Lucid Is Heading Toward Big Layoffs
Lucid is in trouble, Volvo says the obvious, and, according to JD Power, half of new-car buyers could have a viable EV option from a brand they like by the end of this year. All that and more in this edition of The Morning Shift for March 29, 2023.
New York Joins California, Banning Non-Electric Vehicles After 2035
1st Gear: Lucid
Yesterday, we reported on a new Lucid recall, after that other Lucid recall, after that other other Lucid recall, none of which is not too surprising for a young car company, even one with a pretty compelling product to sell. The fact of the matter is, in the last several months, Lucid has been going through it, offering discounts, and still trying to solve production.
Lucid also said in February that it hoped to make 14,000 cars this year, down from expectations of around 22,000. Orders have also dropped. You know what happens next.
According to Reuters:
Electric-vehicle maker Lucid Group Inc (LCID.O) said on Tuesday it would lay off about 18% of its workforce, or around 1,300 employees, to cut costs as part of a restructuring plan.
[…]
The company plans to communicate with all its employees over the next three days about the plan, CEO Peter Rawlinson said in a letter, adding its U.S. workforce will see reductions in nearly every organization and level, including executives.
Lucid, which had about 7,200 employees at the end of last year, will incur between $24 million and $30 million in related charges. The company expects to substantially complete the restructuring plan by the end of the second quarter.
“We are also taking continued steps to manage our costs by reviewing all non-critical spending at this time,” Rawlinson said.
We’re not really in death-knell territory for Lucid just yet; I could still see a situation where it gets more nimble, weathers the storm, and perhaps bursts into 2024 with some fresh momentum. Certainly, a company with even less solid footing like Nikola is somehow still with us. But this isn’t, you know, good, and forces potential customers to ask themselves whether Lucid will still be around in five or ten years when they need their car serviced. Making cars is hard.
2nd Gear: JD Power Has What Might Be Good News
The data analytics company — most famous for its awards, which are touted by automakers depending on what the marketing department is going for in any given year — also does all sorts of other car market reports and “consumer intelligence” stuff.
One of its big focuses nowadays is EVs, and, according to new data from JD Power, around half of new-car buyers in the US might have an EV available to them in the market at a price point they can afford and a size they want by the end of this year, through a combination of falling EV prices and government incentives.
From Automotive News:
The prices and styles of EVs are more closely matching those of gasoline-powered models, J.D. Power found. Most automakers began their EV launches with high-end models, but now, increasing vehicle supply and generous incentives are making them more affordable for mass-market consumers, J.D. Power said.
“Price matters,” Elizabeth Krear, vice president of J.D. Power’s EV practice, told Automotive News. When there is an incentive or a certain manufacturer announces a price cut, “we immediately see the interest increase.”
[…]
Declining prices and broader choice are contributing to rapid EV sales growth. J.D. Power expects three in four consumers to have a viable EV option by the end of 2026.
About 8.5 percent of new-vehicle sales and leases were EVs in the first two months of this year, a record high and almost double the share from a year ago, J.D. Power said.
New EV registrations surged 57 percent last year to 756,534, while the overall U.S. market fell 11 percent to 13.6 million light vehicles, according to Experian. EVs climbed to 5.6 percent of registrations from 3.1 percent a year earlier.
The research firm’s EV affordability index rose to 87 on a 100-point scale in February, driven mainly by Inflation Reduction Act incentives. It hovered around 82 late last year. Once it climbs to 100, EVs will have reached price parity with internal combustion vehicles.
As Auto News also notes, state incentives are almost as important as price when it comes to consumers, so expect states with the best incentives — California is on top by far — to have the best results. Curiously, there is only a passing mention in the story of charging networks or lack thereof, which is a real stumbling block for potential EV buyers. I’m happy for new-car buyers though.
3rd Gear: Volvo’s CEO Says the Inflation Reduction Act Will Put an Increasing Amount of Volvo’s Supply Base in North America
That is part of the point of the IRA, thanks to a senator from West Virginia. Volvo was caught a little flat-footed because, while they established a factory for assembly in South Carolina in 2018, not all of their supplies come from North America, and in any case Volvo still doesn’t assemble any of its EVs in South Carolina. In an interview with Bloomberg, Volvo’s CEO Jim Rowan said that the IRA’s goals were “aggressive,” but that Volvo would deal:
Rowan expects the company’s U.S. customers will eventually be able to take full advantage of the tax credits.
“The timing on that is very aggressive,” he said. “It will be a gradual implementation of how we can get access to make sure that we hit all of those targets.”
[…]
In November, Rowan announced plans to begin selling a three-row, electric SUV, the EX90, later this year.
The vehicle will be built at Volvo’s plant near Charleston, South Carolina — marking the first time the company has started production of a new SUV outside of Europe.
Volvo also has plants in Sweden, Belgium and China.
Another new electric model — “the smallest SUV that we have ever done,” said Rowan — will be announced later this year, followed by new EV models each year for the next four or five years.
Rowan also said that Volvo’s order book is “as healthy as it’s ever been,” though one thing Rowan doesn’t mention — and something I hope Volvo never tries — is going for volume. Volvo makes money selling smaller amounts of premium cars to people who want them. May it forever be.
4th Gear: BYD Is Shaking it Off
BYD, the Chinese EV and PHEV maker which has fans including Charlie Munger, has been ever-rising, propelled by robust demand in its home market, the biggest auto market in the world. And also the fact that its cars are genuinely good, acquiring new converts seemingly easily, or as easily as some company named Tesla used to do around these parts.
The boom in EVs in China, though, recently led, inevitably, to a price war there, making it a struggle for some EV makers. Though apparently that pressure hasn’t reached BYD, at least not yet. Reuters reports that on Wednesday, BYD reported an “11-fold” increase in fourth-quarter profit, compared to the same time last year.
The strong result came as it extended its lead in the Chinese market, thanks to an expanding range of products that is helping it overtake Volkswagen to become the top-selling brand.
BYD’s large scale would help it maintain strong profit margins despite a price war and the end of EV subsidies, Chairman Wang Chuanfu told reporters in Hong Kong on Wednesday, referring to developments that occurred after the end of the fourth quarter.
The company posted on Tuesday a quarterly profit for October-December of 7.3 billion yuan ($1.06 billion), up from 602 million yuan a year earlier.
[…]
Wang said he expected the company’s vehicle sales to grow more than 80% in the first quarter, which would outperform the overall market but mark a slower pace compared to BYD’s more than 200% sales increase in 2022.
Reuters says that BYD has a 41-percent market share of “new energy” vehicles in China, compared with 8 percent for Tesla, which isn’t even close. I’m assuming BYD executives have a dartboard in their office with the Tesla logo on it, or maybe they don’t even think about Tesla at all.
Anyway, I’ve said it before, but sooner or later there’s going to be a price war on our shores for EVs, since what’s happening in China is everyone’s future, and I can’t wait.
5th Gear: Michigan Governor Gretchen Whitmer Spoke in Support of the UAW
Whitmer spoke Tuesday at the auto workers’ union’s 2023 Special Bargaining Convention, ahead of renegotiating the UAW’s contracts with the Big Three later this summer. Whitmer touted her pro-labor record, including the repeal of Michigan’s right-to-work laws. Which is all well and good, but because this is the Midwest, some of it got a little cringe.
From the Detroit Free Press:
After telling the hundreds of delegates gathered at Huntington Place, formerly Cobo Center, that she had signed the bills Friday on right-to-work and restoring prevailing wage rules, she told them it was a “BFD” as the delegates answered with loud applause. That means it’s a big deal though the “F” can’t be spelled out here. (The governor urged those in the crowd to ask a union brother or sister to explain if they weren’t clear on the concept.)
“That makes Michigan the first state to repeal the so-called right-to-work law since (the 1940s),” Whitmer said.
Whitmer said it took a lot of work and advocacy to get to this point, but that more effort is needed on union and worker issues.
“I’m damn proud of the work that we had to do, but we cannot for one second take our foot off the accelerator. We cannot assume it is over and things are just going to be sunny and bright for anyone who is working hard in this state. We’ve got to continue to work for these rights,” she said.
I thought “BFD” stood for “blank floppy disk,” which shows what I know, though Joe Biden called something a “big fucking deal” once. Maybe that’s it.
Reverse: RIP Bill Jenkins
The “Father of Pro Stock” drag racing died on this day in 2012. Fans knew him as “Grumpy.” From his New York Times obituary:
His innovations included a front-suspension system that improved the performance of a stock car by transferring weight to the rear tires, and a “slick-shift manual transmission” that allowed the driver to shift gears without lifting a foot from the gas pedal. He also installed a so-called cool can, containing ice, along the fuel line to lower gasoline temperature, which increased horsepower.
Jenkins’s enhancements paid off. “He was the most successful racer of Chevy Pro Stock and Super Stock cars in the ’60s and ’70s,” [John Jodauga, an editor at National Dragster] said, “which made him one of the most popular racers in the country, because so many fans back then raced or drove Chevrolets.”
Jenkins gained national prominence in 1966 when his 327-cubic-inch, 350-horsepower Chevy II outran most 426-cubic-inch, 425-horsepower Dodge and Plymouth Street Hemis in dozens of local races around the country. “He exploited the ‘giant killer’ approach in 1972 when he won six of eight national events with his 331-cid small-block Pro Stock Vega,” the hot rod association said.
Wins attributed in part to Jenkins’s engineering went far beyond his own races. He opened an engine-building shop in his hometown, Malvern, Pa. Dozens of drivers took advantage of his technical skills.
In a 2008 interview for the Web site Drag Race Central, Jenkins was asked how he felt about being inducted into the International Motorsports Hall of Fame. “I’ve had engines win 61 races and eight championships in all kinds of categories,” he said. “I’m fortunate enough that it happened before I died.”
Neutral: Old Cars
I’ve been down a rabbit hole lately watching old episodes of COPS, mainly for the cars. There were so many shitboxes still on the road in the ‘90s, including, of course, the police cruisers. I’m shocked any of us survived.
