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Stellantis Beat Tesla


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Stellantis’s stock is a year old, Elon Musk is going to Germany, and Toyota. All that and more in The Morning Shift for January 18, 2022.

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1st Gear: Stellantis

A year and a half ago Fiat Chrysler and Peugeot announced that they were merging to form a new company called Stellantis, and we all had a good laugh, because the name sounded like a new medication. Well, Stellantis is laughing now. The company debuted on the stock market on this day last year, and their shares having surged 60 percent in that time. That means Stellantis beat Tesla, whose shares only surged 27 percent. Stellantis, of course, is still worth far less.

From Reuters:

A strong first year augurs well, though, with Jefferies analysts saying [Chief Executive Carlos Tavares] has shown vision and ambition with a “sustained stream of strategic initiatives.”

Since forging the world’s No. 4 carmaker by production, Tavares has mapped out a 30 billion euro electrification strategy, and formed alliances with Amazon and iPhone assembler Foxconn to accelerate development of software and semiconductors for future connected vehicles. read more

He has also drawn up plans for five battery plants and cut deals with unions to keep streamlining its European operations – side-stepping potential labour conflicts and pushing the company’s operating profit margin up to around 10%.

Excluding former Peugeot-controlled parts maker Faurecia (EPED.PA), Stellantis’ workforce was almost unchanged in the past year at around 300,000 – keeping Tavares’ promise not to cut jobs or close plants following the merger.

All this despite facing a semiconductor and supply chain crunch that cost global automakers millions of vehicles in lost production last year and is not expected to ease quickly.

Marco Santino, a partner at management consultants Oliver Wyman, said Tavares was living up to his reputation as a practical man avoiding a “muscular” approach with unions and the outlines of his strategy were in place.

“The path has been mapped out already, it needs to be consolidated,” he said. “I don’t expect fireworks from his business plan”.

Tavares will reveal his future business plan on March 1; I’m sure the word “electric” will be used, though Stellantis has been the main straggler.

2nd Gear: Are You Happier With The Car Buying Experience?

Anew survey says that car buyers report that buying a new car is still not ideal, according to Automotive News, but that it is better than before the pandemic.

Buyers’ satisfaction with the shopping experience from the research stage through delivery dipped to 66 percent in 2021, down from a peak of 72 percent in 2020 but an improvement from 60 percent in 2019, according to the survey.

Consumers who did more of their purchase digitally tended to be happier with their experience than those who did more work in person, Cox found. And buyers’ satisfaction with their experience while at a dealership also stayed above pre-pandemic levels — 75 percent last year, which is essentially unchanged from 77 percent in 2020 but better than 70 percent in 2019, according to the survey.

The findings signal that auto retailers have adjusted their purchase processes during the pandemic in ways that resonate with consumers, even as the market continues to be challenged by a shortage of microchips and new vehicles that has pushed up prices, said Vanessa Ton, senior industry intelligence manager for Cox Automotive.

Consumers reported transaction times at a dealership that were similar to 2020 and faster than years past, and more satisfaction with digital options, including when applying for financing, the survey found.

Ton said she anticipated that consumers would be more discontent with the overall shopping experience with fewer vehicles to choose from and rising prices on those that were available. Instead, she said, dealerships now offer digital purchase options, help with financing and clean facilities during a pandemic — all of which have made the experience tolerable, even enjoyable.

“I just thought people were so sour on inventory challenges that that’s going to sour their experience,” Ton said. “But that was not the case at all.”

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I think customers understand inventory shortages just fine, but price trickery less so, even if markups are justified by the market. Also, it is wholly unsurprising that customers prefer purchasing online, like everyone does with everything else. It’s almost like walking into a dealership is unpleasant or something.

3rd Gear: Toyota Reducing Output

Toyota has felt the global chip shortage less than other automakers, but it is feeling it now. It said this week that it was reducing output because of it.

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From Automotive News:

In a statement on Tuesday on Tuesday, Toyota said the semiconductor shortage would force it to reduce worldwide output by 150,000 units in February to about 700,000 vehicles. Toyota put the blame for the February downturn on the ongoing microchip crisis.

That, in turn, will make it very difficult to reach the company’s 9 million target.

“Current demand is very strong, therefore we were aiming for a high February production plan. However, due to the impact of the continuing demand for semiconductors across all industries, we have adjusted our production plan,” Toyota said in the statement.

“As a result of the revision, the full-year production forecast for the fiscal year ending March 31, 2022, is expected to be lower than the previous forecast of 9 million units,” Toyota said.

Global procurement manager Kazunari Kumakura said after the announcement that achieving 9 million would entail producing more than 1 million units in March alone – a very tall order.

“It will be very challenging for us to achieve the target,” Kumakura said.

I keep thinking that the car market will return to normal around this time next year, which of course is what I thought around this time last year.

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4th Gear: Tesla CEO Elon Musk Visiting Germany

This is presumably to see what the hell is up with the Tesla factory there, which is supposed to have been operational by now, but isn’t. That’s because in Germany they care about things like “the environment,” when it comes to new factories. Anyway, news of the visit caused some minor online drama.

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From Reuters:

Elon Musk will visit Tesla’s (TSLA.O) factory in Berlin in mid-February, the chief executive tweeted on Tuesday, following speculation on Twitter that he would be in Germany this month.

“I obv can’t comment on every rumor, but this isn’t true. Am headed to Berlin mid Feb, not this week,” Musk tweeted in response to an article by website Drive Tesla CA which cited a tweet claiming he was visiting Berlin on Jan. 16.

Musk added in a separate tweet that rumours around his travel plans online were becoming a “security issue,” in response to an apology from the account owner who first posted the wrong travel date, Sawyer Merritt.

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“Sawyer Merritt” is apparently a real person and has been suitably chastened.

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Elon Musk must be protected at all costs.

5th Gear: Related: EVs Selling More Than Diesels In Europe

This is because of regulations there, mainly. Tesla, in particular, is doing well, which helps explain why they are so desperate to get their Germany factory up and running.

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From the Financial Times:

Sales of electric cars in Europe overtook diesel models for the first time in December, preliminary estimates have shown, as drivers continued to choose subsidised emissions-free vehicles over those reliant on a fuel that was tarnished by the 2015 Volkswagen emissions scandal.

More than a fifth of new cars sold across 18 European markets, including the UK, were powered exclusively by batteries, according to data compiled for the Financial Times by independent auto analyst Matthias Schmidt, while diesel cars, including diesel hybrids, accounted for less than 19 per cent of sales.

Thanks to generous government subsidies in Germany and elsewhere, as well as strict regulations introduced in 2020 that force EU manufacturers to sell more low-emissions vehicles, electric sales have been rising steadily.

The trend accelerated in the final quarter last year, as Tesla proved to be better able than rivals to adapt to bottlenecks in semiconductor supply chains by delivering a record 309,000 electric cars.

European carmakers also pushed sales of electric vehicles in December to reduce their fleet-wide carbon footprint and avoid fines from Brussels, after prioritising the production of the most profitable models — mainly heavily polluting SUVs — during the supply chain crisis.

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Reverse: GM

The vehicles came from GM’s Heritage Center, an 81,000 square foot facility in Sterling, Michigan, that houses hundreds of cars and trucks from GM’s past, along with documents chronicling the company’s history and other artifacts and “automobilia.” Rumors spread that the financially troubled GM was selling off its entire fleet of historic vehicles, but that was not the case. As The New York Times reported shortly after the January auction: “Much has been made of the timing of the sale coinciding with G.M.’s current situation, but G.M. is simply doing the same thing that many large-scale collectors and museums regularly do in culling certain pieces from their collections. This was hardly a wholesale dumping of G.M.’s heritage.”

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Neutral: How Are You?

After a decade of street parking in New York, I am close to crying uncle and renting garage space. Please pray for me in this trying time, etc.

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