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🐞 Q3, China, and Buttons n' Bugs
Chris reeves
November 01, 2024
The Gist
EV dreams are hitting hard realities. Ford reports a $1.2 billion Q3 loss on EVs, Stellantis faces a brutal 27% revenue drop, and VW’s profits tanked 42% as consumers pump the brakes on pricey EVs. Ford’s slowing F-150 Lightning production isn’t helping, Stellantis juggles bloated inventory, and VW's plant closures loom large. Rivian, meanwhile, says buttons are “an anomaly,” while they and VW team up on software. For dealerships? Buckle up for the EV learning curve—tech support and customer education are more crucial than ever.
This Digest
⚡📉 Quarters: Ford, Stellantis, and VW Earnings Show Struggles Across the Board
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As the EV market contends with rising costs, pricing pressures, and consumer hesitation, major automakers are feeling the squeeze. Here’s a look at the latest earnings reports from Ford, Stellantis, and Volkswagen, all highlighting challenges in the push toward electrification.
Ford's EV Ambitions Take a Hit 🚘💸
Ford’s Q3 report shows both progress and setbacks, particularly within its Model e EV division. The automaker reported a $1.2 billion EBIT loss for Model e, expecting full-year losses to reach $5 billion. Despite the division's 33% revenue boost year-over-year, industry-wide pricing pressures and the EV learning curve are dragging down profits.
Data:
Total Q3 Revenue: $46 billion, led by the Ford+ division
Net Income: $0.9 billion, down $0.3 billion from Q2
Model e Revenue: $1.2 billion, up 33% YoY
Cost Improvements: $500 million YoY, offset by pricing pressure
Ford’s F-150 Lightning Production Pause 🛑
Why is Ford halting production of the F-150 Lightning?
Slowing EV demand has forced Ford to pause production at its Rouge Electric Vehicle Plant until January 2025. The company cited “industry-wide pricing pressure” and a need for a balanced production plan.
Will this impact Ford’s overall EV strategy?
Not necessarily. Ford recently doubled down on its hybrid SUV offerings, aiming to attract customers to more affordable, long-range options while keeping its EV goals alive.
Stellantis Sees Revenue Declines Across Regions 🌎📉
Stellantis reported a 27% revenue drop for Q3, with the hardest hit in North America, down 42%. Inventory issues in the U.S. and temporary operational challenges led to negative cash flow projections. Despite this, Stellantis plans to roll out 20 new products by year-end, including EVs like the Dodge Charger Daytona, Jeep Wagoneer S, and Ram 1500 REV.
Highlights:
Global Revenue: $36 billion (33 billion euros)
North America Revenue: Down 42%, shipments down 36%
Q3 Shipments: 1.1 million units, down 20%
Stock Buyback: Completed $3.36 billion buyback, returning $8.4 billion to shareholders
Volkswagen Faces Buyer Resistance to EVs 🔋❌
VW’s Q3 earnings reveal a steep 42% profit decline amid “industry-wide buyer reluctance” toward EVs. Sales fell 8.3%, with restructuring expenses and high fixed costs adding strain. VW has announced potential plant closures and job cuts to improve efficiency, signaling that the EV transition may come with tougher choices ahead.
Q3 Profit: €2.86 billion ($3.11 billion), down 41.7% YoY
Year-to-Date Profits: Down 20.5% at €12.91 billion
Sales Revenue: Up 0.9% despite lower vehicle sales
Implications for U.S. Dealerships 🏬🇺🇸
With Ford, Stellantis, and VW all grappling with the challenges of the EV transition, dealerships should prepare for fluctuating demand and potential impacts on inventory. Sales teams may need to be ready to pivot toward hybrids or offer deals on EVs with manufacturer incentives to spur sales. And as EV technology and infrastructure advance, training on new models and software integrations will become even more crucial.
🚗💥 BYD Overtakes Tesla, EU Tariffs on Chinese EVs & Surge in Zeekr Deliveries
From BYD’s record-breaking quarter to EU tariffs tightening around Chinese EVs, this digest spotlights October’s biggest twists and takeaways. Dive in to see why U.S. auto pros should keep an eye on these global dynamics.
BYD Surpasses Tesla in Sales
Quarterly Revenue: BYD hit $28.24 billion for Q3, outpacing Tesla’s $25.18 billion.
Hybrid Dominance: 50% of BYD’s sales are hybrids, allowing a unique edge.
Net Profits: Tesla leads with $2.18 billion (up 16%), versus BYD’s $1.6 billion (up 11%).
EU Tariffs – Leveling the Field or Trade War? 💬
Why did the EU slap tariffs on Chinese EVs?
The EU claims Chinese EV makers, benefiting from state subsidies, have grown their market share to a level that threatens European jobs. By hiking tariffs, the EU aims to “level the playing field.” But as China retaliates with its own duties on European goods, the real question is: can either side keep this road from spiraling into a full-blown trade skirmish?
Who’s hit hardest?
BYD, Geely, and SAIC face tariffs up to 35.3%. Tesla, with a tariff rate of 7.8%, may have a smoother ride navigating these policy speed bumps.
Market Movers: October Delivery Records 🚙📈
Zeekr Hits Record Numbers
Zeekr’s October deliveries surged 92% YoY, reaching 25,049 cars—an all-time high. XPeng and Li Auto also saw record numbers as Chinese automakers continue breaking monthly milestones despite tariff tensions.
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In the great button-versus-touchscreen debate, Rivian’s Chief Software Officer Wassym Bensaid doubled down on voice controls as the future, saying in-car buttons are “an anomaly.” At TechCrunch Disrupt, he noted, “It’s a bug, not a feature,” advocating that voice interactions should replace touch and physical controls. Yet, critics argue that abandoning physical buttons altogether, as Rivian aims to, ignores safety aspects of tactile controls and leaves drivers relying on still-imperfect AI voice systems.
Bensaid’s Vision in a Nutshell:
Voice as Primary Interface: Rivian plans to make every control voice-accessible, aiming for an AI voice system that manages everything from navigation to entertainment.
“CarPlay is Laziness”: Rivian’s custom software excludes CarPlay, claiming it detracts from a fully integrated, Rivian-specific experience.
Why is Rivian ditching physical buttons?
According to Bensaid, buttons are a relic, and voice controls offer a more intuitive, seamless experience. Critics, however, argue that relying solely on voice in a car is “optimistic at best, dangerous at worst.”
Will Rivian ever add CarPlay?
Highly unlikely. Bensaid called CarPlay a “lazy” option that oversimplifies the UI, which Rivian plans to build out with proprietary, integrated software features.
Rivian & Scout Motors’ Surprising Tech Partnership 🚚🤝
Rivian’s partnership with VW has made waves, especially with VW’s revival of Scout Motors in the EV space. The companies will share software architecture, though Rivian and Scout vehicles will remain distinct in design, target audience, and platform.
Joint Venture with VW: Rivian provides tech know-how, and VW brings manufacturing muscle, targeting a 2027 production date for Scout’s EV models.
Zonal Architecture: Scout’s upcoming EVs will feature a simplified “zonal” control system developed with Rivian, meaning fewer control centers handling more functions. Think faster, easier diagnostics and repairs—a potential game-changer for fleet management.
Scout Isn’t a Rivian, but It’s Close 🚙🔍
Despite sharing software DNA, the two brands are taking divergent approaches:
Design Divergence: While Scout and Rivian vehicles both have a boxy aesthetic, Scout retains more traditional features (like physical buttons) catering to off-road enthusiasts.
Range Extension Options: Scout’s Harvester option, a gas-powered range extender, is something Rivian currently has no plans to replicate.
Implications for U.S. Dealerships 🇺🇸🛠️
Software-Centric Sales and Service: Dealerships can expect increased focus on tech support and training, especially as these models roll out with sophisticated zonal architectures.
Customer Education: As buyers gravitate toward simpler yet tech-heavy EVs, dealerships must bridge the gap in understanding new features like voice-only controls and explain Rivian’s software-first approach versus Scout’s more traditional take.
Thank you for reading the digest, we try to keep it beefy yet skimmable. Let us know what you think!
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