Intel Report: The Weekly Mobility News That Matters

BY AUTOMOTIVE VENTURES | Jan 20 2025 | VIEW ONLINE

Why did we invest in SparkServ? | LINK

Early-stage companies to watch that are exhibiting at NADA this week. LINK

What We're Reading:

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Automotive

John Murphy from Bank of America has "Five auto themes to watch for in 2025." | LinkedIn

The average U.S. household spends $13,174 per year on transportation, more than 85% of which go to car payments, gas and other automotive expenses. Driving costs help make transportation the second-largest expenditure for Americans after housing, representing roughly 17% of household income. In the European Union, it’s only 11%. | Bloomberg ($)

A number of Germany’s top carmakers reported slumping deliveries in 2024. Global sales at Volkswagen, BMW Group, Porsche AG, and Mercedes-Benz AG slipped 2%, 4%, 3%, and 3%, respectively, from the previous year, largely driven by even sharper respective declines in China of 10%, 13%, 28%, and 7%. That compounds a miserable few years for many of the car industry’s most revered names, having collectively shed hundreds of billions of dollars in market cap, with Volkswagen alone down nearly €100 billion since 2021. | Sherwood

Glenn Mercer observes that the share of global light-duty vehicle production controlled by the ten largest automakers is actually becoming slightly less concentrated over time. | Glenn MercerElectric vehicle startup Canoo filed for Chapter 7 bankruptcy and will cease operations effective immediately. The petition in U.S. Bankruptcy Court in Delaware will trigger a liquidation of the company’s assets under court supervision. Canoo, which produced cargo vehicles for large commercial, government and fleet customers globally, has been hemorrhaging cash and has struggled to raise additional funding amid uncertain demand for its microbus-inspired vans. | Automotive News ($)Small, affordable cars — like the sedans that were all but abandoned by the American automotive industry in the last decade — are poised to have a good year in 2025. | MSN

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Electric Vehicles (EVs)

Global sales of full-electric and plug-in hybrid vehicles rose by 25% last year to over 17 million cars, helped by a fourth consecutive month of record sales in December as China continued to grow and Europe stabilized. EV makers look into 2025 as a transformative year as China’s sales growth slows, tougher emissions targets come into force in Europe, and questions surround potential U.S. policy changes under the incoming Trump administration. | Automotive News ($)

With road transportation accounting for around 12% of global emissions, it’s hard to see how the world will reach its net-zero climate goals unless people give up their gasoline and diesel cars. For many years, governments offered generous subsidies to encourage drivers to switch to electric vehicles. Automakers began to retool factories and offer a wider selection of EVs to meet demand. As prices fell and the technology improved, zero-emission cars went from niche to mainstream and it started to look as though the combustion-engine era may end sooner than expected. But over the past couple of years, the EV transition has wobbled. Governments have scaled back financial incentives for EV buyers, sales growth has tapped the brakes, and the auto industry is having second thoughts about some of the investment plans that were predicated on a more rapid shift to electric. | Bloomberg ($)

About 45% of electric-vehicle transactions in the third quarter of 2024 were leases, compared with 24% for the industry as a whole, according to Experian. The proliferation of lease deals has made EVs more accessible to buyers who couldn’t afford their higher sticker prices. For the automakers, it is helping get more EVs into customers’ hands after a choppy start for their electric-car operations. There is a potential pitfall for car companies, though. Resale values for electric cars have dropped sharply. This can weigh on automakers’ balance sheets if values remain depressed. | The Wall Street Journal ($)Lithium prices are expected to stabilize in 2025 after two years of steep declines as shuttered mines and robust electric vehicle sales in China soak up an oversupply, although the potential for mines to reopen may cap gains, analysts and traders said. A nearly 86% plunge in prices of the EV battery metal over the past two years from its peak in November 2022 forced companies to mothball mines across the world. But market participants say those closures mean buoyant demand should outpace supply this year as China intensifies policy support to boost sales in the world's largest EV market. | Reuters ($)Many auto experts say market forces and technological progress will ultimately drive a long-term transition to electric vehicles regardless of how far Republicans go in undoing President Biden’s climate agenda. Why? Prices of batteries, the most expensive part of an electric vehicle, are falling fast. Already, many electric cars cost no more to own than comparable gasoline models when savings on fuel and maintenance are taken into account. Technology is improving rapidly. Batteries are becoming lighter and smaller while allowing faster charging and longer travel distances. And more than 12,000 high-voltage public chargers were added in the United States in 2024, a 33% increase from the year prior. Automakers have a strong financial interest in promoting electric vehicles no matter who is in the White House. They need to earn a return on the investments they have made in production facilities. And failing to keep up with the technology could make them vulnerable to emerging Chinese competitors that are all-in on electric vehicles. | The New York Times ($)

Outside of EVs, Toyota is doing not only fine, but great. While it has lagged behind even old-school competitors in transitioning its production lines to all-electric models, the past year made that look smart. Demand for electric cars continued to grow, but not as quickly as the $3 trillion auto industry had wagered while pouring untold billions of dollars into their development. Toyota’s products, meanwhile, were about two-thirds internal combustion, one-third hybrid and 0.1% electric, and it cleaned up. It pulled further ahead of its longtime rivals (Volkswagen, Hyundai, GM) and is estimated to have sold more than 11 million vehicles in 2024, compared with 1.8 million for Tesla and 4.3 million for BYD (1.8 million of which were electric). Chairman Akio Toyoda has insisted on a “multi-pathway strategy,” which in practice has meant hybrids, gas-guzzlers and even hydrogen-powered cars. | Bloomberg ($)Sean Duffy, President-elect Donald Trump’s nominee to head the U.S. Department of Transportation, thinks owners of electric vehicles should pay to use roads. Federally funded road repairs are mainly paid for by taxes collected on diesel and gasoline. EVs don’t consume gas, which means they don’t contribute to fuel tax revenues. Some argue this creates a funding gap. It’s not within the DOT’s power to make this change on its own. The agency would need to work with Congress to pass new legislation authorizing taxes or fees. It might, for example, amend the Highway Revenue Act, which was passed in 1956 and establishes a federal fuel tax. Today, it’s 18.3 cents per gallon. Lawmakers would also need to come up with a new implementation framework, one that could potentially measure and report EV mileage or electricity usage. How to do this accurately and in a way that ensures privacy would be a technological hurdle. And such a fee would likely face steep opposition from environmental advocates and automakers. | TechCrunch ($)

European carmakers led by Volkswagen could be forced to pay hundreds of millions of euros to Chinese electric-vehicle rivals to buy carbon credits, as the auto sector tries to avoid potential fines for failing to meet 2025 pollution rules set by Brussels. Under EU rules requiring carmakers to cut emissions, manufacturers lagging behind in the electric transition face the choice of paying billions of euros in fines, boosting EV sales by slashing prices or buying credits from less polluting competitors. | Financial Times ($)Uncertainty surrounding trade policy and automakers’ electrification plans could make 2025 a rocky year for suppliers looking to increase sales and profit margins, analysts said. Parts makers this year are likely to continue dealing with last-second changes to automakers’ electrification plans, particularly if federal EV incentives are scaled back. At the same time, the threat of tariffs — and the costs associated with them — loom large over the supply base, particularly for those that ship or import large numbers of Canadian and Mexican components. Those factors are combining to make it difficult for suppliers to know where to place their bets on which vehicle programs to supply. Many parts makers are already dealing with stranded capital because of EV parts programs that have not panned out to the degree as they hoped. | Automotive News ($)

🇨🇳 China

In 2025, the competitive gap between fast-rising Chinese automakers and their global rivals is expected to widen, according to a Gartner report on top automotive trends for 2025. Sweeping changes caused by new global regulations and greater integration of AI into vehicles will also be industry highlights this year.“ A number of automakers will try to reverse their bad fortune in 2025,” Pedro Pacheco, Gartner’s vice president of research, told Automotive News Europe. “China is a major market for them and they need to fight back. The question is how quickly they can reverse the situation — and if they can reverse the situation.” As China continues to exploit its software and electric vehicle expertise to boost its standing on the global automotive stage, rival automakers now need to “step up their game,” Pacheco said. | Automotive News ($)

Traditional automakers are running out of road, caught between two forces that are reshaping the industry: Chinese electric vehicle makers upending once-profitable markets and the capital demands of the electric transition. More consolidation looms. Overcapacity in Chinese autos threatens to flood the global market with cheap exports. The Wall Street Journal reports that carmakers in China last year used only about half their capacity. | The Wall Street Journal ($)

China's vehicle exports are expected to grow 5.8% to 6.2 million units this year, cooling from a 19.3% increase in 2024, data from the China Association of Automobile Manufacturers (CAAM) showed on Monday. The association did not give a breakdown of export estimates by engine types, but said exports of electric vehicles fell 10.4% last year while plug-in hybrid exports were up 190%. | Reuters ($)Bill Russo from Automobility reports that Chinese automotive exports increased 19.3% in 2024 (to 5.86 million units), and that 78% of these exports were internal combustion (ICE) vehicles. | AutomobilityVolkswagen Group’s deliveries in China, its largest market worldwide, slipped 9.5% to just under 2.93 million last year, allowing BYD to surpass the German giant as China’s top seller. BYD’s global deliveries last year surged 41% to top 4.27 million, with sales of 3.84 million in China. In a Jan. 14 statement, VW Group said its sales reflected “the intense competitive situation in China.” | Automotive News ($)Chinese officials and automakers are eyeing German factories slated for closure and are particularly interested in Volkswagen’s sites. Buying a factory would allow China to build influence in Germany’s prized auto industry, home to some of the oldest and most prestigious car brands. Any such move could mark China’s most politically sensitive investment yet. VW has long been a symbol of Germany’s industrial prowess, now threatened by a global economic slowdown hitting demand and a creaking transition to green technologies. | Automotive News ($)

BYD just launched the world’s largest car carrier to charge up its global EV ambitions. The BYD Shenzen, its new ro-ro ship that can carry 9,200 vehicles, has officially undocked. BYD’s new car carrier is the world’s largest as the EV giant aggressively expands overseas. After sales surged last year, the Chinese EV leader looks for even more global market share in 2025. | Electrek

For about a decade, Tesla has been the world’s biggest EV producer, making its luxury vehicles the most ubiquitous electric cars on the road. But now a very different type of car, made in China and selling for as little as $10,000, is vying for the top spot. China’s BYD, which makes more than a dozen models of all-electric sedans, SUVs and minivans, built more electric cars than Tesla last year, the first time it has done so. BYD’s rise is a sign of the growing dominance of Chinese electric car companies, which have benefited from generous government subsidies, China’s focus on battery manufacturing and mining, and a state-backed push to build the world’s biggest network of charging stations. That has implications for the climate. Lower prices make EVs accessible to more people, accelerating the global transition from gas to electric vehicles. BYD sells its cars mostly in China, the world’s biggest car market, but it’s also trying to expand abroad. | The Washington Post ($)

🤖 Autonomy & Robotics

Early self-driving demos, which started in the mid-2000s, looked almost like the real thing. Company executives and venture capitalists confidently predicted that all that remained was to figure out how to deal with a handful of so-called edge cases, such as teaching the cars to follow the instructions of emergency workers and to handle foul weather. Much more than $100 billion has been invested since then, the edge cases aren’t solved, and no one is making money on driverless cars. | Bloomberg ($)

China has launched a two-pronged strategy to challenge U.S. dominance in autonomous driving technology. First, it is championing the vehicle-to-cloud (V2C) model, which shifts computational demands from in-vehicle systems to external infrastructure. This approach prioritizes robust communication networks over in-car processing power, mitigating reliance on high-performance chips. Simultaneously, China is making massive investments in domestic semiconductor manufacturing and innovation, seeking to close the gap with the U.S. and Europe in the next decade. However, these efforts are seriously constrained by the export controls maintained by the US and its allies. | South China Morning Post

🚎 Public Transit

Transit ridership in the U.S. continues to rise, growing by more than 17% from 2022 to 2023, according to a recent report from the Federal Transit Administration (FTA) on transit trends. The report notes transit agencies provided 6.9 billion trips in 2023, an increase of 17.3% from 2022. Those same transit agencies moved passengers 35 billion miles, an increase of almost 17% from 2022. According to the report, with that year-over-year-growth, public transportation grew nearly twice as fast as domestic air travel between 2022 and 2023. | Mass Transit

🚜 Industrial Tech

John Deere’s “unfair” practices raised repair costs for farmers and kept them from being able to make repairs on tractors and other equipment they own, the Federal Trade Commission (FTC) alleges in a new lawsuit. The FTC and attorneys general for Illinois and Minnesota filed suit in a long-running fight for the right to repair — a battle that’s become more heated as Deere increasingly incorporated software into farm equipment. The complaint accuses John Deere of “decades” of unlawful practices that forced farmers to turn to the company’s own network of authorized dealers for repairs. Deere produced “the only fully functional software repair tool capable of performing all repairs” on its equipment, according to the FTC. It says the tool was only made available to the company’s dealers, which charged higher prices than independent shops. That unlawfully gave Deere “monopoly power” for certain repair services, the FTC alleges. Deere says it supports customers’ right to repair equipment. The company signed a memorandum of understanding with the American Farm Bureau Federation (AFBF) in January 2023 that was supposed to make its software, tools, and documentation available so that farmers and independent shops can make their own repairs. | MSN

John Deere is taking aim at a longstanding issue that has been a major source of contention with equipment owners: the right to self-repair. In a press release, the company says it's made a "significant step forward in supporting customers' ability to maintain and repair their machines across the agricultural and construction industries." The latest addition, per the company, gives customers and independent repair techs more ability to reprogram Deere-manufactured electronic controllers. | HBS Dealer

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Aviation & Space

The global space economy is projected to reach $944 billion by 2033, according to the latest report from consulting firm Novaspace. In 2024, the space economy was worth around $596 billion. The firm says that value largely is driven by the downstream applications of the industry’s advancements. | NovaspaceThe seventh test flight of SpaceX’s Starship rocket failed on Thursday as the vehicle’s upper stage experienced a catastrophic malfunction as it headed upward to space. SpaceX was able to achieve some success by repeating the feat of catching the gargantuan Super Heavy booster back at the launchpad. But then data indicated that some of the engines on an upgraded, longer version of the upper stage shut down prematurely. About 8.5 minutes after launch, communications between the ground and the upper-stage vehicle, which is known as Starship, were cut off. Videos posted on the social media site X appeared to show debris raining down from the sky over the Caribbean, likely parts of a disintegrated rocket. | The New York Times ($)

📚 Investing

Carta is doing an outstanding job of providing insights on the Venture Capital and startup ecosystem. Check out their "State of Startups 2024" publication, which is full of useful information. | Carta

🚘 Car of the Week

Our Automotive Ventures "Car of the Week": a 1975 Lamborghini Countach LP400 ‘Periscopio’ by Bertone. | RM Sotheby's

Have a great week,Steve Greenfield

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Steve's new book, "The Future of Mobility," is available. | Amazon

Are you an early-stage AutoTech entrepreneur and NOT exhibiting at NADA this week? Automotive Ventures is hosting a private, invite-only event for you. Please email Steve for an invite: [email protected]

Notable & New

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Steve caught up with caught up with Chris Brown from Automotive Fleet to discuss observations from CES last week in Las Vegas. | Automotive Fleet

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In response to increased demand in Europe, Privacy4Cars has invested in new tools, tech and services, and is now offering app support in four additional languages (besides English): German, French, Spanish, and Italian. Fleet Europe

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Automotive Ventures is very excited to announce our investment in SparkServ. We're thrilled to have a chance to work with founders like McKenna (MK) Valley and TJ Higgins! Press Release

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On this week's Automotive Ventures "Future of Automotive" segment on CBT News, we review the early-stage companies to watch that are exhibiting at the NADA conference in New Orleans this week. | CBT News

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