Hey!

Let me start by saying sorry for not dropping a newsletter in your inbox last week. After two years of the pandemic, Covid finally caught me (and my wifey and kids).

We're better now, just coughing like a horse (We have this expression in Estonia. Do y'all say that?). So if you feel today's newsletter stumbles and mumbles a bit more than usual, you know what's up.

Today you'll find:

• A roundup of the recent EV price hikes and the reasons.
• Tesla Giga Berlin gets the green light.
• Rivian's ramp-up is bumpy, and China has a zapton of chargers.
• Oh, and everybody thinks they'll catch Tesla soon. Nothing new.

2,698 words this week, should take around 12 minutes if you read it all.

Btw, there's another 2,150 words-worth of extra insights on the members-only newsletter tomorrow. Get in.

Cheers

- Jaan

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Welcome to the

EV Universe

... where it's getting more expensive to drive one.

On Tuesday last week (March 8th), the London Metal Exchange suspended the trading of nickel after the 3-month nickel futures contract surpassed $100,000 per metric ton, up from $30k just sessions earlier. It's now sitting at ~$43k/ton (link).

The reason - Russia-Ukraine war. Turns out, Russia is the world's third-largest producer of nickel.

Why should you care? Well, batteries.

Morgan Stanley estimates the nickel price surge just increased the input cost of an EV by $1,000. China-based brokerage firm CICC estimates a nickel price increase from $20k to $50k will increase the raw material cost of a 60kWh battery pack EV by about 10,000 yuan ($1,580).

The rising raw material costs will make a dent in EV prices. Here are some examples of that happening already (and not only because of the nickel surge):

Rivian raised the prices of the R1T and R1S by $12k on the base models, even more with options. Jiten Behl, Rivian's Chief Growth Officer commented:

"Like most manufacturers, Rivian is being confronted with inflationary pressure, increasing component costs, and unprecedented supply chain shortages and delays for parts (including semiconductor chips)"

BYD raised its EV prices in China yesterday by $944, just two months after the last price increase (link). XPeng is rumored to raise the prices by $1.5k-$3k in China next week. (link)

Tesla raised prices globally. In China, it has raised the price of a Model Y Long Range by 28k RMB $4.4k within a week. In the US, the Model 3/Y saw $2k-$3k price increases, the MS around $5k and the top-end Tri motor Model X price increased by $12,500 (~10%). The cheapest Model 3 in the U.S. is now $46,990. In Germany, the M3 went up €5,000 in a week ($5.5k). €2k-€3k in Spain, €3k in Austria.

Elon Musk tweeted:

Volkswagen Group's CFO Arno Antlitz said:

“Raw materials are clearly a headwind for us. There might be also the time when we need to pass on some of the increases to the market.”

Lucid Motors CEO Peter Rawlinson said:

"There's an inevitability that we will have to look at the price points of models that are coming out in the future"

At the same time, due to the high gas prices, EVs are in even higher demand. I've seen these viral memes circling that say the gas price hike is a government-planned attempt to push electric cars to people. Here's one:

Well - the meme is not wrong, but the pricing action is hardly government-induced.

In just a week, the volume of advert views on Auto Trader for new EVs has increased 30% (link).

According to Edmunds, the average transaction price for a new EV climbed to $60,054 in February — and most of that data was collected before Russia invaded Ukraine.

Production issues in Europe continue

Production-wise, VW has halted the production of EVs in the Zwickau and Dresden plants "until at least 18th March". It's likely to continue to next week too.

The productions in the BMW (i4, iX) and Porsche (Taycan) sites, as these are gradually coming back online. (link) Mini production will still be shut down for the next week. For scale: around 200 Taycans per day haven't been built while the factory is closed.

Most of these shutdowns come directly from the missing cable harnesses that were, until now, produced in Ukraine, as these demand a lot of manual work. There are 17 wire-harness facilities in Ukraine (only Romania has more in Europe) and according to experts, it'll take a minimum of 2-3 months to start additional production elsewhere.

Thanks, Faheem, for some of these insights!

What's next?

So let me get this straight. The auto industry, and even more so, the EV industry is 'only' crippled in 2022 by:

• Ongoing chip shortage
• Covid lockdowns (currently in Shenzen and Shanghai)
• Russia-Ukraine war cutting off the workforce and raw materials supply
• Continuing congestion at ports - logistics frunked
• Rising raw battery material prices

It's only Q1... what's the next wildcard?

Giga Berlin gets a 🟢

^ Made-in-Germany Model Y's parked in a Giga Berlin lot. Is that the famous German precision?

Tesla got the green light for Giga Berlin in Grünheide, Brandenburg.

There have been months of delays - the factory should've been starting production in July last year - because of the environmental concerns and just a bunch of red tape. Tesla started the construction of the facility about two years ago.

The company had to relocate hibernating bats, snakes and lizards, replant more trees than it cut down, and reduce water consumption as much as possible (link). And then there were the 'environmental groups', trying to kill the process mainly touting the local water supply is at risk (Giga Berlin will use 1.4m cubic litres of drinking water per year, but not the biggest consumer around).

Now, Brandenburg’s Minister President, Dietmar Woidke, handed Tesla the final environmental permit for Giga Berlin in Grünheide.

The permit means that if Tesla fills the <400 requirements and conditions listed in the 23,000 pages on 66 different documents (conditions on 536 pages), it can start producing cars. The conditions include setting up emissions-monitoring equipment and introducing measures to protect local groundwater. Tesla said it expected to complete the final process in around two weeks. (link)

Per the permit, Tesla is allowed to produce 500,000 EVs per year in the plant. For scale: in 2021, no automakers in the world except Tesla was able to build that many. This year, we'll also likely only see a few OEMs pass that. Or maybe not even that, considering the supply constraints.

The VW CEO, Herbert Diess, also congratulated Tesla, tweeting that the company is "setting new German standards in industrial project approvals", and plugging VW's plans right after:

Now, the new €2.17B ($2.4B) site in Wolfburg-Warmenau (link) would indeed be "following swiftly", but it does so in rather legacy terms: the construction is planned for spring 2023 and production is to start in 2026. Swiftly. And the kicker? It'll be producing 250k EVs per year. In 2026. Swiftly.

Sorry, I couldn't help myself. VW Group's plans are bigger than that and it is the 2nd-largest EV maker in the world currently, with 452,900 EVs sold in 2021 across the group's brands. What's swift about the Trinity plant is that they target a 10-hour-per-vehicle production rate with their lean production concept, which is the same Giga Berlin targets (and will likely achieve in sometime 2023?). Anyway,

Tesla has officially confirmed the first made-in-Giga-Berlin MYs will be delivered on 22. March, to the company employees (per tradition). Here's a photo of what the invite looks like.

Rivian's bumpy ramp-up

Rivian raised the R1T and R1S prices by $12k on March 1st, including on the preordered vehicles, because of the rising input cost.

Two days later, it rolled it back on the preorder holders part, saying all who reserved before (and/or canceled after the announcement) will have their original price honored. The CEO, RJ Scaringe, also wrote a full letter for apology and explanation (here).

Now the company is sued by a shareholder for failing to tell investors it had underpriced its EVs, which lead to the incident above.

Meanwhile, here's Rivian's Q4 2021 shareholder letter from last week (pdf). Highlights:

• 83k preorders in US & Canada for the R1T/S,
• 11.5k+ employees,
• 2,425 vehicles produced total, 1,410 this year.
• Net loss: $4.668B.

2022 will be a truly difficult time to ramp up, considering the supply chain constraints. Rivian expects to produce 25k vehicles in 2022, and says it could double that if the supply chain didn't limit 'em.

In related news - Rivian brought in some cavalry for exactly that. Frank Klein will start as the Chief Operations Officer (COO) from June 1st (link). Klein is the former President of Magna Steyr, the contract vehicle-manufacturing arm of Magna, which is the biggest autoparts supplier in North America. As far as experience in this goes, Magna is the supply chain.

At Rivian, Frank will "lead the buildout of robust and stable operations processes as well as scaling vehicle production across several new programs."

$RIVN is trading at around $40 currently, which is nearly -78% down from its high after IPO and hovers at around $35.5B market cap. For scale, the 28 EV makers we follow on our Stock Tracker are on average -67.8% down from their 52-week-high.

Here's something to lighten the mood, in case you know of a book/game/show called Witcher. I present you... the Geralt of Rivian:

Yes, made this myself. Yes, I'm fully of aware how weird I am.

Crazy charger numbers in China

We know China is the frontrunner in EV adoption - as our 2021 BEV sales spreadsheet shows, the country was responsible for 2,734,000 BEV sales of the 4.79M global total (57%).

The infrastructure seems to be keeping up nicely.

China now has 2.864 million chargers across the country, with 247k (+219.6% YoY) added in the first two months of this year. Of these, 66k were public chargers and 181k private ones. (link)

Of the 2.8M chargers in China, there are currently:

• 1.213M public chargers,
• 496k of which are DC ("fast") and
• 717k AC ("slow") chargers.
• 1,405 battery swap stations, 873 of which are owned by NIO.
• Tesla has 364 charging stations in China.

⚡ Znippets

👀 ICYMI, last newsletter's most clicked link was: the video of the EV chargers hacked in Russia to show "Putin is a d*ck" and "Slava Ukraini."

🇨🇱 The country of Chile revealed a roadmap for most vehicle sales to be zero-emission by 2035, agricultural machinery by 2040, and all combustion motors banned by 2045. (link, pdf in Spanish)

🇱🇺 Luxembourg's EV subsidies are tied to the consumption: €8,000 ($8.9k) for EVs that consume <18kWh/100km (/62mi), and 3k€ for the thirstier.

Per Crunchbase, venture-backed startups in the EV space raised upward of $20B in 2021, more than double of what it was in 2020. There were 37 companies acquired last year in the EV space. (link) via Trucks.vc.

🚗 The new Lotus electric car, internally known as the Type 132, is debuting officially on March 29th. The carmaker has however submitted the patent images which reveal the design of the car in detail already (link).

🚐 Volkswagen unveiled the ID Buzz:

Here's a Doug Demuro walkaround (video). And here's a picture I found of the real ID Buzz'z color choices ahead of the SXSW reveal in the US:

♻️ Mercedes-Benz presented its global EV battery recycling strategy, starting with its own recycling plant in Kuppenheim, Germany, starting in 2023 with an annual capacity of 2,500 tonnes. They claim a 96% material recovery rate. (link)

Mercedes also opened a battery assembly plant (although the press release may make it look like they'll produce cells) near its US plant in Alabama, for the new EQS SUV that will be revealed on April 19th. (link)

🔋 Northvolt announced its second and third battery plant in Europe.

• #2 in Sweden: up to 100 GWh of cathode material and battery cells a year by 2024, in a former Stora Enso paper mill in Borlänge, Sweden. (link)
• #3 (Drei) in Germany: up to 60 GWh in Heide, northern Germany, from 2025. (link)

🌎 The EPA has now officially restored California's right to set its own tailpipe emission-limits and standards of EV sales, something that was 'taken away' during the Trump administration in 2019. (link)

🌎 Sony and Honda are planning (signed MoU) to form a new company to design and sell EVs together from 2025. (link)

👨‍💻 VW's CDO Thomas Ulbrich says the Trinity, coming in 2026, will contain 2...2.5 times more code than the current ID.3 (link):

🚚 The US Department of Energy released a study projecting that medium- and heavy-duty electric trucks will be cheaper to buy, operate and maintain than diesel-powered ones by 2035 - and nearly half are already by 2030. (pdf, 69pp)

🚌 The Federal Transit Administration (FTA) through President Biden's Bipartisan Infrastructure Law awarded the first $409.3 million in grants to 70 projects in 39 states to electrify America’s buses. Here's who got the funding (link). Over the next five years, $10B will be distributed.

⚡ (Enter a double-energy pun here): Starbucks partnered with Volvo to put up 60 DC chargers across 15 of its locations in the route between Denver and Seattle as a pilot. Chargers and operations will be by ChargePoint, Volvo owners will get a free or discounted charge (link).

⚡ A Tesla owner in China received a $608k bill for a 20-minute charge, due to a bug with Tesla Supercharging. (link)

I love this: Bristol City Council in the UK offers businesses to trial electric vans and cars for free, with full insurance, for up to two months. Expected program cost - £3.2M ($4.2M). This year, Bristol will also introduce the Clean Air Zone in the city center, similar to London. (link)

I'm watching:

👀 Nissan shows off its CMF-EV platform. Ariya will be the first to run on it. The first units were supposed to reach us in Europe in fall 2021, if I remember correctly from the preproduction vehicle (that I covered on our #19 here), but it has since been pushed 'due to component shortage'. Aaaaaany minute now...

👀 An hour-long GMC Hummer EV documentary premieres on The History Channel next Sunday, to show the electric truck's "record-fast" development. GMC will add the documentary to its YouTube channel on April 3, 2022. Here's the trailer:

I'm reading:

📚 Ford and University of Michigan study on how the electrification of different light-duty vehicles affects the life cycle emissions, considering specific grid emission mixes across the US:

To my surprise, one of their conclusion was that the 'break-even time' of BEV vs ICEs were 1.2-1.3 years for sedans, 1.4-1.6 for SUVs, and 1.3 years for pickup trucks, based on the average US grid and vehicle miles traveled.

QUOTE

Carlos Tavares, the CEO of Stellantis, said on a televised Q&A session (link):

“I am very confident, I am trying not to be arrogant, just confident of the fact that we are going to catch up in the next couple of years with Tesla and it's going to be a very healthy competition.Very good for the consumer by the way."

He also emphasized the importance of investing much more in charging networks in Europe and the US. I agree on the latter, but... catching up in the next couple of years? Tesla sold 936k BEVs in 2021 and is clearly ramping up. Stellantis as a whole hasn't reported the exact 2021 BEV numbers, just that it sold 388k plug-ins. It was likely at around <200k BEVs.

Long ways to go, Carlos. Good luck.

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