“Why can’t you be more like Tesla?” That’s what Wall Street investors have spent years demanding of the traditional automakers. So then Ford takes their advice, tries a Tesla tactic… and it immediately backfires.
That unfortunate situation leads off today’s morning roundup, along with several rounds of important Nissan updates and a dispatch on how Great Britain’s car industry may not be dead quite yet.
Lightning Doesn’t Strike On Wall Street
This week, Ford pulled a Tesla move and cut the price of the F-150 Lightning by nearly $10,000, putting it close to price parity with gasoline trucks—a long-sought goal for just about every automaker trying to make electric vehicles financially viable. You’d think the move would project confidence among Ford’s investors in its manufacturing methods, its ability to scale batteries and its commitment to an electric future, which is part of why Tesla’s valued so highly. (Another big part of it is Elon Musk’s continued claims that the company has basically “solved” self-driving cars, which is untrue and has been untrue for almost a decade now.)
You’d be wrong! Bloomberg reports that in the wake of this price cut, Ford’s stock price took an immediate bath:
“Everyone loved it when Tesla did it,” said David Whiston, an auto analyst at Morningstar. “As long as they’re truly making improvements in production costs and input costs, then giving some of that back to the consumer makes sense.”
Investors didn’t see it that way, sending Ford shares down 5.9%, their biggest drop in five months.
Oof. And since you’re probably asking why:
“Investors fear this fits recent noted theme of higher US EV inventories,” Chris McNally, an Evercore ISI analyst with the equivalent of a hold rating on Ford shares, said in a report Tuesday. “Time will tell if the Ford price cut was demand or supply,” he wrote, adding that it’s likely a bit of both.
Then again, fears around demand are part of why Tesla started slashing prices at the beginning of this year. Those price cuts have paid off massively both in the U.S. and China, helping (along with favorable tax breaks) to maintain Tesla’s sizable lead in the EV market despite increased competition. Tesla, in case you’re curious, remains the automaker with the biggest market cap by an extremely wide margin.
But investors must see the question of EV demand differently for companies like Ford, apparently because it raises tough questions about its core product:
Ford is counting on demand for combustion F-Series trucks — the top-selling vehicle line in the US since the Reagan administration — carrying over to the electric versions. In addition to targeting a 150,000 annual run rate of F-150 Lightning output after its Michigan factory reopens next month following a few weeks of downtime, a second-generation electric pickup will go into production starting in 2025. The new factory for that model, sprouting up in Tennessee, will have the capacity to make half a million vehicles a year.
That’s what may have been most unsettling of all about Ford’s announcement for investors — that the company would drop prices this much and this early in its transition to electric trucks.
One quarter of weird EV sales and everything goes to hell. I dunno, it’s almost like all of this stuff is made up.
Either way, a price-cut Lightning Pro is probably a great deal right now, despite what a bunch of guys in fleece vests think.
Tata Delivers Giant Win For Britain’s Car Industry, Announces $5 Billion Battery Factory For JLR
The British car landscape has been a pretty bleak one since… well, it’s felt almost frozen in that state since Combat Rock came out. Over the decades it’s been nationalized, downsized and seen its storied brands sold off to foreign ownership. Brexit accelerated that downward spiral as the remaining companies manufacturing in the UK faced trade tariff uncertainty that made production there feel increasingly untenable. Nissan, Honda, Toyota, BMW and Jaguar Land Rover have all started quietly ghosting the country since the middle of the last decade.
Now, Tata—JLR’s Indian parent company—announced an electric lifeline that will be welcome news to Great Britain’s flagging auto industry. It’s getting a $5.2 billion battery factory for future JLR cars that’s due to bring some 4,000 new jobs, reports Bloomberg:
JLR and Tata Motors Ltd. will be anchor customers for the plant capable of providing 40 gigawatt hours worth of batteries with supplies starting from 2026, according to a statement. The factory could supply roughly half a million vehicles per year depending on the size of the batteries.
The decision marks a significant victory for the UK government, which fended off competition from Spain for the factory. Britain’s auto industry has been struggling to compete with generous incentive packages for green technology in the US and European Union.
The UK’s car manufacturing sector, once a core part of the economy, has been struggling to cope with Brexit and the shift to electric vehicles. The company at the center of a proposed battery factory in the northeast of England, Britishvolt Ltd., fell into administration earlier this year.
European carmakers have been raising the alarm over upcoming tariffs on electric vehicles shipped between the UK and EU, unless much of their parts come from within the region. UK officials have not yet persuaded Brussels to delay the deadline.
JLR also has a big $18.7 billion electric push in the works that includes Jaguar trimming models and going way upmarket, as well as a fully electric Range Rover. It’s going to need to prove it can compete in a more connected, automated and alt-powertrain future, and so far all we’ve seen of that is the aging I-Pace. Which is still on sale! Wanna spend $80,000 on one of those?
Nissan Goes Tesla, Too
It hardly feels like news at this point, but yet another automaker has announced a switch to Tesla’s North American Charging Standard plugs, and it’s a “big” one. Nissan will go the way of Ford, General Motors, Rivian and Volvo and on a similar timeline. Here’s what the company said in a news release:
From 2024, Nissan will make available a NACS charging adapter for Ariya models which are currently equipped with the Combined Charging System 1 (CCS1) for DC fast charging. This will enable customers to connect their vehicle’s charging port to NACS plugs at compatible chargers.
Starting in 2025, Nissan will begin offering EVs for the U.S. and Canadian markets with a NACS port. This will make charging on the Tesla Supercharger network seamless and convenient for drivers, significantly increasing the number of public fast-charging locations at which Nissan EVs can be charged1.
“Adopting the NACS standard underlines Nissan’s commitment to making electric mobility even more accessible as we follow our Ambition 2030 long-term vision of greater electrification,” said Jérémie Papin, chairperson, Nissan Americas. “We are happy to provide access to thousands more fast chargers for Nissan EV drivers, adding confidence and convenience when planning long-distance journeys.”
I say “big” in quotes because Nissan’s a major automaker that sells a ton of cars in the U.S., but it dropped its early lead in the EV race after the second-generation Leaf came out. It’s pinning a lot of hopes on the Ariya, but that too has had some production problems. Making electric cars is hard.
But Nissan And Renault May Finally Have A Deal
Part of the above problem is that a lot has seemed on hold at Nissan while it figures out its weird, sometimes uncomfortable live-in-separate-bedrooms marriage to French giant Renault. Like a wealthy couple who have messed around on each other a few times, there doesn’t seem to be a tremendous amount of trust between the two, especially after the scandalous ouster of Carlos Ghosn and Nissan’s own attempts to seize more power in the relationship. Besides investments in one another, a lot is at stake here, like intellectual property, chip and battery joint ventures and other complicated matters related to future tech.
But! They may soon be able to get back on the road together, reports Reuters:
Nissan and Renault will make an announcement in the coming days on their restructured alliance and have finalized the deal, three people familiar with the matter said, capping 10 months of sometimes tense negotiations.
The automakers announced a framework agreement in February and had aimed to finalize negotiations as early as March. Under the framework, the Japanese automaker would take as much as 15% of Renault’s new electric vehicle unit, Ampere, while Renault would reduce its 43% stake in Nissan.
[…] Renault wants to attract more investors to Ampere, given the massive investment required for connected cars. Nissan and Renault’s junior partner, Mitsubishi Motors, has also indicated it may invest in the company. U.S. chip giant Qualcomm has already said it will invest.
Discussions have focused on how to deal with future IP – including technology that may not yet exist, one of the people said. A Mitsubishi spokesperson said it was still considering investing in Ampere but that nothing had been decided.
As for Ghosn, he’s still a fugitive in Lebanon (which has no extradition treaty with Japan), waging a $1 billion lawsuit against Nissan and talking shit for days, according to Automotive News. And he doesn’t seem optimistic about this new deal between the two:
He pointed to the long-delayed completion of a Nissan agreement to invest in Renault’s planned electric vehicle spinoff as a sign of festering distrust and withered ambition.
“After my arrest, the alliance was shattered,” Ghosn said.
“The only thing you can do is to restart something less ambitious, much more restricted,” Ghosn said via video link from his home office in Beirut. “And now what they’re trying to do with this latest agreement is trying to go for a mini alliance with a very reduced scope of cooperation.”
Ghosn’s hardly a neutral observer here, but he certainly knows what he’s talking about.
Your Turn
A lot of this TMD today has been about the struggles of legacy car companies to prove themselves in an era when so much is changing with EVs, connected cars and autonomy—but those same companies are subjected to the whims of thirsty shareholders every quarter. This, despite the massive investments needed to survive in the future, whether it’s fully battery-powered or something else.
So who’s best positioned to go into the next era of cars? Who’s doing it right these days and who do you worry about?
Ford and Toyota seem like the best positioned to me ¯\_(ツ)_/¯