Everyone Expected More From Tesla's Big Day

Photo: Justin Sullivan/Getty Images

Tesla CEO Elon Musk’s latest grand master plan didn’t blow anyone away, Germany and Italy are pushing back on the European Union’s combustion-engine ban and VinFasts are finally on American roads. All that and more in The Morning Shift for Thursday, March 2, 2023.

1st Gear: Not Impressed

So Tesla’s big Investor Day was last night, and we’ll have a bigger article here on the site delving into all the takeaways from it. But the Morning Shift digest version of it is that investors and analysts were, by and large, not impressed. At least if you’re going by the EV maker’s share price as of Thursday morning, which sat six percent lower during premarket trading. From Reuters:

Musk and more than a dozen executives laid out fresh plans to cut assembly costs by half, invest in a new plant in Mexico and discussed the company’s innovation in managing its operations at its investor day on Wednesday.

However, the event, where Musk revealed the EV maker’s ‘Master Plan 3′, was short on details about the timeline or any new Tesla products.

“The markets were primed for a big announcement, perhaps on something like a more affordable new model,” said Russ Mould, investment director at AJ Bell.

“Tesla had been on a tear so far in 2023. Then Musk raises his head above the parapet in an investor day presentation and the shares are sputtering … It may just have been a case of failing to live up to the hype.” […]

“The timeline and cost details were limited, and the event lacked a Tesla-like surprise,” Wells Fargo analyst Colin Langan said.

This was a four-hour presentation. And everyone expected something big out of it. Many seemed to believe that the repeatedly ignored, $25,000 “Model 2” would get its moment in the spotlight, but that moment never came.

Maybe that’s for the best. Tesla has enough announced, unreleased vehicles — it certainly doesn’t need another that’s cheaper than all the rest, especially when it’s slicing into its own profit margins on every product across its range. But when you cultivate a culture of “one more thing” and then you don’t give it to the crowd, eventually it comes back to bite. Though there was certainly one tangible outcome from all this, as Reuters tells us:

[Tesla’s] plan to use 75% less silicon carbide vehicles without compromising the performance or the efficiency of the car also weighed on semiconductor maker and supplier STMicroelectronics’ shares.

The reduction plan was “bad news for the whole silicon carbide production chain and in particular for STMicro,” Brokerage Equita said. It estimates that Tesla accounted for 70% of 2022 semiconductor sales at STMicro.

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2nd Gear: Germany and Italy Aren’t Ready

The European Union’s prospective ban on internal combustion-engine cars is set to take effect in 2035, but two member countries are signaling that they won’t have it. They also happen to be among the largest by GDP, which might throw a wrench in lawmakers’ plans. From the Wall Street Journal:

Germany and Italy said this week they could block the plan’s formal approval at crucial meetings this week and next. Berlin said it would oppose the plan unless Brussels agrees to allow so-called synthetic fuels that can burn like gasoline and diesel but spew fewer climate-damaging emissions alongside fully electric vehicles. […]

Under a compromise reached last October, lawmakers agreed that the European Commission could put forward additional rules allowing new vehicles with engines that use carbon-neutral fuels to continue to be sold, but it has yet to do so.

German Transport Minister Volker Wissing on Tuesday said Berlin now wanted Brussels to present this legislation ahead of the plan’s approval, saying that because it had yet to do so, “the German government cannot approve the compromise.”

Italy’s Environment Ministry said that environmental targets should be pursued in a way that avoids harming jobs and production and that electric vehicles shouldn’t be seen as the only route to zero emissions.

Germany’s really hitching its cart to the whole synthetic fuels thing, which may very well work out to be a solution but certainly not the only solution or even, say, a quarter of the solution. Producing e-fuels is an inefficient process by its very nature, which makes it an expensive process. At least that’s likely to be the case for the remainder of the decade.

Perhaps Germany knows something we don’t, and five more years will make all the difference in the world. The EU said it would offer a provision for such vehicles, so it should probably follow through on that, but you get the sense Germany and Italy are looking for a way out of what is at this point a pretty inevitable industry-wide shift.

3rd Gear: VinFast Did It

The EV startup said initial deliveries of its VF8 SUV to American buyers were imminent, and it’s finally followed through on that after two months of delays. According to the company, 45 examples are now in driveways in California. From Reuters:

At VinFast’s store in Marina Del Rey, California, James and Christine Wang took possession of a VF8 they had reserved earlier this year.

“We’re early adopters, we like to try things out,” said James Wang, 36.

Andrew and Nikki Le, who ordered 11 VinFast cars, took delivery of the first of those at the store. They had toured the VinFast factory in Haiphong, Vietnam in May as part of a promotion by the company, they said.

VinFast said insurers including State Farm, Allstate and Progressive would provide policies for the new model.

Vehicle subscription service Autonomy has a deal to purchase 2,500 vehicles from VinFast, the companies said last year. Autonomy did not respond to a request for comment on when it would take delivery.

At least these buyers are getting an inexplicable, favorable lease agreement all of a sudden, after VinFast decided to cut lease payments by up to 54 percent out of nowhere for this first run of deliveries. That’s certainly confidence inspiring.

4th Gear: Polestar’s Doing Alright

Polestar hopes to build 80,000 cars in the coming year, compared with the 51,491 it sold in 2022, according to the company’s latest earnings report and forecast. And it seems well positioned to meet all its goals at a time when most of its rivals aren’t. From Barron’s:

Electric-vehicle start-up Polestar finished 2022 on a high note with substantially better results than its peers’. The stock is taking off.

Thursday morning, Polestar Automotive Holding UK reported a full-year operating loss of $914 million from $2.5 billion in sales. Wall Street was looking for a $1 billion operating loss from $2.4 billion in sales.

The company delivered 51,491 cars in 2022, up from 28,677 in 2021. That’s impressive for an EV start-up. Rivian Automotive delivered 20,332 to customers. Ford Motor sold 61,638 EVs in the U.S. in 2022.

“We left 2022 having exceeded our 50,000 delivery target, grown revenue over 80 percent and with strengthened liquidity,” said CEO Thomas Ingenlath in a news release. “We are focused on business execution and have had a busy start to this year with a major update to Polestar 2, excellent reception for Polestar 3.”

Of course, it’s important to acknowledge that Polestar isn’t really a startup in the vein of, say, Rivian. Polestar came out of Volvo, which of course is owned by Geely, which Wikipedia tells us is China’s seventh-largest automaker. It’s sort of like starting your entrepreneurial career with a rather sizable loan from your very wealthy parents. You get to grow at a more reasonable pace, and concentrate more on long-term success. Polestar’s going to be just fine, but then who didn’t expect it to be?

5th Gear: Renault Is Researching Internal Combustion

Saudi Aramco, Formula 1’s favorite sponsor and one of the biggest companies in our world, will work with Renault and Geely as they join forces to advance the internal-combustion engine. The yet-unnamed company might be called “Horse,” and I promise you none of this is a joke. From Automotive News:

Saudi Aramco has agreed to take a minority stake in Renault Group and Geely’s planned combustion-engine venture as the oil behemoth seeks to expand into transport technologies.

Reuters reported in January that Aramco was in advanced discussions to take a stake of up to 20 percent in the joint venture, which would develop and supply internal combustion engines and hybrid technologies. Renault has referred to the company as “Horse,” but that name was absent from a news release announcing the agreement on Thursday morning.

Geely and Renault are expected to retain equal equity stakes in the new independent entity, according to the release, which did not disclose how much each would own and how much Aramco would invest.

The joint venture is aimed at developing more-efficient gasoline engines and hybrid systems at a time when the focus of much of the automobile industry has been on the capital-intensive transition to purely electric vehicles.

Saudi Aramco seems to have its fingers in quite a lot of pies these days, as it’s also working with Hyundai to spearhead synthetic fuels. Of all of the automakers I would have pegged to launch an ICE research-and-development joint venture in 2023, Renault wouldn’t have quite been first on my list. That slot would’ve been reserved for Stellantis or maybe Toyota. But it would’ve been near the top.

Reverse: Claudette Colvin

On this day 68 years ago in Montgomery, Alabama, 15-year-old Claudette Colvin didn’t move to the back of the bus. From History.com:

A full nine months before Rosa Parks’s famous act of civil disobedience, 15-year-old Claudette Colvin is arrested on March 2, 1955 for refusing to give up her seat on a segregated Montgomery, Alabama bus.

Colvin was traveling home from school when the bus’ driver ordered her, along with three fellow Black students, to give up their row of seats to a white passenger. Colvin’s friends obliged, but she refused to move. At school, she had recently learned about abolitionists, and later recalled that “it felt like Sojourner Truth was on one side pushing me down, and Harriet Tubman was on the other side of me pushing me down. I couldn’t get up.”

Montgomery segregation laws at the time dictated that Black passengers sit behind white passengers on public transportation, and bus drivers routinely moved Black passengers to make room for white passengers. Colvin, in refusing to move, cited that she paid her fare and staying seated was her constitutional right. She was then forcibly removed from the bus by two police officers, handcuffed and arrested, and booked in a local adult jail. She was charged with violating segregation law, disorderly conduct and assaulting a police officer. (The former two charges were dropped, but the latter stayed on her record until it was expunged over six decades later in 2021.)

Neutral: Actually, Sometimes Meet Your Heroes

Yesterday a Twitter user in Japan posted pictures of a Jiotto Caspita — the failed supercar designed by race car company Dome, powered by a Subaru flat-12 — seen in the wild. Normally the public appearance of any car, even one as rare as the Caspita, would not elicit a share on this website. However, the Caspita is different. The Caspita is special. What holy grail sighting would leave you starstruck?