Intel Report: The Weekly Mobility News That Matters

BY AUTOMOTIVE VENTURES | July 29 2024 | VIEW ONLINE ➡️

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🚗 Automotive

Software vendors can band together as a class to sue automotive technology giant CDK Global for allegedly restricting access to data and causing them to pay hundreds of millions of dollars in overcharges, a federal judge in Chicago has ruled. The vendors accused CDK of violating antitrust law by suppressing competition. They are seeking estimated damages of $395 million against Austin, Texas-based CDK, which sells software platforms to dealers to run their daily sales, financing and service operations. The class includes 244 software vendors that since October 2013 purchased data integration services from CDK or one of its rivals, The Reynolds and Reynolds Company, which is not a defendant. | Reuter ($)Automakers are warning of profit pressures in their traditional car businesses, a fresh worry that adds to the challenges already posed by the industry’s costly transition to electric vehicles. Ford, Tesla and Stellantis last week saw their share prices hammered after posting results that fell short of Wall Street’s expectations. General Motors beat estimates and raised its full-year profit outlook, but its shares also sank. Reasons for the pressure on profits ranged from warranty expenses and bloated vehicle inventory to trouble in overseas operations. Taken together, they signaled to investors that carmakers—while pushing toward a transformation to tech-infused electric vehicles—are facing speed bumps. | The Wall Street Journal ($)Ford Motor Company's full-year profit forecast:

Ford Pro (Commercial Truck division): Profit of $9 billion to $10 billion.
Ford Blue (Internal Combustion Engines): Profit of $6 billion to $6.5 billion.
Ford Model e (Electric Vehicles): Loss of $5 billion to $5.5 billion.

| Automotive News ($)Average incentive packages offered on new vehicles rose 53% year over year in June, according to Motor Intelligence. According to J.D. Power, only 16.9% of new cars sold above the manufacturer’s suggested retail price, down from 34.9% last year. | Financial Times ($)Things could have been so much worse for Tesla this past quarter. In a period when profit fell 45%, the electric carmaker benefited from a potent weapon for improving its income statement: regulatory credits. A record amount, equal to more than half of Tesla’s second-quarter profit, was attributed Tuesday to the sale of these credits to rival automakers that use them to meet emission rules. The money, essentially pure profit, isn’t technically a subsidy. Tesla rather benefits from government programs—such as in California—that are aimed at pushing the development of electric and other green vehicles. Regulatory credits reported Tuesday for the period that ended in June totaled just shy of $1 billion, compared with $282 million in the same quarter a year ago and $1.79 billion for all of 2023. | The Wall Street Journal ($)

Tesla reported its lowest profit margin in more than five years and missed Wall Street earnings targets in the second quarter, as the electric vehicle maker cut prices to revive demand while it increased spending on AI projects. | Reuters ($)

App Economy Insights helps us understand how Tesla makes money, where they incur costs, and how much profit they generate. | App Economy

In 20 years we'll look back and realize we were living through the golden age of the vehicle. The new Corvette ZR1 may be the platonic ideal of peak car. The new ZR1 LT7 engine is a 5.5-liter, flat-plane crank, twin-turbo V8 that makes 1,064 horsepower at 7,000 rpm and 828 lb-ft of torque at 6,000 rpm. It’s the most powerful V8 ever produced in America by a car company. | The DriveTurn up your volume for this one: Watch the new 1064-hp Corvette ZR1 do an acceleration run to 206 mph! | Road&Track

More Americans are driving without car insurance, and it’s making coverage more expensive for everyone else. The problem has been growing since the start of the Covid-19 pandemic, according to the Insurance Research Council, whose latest data show the percentage of uninsured drivers rose to 14% in 2022, from about 11% in 2019. The IRC, which calculates the data based on the relative frequencies of auto-insurance claims, expects the numbers have continued to climb since then. | The Wall Street Journal ($)The Jaguar brand is launching stand-along "boutique stores" as it moves dramatically upbrand (to compete with Bentley and Aston Martin), and goes 100% electric. Steve bet Jamie Butters a Detroit pizza that this brand transition isn't going to work out for them. | Automotive News ($)

Glenn Mercer reports that dealerships’ market share of automotive service has declined from a 45% share in the 1960s to about 30% now. To declare the obvious: if the dealership where I bought my car is far away from where I live, I will be less likely to return to that dealer for service. Mercer goes on to build a case for dealerships offering mobile service. | Glenn MercerThe factors that have combined to drive auto insurance costs higher over the last decade:

First, vehicles have become more technologically sophisticated, making repair or replacement of electronic and computer-based components much costlier. Also, there is now more multi-component manufacturing, which promotes cost-effectiveness and efficiencies in the building process, but also results in greater costs associated with repairing or replacing a damaged component, since often the entire structure around that component must be replaced.
Second, social inflation is a long-recognized tendency for insurance loss costs to increase at a rate exceeding general consumer inflation. This effect is largely due to the increasingly litigious nature of our society, resulting in greater numbers and sizes of tort awards and settlements.
Third, behaviorally, distracted driving is becoming an increasing problem. Advancements in available technologies–phones, GPS, and other electronics–tempt drivers’ attention away from focusing on the road.

| Claims Journal

Within 30 minutes of the attempted assassination of former President Donald Trump, Elon Musk did what he had previously promised not to do. “I fully endorse President Trump and hope for his rapid recovery,” the billionaire posted on X. So much for that vow to stay on the sidelines. Musk’s MAGA awakening is probably pretty befuddling for his fan base. After all, Musk has staked his legacy on shifting the world to renewable energy, and Trump is widely seen as an accelerant for climate change. | The VergeElon Musk’s embrace of Donald Trump can be traced in part to a snub by President Biden. In early 2021, the new Biden administration began making plans to implement its campaign promises to boost electric vehicles. t the time, Musk’s Tesla produced about two-thirds of the EVs on U.S. roads. But Tesla is also the only major U.S. car manufacturer that doesn’t have unionized factory workers, and some of its labor practices were under scrutiny by federal regulators. Tesla officials reached out to the White House multiple times after the inauguration, hoping to connect Biden and Musk, according to people familiar with the matter. The Tesla boss, who said in a television interview that he voted for Biden—and has said he voted exclusively for Democrats until a few years ago—repeatedly got the cold shoulder. The reason: Biden officials didn’t want to anger the powerful United Auto Workers union, which leaned on the White House to keep its distance from Musk, according to people familiar with the matter. Then in August 2021, Biden organized an EV event, to be anchored by him signing an executive order with a target to make half of all new vehicles sold in 2030 zero-emissions vehicles. Just ahead of the event, White House officials called Tesla with an apology: Musk wasn’t invited. | The Wall Street Journal ($)

What's the most difficult job at most automakers? It's the head of product planning. In the best of times, being an automotive product planner can be like trying to correctly predict the score of a game that won't take place until one specific afternoon five years from now. But today, automotive product planning is like trying to place a giant bet on the score of that future game when you don't know who will be playing, what they'll be playing, or even the rules of the game that will be played. | Automotive News ($)

⚡️ Electric Vehicles (EVs)

As the quarterly earnings season gets underway for the car industry, the one through line already emerging is a further resetting of once-lofty expectations for EVs. | Bloomberg ($)

Despite EV sales skyrocketing from 3 million in 2021 to almost 14 million last year, both established carmakers and startups are seeing softer demand. As a result, dealerships are now grappling with parking lots full of EVs. According to data from Cox Automotive Inc. cited by The Wall Street Journal, the average dealership held a 125-day supply of EVs as of early June. | Sherwood

The global growth rate of new battery-electric vehicle sales last year was an estimated 29%, less than half the previous year, according to BloombergNEF. This year, sales growth is forecast to slow further to 21%. | Bloomberg ($)

In The Battery Mineral Loop, RMI lays out a comprehensive strategy to address the rising demand for battery minerals. | RMI

Former President Donald J. Trump has spent years ridiculing electric vehicles, saying they don’t go far, are too expensive and are made in China. But in recent months, Mr. Trump has been saying some nice things about EVs. While he still throws some shade on electric vehicles, in the same breath he also tells crowds that he likes them. On Saturday, he went further, telling a rally in Grand Rapids, Mich., “I’m constantly talking about electric vehicles but I don’t mean I’m against them. I’m totally for them.” Moments later he said, “I’ve driven them and they are incredible, but they’re not for everybody.” | The New York Times ($)Porsche is lowering its electric vehicle (EV) sales ambitions over lower-than-expected momentum in key markets including Europe. The automaker said it expects the transition to electric vehicles to take longer than it thought. Previously, Porsche said its aim was for 80% of its vehicle sales to be all-electric by 2030. The target is no longer the company's concrete goal, Porsche said. | Automotive News ($)Automakers are faced with significant overcapacity to make EVs because of softening demand with many turning back to development plans for combustion-engine cars, according to French supplier OPmobility. U.S., German and French automakers are producing EVs at levels currently 40% to 45% below initial expectations.. | Automotive News ($)

Many electric models have never been cheaper, as automakers splurge on financing deals and cash incentives to sway consumers who might be hesitant to give up their gas guzzlers. The steeper discounts will serve as a test of Americans’ appetite for going electric after months of slowing demand. On average, buyers paid about $1,500 more for nonluxury EVs than internal combustion engine vehicles, according to a July J.D. Power report. Just over a year ago, the average EV fetched $8,400 more. | The Wall Street Journal ($)

America’s EV charger deserts continued to vanish in the second quarter, as a motley array of networks switched on 704 new, public fast-charging stations, an increase of 9% in three months, according to a Bloomberg Green analysis of U.S. Department of Energy (DOE) data. There are now nearly 9,000 public, fast-charging sites in the US. At the current pace, public fast-charging sites will outnumber gas stations in the US in about eight years — but charger momentum is only expected to accelerate. North American operators will spend a collective $6.1 billion on charging infrastructure this year, nearly double their 2023 investment, according to BloombergNEF estimates. That annual spend is expected to double again by 2030. | Bloomberg ($)

🇨🇳 China

China is solidifying its position as a global automotive powerhouse, with BYD emerging for the first time as one of the top 10 manufacturers worldwide, according to S&P Global Mobility. Overseas sales of Chinese brand cars and light trucks quadrupled from 2020 to 2023, rising from half a million to 2 million. Leading importers of Chinese automobiles include Russia, Australia, Brazil, Mexico and the United Arab Emirates. Five Chinese brands are gaining the most traction overseas: MG, CHERY, Great Wall Motor, GEELY and BYD. | Automotive News ($)

🤖

Robotics & Autonomy

Alphabet will spend an additional $5 billion on its self-driving subsidiary, Waymo, over the next few years. Waymo is delivering well over 50,000 paid rides per week. The self-driving company offers a fully driverless ride-hail service in San Francisco and Phoenix, and recently expanded to Los Angeles and Austin. Waymo is ramping up efforts to gain access to lucrative SFO airport rides. The company already has the permits to operate its robotaxi service 24 hours a day in the city of San Francisco, parts of the Peninsula and the highways that reach the airport. | TechCrunch

SoftBank's Masayoshi Son is trying to convince automakers from around the world, rivals under most scenarios, to work together to use artificial intelligence to accelerate autonomous driving advances. That way, the thinking goes, they will be able to overcome the challenges that have led some to abandon self-driving car efforts. Mr. Son’s vision is to assemble a group of auto companies across the United States, Japan and Europe that would pool resources, including the vehicle-driving data crucial to autonomous-driving systems. | The New York Times ($)

Over the past decade, the $74bn robotics sector has accelerated in capabilities due to significant leaps in AI, such as advances in neural networks, systems that mimic the human brain. The world’s biggest tech and AI companies, from Google, OpenAI and Tesla, are among those racing to build the AI “brain” that can autonomously operate robotics in moves that could transform industries from manufacturing to healthcare. In particular, improved computer vision and spatial reasoning capabilities have allowed robots to gain greater autonomy while navigating varied environments, from construction sites to oil rigs and city roads. Training and programming robots previously required engineers to hardwire rules and instructions that taught the machine how to behave, often specific to each system or environment. The advent of deep learning models in recent years has enabled experts to train AI software that allows machines to be far more adaptive and reactive to unexpected physical challenges in the real world and learn by themselves. | Financial Times ($)

🛴

Micromobility

Skip exited stealth this week to announce a partnership with outdoor clothing specialist Arc'teryx. The deal is the first to bring Skip’s MO/GO technology to market: “powered pants” that utilize a soft exoskeleton technology, developed in-house at Alphabet Inc.’s X Labs moonshot factory. MO/GO, short for “mountain goat,” is a hybrid soft/rigid exoskeleton system designed to assist wearer mobility that boosts the wearer while walking. Rather than actually walking for a person, it provides a 40% energy assistance to the quadricep and hamstring, while offloading work from the knees. | TechCrunch

🚘 Car of the Week

We have a new "Car of the Week": a 1978 Ferrari 512 BB. | RM Sotheby'sHave a great week,Steve Greenfield

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Notable & New

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Steve caught up with Martin Romjue to discuss his upcoming presentation at the Automotive Remarketing Alliance's Summer Roundtable. | Automotive Fleet

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Steve caught up with Don Richards-Boeff from Upstart to discuss the automotive industry. | Upstart

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On this week's "Future of Automotive" segment on CBT News: we catch up with Impel CEO/Co-Founder Devin Daly to discuss the recent acquisition of Outsell. | CBT News ($)

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Companies to Watch

🌟 Fairway provides AI automation for fleet management, including automated registration and licensing, maintenance management, and fuel optimization (for both FMCs and for fleets). | Fairway

The NAVIcon Cup Returns! November 21st in Scottsdale, AZ.