I hope you’re having a very fine July 3 Monday morning, Autopians. I also hope you aren’t having to work right before a weird midweek July 4, or at least, are phoning it in as hard as you possibly can and punching out early. Not us, however—ever vigilant, we will never stop delivering you the finest of posts.
Also unstoppable: Tesla, apparently, which rode the price cut wave to some record Q2 sales. We have that story today, plus some news about Hyundai’s next planned conquest; some robotaxi news in San Francisco that has city officials balking; and the automotive design world says goodbye to one of its modern greats.
At This Point, Nobody Can Stop Tesla (Except Maybe BYD And That Doesn’t Concern You, At Least Not Yet Anyway)
Tesla’s months and months of price cuts were occasionally derided as a cheap play to move metal, ultimately detrimental to a “premium” brand, to cover up for the fact the EV competition is rapidly catching up while it still struggles to launch new products. Of those criticisms, only the last one is proving still true—and for now and a good while to come, it may not matter.
Bloomberg reports Tesla had a very, very good Q2: 466,140 cars delivered globally, beating Wall Street estimates. Tesla doesn’t break out sales by model or region but it’s safe to assume the Model Y and Model 3, in that precise order, are utterly dominating EV sales right now. Bloomberg says that in Q1 at least, those two cars made up a stunning 96% of Tesla sales; basically nobody’s buying the Model S and Model X anymore.
In America, this sales win is helped along by the fact that Tesla’s cars are some of the few that qualify for the new EV tax credits—and come from an automaker able to supply them readily and with gusto.
The only real competition is BYD, Bloomberg reports, and at least here in America that doesn’t matter yet:
Elon Musk-led Tesla delivered 466,140 cars worldwide, beating Wall Street estimates. BYD, China’s top-selling car brand, posted its best-ever quarter, selling 700,244 fully electric and plug-in hybrid vehicles.
Worth noting that BYD’s sales figures always account for “electrified” vehicles so they include hybrids too. On pure EVs, Bloomberg’s chart shows, Tesla was still on top. More analysis:
Tesla has vowed to push for more volume even at the expense of profitability, putting more pressure on legacy carmakers that haven’t kept pace on EVs and have ceded overall market share. Volkswagen AG last week announced new leadership for its Audi brand, which fell behind Tesla in the first quarter.
Analysts surveyed by Bloomberg had expected Tesla to deliver 448,350 cars in the last three months.
“It’s a big beat,” Ben Kallo, a Robert W. Baird analyst, said by phone Sunday. “People were still bracing for another round of price cuts, and this big delivery number makes that less of a risk.”
The deliveries are the most ever in a quarter for Austin-based Tesla, and were up 83% from a year ago, when lockdowns hampered its operations in China. The company produced 13,560 more vehicles than it delivered in the quarter, after output exceeded sales by almost 18,000 cars in the first quarter.
“Everyone was worried about inventory build, and it looks like they’ve normalized,” Kallo said. “The delta between production and deliveries is shrinking, which is what Tesla said they would do.”
At the start of this year, I theorized Tesla could get hammered by a wave of new EV competition from General Motors, Ford, Hyundai, Volvo—almost everybody else. That certainly hasn’t been the case yet; I still think Tesla’s weak when it comes to putting truly new products on the road and the Cybertruck’s many delays are proof of that.
But guess what? So far, it doesn’t matter. Not to buyers. Right now Tesla’s still considered a hot, fresh product, and it alone has the scale and production capability to keep shelling out Model 3s and Model Ys to often first-time EV buyers. Meanwhile, the other OEMs are straining to get quality in order, ramp up battery production and sell EVs without bleeding cash.
In America, Tesla’s got a wide lead in the EV game. And the fact that the cars are getting older may just not matter for a very long time—not until some other automaker can match it at scale.
In that way the Model 3 and Model Y are becoming the iPhones of cars: ubiquitous, appliance-like, often identical (or customized but only on a superficial level) and just purchased by default by countless people. For now, at least, the other brands are Androids—a few players duking it out for a smaller share of the market.
I emphasize for now because Tesla’s market share is slipping each quarter, but that’s taking a while. A bigger problem for Tesla may be in China, however, where it does face real competition and a newfound sense of hometown pride as Chinese buyers look to domestic brands and not foreign ones:
The company has fallen well behind BYD in China, its No. 2 market after the US. Right after the quarter came to a close, Tesla cut prices of its premium models in China by more than 4.5%.
Hyundai Goes After Japan’s Automakers On Their Home Turf
Speaking of domestic competition, few car markets are as tough to break into as Japan is. FUN FACT: It’s in part because, after World War II, Japan’s government essentially banned foreign investment into their domestic auto industry to keep it from being “colonized” by Ford or General Motors or whoever. The net effect of this allowed a bunch of brands to spring up fast, get up to speed quickly amid tight competition with each other, and kept the market largely closed off to foreign brands—save for the occasional Mercedes, BMW, Porsche or even Corvette for well-heeled buyers who wanted to flex.
To give you an idea of how deep this runs, Mercedes-Benz ranked ninth in Japanese sales in 2022, the highest-selling foreign brand, and even that was almost half what Mitsubishi did there. Even Mini, which is closest to the kids of cars they like, was way down at number 17. This is a hard market to break into.
But one automaker that’s going after it is Hyundai, and it sees an opening with EVs—where the Japanese OEMs have proven to be incredibly weak in a modern sense. Hyundai’s betting that at least some Japanese buyers will be into EVs and the market will grow over time, so the plan is to get in good with Japan now while Toyota and Nissan and the rest work overtime to catch up.
It’s even trying to break in with online sales, which also aren’t a huge thing in Japan yet: Here’s Nikkei Asia (subscription required):
Hyundai reentered Japan in May 2022 after a 12-year break. Sales of its Ioniq 5 EV and Nexo fuel cell vehicle have begun online, but only 682 units had been sold as of this May.
“Hyundai’s brand recognition is still low. It’s not easy,” [Hyundai Motor CEO Chang Jaehoon] said of the Japanese market.
I didn’t know that! But not completely shocking given Japan and South Korea’s trade wars and historic tensions:
Hyundai Motor Group, including affiliate Kia, sold 6.85 million units worldwide in 2022, jumping to third globally. Yet it is difficult to break into the Japanese market, where the world’s top automakers already have an established presence. The company aims to raise brand awareness and capture new customers through its tie-up with CCC.
In addition to Tesla, the driving force behind online auto sales, Nissan Motor began online sales of an EV in November 2021 while Honda Motor announced plans the same year to start online sales in Japan within a few years.
But the majority of cars are still sold through dealerships in Japan. Chinese electric vehicle giant BYD, which entered the Japanese market at the end of January, is racing to build a network of dealerships.
“We want to try out this new online sales method for the EV age in Japan and adopt it in the rest of the world,” Chang said of Hyundai’s insistence on online sales despite Japanese market trends.
It will be super interesting to see how this plays out. EVs aren’t big in Japan but it’s unfathomable that those OEMs would want that to just be an export or U.S.-made market forever.
Is San Francisco Ready For The Robotaxi Takeover?
I was in San Francisco this summer on a reporting project for another outlet and I got to sample a few of my fully automated, no-human-in-the-front-row robotaxi options. In short, Waymo’s very good and Cruise is also good, though slightly less so; both were vastly more impressive than I thought they’d be. But are they ready to run around the clock, 24/7, along with other entrants into the market?
That could happen soon, the Washington Post reports:
That would make San Francisco among the first cities in the country to offer such widespread service, and help solidify Waymo and Cruise as leaders in the internationally competitive industry of self-driving cars. It also would mark a major win for the companies, which argue that their technology operates largely without issue and could ultimately lead to safer streets in a city that experienced a spike of human driver-related road fatalities in 2022.
But the city has little say in the matter, which is regulated by the state. Still, officials have written letters of protest to the state regulators, fixating on a recent spike in incidents: driverless cars that have snarled traffic, interrupted emergency scenes, disrupted bus routes and clashed with bicycles and pedestrians.
“We’ve had them run over our fire hoses. We’ve had our hoses get caught in their axles. We’ve had them block fire engines, and we’ve had them come into live active fire scenes,” said Jeanine Nicholson, chief of the San Francisco Fire Department. “We need something to change.”
She said the fire department has logged 66 incidents since May 2022, and that their frequency is accelerating. She added that she is “certain that we have not logged all of them.”
However, since it’s an issue of state regulations, “city officials are left with few options other than to tally up these incidents, complain loudly and warn that it’s only a matter of time before something catastrophic happens,” the Post reports. Ouch. Incident reporting from these robotaxi companies in particular is a problem; cities like San Francisco say they aren’t getting enough data on minor incidents or guarantees that they’re made aware of all the problems that arise.
Why does this matter to you if you don’t live in the Bay Area, you ask? It does because all these companies are planning wider expansions soon: Phoenix, Los Angeles and Austin are just some places where you’ll see a lot more robotaxis soon. Your city may be next.
The director at the San Francisco Municipal Transportation Agency told the Post he feels like a lot of these cars are teenagers on their learner’s permits, rather than experienced pro drivers. That’s more a metaphor I apply to Tesla’s sketchy Full Self-Driving than Waymo, but yeah, point taken.
Peter Horbury, Volvo, Lotus and Ford Design Legend, Dies At 73
We end today’s morning news roundup on a more unfortunate note but one that is worth covering here: Peter Horbury, a design legend in the car business, died last week visiting colleagues in China, according to multiple auto companies and news outlets. Horbury was 73; the cause of his passing is unknown.
Horbury, a British designer, began his career at Chrysler in the UK before a stint at Ford and then Volvo; the latter is what he was arguably best known for. After stints there and at Geely, he was most recently at Lotus following its acquisition by the Chinese automaker.
I am deeply saddened by the passing of Peter Horbury. Our heart and condolences go out to his family. Peter was a remarkable design leader, perhaps best known for using the power of design to transform & modernize Volvo globally. He was an incredible advocate for Lincoln & Ford… pic.twitter.com/fqWG6iT83L
— Jim Farley (@jimfarley98) July 1, 2023
He was also, based on everything I have read and heard, a first-rate human being. From Automotive News:
“He was a proper giant in car design. Everybody knew Peter. There will be a pain felt throughout the industry because of this,” Sam Livingstone, director of consultancy Car Design Research, told Automotive News Europe.
Peter Stevens, former Lotus head of design and now a design consultant, was Horbury’s former tutor at the prestigious Royal College of Art in London. He said Horbury’s talents extended beyond design.
“Peter’s natural charm, great sense of humor and modesty were far from the brash, ego-driven characters who now populate many automotive boardrooms,” he told ANE. “He had an ability to understand the culture of all the makes that he worked on, from Chrysler to Ford, Volvo, Lotus and others, which manifested itself in guiding the long-term design language of those brands.”
Among many other achievements, Horbury is credited with helping to bring Volvo into a more modern era in the 1990s and 2000s with hits like the XC90 crossover and its contemporaries; he later served as head of Ford’s Premier Automotive Group design studios, which at the time included Volvo, Jaguar, Land Rover and Aston Martin. Our condolences go out to his family, friends and industry colleagues.
Your Turn
How long can Tesla maintain this intense EV lead with an aging product line? The Model Y isn’t so long in the tooth; it just came out in 2020. But the competition hasn’t materialized at scale as quickly as we thought. Will this lead ever really start to taper off?
“At the start of this year, I theorized Tesla could get hammered by a wave of new EV competition from General Motors, Ford, Hyundai, Volvo—almost everybody else. That certainly hasn’t been the case yet; ”
And it hasn’t been the case (and won’t be for at least a few years) because even the biggest company can’t build up the supply chain needed for high volume overnight. And all their experience building ICE vehicles and the supply chain tied to that isn’t worth shit when it comes to building BEVs in volume.
“I still think Tesla’s weak when it comes to putting truly new products on the road and the Cybertruck’s many delays are proof of that.”
The issue is not ‘weakness’. The issue is not having enough labour resources combined with not having enough manufacturing sites combined with needing to have the battery supply further ramped up to support those additional vehicles.
The real reason stuff got delayed isn’t because of ‘weakness’. It’s because there was no point in introducing new vehicles when they couldn’t produce enough of their existing vehicles to satisfy demand.
What good is introducing a new vehicle if they don’t have a plant built to assemble it in… or enough battery cell supply to be able to sell that new model in volume?
The sales strength of their existing models is why the new stuff has gotten so delayed.
Most brands seem to have an association with them. For example, BMW has sporty luxury, Mercedes is staid luxury, Honda is reliability, etc.
Right now, Tesla’s association is “EV”
As EVs becomes mainstream they’ll lose that association, and unless or until they find a new niche they’ll try to be all things to everybody which leads to nothing to nobody.
My turn:
Hot take… Tesla has the psychological advantage. It will continue until that psychological advantage wears out. There really is no competition besides Hyundai, IMHO. The Mach-E is about the only proper competition from the US, and where are those??? I live in the Northest, it’s Teslas or Hyundais with a sprinkling of all the rest. AND, Hyundai is probably 1:5 of total electrics I see, Tesla 4:5, the rest is the rest (basically zero to three per day in my commute).
There will be a tipping point where buyers feel confident enough to go back to the “old school” manufacturers once they feel like their product is better. Until then, Tesla wins, and will cash in.
I don’t get it…why does every other company in the automotive world have to produce a new model every couple of years but Tesla can sell one old design? Why does Tesla only sell sedans when the everybody else is focused on trucks the size of my house? Why does American protectionism spell corporate success? Can’t compete head to head? I don’t get the EV market at all…AND PLEASE, stop it with the TV screens on the dashboards and put in some buttons and gauges you cheap bastards…kids don’t know any better.
“I don’t get it…why does every other company in the automotive world have to produce a new model every couple of years but Tesla can sell one old design?”
Your question is based on two false premises… The first false premise is that truly every other company in automotive produces a new model every year.
That’s false.
Chrysler/FCA/Stellantis is notorious for keeping the same basic models in production with only minor updates for years.
Same for Ford. Same for GM.
And how long did Toyota keep the Tacoma in production? And Nissan with the Frontier?
Yeah.
The second false premise is that Tesla sells “one old design”
That’s false. The Model S is one design that received a bunch of minor updates over the years and a major update in 2021.
The Model X is another design that is somewhat based on the S, but it also had numerous updates and a major update around 2021 as well.
The Model 3 is a completely different platform from the S/X, has had a bunch of small updates over the years and is about to get a major update.
And the Model Y just came out in volume in 2020 and while based off the Model 3, has some major differences in the frame/chassis… particularly in the rear.
So Tesla doesn’t sell one vehicle… they sell 4 distinct vehicles. And 2 are on one larger platform… and the other 2 are on another smaller platform.
“Why does Tesla only sell sedans when the everybody else is focused on trucks the size of my house?”
Since when are the Model Y and Model X sedans?
If you are trying to make yourself look stupid, you’ve done a great job!!
Congrats!!!