air with less range and lower prices will begin deliveries after October, Newark, California-based Lucid said, without giving a specific date. The company has faced delays and setbacks stemming from the Covid-19 pandemic.
The shares jumped 9.4% to $26.85 at 11:20 a.m. Wednesday in New York. The stock had more than doubled this year through Tuesday while the Nasdaq Composite Index climbed 13%.
“We have the aftermath of Covid to deal with for our supply chain and it is supply-chain quality issues.” Rawlinson said in an interview with Bloomberg Television on Wednesday. “We are on track to ramp up to 20,000 units next year, with a target of 50,000 in 2023.”
Lucid said it has more than 13,000 reservations for the Air. The company has begun an expansion of its Arizona factory, with plans to add 2.85 million square feet (265,000 square meters) of space to increase manufacturing capability.
The company is well-funded through 2022 yet will look to raise additional capital for growth and new products, Rawlinson said.
Production of its next vehicle — the battery-electric Gravity sport utility vehicle — is expected to begin in 2023.
Rolls-Royce To Stop Making Internal Combustion Cars By Decade’s End
So long, V12.
In nine years, Rolls-Royce will stop selling vehicles that run on gasoline, Chief Executive Officer Torsten Müller-Ötvös said in a Sept. 29 announcement. The first of the company’s planned all-electric portfolio, the Spectre sedan, will arrive by fourth quarter 2023.
“With this new product, we set out our credentials for the full electrification of our entire product portfolio by 2030,” Müller-Ötvös said. “By then, Rolls-Royce will no longer be in the business of producing or selling any internal combustion engine products.”
Müller-Ötvös described the news as the most important decision in the history of the brand since Charles Rolls and Henry Royce agreed to build cars together on May 4, 1904.
Since its inception, Rolls-Royce has served as the vanguard of powerful V12 engine technology and quiet, smooth excellence for the world’s wealthiest, most discerning customers.
Many of its most iconic models, from the early Rolls-Royce Phantoms to the modern Cullinan, employed the company’s famous 12-cylinder combustion engine technology. As recently as 2019, Müller-Ötvös was saying he’d keep the V12 around “as long as possible.”
During a Bloomberg TV interview following the announcement, that messaging had changed: “We will go electric—it fits perfect to the brand, it is as silent, as torque as our great 12-cylinder engines,” he said.
While Spectre will be the first fully formed production electric car from Rolls-Royce, the brand had previously experimented with a fully operational all-electric Phantom called the 102EX in 2011; an electric 103EX prototype followed in 2016.
Rolls-Royce currently offers no hybrid vehicles among a fleet that includes the Phantom sedan, Cullinan SUV, Ghost sedan, Wraith coupe, and Dawn convertible.
The electric motor was a familiar concept even for Rolls-Royce’s founders: Henry Royce’s first venture, named F. H. Royce and Co., created dynamos, electric crane motors, and bayonet-style light bulb fitting. In 1900, Charles Rolls drove an electric car named the Columbia and declared it “ideal,” according to Rolls-Royce records.
But Royce noted that the electric car would not become prevalent until a charging network could be established. Many would argue that this time still has yet to arrive: BMW’s vehicles charge on EVgo’s network of just 800 fast-chargers nationwide. (Presumably, the Rolls-Royce Spectre would charge at a well-appointed home setup rather than resorting to the indignity of charging in public with the masses.)
Further details of the Spectre remain scarce, including pricing. While early rumors say the new vehicle might share motors with BMW’s i7, a spokesman also declined to discuss the drivetrain for the upcoming vehicle. Speaking with Bloomberg TV, Müller-Ötvös confirms that the electric model will have the same high-touch, “handmade” construction as all conventional Rolls-Royces do.
“Nobody here in Goodwood needs to worry about his job,” he says. “It will be fully embedded here at Rolls-Royce in Goodwood. We are well-served with all the semiconductors we need. We’re sitting on an order book as strong as I’ve ever seen it.”
Rolls-Royce’s news will work to keep up with parent company BMW AG as much as anything else. BMW recently introduced its first-ever all-electric SUV, the BMW iX, which will start deliveries in March 2022. It will soon begin delivering its all-electric i4 sedan as well.
Earlier this month, the auto manufacturer upped its battery cell orders to $24 billion to keep pace with surging demand for electric cars. During the first half of 2021, EVs contributed 11% of deliveries across the group.
Meanwhile, cross-country rival Bentley has announced it will bring forth a fully electric vehicle by 2025. Bentley has been selling hybrid vehicles for years.
Spectre will be built on the aluminum spaceframe architecture currently found in the $455,000 Rolls-Royce Phantom sedan and designed to underpin all forthcoming Rolls-Royce motor cars. The company says it is currently undergoing 2.5 million kilometers of testing by company engineers to ensure its indestructibility—a simulation that approximates “400 years of use.”
It offers a veritable Easter egg hunt for lovers of Goodwood’s pride, since the cars will be tested in “plain sight” on public roads by Rolls-Royce employees, Müller-Ötvös said.
While EV technology has neutered cars from other brands—rendering them more like transportation appliances than driving machines—Rolls-Royces, which are known for their quiet, smooth rides, will naturally excel under battery-power, he continued. “This is not a prototype, it’s the real thing.”
Silicon Valley Answer To The EV Question Calls For Less Silicon
Automakers like Tesla and GM urged to ditch traditional silicon in race to increase charging speeds and driving distance.
As automakers scramble to make electric vehicles with longer ranges and speedier charging times, the chip industry has a message for them: You’re doing it wrong.
Semiconductor companies are urging EV makers to ditch traditional silicon chips and embrace materials that will make cars more efficient, helping ease consumers’ “range anxiety” and someday making recharges as quick as a gas-station fill-up. But there isn’t an agreement yet on which approach to use. Silicon carbide is the front-runner, with gallium nitride emerging as a key contender.
What are these new materials? Well, silicon carbide — as the name suggests — is a combination of two elements, silicon and carbon. And it does a better job as a power converter, meaning chips using the material can move energy around with less of it getting lost along the way.
The same is true of gallium nitride, which is made of gallium and nitrogen and — like silicon carbide — has a distinct edge over traditional silicon. Proponents say it could cut charging time in half.
Choosing the right technology has especially high stakes as the auto industry undergoes its biggest transformation in more than a century. Manufacturers around the world are racing to ditch internal combustion engines, and even icons of the gasoline age like Ford Motor Co.’s Mustang and the GMC Hummer are getting versions with batteries.
Along the way, chips have become ever more critical to how a vehicle works, spanning everything from the powertrain to the airbags. That’s become painfully apparent this year as carmakers have had to limit production and leave dealer lots empty because they can’t find enough silicon. But getting automakers on board with the newer technologies is critical to raising EVs to the next level.
“It’s a big learning curve for the carmakers,” said Jean-Christophe Eloy, head of Yole Développement, a semiconductor analysis firm in France. “A good battery, a good inverter and a good electric motor doesn’t give you a good electric car.”
The good news, Eloy says, is that Tesla Inc. — a company that prodded the industry to embrace EVs in the first place — could help spur this transition as well.
Tesla is one of the first major adopters of silicon-carbide chips, supplied by STMicroelectronics NV, Eloy said. And Chief Executive Officer Elon Musk has touted the technology as a key advantage of his cars.
With silicon carbide, watts of power can be crammed into the battery much more quickly, cutting charge times. And it provides for longer ranges because there’s less leakage — wasted power — as a car taps the energy needed to drive motors.
Infineon Technologies AG, the biggest maker of automotive chips, expects silicon carbide to exceed more than 30% of the market in electric-vehicle power chips by 2025.
“Silicon carbide can bring a significant advantage, literally a 5% to 10% improvement in range,” according to Stephan Zizala, the head of Infineon’s automotive high-power solutions group.
The typical reaction at the time: “Why would I do that? It’s crazy.”
Some manufacturers are already sold on the concept. General Motors Co. is using silicon-carbide devices in its Ultium EV battery platform, the basis of all of its future electric vehicles.
Toyota Motor Corp., which pioneered hybrid vehicles with the Prius, uses silicon carbide in the hydrogen-powered Toyota Mirai, and its supplier Denso Corp. has built the chips into other vehicle lines.
Stellantis NV, formed from the merger of Fiat Chrysler Automobiles NV and French rival PSA Group earlier this year, said recently that it may use silicon carbide in power inverters that will be key to mass manufacturing a new generation of electric vehicles globally.
But some companies, such as GM, are hedging their bets. They’re also looking at gallium nitride, or GaN, for future use.
Gallium nitride is a newer entrant — and it’s not yet clear what role it will play. Infineon expects it to complement other technologies. Others are positioning it as more of a rival to silicon carbide. BMW AG earlier this month signed a deal to secure $250 million of such chips from GaN Systems Inc.
Gallium-nitride chips can cut the time it typically takes to charge a car to 4.7 hours from 11.3 hours, saving 70% on energy in the process. It also could boost the vehicle’s range by 5% and use fewer batteries. That’s according to startup Navitas Semiconductor Inc., which is telling investors that gallium-nitride chips will account for 16% of the power semiconductor market by 2026, up from less than 1% last year.
Carmakers have taken years to warm up to the new technologies. When silicon carbide was first offered to auto manufacturers more than a decade ago, they shunned it as “horribly expensive,” said Michael Duhaime, vice president of JJE North America, a Chinese-owned maker of electric drivetrains in Troy, Michigan.
The typical reaction at the time: “Why would I do that? It’s crazy,” he said. Now it’s making its way into premium vehicles, where cost is outweighed by the performance benefits.
There are still some painful trade-offs, though. Traditional silicon-based chips are made in the billions each year, and the technology’s 50 years of dominance has created a massive global infrastructure to produce it. That’s brought costs down.
Silicon-carbide wafers, the basic material on which the new chips are built, are produced by only a few companies, such as Cree Inc., in a process that’s still difficult and expensive.
One obstacle is the material itself, which has to be grown from seed crystals in a chemical process. There are relatively few crystals available that will produce the purity required. Any impurities can result in wafers and chips that are less efficient.
In a sign of how scarce the materials are, Cree rival On Semiconductor Corp. agreed to pay $415 million last month for GT Advanced Technologies, acquiring its supplier of silicon carbide. That deal lets it secure access to the raw material.
Silicon-carbide components could add an extra $200 to the cost of a vehicle, according to an estimate by Cree. But boosters of the new technology say the cost will quickly be recouped because cars won’t need as many batteries.
And that speaks to the need for carmakers to put more thought into the chips they use, Eloy said.
“If you want to save costs, if you want to increase range, if you want to do all of this optimization, you need to have your hands in the semiconductors,” he said.
Electric Vans Roll Off Line That Once Made Gas-Guzzling Hummers
The Indiana factory is producing a fully electric, light-duty delivery vehicle.
When the first snub-nosed, electric van rolled off the assembly line yesterday at the Electric Last Mile Solutions Inc. plant in Mishawaka, Indiana, it was a proud moment for the company’s co-founder and chief executive officer, Jim Taylor.
The van, one in a run of 1,000 scheduled for this year, is among the first of its kind in the U.S. market: a fully electric, light-duty vehicle meant for delivery workers, contractors and other commercial fleets.
“Who else is starting up this month?” asks Taylor, checking through the list of major auto manufactures and startups, from Ford Motor Co. and General Motors Co. to Arrival Ltd. and Canoo Inc., that have announced plans to build electric vans.
Delivery vans and other light commercial vehicles offer fertile ground for electric vehicle makers, according to James Martin, a consulting associate director at the research house IHS Markit. Buyers aren’t commuters, concerned about range estimates and how to handle the occasional long road trip.
Instead, they’re fleet managers who know precisely how far their vehicles will travel each day and where they plan to recharge them during off-duty hours. “We think it’s going to be swifter than the ramp-up of electrification in personal vehicles,” says Martin.
IHS expects North American commercial-van production to grow from around 400,000 units this year to nearly 600,000 by 2028, with electric vehicles growing from almost nonexistent to nearly 40% of the market in that span.
Electric Last Mile Solutions, known as ELMS, is aiming for the bottom end via a bare-bones vehicle with relatively low range that’s ideal for customers who carry light packages on short, repetitive routes. The segment has exploded with the rise of e-commerce.
ELMS began in August 2020 as a plan B for the Chinese auto manufacturer Chongqing Sokon Industry Group. In 2017, Sokon subsidiary SF Motors bought the Mishawaka plant from contract manufacturer AM General with a plan to build an electric SUV called the SF5. But the SF5 never came to Mishawaka, a city of 50,000 on the eastern edge of South Bend.
When Sokon hired Taylor, a 30-year GM veteran, to take over as CEO at SF Motors in the summer of 2019, he reviewed the business plan and concluded that it was doomed.
Launching an electric SUV brand in the U.S. would be far more expensive than Sokon anticipated, Taylor told the company’s leadership, and it would land them in a brutal competition with some very large players. Sokon heeded his advice and abandoned its U.S. plans for the vehicle.
This left the question of what to do with the Mishawaka plant. Taylor suggested pivoting to electric delivery vans, which Sokon already was producing in Asia. Sokon, however, didn’t want to spend more in the U.S. market, so Taylor offered to start a new company that would raise the funds to buy the Mishawaka plant.
Taylor, 64, knows the 675,000-square-foot space well: Two decades ago, when he was an executive in the truck group at GM, he outfitted it to assemble Hummers. In 1999, GM bought the Hummer brand from AM General and contracted with them to build a mass-market version of the SUV.
AM General built a plant for the job next door to the one where it makes Humvees for the military. Taylor, who oversaw purchasing for GM trucks, chose the equipment.
By 2005, 1,000 workers were building tens of thousands of Hummers per year in Mishawaka. When the financial crisis arrived three years later, the fad was fading and GM, forced into bankruptcy, decided to shutter the money-losing brand.
The plant revived in 2015, when Daimler AG hired AM General to build Mercedes-Benz minivans there for the Chinese market. But Mercedes walked away two years later and AM General announced plans to close the plant, a demise that was seemingly averted with the arrival of SF Motors.
In the summer of 2020, Taylor and his co-founder Jason Luo, a longtime auto executive who briefly ran Ford China, began trying to raise money for ELMS.
This was during the rise of SPAC fever. In the six months before ELMS’s founding, electric vehicle startups Nikola Corp., Fisker Inc., Lordstown Motors Corp. and Canoo all had announced plans to enter the public markets via mergers with special purpose acquisition companies.
SPACs intrigued Taylor. Since leaving GM in 2010, he had done stints at a pair of electric vehicle companies — what are now Workhorse Group and Karma Automotive — and seen enough of the traditional fundraising process to know that he’d be happy to fast-forward through it. “This allows you to get the money much quicker,” he says, “and it arrives in a gigantic trainload.”
In fall 2020, Taylor and Luo began discussing a merger with a SPAC called Forum Merger III, which recently had raised $250 million. By late October, they were ready to approach private equity firms, hedge funds and investment banks about adding to this pool of funds through a so-called private investment in public equities, or PIPE.
In December, Forum announced the planned merger, which valued ELMS at $1.4 billion. With $155 million in PIPE money, the deal was set to generate nearly $380 million in gross proceeds for ELMS.
The companies originally hoped to close the deal in the first three months of 2021, but that was delayed after the Securities and Exchange Commission began to scrutinize SPACs more closely. The EV companies that preceded ELMS into the public markets had illustrated the downside to giving startups a big bucket of money all at once: Few live up to their hype.
After refiling paperwork to meet new SEC guidance, ELMS completed the merger and began trading on the Nasdaq at the end of June. As soon as the funds were in the bank, Taylor made a $30 million down payment on the $145 million purchase of the Mishawaka plant and beginning outfitting it to assemble electric vans.
ELMS is taking a crawl-before-you-walk approach to production. For now, the vans arrive in Indiana from factories in China as “pushers,” complete with chassis, frames, battery packs and wheels. At Mishawaka, a couple of dozen hourly workers spread across a handful of stations add steering wheels and a few electronic components.
It’s a comedown from the Hummer days, but if all goes according to plan ELMS could bring the plant back to something approximating that scale.
Over time, the company plans to buy more parts from U.S. suppliers and do more assembly in Mishawaka. ELMS told the Indiana Economic Development Corp., a public-private partnership, that it expects to create up to 960 new jobs building 100,000 vehicles per year by the end of 2024. If it does, IEDC will grant $10 million in tax credits.
“Everyone here is just excited that the doors are getting opened up,” says Bryan Tam, a 62-year-old plant manager for ELMS who has been at Mishawaka through its 20-year history.
The initial 1,000 ELMS vans are headed to Randy Marion Automotive Group, a collection of dealerships in North Carolina whose namesake and founder was in Mishawaka on Tuesday for a ceremonial handing over of keys.
His first few hundred vans are destined for campuses, airports and other spaces where they won’t encounter public roads, which saves ELMS from having to meet full safety standards until it scales up production.
The vans are basically breadboxes on wheels. But the company is not trying to turn heads on the sidewalk. It’s hoping to get the attention of fleet managers with a simple proposition: save money by converting to electric.
The vehicles have a range of 100 to 120 miles, 171 cubic feet of cargo space (enough to carry several hundred shoe boxes) and a cost of about $27,000 after a $7,500 federal tax credit. By ELMS estimates, the total cost of ownership, including fuel and maintenance, is 35% cheaper than comparable gas-powered vans.
While ELMS is betting on gaining an edge by being first, the competition isn’t far behind. Ford, Daimler and General Motors all have plans to introduce commercial electric vans to the U.S. by 2023. Earlier this week, GM unveiled a midsized cargo hauler and announced that it has signed up Verizon Communications Inc. as its first customer.
Rivian Automotive, meanwhile, has already taken an order for 100,000 vans for Amazon.com Inc., with the first expected to arrive this year.
“It’s an incredibly short window,” says Reilly Brennan, founding partner at the San Francisco venture capital fund Trucks. “The clock is ticking.”
Foxconn Made The iPhone In Your Hand And Wants To Make The EV In Your Garage
Smartphone assembler sees Lordstown factory as potential maker of other brands’ vehicles.
The Taiwanese company that assembles iPhones wants to become a top contract maker of electric vehicles too, a plan boosted by the purchase of Lordstown Motors Corp.’s electric truck factory in Ohio.
Foxconn Technology Group, the world’s largest electronics contract manufacturer, is known for assembling products sold by big technology brands such as Apple Inc., Amazon.com Inc. and Alphabet Inc.’s Google.
It now hopes to expand into a pricier piece of technology. Foxconn’s chairman has said he wants to be able to supply three million electric vehicles annually by 2027, which he estimated would be about 10% of the global market then.
It has made a flurry of deals in recent years to get a foothold throughout the auto-supply chain, including semiconductors, components, software and assembly. Partners include Jeep and Chrysler maker Stellantis NV and Los Angeles-based EV startup Fisker Inc., which is looking to make more than 250,000 vehicles a year in the U.S. with Foxconn’s help.
Now Foxconn has reached a deal to buy the Ohio factory of Lordstown Motors, the electric-truck startup that acquired a former General Motors Co. plant but has had trouble delivering a product. Lordstown Motors said Foxconn would make Lordstown-branded vehicles including its debut pickup truck, the Endurance.
Chairman Young Liu said the Lordstown factory would accelerate Foxconn’s timeline for having EV production capacity in North America. People familiar with plans for the factory said its capacity could be used for other brand-name clients too.
Analysts said there was plenty of profit to be made if Foxconn figures out low-cost assembly of EVs that sell for $40,000 or $50,000. And the rise of EV startups brings a pool of potential customers looking to tap Foxconn’s manufacturing expertise to challenge incumbent auto makers.
But a car is more than an iPhone on wheels.
“You need a better and bigger supply chain,” said analyst Bakar Sadik Agwan of GlobalData, a consulting firm. “EV manufacturing is a bit more complex than smartphone manufacturing.”
Mr. Liu, the Foxconn chairman, said in March that Foxconn felt at home making EVs because they rely heavily on electronics and software rather than a gasoline-powered engine.
Foxconn’s main advantage over traditional auto manufacturers is speed, as well as a drive to prove it could succeed at the toughest manufacturing tasks, he said.
“Foxconn is the new kid in town. We need to build up our capabilities as soon as possible,” Mr. Liu said.
He told investors in August that the company planned to mass-produce EVs in the U.S. and Thailand starting in 2023 and was in talks about several potential locations in Europe.
Looming over Foxconn’s plans is the possibility of an Apple EV, a project the Silicon Valley company has been working on for years but has never announced.
“The relationship between Apple and Foxconn might extend from phones to cars,” said Soumen Mandal, an analyst with Counterpoint Research. However, Mr. Mandal observed that Foxconn has a joint venture in Taiwan set to make cars and start selling them in 2023, which could make Foxconn a competitor to a possible future Apple EV.
It remains unknown whether Apple will put its brand name on a vehicle. If it did, it would likely look at making cars for American consumers in the U.S., given the political sensitivities about having auto production overseas in countries like China.
Foxconn’s Mr. Liu has said the expansion in manufacturing in the U.S. is to fulfill customer needs. Apple declined to comment.
Foxconn, known formally as Hon Hai Precision Industry Co., has taken a broader view of the EV business than simply vehicle assembly, planning for a future in which brand-name clients seek its help on certain aspects of car-making rather than the whole process. Most big car makers in developed markets like the U.S. still like to manufacture their cars themselves.
Foxconn has made deals with EV battery and materials suppliers and in August bought a Taiwan semiconductor factory to make car chips. Mr. Liu said in September he hoped to build a comprehensive EV supply chain in Taiwan and leverage better semiconductor and battery technology to overcome the main hurdles to EV adoption: long charging time, inadequate range and high prices.
“Through these preparations, our EV customers won’t have any more capacity issues,” he said.
William Wei, a former Steve Jobs ally at Apple, was hired by Foxconn last year and now supervises the development of a software and hardware platform for EVs, essentially a starter kit that manufacturers could customize to build electric and self-driving cars.
Mr. Wei said at a company event a year ago that he wanted Foxconn to be the Android of EVs, a reference to the Google operating system used by smartphone manufacturers around the world.
Is Ford Investing In The Wrong Type Of EV Technology?
Electric vehicles are the future. But lithium-ion batteries might not be the best way to power them.
* There it is again: Another automaker makes a big announcement about its electrification plans with a battery manufacturer. Going by previous proclamations, that’s not just ambitious, but it’s also far-fetched.
* Ford Motor Co. and SK Innovation Co. announced they’re partnering to spend $11.4 billion on three electric-car battery plants across the U.S., making it the most sizable investment in Ford’s 118-year history. The deal to build the biggest battery plant ever in America would catapult the South Korean firm to the status of a leading battery maker in the U.S. and is also its largest single outlay. All very big.
* It comes at a time when President Joe Biden’s administration has been talking up electric-vehicle subsidies, including tax credits. In addition, anything made in the U.S. or with higher domestic content, including battery cells, would get more government support.
That’s on top of a new national blueprint for lithium-ion batteries, making it perfect timing for Ford and SK’s blockbuster investment. There’s more to consider, however.
VW Workers Urge Faster EV Rollout At World’s Biggest Car Factory
Volkswagen AG’s main plant in Wolfsburg might face historically low output this year and needs a faster shift toward electric vehicles to remain competitive, according to the German automaker’s top labor officials.
The planned production of an electric car — dubbed Trinity — is set to roll off assembly lines in 2026, which is too late to ensure sufficient utilization of the site, VW works council chief Daniela Cavallo and her deputy Gerardo Scarpino said in a joint statement on Saturday.
“The location needs a quicker way toward e-mobility,” Cavallo said.
The global chip shortage hampers manufacturing at the sprawling Wolfsburg factory, which produced about 780,000 cars annually on average over the past 10 years and covers an area as big as Monaco.
VW Chief Executive Officer Herbert Diess has pitted the site against Tesla Inc.’s factory that’s under construction outside Berlin and is slated to start production next year. VW plans to upgrade Wolfsburg with the latest electric-vehicle technology and software operations.
Due to the persistent scarcity of semiconductor chips, the output at Wolfsburg this year could even fall below the level of 2020, when the Covid-19 pandemic pushed production to just below 500,000 cars, according to VW’s works council. VW’s initial goal agreed in a labor pact five years ago was to make at least 820,000 vehicles in Wolfsburg last year.
Activist Investor Engine No. 1 Commends GM’s Electric-Vehicle Push
Following its purchase of GM stake, Engine No. 1 says car company is primed to lead in EVs.
Engine No. 1 LLC, an activist investment firm that successfully pushed for change at Exxon Mobil Corp. , said Monday it is backing General Motors Co.’s bid to lead in the transition to electric cars.
In a white paper, the San Francisco-based investment firm said it believes GM and other traditional auto makers have the scale and know-how to drive electric-vehicle adoption. Engine No. 1 took a stake in GM in the first quarter but had not publicly outlined its thinking behind the move.
“The scale of the [electric vehicle] transition challenge is beyond what Tesla and other new entrants can surmount in the time frame needed” to significantly reduce tailpipe emissions, the firm wrote. “Incumbent auto makers…are fully capable of becoming central players in the transition to [electric vehicles] and are also fully motivated to do so.”
The investment firm owned 397,000 GM shares as of June 30, according to FactSet. That would be worth about $22 million based on Monday’s trading price, a tiny stake relative to GM’s largest shareholders.
Engine No. 1 founder Christopher James said GM has an early lead on battery technology and is betting big on electrics, including its goal of largely phasing out gas- and diesel-powered cars by 2035. He said he sees GM as a rare example of an industry incumbent that is moving swiftly to stay ahead of disruption.
Mr. James said he has no plans to lobby for changes in strategy or board composition, as he did in his battle with Exxon. He said he wanted to formally express his backing to help mitigate the possibility that other shareholder activists could pressure GM to take a shorter-term view.
“We felt like just getting out in front of that and saying ‘This is the path to create long-term value,’ ” he said.
GM shares rose about 3% in morning trading Monday.
The statement of support comes ahead of a daylong investor event, planned for Wednesday, at GM’s research center in suburban Detroit. The auto maker is expected to detail its plans for plug-in cars and how it might boost profits from them.
Engine No. 1 said it has had “very constructive and collaborative two-way conversations with GM.” In a statement, GM said it is making progress toward an all-electric future but didn’t comment directly on Engine No. 1’s stake or white paper.
In a proxy fight with Exxon this year, Engine No. 1 leveraged a relatively small position in the oil company to secure three board seat for Mr. James’s candidates. The investment firm criticized Exxon for lacking a clear plan to transition to cleaner energy.
In contrast, Engine No. 1 has endorsed GM’s plans, an indication that it isn’t looking to take the same combative approach.
GM has gotten more ambitious about electric vehicles within the past few years, declaring earlier than many car companies that it plans to make an aggressive shift to plug-in models. In June, it pledged to spend $35 billion on the effort through mid-decade.
The company’s bet on electric cars faces hurdles. Plug-in cars are currently more expensive than gas-powered cars because of the high cost of batteries. A shortage of places to charge cars also poses a barrier to adoption, analysts and dealers say.
GM also is grappling with a safety crisis on its lone electric vehicle on sale in the U.S., the Chevrolet Bolt. It has said it would spend roughly $1.8 billion to replace batteries in about 142,000 Bolts, citing the risk of the battery pack catching fire.
In its white paper, Engine No. 1 gives accolades to Tesla Inc. for driving early electric-vehicle adoption, but says the California-based auto maker and the growing number of electric-vehicle startups won’t be enough to achieve a meaningful reduction in emissions.
During her eight-year tenure as GM chief executive, Mary Barra has dealt with activist shareholders who pressed the company to take bolder steps to boost the auto maker’s valuation.
In 2017, investor David Einhorn pressured GM to divide its stock into two classes that would have separated the auto maker’s dividend from its operations. Shareholders voted down the plan.
Investor Harry J. Wilson also mounted a potential proxy fight in 2015 to get a seat on GM’s board, only to later drop the plan after GM agreed to buy back about $5 billion in shares.
GM shares have rallied over the last 18 months after largely languishing in the decade following its postbankruptcy IPO in 2010 and plummeting at the onset of the pandemic in early 2020.
GM-Backed Cruise Sees Robotaxi Unit Growing Past $50 Billion
General Motors Co.’s Cruise LLC autonomous vehicle unit will tell investors this week that it sees a path for its ride-hailing business to reach $50 billion in revenue as it ramps up over the next couple of years, people familiar with the matter said. GM’s shares jumped the most in nearly three months.
Cruise Chief Executive Officer Dan Ammann is expected to say that the company plans to charge for rides as soon as next year and could expand in 2023 if Cruise gets the green light from California regulators.
The operation will take a starring role as GM makes a case to investors on Oct. 6 and 7 that its push into electric vehicles, self-driving software and connected technologies will soon start increasing the automaker’s revenue, said the people, who asked not to be named because the details haven’t been revealed.
Charging for self-driving vehicle services would be a significant step for Cruise and other companies that have spent billions trying to get their technology ready and regulatory permission to run cars without a human safety driver. Technological progress and establishing approvals for robotic driving have taken longer than anticipated, making revenue elusive for startups.
Cruise had to back off plans to deploy robotaxis in 2019 because it needed more time for performance and safety checks.
The shares climbed 3.6% to $55.04 at 9:36 a.m. Monday in New York after gaining as much as 4.4%, the most intraday since July 9. GM had advanced 28% this year through Oct. 1 while the S&P 500 rose 16%.
Cruise, in which GM has a majority stake, hopes to start charging for rides next year with a modified version of the Chevrolet Bolt electric car. Ammann is expected to say that if California Public Utility Commission approvals are obtained, the company could start offering shared ride services in 2023 with its Origin autonomous shuttle.
It will be built alongside the Hummer EV and electric Chevrolet Silverado pickup in GM’s Detroit-Hamtramck plant.
Ammann is expected to show how Cruise can increase revenue to $50 billion or more and provide analysts with details on cost per mile to consumers. The presentation will show how some big-name companies took years to get to that kind of revenue, the people said.
GM has said that Cruise had $55 million in revenue in the first half. The company charges for delivery services in Phoenix and gets some licensing revenue from Honda Motor Co. GM reported a $561 million first-half loss attributable to Cruise.
A GM spokesman declined to comment on the Cruise presentation.
GM’s presentation will include updates on the automaker’s electric vehicle plans, its SuperCruise driver-assistance feature and how the company will use its Ultify software platform to generate more revenue from app-based services in cars.
This week’s presentation won’t just focus on GM’s plans and technology, the emphasis will be on how the automaker plans to start increasing revenue and profit with new vehicles and business lines. After paring the size of the core auto business overseas, Chief Executive Officer Mary Barra will lay out a road to growth.
Barra’s technology investments have been pushing up GM shares this year. Activist investor Engine No. 1, which has said it invests in companies that have a positive impact on workers, communities and the environment, disclosed Monday that its stake in GM is passive. The fund praised Barra’s move into electric drive technology.
“GM’s goal to go 100% electric by 2035 signals one of the largest transformations in the history of the auto industry and creates an opportunity to re-center the battery supply chain in America,” Chris James, founder of Engine No. 1, said in an emailed statement. “The company’s early lead on battery technology, along with Mary Barra and the board’s leadership, creates tremendous advantages.”
Part of GM’s investor presentation will show how services like SuperCruise can bring in recurring subscription revenue.
Cruise plans eventually to expand its offerings beyond San Francisco with four- to six-passenger Origins but needs permission from the National Highway Traffic and Safety Administration to put the shuttle on public roads. The vehicle needs a government exemption because it has no steering wheel or manual controls. The company is working toward submitting a permit application with the agency.
The timing for the planned announcement on fares makes sense for Cruise. The California Department of Motor Vehicles last week gave the company a permit to charge fees for autonomous vehicle services.
That means Cruise can operate delivery services for a fee using its self-driving cars without a safety driver. All autonomous vehicle operators need approval from the Public Utility Commission to charge passengers for rides in the state.
Alphabet Inc.’s Waymo self-driving vehicle unit is collecting fares in the Phoenix area and has a permit to operate autonomous vehicles with a safety driver in parts of San Francisco and San Mateo counties, the California DMV said last week.
With its permit, Cruise may operate vehicles on public roads in San Francisco between 10 p.m. and 6 a.m. at a top speed limit of 30 miles per hour and can drive in light rain and light fog. Cruise received permission to test autonomous vehicles on public roads with a safety driver in 2015 and without a driver in October 2020.
The company raised $2 billion from GM and Microsoft Corp. in January and brought in billions of dollars in previous investment rounds from SoftBank Vision Fund, Honda Motor Co. and T. Rowe Price Group Inc.
Cruise announced a deal to offer rides in Dubai in 2023. The company also acquired startup Voyage in March in an effort to bring in tech talent.
Ammann was president of GM and went to Cruise to prepare self-driving technology for commercialization. Since then, he has been expanding the company by hiring more technology experts. Earlier this year, he named former Delta Air Lines Inc. executive Gil West as chief operating officer.
Rolls-Royce To Be All-Electric By 2030
It’s official: Rolls-Royce will be all-electric by 2030 and will field its first production EV, the Spectre coupe, in the fourth quarter of 2023.
The company is framing it as a promise kept: In 1900, co-founder Charles Rolls saw an early EV and proclaimed, “The electric car is perfectly noiseless and clean. There is no smell or vibration, and they should become very useful when fixed charging stations can be arranged.”
The Spectre will sit on Rolls’ own aluminum space frame architecture (shared by Ghost, Phantom, and Cullinan ), but it’s a whole new car. “This is not a prototype. It’s the real thing,” said CEO Torsten Müller-Östvös in a statement in September. “With this new product, we set out our credentials for the full electrification of our entire product portfolio by 2030.”
Müller-Östvös said the Spectre will be “tested in plain sight,” meaning not in a super-stealth program. It is to be subjected to 1.5 million miles of testing, simulating 400 years of use. Müller-Östvös told Stuart Varney on Fox Business, “I think [younger buyers] will love the car because foremost of all it is a Rolls-Royce, a true Rolls-Royce, and then it is electric. And I think that combination is perfect.”
Car and Driver said the Spectre is likely to have “two or more” electric motors, and speculated a price of US$350,000.
This is not Rolls’ first-ever electric car. The company unveiled 102EX, a one-off battery version of the Phantom, in 2011. The car used wireless charging from Qualcomm, and in that form was shown at the Consumer Electronics Show in Las Vegas in 2013. A second EV, the radically styled and autonomous 103EX coupe, was shown in 2016.
Bentley, once Rolls-Royce’s close partner but spun off to Volkwagen in 1998, has already declared its intentions to be an all-electric brand by 2030. By 2026, Bentley will sell only battery EVs and plug-in hybrids. Being Britain-based may have something to do with the announcements from both companies—the country is to ban the sale of new gas and diesel cars by 2035.
Rolls is a subsidiary of the BMW Group, and thus able to tap into that company’s evolving electric powertrains. BMW recently showed the 516-horsepower iX SUV, which goes on sale next year with a starting price of US$83,200. Some form of that drivetrain could make it into the Spectre.
Whatever form the Spectre takes, it will have plenty of competition in the electric luxury space. Tesla has set a fairly high bar, one that has arguably been raised by Lucid, whose luxury Air model has been certified at 520 miles of range in its most exclusive “Dream Range” version.
“I’m frankly a bit surprised that Rolls-Royce hasn’t done this sooner, especially for the Phantom,” says Sam Abuelsamid, principal analyst for e-mobility at Guidehouse Insights. “The silence and smoothness of electric propulsion is a perfect fit for R-R. Given that the Phantom in particular tends to be driven by a chauffeur, I doubt most are used for long road trips. It would seem like they could have built an electric Phantom with 150 to 200 miles of range years ago and met the needs of those owners.”
Abuelsamid adds: “Now that electric tech has advanced to where it has and cost isn’t really an issue for Rolls customers, going all electric this decade should be a non-issue.”
Volvo Wins Biggest Electric-Truck Order As DFDS Goes Green
Volvo Group won an order for 100 electric heavy trucks from DFDS A/S, Northern Europe’s largest shipping and logistics company, as pollution and noise restrictions overhaul the transport sector.
The second-biggest truckmaker will start deliveries of the vehicles, capable of driving 300 kilometers (186 miles) on a single charge, during the fourth quarter of next year, Volvo said Wednesday. The deal is the largest commercial order of electric trucks for the company so far.
The order shows “it’s possible to drive heavy transports with electric vehicles,” Roger Alm, president of Volvo’s trucking unit, said in an interview. “We are market leaders in the electric segment. That’s a position we strive to maintain.”
Manufacturers and logistics companies need to comply with tighter rules on diesel trucks operating in urban areas as well as cutting carbon dioxide emissions. The changes are opening the door for new competitors to the likes of Volvo and Traton SE, who have pledged that 50% of truck sales will be fossil-free by 2030. Volvo’s target is to have more than 35% of trucks fully electrified by 2030.
U.S. startup Nikola Corp. last month said it had won an order from the port of Hamburg, while Tesla Inc. has also been working on an big electric rig.
“It’s obviously a costlier alternative, but we want to be first movers in this,” DFDS’s head of logistics Niklas Andersson said, whose company runs a fleet of 1,500 trucks. “It’s a very big part of our climate plan.”
Sales of larger e-trucks have so far remained in the low hundreds due to limited driving ranges and high battery costs. Volvo sold about 95,000 heavy-duty trucks in the first half of the year.
The order “confirms Volvo has a competitive offer and is well-situated in the transition to electric the transportation sector is currently undergoing,” Mats Liss, and analyst at Kepler, said in a note.
No One Seems To Care That EVs Are Catching Fire
With all the excitement around rising sales, splashy investments and government initiatives, we’ve lost sight of the most basic requirement: safety.
Electric vehicles, and the technology surrounding them, are all the rage. Everyone loves to talk about rising sales and a greener future. Yet for all that attention, there seems to be very little concern about safety.
This week, the U.S. National Highway Traffic Safety Administration rejected a 2019 petition to open a formal investigation into Tesla Inc.’s battery-management software, according to documents posted on the agency’s website.
Certain Tesla vehicles that received an over-the-air system update, or wireless delivery, were defective and caused fires in five vehicles, according to the petition.
The agency’s denial noted that none of the fires were related to fast charging in the U.S., unlike those that occurred elsewhere. It added that there hadn’t been any incidents globally since May 2019.
“It is unlikely that an order concerning the notification and remedy of a safety-related defect would be issued due to any investigation opened as a result of granting this petition,” it said. The petition referred to fires in the U.S., China and Germany.
The issue here isn’t just what happened to those five Teslas – there are several other instances of electric cars that have gone up in flames. It’s that regulators don’t appear to show an interest in investigating all possible outcomes and preparing for new scenarios when battery-powered vehicles catch fire.
That’s despite the fact that this technology is being aggressively pushed by lawmakers and companies, and chased by billions of investor dollars.
Unfortunately, fires and recalls happen frequently in the auto industry. But what we’re dealing with here isn’t a faulty switch or seat belt or airbag. The issues addressed in the petition pertain to the core technology of new-age cars (the battery), which we still don’t know enough about. It’s simply not enough to say these incidents happen with diesel and gas cars, too.
When an electric vehicle burns, it does so for longer and the fire gets hotter. The flames can end up accelerating through chain reactions and spiraling out of control quickly, a process called thermal runaway. They can take hours to extinguish. U.S. federal regulators have even warned that first responders aren’t adequately informed or prepared to deal with such incidents.
As this technology evolves and interest surges, particularly in Europe and China, there’s a rush to make more energy-dense and higher-performance batteries. Carmakers and battery manufacturers, incumbents and startups alike, are forging ahead to meet the goals and aggressive emissions rules set for them.
But just because sales are rising doesn’t mean these vehicles and the technological advances we hear about frequently are in the clear.
While manufacturers are likely doing their best to test for safety issues, there are several variables and unknowns. The hype around battery technology also means companies aren’t going to openly acknowledge and discuss proprietary information.
The burden to get this right isn’t just on manufacturers. Regulators also need to play a more active role in establishing uniform standards, and proactively use reported incidents to set more stringent safety codes for this immature technology.
To do that, they’ll first have to be willing to understand what’s going wrong. If regulators are reluctant to investigate incidents like Tesla’s, it’s unclear what exactly will kickstart that process.
GE And General Motors Team Up To Develop Rare Metals Supply Chain
The collaboration aims to support the growth of electric vehicles and renewable energy.
GE Renewable Energy and General Motors (GM) have teamed up to evaluate opportunities to improve supplies of heavy and light rare earth materials and magnets to support the growth of electric vehicles (EVs) and renewable energy.
They have signed a memorandum of understanding (MoU) for the collaboration, which will initially focus on creating a North America and Europe based supply chain of magnet manufacturing that both companies will use in the future.
Metal alloys and finished magnets produced from rare earth materials are critical components used in manufacturing electric motors for automotive and renewable power generation.
The companies will also work to help establish new supply chains for additional materials, such as copper and eSteel that are used in automotive traction motors and renewable generation.
Danielle Merfeld, GE Renewable Energy Chief Technology Officer said: “At GE Renewable Energy we constantly innovate, both through our products like the Haliade-X, the most powerful offshore wind turbine built today, as well as by developing strategic collaborations that can help us accelerate the energy transition.
“Working with GM gives us another tool to obtain reliable, sustainable, and competitive source of key materials going forward that will help us lower the cost of renewable energy and drive more electrification by making EVs a more viable option for consumers. We are also excited to partner with GM to explore opportunities to develop critical supply chains in the US and further reduce CO2 emissions.”
For Longer-Range EVs, A Cousin Of Silicon Makes A Material Difference
Car industry invests billions in silicon carbide for chips that control power, but cost challenges remain.
The global auto industry is investing billions of dollars in chips made of silicon carbide, a more robust cousin of Silicon Valley’s namesake element that companies believe can help them build high-performance electric vehicles.
Silicon carbide, or SiC, is silicon married to carbon, the material in a diamond. Using it in chips that control power—as Tesla Inc. has done for several years—means less energy gets lost, which in turn leads to a more powerful motor that can drive farther on a single charge.
“Customers of EVs are looking for greater range, and we see silicon carbide as an essential material in the design of our power electronics,” said General Motors Co. Vice President Shilpan Amin this week after GM reached a deal to use silicon-carbide devices made by Durham, N.C.-based Wolfspeed Inc.
The big challenge now is ensuring that the battery cost savings achieved with silicon carbide chips outweigh the higher cost of making them. Industry observers say companies are making progress but remain years away from getting the cost close to silicon.
A device based on silicon carbide can be five times as expensive as regular silicon, according to Claire Troadec of French research firm Yole Développement. Among other issues, silicon carbide is harder and more brittle and that means it is more difficult to polish the surface of a silicon-carbide wafer without ruining it.
Wolfspeed, which changed its name from Cree Inc. this week, is set to open what it calls the world’s biggest silicon carbide factory with a $1 billion investment early next year near Utica, N.Y. In August, it expanded a deal with Europe-based STMicroelectronics NV under which it will supply more than $800 million worth of silicon carbide wafers over the next several years.
The U.S. and China are competing over leadership in silicon-carbide technology, with Beijing hoping to avoid dependence on the West.
The government of Changsha, the capital of China’s Hunan province, in June started operation of a $2.4 billion network of facilities related to silicon carbide, both making the raw material and using it in electronic components.
Taiwan-based Foxconn Technology Group, which assembles Apple iPhones, in August bought a plant that is expected to make six-inch silicon carbide wafers. That move is part of the company’s effort to establish a base in auto technologies as it seeks to become a contract manufacturer of EVs for global brands.
Last week, Foxconn agreed to buy the Ohio factory of Lordstown Motors Corp. and plans to make vehicles for the electric-truck startup and other customers.
Companies have long known how to make silicon carbide by mixing silicon and carbon in a furnace and the material has various industrial uses. Like silicon itself, silicon carbide is a semiconductor, meaning its properties lie between a material like copper that conducts electricity and an insulator like rubber that doesn’t.
Silicon carbide and other materials known as third-generation semiconductors are closer to the insulator side, allowing them to operate at higher voltages and temperatures.
Some types of chips, like the microprocessors that run a smartphone, typically don’t need to work under extreme conditions, so traditional silicon is used.
But when the chips are controlling electric current, silicon carbide’s advantages matter—especially in an electric vehicle’s inverter, which converts the direct current generated by an EV’s batteries into alternating current that powers a motor and makes the wheels turn.
When silicon carbide chips are used, less energy gets lost in the inverter, so the car can be lighter and deliver more power. Likewise, EV charging stations with silicon carbide chips can power up cars faster.
Yole Développement’s Ms. Troadec estimated that SiC-related technologies can save car makers as much as $750 in battery costs per unit depending on the EV type.
As in many fields of EV technology, Tesla was the first to market with silicon carbide chips, using them in its mass-market Model 3 when it went on sale several years ago. According to a Yole Développement report, STMicroelectronics was Tesla’s supplier in the pioneering move.
“The SiC components first used in the Tesla Model 3 allowed a great improvement in its range and other performance, towering over other electric cars on the market back then,” Kung-Yen Lee, a professor at National Taiwan University, told an industry forum last month. “We can say that SiC propelled Tesla to fame.”
Tesla didn’t respond to a request for comment.
Chinese EV makers like BYD Co. , which is partly owned by Warren Buffett’s Berkshire Hathaway Inc., have followed suit. BYD pitches its Han electric sedan as a bargain version of luxury EVs that goes from zero to 60 miles an hour in 3.9 seconds while costing about $30,000 to $46,000.
The White House called for stepping up investment in the silicon carbide supply chain in a June report that called the U.S. a “global leader in deployment of SiC.” It pointed to national-security applications for third-generation semiconducting materials like SiC.
China’s Ministry of Industry and Information Technology included silicon carbide in its five-year strategic plan released in August, calling on companies to be ready in case the U.S. restricted China’s access to Western technology.
Zhang Yongxi, founder of Shanghai-based SiC chip company Inventchip Co., said at a September forum that lowering the cost of silicon carbide so it can catch up to its more famous cousin will be a long road requiring continuous investment.
“This gap might disappear in about five to 10 years,” he said.
Ford Gives Michigan A ‘Wake-Up Call’ With Out-of-State EV Expansion
The carmaker’s $11.4 billion planned investment in electric vehicle and battery plants in Tennessee and Kentucky is forcing local officials to examine how the state will compete.
Ever since Henry Ford’s Model T brought mobility to the masses a century ago, Michigan has been America’s automotive epicenter, home to scores of vehicle parts and production plants—and the tens of thousands of jobs that go with them.
Now the birthplace of the U.S. auto industry is suffering a crisis of confidence after being passed over by hometown hero Ford Motor Co. for $11.4 billion in new electric vehicle and battery factories in favor of Kentucky and Tennessee. “The reality,” the Detroit News wrote in an editorial on Sept. 28, is that Michigan is “unprepared to achieve its dreams of dominating the automotive future.”
The project includes three battery factories in Kentucky and Tennessee and Ford’s first brand-new assembly plant in a half-century, to be located in a rural area near Memphis. The four factories, which Ford is building with South Korean battery partner SK Innovation Co., will employ almost 11,000 workers.
The setback has led to criticism from pundits and politicians of Michigan Governor Gretchen Whitmer and her economic development officials for failing to get in the game because they didn’t submit a bid on the project. “It was a shock, and I’m extremely disappointed,” says Tim Walberg, a Republican congressman from Michigan.
“The key question is: How did this happen on Governor Whitmer’s watch? And what is it about Governor Whitmer’s economic policies that has Ford looking out of state?”
On the defensive, Whitmer accused Ford of not giving Michigan “a real opportunity” to bid on the big deal.
Whitmer declined an interview request for this story. But the governor, a Democrat, sent a letter to the Republican-controlled Michigan Legislature on Oct. 5 imploring it to use a big chunk of $6.5 billion in federal coronavirus recovery funds the state has coming to “put more tools in our economic tool box.”
She also noted that the state has work to do to attract business expansion, saying, “Let’s not sell ourselves short—we have plenty to offer, but we need to do more to be the number-one destination for any business.”
Representative Debbie Dingell, a Michigan Democrat whose district includes Ford’s home base in Dearborn, says the state’s previous Republican governor dismantled some of the economic development programs that could have been used to offer incentives to rival what Kentucky and Tennessee gave.
But she acknowledges that the state needs a better and less fractious approach to land the automotive factories of the future. “Pointing fingers at each other just gives another reason for companies not to come to Michigan,” Dingell says. “This is a wake-up call for all of us.”
Ford has tried to placate its unhappy neighbors, with Chief Executive Officer Jim Farley taking to Twitter to declare his “love” for the Great Lakes State, where the automaker has invested $7 billion in the past five years.
Executive Chair Bill Ford, great-grandson of founder Henry, told the Detroit News that the company considered Michigan for its EV expansion, but it just didn’t have a shovel-ready location that met the automaker’s needs, including enough acreage to match the 6-square-mile megasite in Tennessee.
Behind the bickering is the uncomfortable truth for Michigan that winning investment during the century of the internal combustion engine is no guarantee of riches during the dawning electric age.
Although Ford plans to produce the electric F-150 Lightning pickup at the vast Rouge factory complex that founder Henry constructed a century ago in Dearborn, no automaker has announced a single new battery factory in the state.
General Motors Co. and its South Korean battery partner, LG Chem Ltd., have chosen Ohio and Tennessee for their first two plants, with no sites yet announced for two others.
Moreover, because EVs don’t use conventional engines and drivetrains, Michigan is at considerable risk as the industry transforms. The state’s factories produce 1 in 6 internal combustion engines in America and a third of transmissions, according to the Center for Automotive Research in Ann Arbor.
More than 32,000 workers in Michigan built gasoline-fueled engines and transmissions in 2019, when factories were still running at full tilt before the pandemic. “What’s at stake is really the future of mobility and the automotive industry,” says Carla Bailo, CEO of researcher CAR, who counsels Michigan’s leaders on luring investment.
“If all this work goes somewhere else, we have a number of plants that do internal combustion engine work that are really going to be in jeopardy. We really need to take this seriously.”
Among Michigan’s biggest drawbacks is its high cost of energy. The state has industrial energy rates of 8¢ per kilowatt-hour, more than the national average of 7.53¢ and well above its neighbors to the south, with Tennessee at 5.85¢ and Kentucky at 6.06¢, according to the U.S. Energy Information Administration.
That price premium would add up fast in the factories Ford and SK are building, which together will have the capacity to produce 129 gigawatt-hours of batteries—enough to power more than a million electric cars annually.
The highly automated and antiseptic environment that battery plants require results in five times the energy consumption of a typical auto plant, according to Ford.
Making matters worse for the industry, Michigan’s utility regulations cap the amount of energy that industrial users can buy via competitive bids at only 10% of their consumption, which keeps rates elevated, says Greg Keoleian, director of the Center for Sustainable Systems at the University of Michigan. “That would account for a lot of the differences with other states that have more competitive markets,” he says.
Michigan’s reputation as a stronghold of organized labor also works against it, Bailo says. Electric vehicles are more costly to build, mostly because of high battery costs, so automakers are heading south to Kentucky, Tennessee, and other states with right-to-work laws to lower their operating expenses.
The employees Ford and SK hire in Tennessee and Kentucky will choose whether they want union representation. Workers in Tennessee have already rejected organizing drives by the United Auto Workers at Nissan Motor Co. and Volkswagen AG factories.
Ford builds its electric Mustang Mach‑E in Mexico, where wages are a fraction of what U.S. workers make. The automaker has said that’s one reason it books a profit on every Mach-E it sells. “We’re seen as a union state, and that has baggage,” Bailo says.
She contends that can be “turned around” by training UAW members for the high-tech jobs of the future and encouraging greater teamwork on the factory floor.
UAW spokesman Brian Rothenberg took issue with such thinking. “That is a 1980s analysis that does not apply to today’s Michigan,” he says, noting that Ford, GM, and Stellantis NV, the former Fiat Chrysler, are building and renovating factories around Detroit.
Michigan’s fractured political environment also takes a toll on economic development. Mask mandates and school shutdowns during the pandemic exposed deep divisions. Armed right-wing extremists stormed the Michigan State Capitol months before the siege on Jan. 6 in Washington, and federal investigators broke up a plot to kidnap and possibly harm Whitmer.
Those hostilities continue to simmer as Republicans seek to oust Whitmer in the gubernatorial election next year. “Our governor has been concerned about cloistering us away and putting masks on our faces and keeping us out of school and out of work and out of church for the better part of two years,” says GOP Representative Walberg. “This better just sock us between the eyes and wake us up.”
Tennessee’s Republican governor and Kentucky’s Democratic governor are boasting about their new role in ushering in the automobile’s electric era. They paid dearly for it, with Tennessee giving half a billion dollars in incentives and Kentucky forking out almost $300 million and handing over a 1,551-acre site south of Louisville.
But the Southern states’ leaders say the payoff will likely last at least as long as Michigan has been the Motor Capital. At a splashy ceremony on Sept. 28 on the vast, 3,600-acre site in Stanton, Tenn., to be known as Blue Oval City, Governor Bill Lee declared, “West Tennessee will now lead the nation in the next industrial revolution.”
The Problem With Electric Trucks
Despite their potential to curb emissions, many of the most-hyped electric vehicles will exacerbate another safety crisis: traffic deaths.
Electric vehicles recently received a massive boost in the U.S., with a promotional spin by President Joe Biden on the White House lawn, and a non-binding federal mandate to make half the vehicles sold in the U.S. electric by 2030.
A number of car companies have piled on with their own electrification goals, and are committing to make even some of their most carbon-intensive vehicles electric.
The development of vehicles like the 9,000-pound GMC Hummer EV and 6,500-pound Ford F-150 Lightning are seen by some as a win for fighting climate change, with the potential to convert the large population of truck-loving Americans.
The problem is, while these trucks are reducing the ecological destruction of motor vehicles, they are exacerbating another public health crisis: traffic violence. The auto industry is greening itself by building vehicles that will make our streets run red.
Globally, traffic crashes kill 1.35 million people a year — including almost 40,000 in the U.S. annually, where the traffic death rate has historically been the highest among high-income countries. They are the leading cause of death for children and young people around the world.
In the U.S., Black and Indigenous people are especially likely to be killed in traffic crashes, as are older adults and bicyclists. Between 2015 and 2030, fatal and non-fatal crashes will cost the world economy an estimated $1.8 trillion.
In the U.S., enormous vehicles are largely to blame for increasing death counts.
Over the decades, as almost every other technology has gotten smaller, from laptops to cell phones, cars keep getting bigger and more dangerous. Now, SUVs and light trucks are so large that they spur comparisons to World War II tanks and complaints that they’ve outgrown garages. As they have expanded in size, they’ve also become heavier.
Between 2000 and 2019, the average weight of vehicles involved in a fatal crash increased by 11%. One new GMC Hummer EV, for example, exceeds the Brooklyn Bridge’s 3-ton weight limit by 50%. Larger and heavier vehicles tend to have longer stopping distances, and hit with greater impact on collision.
These enormous personal transportation devices loom over our streets, requiring steps for drivers to climb up to their seats. Their increasingly flat fronts and tall hoods create front blind zones two to three times larger than a sedan’s; one experiment sat 18 children in front of an SUV, and all were fully hidden from the driver by the massive hood.
This exacerbates the risk of “frontover collisions,” in which a vehicle moving forward slowly hits a person the driver can’t see. Most frontover collision victims are between one and two-years-old, and the vast majority of frontover fatalities since the 1990s have involved an SUV, van or light truck.
A recent study in the Economics of Transportation estimates that if between 2000 and 2019 all light trucks were replaced with cars, more than 8,000 pedestrians would still be alive today.
The auto industry is greening itself by building vehicles that will make our streets run red.
At present, SUVs and light trucks make up 72% of new car sales in the U.S. and are expected to grow to 78% by 2025. These vehicle types, led by the Ford F-150, also represent eight of the ten best-selling vehicles in the U.S.
A study from the University at Buffalo concluded that passenger car drivers are seven times more likely to be killed in a crash with an SUV, partially due to the ability of the SUV to roll over the smaller car (a phenomenon unfortunately named “bumper mismatch”).
Simply put, the larger your vehicle, the more likely you are to kill someone else.
As car companies scale their electric operations, they should take this moment to build more ethical vehicles — cars that can help save our planet and save our lives.
Such vehicles must prioritize the safety of both drivers and those outside the vehicle, especially the most vulnerable — children, older adults, those with limited abilities, Black and Indigenous people, pedestrians and cyclists — above all else.
Instead, after years of pumping up egos with fossil-fueled assault vehicles built to race, conquer and destroy, car companies are overcompensating on size, machismo and violence to make up for a plug instead of a pump.
In a recent letter, General Motors Co. President Mark Reuss promised that the company’s goal will be “making electric trucks that are as tough as their drivers.” While car companies have sold decades of tough to customers, no amount of marketing or ego-boosting can protect a human body from a “supertruck.”
Elon Musk debuted his Cybertruck with a “tug of war” with a Ford F-150. Ford responded by unveiling the F-150 Lightning as the “fastest-accelerating F-150 ever built. #BuiltFordTough.”
The Ford F-150 Lightning is 35% heavier than its gas-powered version. The enormous front compartment, freed of its need to hold such a powerful engine, has become the entirely unnecessary “Mega Power Frunk” (front trunk), adding more storage space at the expense of visibility and others’ safety.
And, describing its own EV strategy, Dodge has advertised that it will “not sell electric cars, it will sell American eMuscle” and that it will “tear up the streets, not the planet.”
We are witnessing a deadly pissing contest manufactured by the auto industry, where more power, larger vehicles, and “super fast” “supertrucks” are heralded as the pathways to sustainability. And it is going to kill a lot of people under the guise of “green.”
A spokesman for GM said the electric Hummer is just one part of a “comprehensive strategy to drive massive EV adoption” that includes a range of other vehicle options, as well as plans to market its battery and fuel cell technologies to other industries like rail and aerospace. Representatives for Ford and Dodge did not respond to requests for comment.
The world needs ethically minded car companies capable of mitigating their damage to the environment and to the fragile bodies of human beings. These companies can build smaller cars capable of moving the people and equipment required for daily life and work.
They can ensure that vehicles maximize external visibility and minimize internal distractions. They can market their products in a responsible way that doesn’t glorify violence and toxic masculinity. They can put people into cars without putting them into crippling debt.
They can produce vehicles that protect our most vulnerable and are still good for a company’s bottom line. Most importantly, these companies can acknowledge that they are the cause of, and solution to, numerous societal problems.
While car companies and their enthusiasts may push back against these changes by citing consumer demand for larger and more powerful vehicles, what most consumers do not want is to kill a child while driving to pick up groceries.
To meet that demand and end the preventable tragedy of millions of families and communities devastated by traffic violence every year, car companies must prioritize safety, not weaponization, as selling points for our electric future.
Allstate Wants To Track Your Driving To Determine Your Car Insurance Rate
Insurer is talking to state regulators about reducing the use of credit scores in pricing auto policies.
Many consumers are unhappy that car insurers use their credit histories in setting premium rates. Now an alternative is in sight—and some might like it even less. Insurers would be able to track how, when and where they drive.
Since late summer, car insurer Allstate Corp. has been talking to state regulators about helping to lead an industrywide effort to transition in the coming years from sizing up risk in applicants with factors including credit scores to largely using telematics to determine rates, the company and regulators said.
With telematics, insurers monitor policyholders’ driving behaviors either through smartphone applications or devices embedded in their vehicles. Insurers slice the tracking data to tailor individual rates.
While a switch could be unsettling to many people with privacy concerns, it would hold out the possibility of lower rates for vehicle owners who are excellent drivers or don’t drive that much, and who might now be overpaying for the risk they pose.
Allstate is a leading seller of policies that use telematics in conjunction with credit scores and other traditional pricing factors, and it has a unit, Arity, that sells telematics services to other insurers.
“There is an opportunity to encourage innovation in the insurance industry, and we want to start that dialogue with regulators and others, and be thoughtful about how we step into this over time,” Allstate Chief Legal Officer Rhonda Ferguson said in an interview.
“It takes collaboration across the industry to get there—from legislators and regulators creating clear and consistent rules for driving-based rating plans to insurers advancing telematics programs and customers using them,” Ms. Ferguson added.
Allstate’s championing of telematics is the latest development as state insurance regulators fulfill a pledge from last year to scour existing practices to identify those that might place minorities at a disadvantage. Auto insurers’ use of credit scores is one area of concern.
Most states permit insurers to use credit-based factors, but consumer groups have long maintained that the practice is unfair to low-income and many minority consumers because they are overrepresented in lower credit-scoring categories.
The Biden administration is also scrutinizing car insurers’ pricing techniques.
Under the traditional pricing approach, insurers lump applicants into actuarial categories by such characteristics as age, gender, marital status, vehicle type and driving records, in addition to credit behavior.
Many also use education and occupation, which likewise have come under fire as unfair to certain consumer groups. Actuaries have struggled to explain why credit factors work to predict claims activity, with some speculating that people with good credit habits have meticulous behaviors that make them cautious drivers.
While Allstate stands by its current approach as actuarially sound, “sophisticated, accurate and fair,” Ms. Ferguson said, telematics provides an opportunity “to improve the accuracy of insurance pricing.”
An Allstate spokesman said the insurer wouldn’t speculate on the degree to which any of the traditional factors would decrease in use in a shift toward telematics.
The technology has gained ground since it was introduced by Progressive Corp. about two decades ago. But less than half of new auto-insurance applicants enroll when given a chance, according to trade groups.
Just over two million of Allstate’s roughly 22 million total auto policyholders currently are enrolled. They are a big chunk of the approximately eight million individuals industrywide with telematics-connected cars, or less than 4% of the nation’s more than 210 million personal-auto policyholders, the National Association of Mutual Insurance Companies estimates.
Telematic devices track behavior such as hard braking and speeding, as well as hours of travel, location and total miles driven. Some programs also measure distracted driving.
That detail plays into why Allstate’s proposal might be a hard sell. “There are a lot of ‘ifs,’” said Pennsylvania Insurance Commissioner Jessica Altman, including the potential need for state legislatures to ban use of factors such as credit.
Many people are reluctant to try telematics because of data concerns or inertia, she said, with some dubbing it “Big Brother.” Working in telematics’ favor, broad data collection “is becoming more and more the norm for consumers,” she said.
Louisiana Insurance Commissioner Jim Donelon said, “There would have to be very strong consumer protections around what insurers can do with this telematics data….Who owns the data that is produced: the driver or the insurer?”
Another concern is whether telematics’ ability to zero in on location might “create new issues—for example, ‘redlining’ cars that drive or park” in certain areas, said District of Columbia Insurance Commissioner Karima Woods.
Nissan Unveils High-Tech Green Factory For Next-Generation EVs
Nissan Motor Co. is planning to spend more than 130 billion yen ($1.2 billion) implementing new technologies that will make its global factories more efficient, less polluting and ready to produce next-generation cars such as electric vehicles.
As part of its “Intelligent Factory Initiative,” Nissan has spent about 33 billion yen over the past two years installing advanced equipment at its Tochigi plant north of Tokyo. The company now plans to bring the same initiative to major plants in Japan and the U.S., Nissan Executive Vice President Hideyuki Sakamoto said in an interview Friday.
The plants Nissan is looking to furnish with new investment include its Oppama and Kyushu factories in Japan and its Canton and Smyrna plants in the U.S. Investment in those latter two plants will top 70 billion yen while each Japan plant will receive around the same amount injected in the Tochigi site, Sakamoto estimated, adding that new equipment will be introduced at the sites gradually over a period of around seven years.
Nissan took the wraps off its revamped intelligent factory in Tochigi on Friday. Technologies introduced at the site include production facilities for EVs, efficiency-boosting VR training systems and new automated parts of its production lines. Nissan will also electrify plant equipment and source electricity from renewables and fuel cells as part of its plan to cut factory carbon dioxide emissions by 41% in 2030 versus 2019 levels, Sakamoto said.
Nissan first announced in 2019 it would begin installing advanced technologies and equipment at its Tochigi plant. The 2.9 million square meter (717 acre) site produces around 250,000 vehicles annually including several Infiniti brand models. The Nissan Tochigi plant and its technologies are designed to serve as a model for global plants.
Nissan is scheduled to start production of its flagship Ariya electric vehicle at Tochigi this fiscal year. The crossover EV is one of 12 new models Nissan plans to bring to market as part of its Nissan Next turnaround plan. Analysts have highlighted the model as key to the automaker’s future performance. Nissan touts the car as embodying its decades of experience producing electric models.
Because the Tochigi plant will be producing electric cars, there are several ways lines have had to be modified to churn out both battery and gasoline-powered models. This is noticeable in the section of the production line that mounts powertrains — the assembly of every component that pushes a vehicle forward.
Automated pallets are programmed to install electric and conventional car-oriented powertrains. The system measures the car’s dimensions and makes micro-adjustments to ensure the assemblies are installed to within a fraction of a millimeter’s accuracy.
There are also machines installed to produce parts specifically for the Ariya. For the first time ever in mass-produced cars, according to Nissan, the Ariya will replace magnets commonly used in rotors with tightly-wound copper wire. That improves the efficiency of the motor component when traveling at high speeds and means expensive and supply-risky rare earth metals can be reduced.
To boost efficiency at the Tochigi plant, mixed-reality headsets are being used to train workers to perform processes such as checking complex auto parts for scratches or deformations. When using the headset to look at machinery, instructions appear suspended in the air and arrows point to areas of the part that need to be checked. Workers can also pace around and inspect a simulation of a car.
In another attempt to increase efficiency, Nissan has installed human monitors in a control room on the second floor of a building on the site. They monitor 27 screens for any issues occurring on production lines. Sensors scattered throughout the factory floors warn of any problems, and workers using a camera headset and tablet are dispatched to the site and given instructions by the monitors on how to fix an issue if it occurs. Nissan estimates this system reduces equipment recovery time by 30%.
U.S. Electric Mail Truck Push Stalls Without More Funding
The White House wants USPS to order more electric vehicles. The issue, as always, comes down to money.
We all know the tribulations of the U.S. Postal Service. It’s losing billions of dollars a year, even as it’s delivering record numbers of packages, to say nothing of mail-in ballots, while struggling with Covid-related absences. Ben Franklin would be awed.
Then there’s something else that’s hardly classified information: the woeful state of the agency’s delivery vehicles. The USPS operates a fleet of 228,000 trucks and vans, one of the world’s largest.
Many of them have been on the road for more than a quarter of a century and lack basic safety functions such as automatic brakes and driver air bags. And their fuel efficiency is at a level that keeps climate activists awake at night. They get about 10 miles per gallon of gas — worse than a Humvee.
The slow-moving USPS is finally remedying this. Last year, it awarded a 10-year contract worth an estimated $11.3 billion to Oshkosh Corp. to furnish as many as 165,000 new vehicles. They’re rather cute and sparked a social media sensation when the Postal Service posted their preliminary images. The agency’s initial order includes 5,000 electric ones.
Sounds encouraging. But not as far as the White House is concerned. The Biden administration has scolded the USPS for not ordering more EVs.
“The Postal Service’s proposal as currently crafted represents a crucial lost opportunity to more rapidly reduce the carbon footprint of one of the largest government fleets in the world,” Vicki Arroyo, the EPA’s associate administrator for policy, wrote to U.S. Postmaster General Louis DeJoy earlier this month.
And that’s not to mention the consternation on Capitol Hill. Gerry Connolly, a senior House Democrat, has called for DeJoy, a Republican, to resign because of the paucity of his agency’s EV order.
Arroyo, at least, has a point. Given the leisurely pace of the Postal Service’s fleet replacement efforts, the trucks and vans it purchases now are likely to be in use for decades. Does it make sense for letter carriers to be piloting carbon emitting trucks in 2050? Not if the U.S. is expected to reach its goal of net zero emissions the same year.
DeJoy, however, has pushed back and he, too, makes sense. He says the USPS, which is supposed to be self-supporting, doesn’t have the money currently to buy more EVs. But as he has put it more than once, the agency would be happy to upgrade its order “should additional funding become available.”
The irony perhaps is that the White House and its congressional allies did try to make $6 billion available in the sprawling $2 trillion Build Back Better bill for electric postal vehicles and charging infrastructure.
But after month of tortured negotiations, they couldn’t round up enough votes from their own party members to pass it. With the midterm elections approaching, it may be too late.
After Build Back Better’s apparent collapse, it seems a tad hypocritical for Democrats to beat up on DeJoy for not embarking on an EV spree. Then again, the situation isn’t as dire as the postmaster general’s critics would have people believe.
As the USPS noted in its press releases announcing the Oshkosh deal, whether they are gas powered or run on batteries, the next generation of postal vehicles are being designed so they can be retrofitted to keep up with the latest in EV technology.
Because who knows what will be available when these trucks and vans finally roll out — and who knows when Congress will get around to funding them?
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