Elon Will Answer To Tesla's Investors And Analysts This Week

Good morning! It’s Monday, October 21, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

Tesla Had A Very Interesting Week

Contents

1st Gear: Even Elon Musk Has To Answer To Someone

The We, Robot event held by Tesla to unveil its Cybercab and Robovan concepts earlier this month was heavy on sci-fi looking vehicles covered in lights spray paint and very light on details. While the futuristic-looking and ultimately inconvenient vehicles might be exciting for the true believers, the lack of clear direction and detail has investors jumpy. Shares shrank after the 20-minute event—highly unusual, as such pie-in-the-sky announcements have buoyed Tesla’s stock price in the past.

Tesla is expected to announce that its profit margins remain slimmer than in the past as the company uses big incentives to lure buyers. The company is also predicted to see a slight drop in total vehicles delivered for the year—its first ever, according to Reuters. Investors and analysis will have a chance to ask the big man about future plans directly:

Some Wall Street analysts, however, have shifted their focus from the Cybercab event. “With Tesla’s Robotaxi Day passed, we believe the focus for Tesla at least for now shifts back to fundamentals,” Barclays analysts said in a note last week.

Wall Street expects Tesla to report 14.9% automotive gross margin, excluding regulatory credits, for the three-month period ended Sept. 30, according to 23 analysts polled by Visible Alpha. In the second quarter, Tesla recorded 14.6%.

The company has cut prices to stimulate demand amid high interest rates, but with limited success. It has offered incentives and low-cost financing options, especially in China.

Analysts expect this to hurt its margin, a metric in which Tesla long had an edge over traditional automakers.

Tesla’s aging line up, aggressive pricing from legacy brands on EVs, controversial statements from Musk and a looming National Highway Traffic Safety Administration investigation into deaths potentially caused by “Full Self-Driving” software all point to sales problems continuing into the near future. Musk’s well-known tendency to over-promise and under-deliver on future vehicles also has investors feeling antsy. But they shouldn’t worry too much. I’m sure Tesla will have full self-driving cars next year, or the year after that, or the year after that. It’s not like Elon Musk would just lie in perpetuity about something like that.

2nd Gear: GM, Ford Also Face Questions From Weary Investors Over EVs

Tesla isn’t the only automaker facing scrutiny from restless shareholders this week. We already know Stellantis is in trouble, but the other two in the Big Three aren’t on the most solid ground, either.

GM is doing great, actually, with the stock pricing rising by a third this year thanks to gas-powered vehicles. This boon is actually a bit of a problem as GM’s CEO Mary Barra is still shoveling money into GM’s EV—or at least electrified— future, even as results wane. Ford’s woes are worse. Shares on the Blue Oval are down eight percent this year due to quality issues and large EV losses.

There are also concerns about costs: Both automakers have made big, gas powered vehicles their money printing machines, but folks may be at the limit of what they’re willing to spend on the giant gas guzzlers. Industry analysis are concerned automakers have hit peak pricing, according to Automotive News:

Investors and analysts will also be looking for comments on how the economy is affecting consumers.

“Even with a larger-than-expected rate cut by the Fed in September, there hasn’t been a material improvement in auto loan rates or the overall affordability of new vehicles,” said Cox Automotive Chief Economist Jonathan Smoke.

Consumers’ preferences have shifted towards economical compact crossovers over traditionally preferred larger vehicles due to their lower upkeep costs and better gas mileage, U.S. automakers’ third-quarter sales data showed.

3rd Gear: Stellantis Closing Arizona Proving Grounds

Oh yeah, there’s another American(ish) automaker that is not going to have a nice time once third-quarter reports come due this month: long-suffering Stellantis. The company is selling off a 18-acre property in Arizona used for testing vehicles. It’s just the latest cost cutting move by the automaker. Everything is on the table, including the sprawling 5.4-million-square-foot headquarters in Auburn Hills Michigan, according to the Detroit Free Press:

Recently, speculation has ramped up over the fate of the company’s 5.4-million-square-foot Auburn Hills complex, with Gov. Gretchen Whitmer saying earlier this month she was in discussions with the automaker about its Michigan footprint, without providing specifics.

This week, the Michigan Economic Development Corp. responded to questions about whether Stellantis had asked for or been offered any incentives related to the Auburn Hills complex or other Michigan operations.

Spokesman Otie McKinley said in an email that “Stellantis has a longstanding history in Michigan as a significant employer, and as such, the MEDC is in regular communication with the company about how Michigan can be a core location for them for generations to come.”

Everyone from dealers to UAW members seem ready to revolt as Stellantis sales flag to dangerous levels. There’s even talk of selling off struggling brands by 2026, but what brand under the Stellantis banner isn’t struggling right now? Even formerly solid moneymakers Jeep and Dodge have seen serious drops in sales.

4th Gear: VW Fined $7 Million In The UK For Treating Customers Unfairly

This is wild to the American mind: Volkswagen caught fines in the UK for taking away already struggling customers cars and not communicating properly with those customers. It appears the UK requires company to work with customers who can’t pay their bills. Again, absolutely wild. From Reuters:

Volkswagen Financial Services (UK) Limited, which has agreed to pay over 21.5 million pounds in redress to around 110,000 customers who may have suffered, also took cars away from vulnerable customers without considering other options, the Financial Conduct Authority (FCA) said on Monday.

The failings occurred between January 2017 and July 2023 and were compounded by poorly formatted and automated communications, the regulator said.

“Volkswagen Finance made tough personal situations worse by failing to consider what those in difficulty might need. It is right it compensates those who suffered,” the FCA said.