Newsletter | Renault has a negative valuation – Electric University – New EV strategies
The Universe is a bit crazy these days. Make sure you take that little break to breathe. I'll wait.
Today you'll find my rants on:
- Renault is in trouble because of its Russia bet.
- Giga Berlin Delivery Day.
- New EV strategies from lots of automakers.
- Flying Teslas (again), Electric University, EV scalpers, and more.
2,661 words this week, should take around 11 minutes if you read it all.
I should start doing pop quizzes (mwahaha).
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Renault is in B I G trouble
A little something, not 100% EV-related, but a strong signal of how the Russia-Ukraine war affects the automakers. And Renault in particular.
Three weeks ago, I wrote to you about Renault's Russia bet through its 2/3 ownership of AvtoVaz, the automaker building both Renault and Lada brand vehicles. Russia has become Renault's 2nd-biggest market with over 480k vehicles sold there.
Safe to say, the war hasn't made things easy for the automaker - Renault first shut off its factories a month ago, but now reopened the Moscow assembly plant this week. This however received a massive blowback and within hours, Renault closed the factory again. (link)
Ukrainian President Volodymyr Zelensky accused Renault and French companies of financing the war.
The stock market has reacted brutally. The stock €RNO has tumbled down about 40% within the last month. Now, Groupe Renault has a 'negative valuation', as the stake that Renault has in Nissan (43.4%) is worth more than the market cap of Renault:
FYI, Nissan has a 15% stake in Renault.
Yesterday, Renault announced it is examining options to 'walk away' from its investment in AvtoVaz (link) and considering writing €2.2B off its assets in Russia. Comparison: Renault's market cap hovers at ~€6.72B.
AvtoVaz on the other side says it is ready to take the wheel at Lada - "Avtovaz" remaining stakeholder here being the Russian state. The Kremlin has suggested it could nationalize assets of foreign firms that leave the country, so this would be one of the first such moves.
Meanwhile, on the Ukraine side of EVs, VW has now confirmed that the Zwickau plant and Dresden plant won't resume production until April, due to the missing wire harnesses.
🇩🇪 Giga Berlin Delivery Day
As I wrote last week, Giga Berlin secured the necessary permits to start production. The Delivery Event took place on Tuesday (22nd) with the first set of Model Ys handed to the employees. Here's what went down:
Elon gave a speech for the factory workers, video by Alex Voigt:
And here's his speech right before the first delivery (video). Y
ou can find some more videos on the event & the evening party on Tesla's Instagram page (here). Additionally, here's Elon breaking out dance moves (video). And here's a video review of the #22 Model Y delivered. It's in 🇩🇪, but the closed captions to English are pretty good (video).
Credit Suisse analyst Dan Levy estimated in January that the two factories combined will produce a total of 118,500 vehicles this year. He sees Shanghai cranking out 877,000 cars [I estimate more] and Fremont making 458,250. There are reportedly already talks of the expansion of Giga Berlin, which is said to be in an identical size, "mirroring" the first factory for effective overlap.
The footprint of the Giga Berlin building is (link):
- 77% the size of the Fremont Factory,
- 61% of Giga Texas, and
- 60% of Giga Shanghai
What occurred to me today is that the Giga Berlin isn't only important for Tesla's European market.
It's also going to change Tesla's China operations, as there will be (likely) fewer exports going towards Europe. Of course, this will influence at scale only after the German plant has ramped up towards its full 500k/year capacity.
As far as I've heard, the goal for the first half of 2022 is 30k Model Ys and it should end the year at 5k/week production (260k annualized). The Tesla Model Y already was the best-selling premium SUV in China in February (link), so there's certainly demand left in China.
Meanwhile, the $TSLA stock is now finally over the $1,000 share price again, which also means the market cap is >$1T.
$TSLA remains to be the EV maker that is the least away from its 52-week high price with -18.5%, while the average on the 28 EV makers on our spreadsheet is -63.33% from its 52-week high.
EV prices rise in China
A follow-up: as I compiled the price increases of EV makers to you last week, here are the newest, this time from China.
XPeng increased the cost of its EVs between 10-20k yuan ($1,587-$3,143).
Li Auto, another member of the Chinese EV-startup trifecta, CEO Li Xiang said on his Sina Weibo account:
The cost of batteries in the second quarter rose by a very ridiculous amount. EV makers that have not raised prices yet are probably going to have to once their battery suppliers start charging more.
Li Auto raised its Li ONE price by 11,800 yuan (~$1,853) (link).
CATL, the world's battery maker's spokesman said:
The surge of upstream raw materials has caused certain pressure on downstream segments of the industry chain, including carmakers and battery makers. We adhere to the principle of providing customers with high-quality products while maintaining a reasonable level of profit
Meanwhile, the Chinese government has called in 'a range of market participants' like the lithium producers and automakers' association, to discuss a rational return for sustainable lithium prices. (link)
Jaan's rant 👇
Here's a perspective: about 74% of the world's battery and battery materials in whatever form come from China. The rest of the industry is trying to diversify the supply chains hard, but as BNEF currently forecasts, China will continue to hold at least 2/3 of the market in 2030.
Also, here's a good overview from Benchmark Minerals of where exactly does China's influence lie across the supply chain:
So when I read a little news snippet that the Chinese gov calls in the "market participants" and tries to reason for a sustainable price for raw materials, I know it can and will affect the whole industry, not only China locally.
Ford announced plans for 3 new electric passenger cars and 4 commercial vehicles in Europe by 2024. Here's the 21min announcement (video).
With its new Model e global business unit, it aims to sell 2M+ EVs globally by 2026, 600k of which in Europe.
Ford also signed a non-binding MoU with SK On and Koç Holding to create one of Europe’s largest commercial vehicle battery production sites in Turkey
VW revealed its EV strategy for North America: 55% BEV sales by 2030, a $7.1B investment. American-assembled ID.4 in 2022, ID. Buzz in 2024, new electric SUVs from 2026. A total of 25 EV models will be introduced by 2030 (link).
BMW said at its annual conference (link) that it aims to have 2M BEVs on the road by the end of 2025, 10M by 2030, and surpass 1.5M units annually by 2030.
Porsche's held its FY2021 press conference (link) (video 54:30).
Porsche expects half of its sales to come from EV (or hybrid) sales by 2025 and 80% from BEVs in 2030. It will also turn the 718 Boxster into an exclusively electric model from 2025. (link) CFO Lutz Meschke said: "We've already achieved double-digit profitability now for the Taycan.”
The conference also revealed that Porsche is planning to build out its own "proprietary" charging network, alongside its partnerships and joint ventures like Ionity.
🔱 Maserati (a subsidiary of Stellantis) announced it will offer a fully electric version of all of its models by 2025 and will only sell EVs from 2030. The first EV will be the GranTurismo in 2023:
🇩🇪 Germany ditches the plans to lobby against the EU's CO2 target legislation and will back the mandate which states only zero-emission vehicles can be sold after 2035, also excluding e-fuels. (link) via Trucks FoT.
🇺🇸 Washington states one-ups, or five-ups, other US states in the ICE sales ban, by targeting 2030. (link to news, pdf on page 86/121)
🇮🇳 96% of the EVs sold in India in February were from Tata Motors, with 2,264 units (link).
💸 After a local Tesla event, a driver in a rented Tesla Model S jumped 50ft in the air in San Fransisco reenacting an earlier Model X jump at the same spot, only to crash hard into a parked Subaru:
LAPD is offering $1k to find the driver who still hasn't been given up. The Subaru Forester owner, Jordan Hook, set up a Gofundme page which has now gathered $23k (link)
🍏 Another rumor for the 2025 Apple Car - it might be built by Porsche? At the same time, reportedly the Apple Car team has been dissolved for some time and is undergoing reorganization within the next 3-6 months. (link)
🖋️ Elon Musk tweeted he's working on Master Plan Part 3. Now he has teased that the:
"Main Tesla subjects will be scaling to extreme size, which is needed to shift humanity away from fossil fuels, and AI. But I will also Include sections about SpaceX, Tesla and The Boring Company."
Here are part I (link) and part II (link) for a refresher.
🏭 Cadillac Lyriq has started series production in the GM's Spring Hill in Tennessee. The planned production for this year is 25,000 vehicles (link).
🎓 Ford and its dealer council are launching Electric University to train salespeople, service technicians, and parts department staffers on EVs. (link)
🙊 My bad: last week I wrote about the crazy nickel price increase on the London Metal Exchange. I failed to mention that the price increase, although triggered by the War, was in large caused by traders and speculators, centered on the Chinese nickel tycoon Xiang Guangda's short bet.
Nickel trading was halted for a week, continued on the 16th. Thank you, Andre, for clearing that up on your post better than I could!
🖋️ Community effort: FairCharge campaign by Quentin Wilson on change.org has gathered 80,678 signatures so far and petitions for incentives for used EVs, VAT cuts for fast charging, and more EV chargers across the UK. (link)
🇨🇳 Curious: a crypto mining farm with 190 devices (worth ~$800k) in Guangzhou, China was operating for months by hiding behind the high energy consumption of EV chargers. The operation was now discovered and seized, as mining is illegal in the country. (link)
🏷️ Some new Model Y's are sold with a £5,000+ mark-up by dealers, as they are scalping the new model that has just hit the UK shores. Via The Fast Charge. The profit scheme for these 'scalpers' goes like this:
- Reserve the upcoming popular model as fast as possible (In October for MY in the UK).
- List it up to a few months before arriving with a price premium.
- The car arrives, hand it to the customer as new & pocket the premium. The customer thus skips the long waitlist if there is one.
I've noticed this a few years ago happening on Mobile.de for then highly anticipated 2018 Nissan LEAF and Kia e-Niro's.
Also, maybe that's why Tesla asks owners who buy multiple vehicles in China to promise not to resell them within a year (link)?
⏳ You could shorten the delivery wait time of a Model Y for up to 7 months if you added FSD capability on the order (even intending to remove the software upgrade right before delivery)... but the "loophole" for removing it is now closed. (link)
It will likely continue to allow quicker delivery with FSD though, which is a nice bump on average order value for Tesla.
⚡ Needs improvement, badly:
Kate was charged £30 as a holding fee by the BP Pulse charging network in the UK. For a failed charge. She hadn't gotten the money back in 37 days and apparently, most people need to talk to their bank to get their money back on such occasions. Talk about bad user experience...
Tom from The Fast Charge laid out how different networks handle this - e.g Ionity charged Tom £67 (twice) and could hold it up to 4 weeks (link).
👀 Polestar O₂ concept made a lot of waves and I can see why (link). I mean, the car comes with a drone...
👀 I also set my eyes on this A6 Avant e-tron station wagon concept from Audi (link). Just drooling...
👀 Nikola Motors investor day presentation, live right now (video).
👀 If you ride a robot goat by Kawasaki... is it considered an electric vehicle? (video).
📚 Battery Chat with Richard Wang, the Co-Founder & CEO of Cuberg, which as we know was acquired by Northvolt a year ago (link).
Interviewed by Intercalation Station. My snippet from Richard's word of caution on the hype in the battery (stock) market:
My word of caution is to pick winners carefully, emphasizing the need for genuine transparency in the industry surrounding next-generation technologies and the development of their performance, as there is so much misinformation regarding what technologies are real and feasible and which aren’t.
📚 Ian Morse from the Green Rocks (a great green mining newsletter you should subscribe to), breaks down the successful protests of Serbians against the $2.4B Rio Tinto lithium extraction operation that we've briefly covered before. Comments from the protest leader, Savo Manojlovic, are featured too. (link)
📚 Here's a shoutout Ranno that I forgot last week - for sending me the Ford & University of Michigan study on the US vehicle life cycle emissions. Thank you!
Alex Keynes, the clean vehicles manager at Transport & Environment, one of Europe's most vocal environmental lobby groups (which I deeply respect):
"The soaring lithium prices underscore the economic own goal of governments delaying already weak recycling targets.
Europe’s battery industry cannot wait until 2029 to start building up a domestic supply of critical metals. Strong recycling targets will help improve Europe’s strategic autonomy by establishing a secure domestic supply of raw materials, and will cut the costs of batteries needed to power the green transition"
Governments want manufacturers to recover just 35% of lithium from spent batteries by 2029. T&E has backed the European Commission's call for a more ambitious target of 70% [...] from 2026. Lithium prices had increased by 750% in the 12 months to January 2022. (link)
I don't want to end on a sour note, but... this one might make your stomach churn a bit:
What are your thoughts on this?
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