Welcome to the Hyperdrive daily briefing, decoding the revolution reshaping the auto world, from EVs to self-driving cars and beyond.
News Briefs
What a Week
TGIF — especially if you've been trying to keep up with all the earnings coming from carmakers this week. The word from the world's auto CEOs has been mostly upbeat, aside from the clear consensus that the semiconductor shortage will last longer than initially thought. Just this morning, Germany's BMW said it expects automotive profitability to be resilient this year despite supply-chain issues.
There's been more to the headlines than just chips, though, including some important learnings on just how well prepared companies including General Motors, Volkswagen and Stellantis are for the electric future.
Here's some of the most noteworthy things we learned:
No Credit Needed
The maker of Jeeps and Peugeots only published quarterly revenue results on Wednesday, but the 14% growth it posted pleased analysts nonetheless. More interestingly, Chief Financial Officer Richard Palmer confirmed Stellantis is exiting a European emissions-credit agreement with Tesla, which originated with Fiat Chrysler.
Now that Fiat has paired up with PSA and its lineup of plug-in hybrid and battery-electric models, the combined company can comply with standards on its own and save about 300 million euros ($362 million) this year. This is an early proof point that the mega merger pulled off by the Peugeot and Agnelli clans had serious merit. Stellantis shares are up more than 9% for the week.
A Little Help
Before you assume selling regulatory credits will be a business Tesla must kiss goodbye, consider that even VW — arguably Elon Musk's most credible competitor in electric vehicles — is going to need some help meeting emissions standards in two key markets for a while still.
Europe won't be an issue for CEO Herbert Diess, as it will account for much of the 1 million plug-in hybrid and fully electric vehicle sales VW expects this year. But the German giant is still delivering way more gasoline-powered cars, particularly in China and the U.S. It has reached “minor” deals with other automakers who will help offset its emissions in those regions for the next two to three years, Diess said.
VW also is trying to ramp up battery capacity as quickly as possible and talking with other companies, as well as governments, about building cell factories in Europe. It could even pursue an IPO for “some of the activities,” Diess told analysts Thursday.
On the Offensive
GM knocked it out of the park on Wednesday, with first-quarter earnings coming in way above expectations and sending its stock up the most in a month. Its customers in the U.S. are paying steep prices for bigger SUVs and trucks that are better for profitability. Demand for beasts like the Cadillac Escalade and Chevrolet Tahoe is “exceptionally strong,” CEO Mary Barra told my Bloomberg TV colleague David Westin.
After decades of decline, GM has made massive progress under Barra in shrinking itself down to markets and models that earn their keep in good times and bad. Her focus is now turning to EVs that could better appeal to consumers on the coasts, a strategy that's getting analysts excited.
“Perhaps for the first time since the 1970s, GM has a chance to be on the offensive in the market and is positioned to capture the leading share in the growth segment of the industry,” Benchmark analyst Michael Ward wrote in a report.
Before You Go
Live from New York, it's Elon Musk. The Tesla CEO has taken time on several occasions to sign autographs in the city between rehearsals for his Saturday Night Live hosting gig this weekend. TMZ captured the billionaire offering his view on dogecoin, the joke currency he's been hyping on Twitter for months, late Thursday evening. “People should not invest their life savings in crypto currency,” he told his fans. A word to the wise.
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