Despite conceding the title of the world’s largest electric vehicle maker to Chinese automaker BYD in the final quarter of 2023, Tesla still had a blockbuster year overall. It sold more BEVs than its Asian rival throughout the year. But at the start of 2024, CEO Elon Musk warned investors that the company was amidst two major growth waves and the brand’s next major era of steady growth could be years away. And this week’s earnings call could shed light on what to expect in the coming months.
Welcome to Critical Materials, your daily round-up of the hottest news from the burgeoning EV industry. Today, we’re discussing Wall Street analysts' grim outlook for Tesla’s Q1 sales and earning report, thousands of job cuts planned by the SAIC-General Motors joint venture in China, and why multinational automotive conglomerate Stellantis plans to accelerate its EV plans in the U.S. when most others are taking things slow.
30%: Wall Street Grinds Its Teeth Over Tesla Sales
The first quarter of 2024 is already over, folks. It feels like the Tesla Model Y was crowned the world’s best-selling car just yesterday. But time is flying, and some analysts surveyed by Bloomberg have lowered their projections for Tesla’s Q1 2024 sales. Some are even bracing for a year-over-year drop for the first time in four years, something that could be unprecedented if turned out true.
Here’s what the news wire wrote this morning:
On average, analysts surveyed by Bloomberg estimate that Tesla delivered 453,964 vehicles in the quarter. That would be down more than 6% from the company’s record showing in the fourth quarter, which tends to be the best time of year for sales. The key will be delivering more cars than the 422,875 managed in the first three months of 2023 and avoiding a first year-over-year drop since the second quarter of 2020.
I’m no big fan of speculations, especially when it comes to a brand that revolutionized electric cars and is now the world’s largest automaker by market valuation. But looking at the aggressive measures Musk’s company has taken over the past few weeks to lure customers and keep the momentum going, there’s little reason to take these predictions lightly. Tesla’s Chinese rivals are gaining explosive popularity and the EV sales growth rate is slower than expected this year.
A few days ago, Gigafactory Shanghai slowed its production rate. It will now produce EVs five days per week, compared to 6.5 days previously. In the U.S., Tesla has enabled the latest version of its Full-Self Driving (FSD) software for all models capable of having it for one month at no cost. FSD is available at a $199 monthly subscription or $12,000 for an outright purchase. Despite these measures, the stock is trading low, and investor confidence isn’t where it was.
Even if these predictions turned out to be true, this could be a minor roadblock in the long run. The Model 2 (a rumored name) is coming next year to fend off Chinese rivals. If Tesla delivers on its promises, it could give the industry exactly what it needs, a cheap, reliable EV to accelerate adoption rates and reduce emissions.
But Tesla’s real challenge would be to hold ground with its existing lineup in the interim. Tesla’s earnings call is tomorrow, so keep watching this space for the latest updates.
60%: Mass Layoffs At General Motors’ Joint Venture In China
SAIC-General Motors, SAIC-Volkswagen, and one of SAIC’s EV units called Rising Auto plan to slash thousands of jobs this year.
SAIC is China’s state-owned carmaker, and its joint venture with General Motors is responsible for selling Chevrolet, Buick, and Cadillac models among others in the world’s largest car market. On the other hand, SAIC-VW sells the German automaker’s ID-branded EVs as well as Audis in China. But the likes of BYD have left rivals in the dust, as its market share continues to grow at home and overseas.
Here’s what Reuters reported this morning:
The state-owned automaker hopes to cut 30% of employees at SAIC-GM, 10% at SAIC Volkswagen, and more than half at its Rising Auto EV subsidiary, the people said.
The staff reductions won't happen all at once in mass layoffs but are targeted for 2024, the sources said. A large portion will come through implementing stricter performance standards and offering payouts to lower-rated employees who resign, they said.
SAIC recently recruited 2,000 employees in the first two months of 2024 to further develop its software and BEV manufacturing capabilities. However, the report states that workers with lower ratings are being offered payout packages to quit. These are “white-collar professionals,” and not factory workers. SAIC has dismissed the report about mass layoffs but it declined to elaborate, the report stated.
The company has long relied on partnerships with Western automakers to sell cars profitably in China. But with homegrown automakers and established consumer electronics giants like Xiaomi entering the space with skyrocketing popularity, SAIC could see its market share drop in the coming years if it doesn’t manage to stay competitive.
90%: Stellantis Will Go “Flat-Out” With EVs
Stellantis, which owns over a dozen global carmakers, including Ram and Jeep, as well as European rivals Peugeot and Fiat, has no plans to scale back its ambitious EV plans.
The automaker wants EVs to account for 50% of its U.S. sales by the end of the decade, and CEO Carlos Tavares has doubled down on that goal.
Take a glance at this excerpt from the Wall Street Journal:
“We’re going flat out,” he told analysts on the company’s earnings call.
Tavares, who ran Peugeot after several years at Nissan Motor, has developed a reputation for maintaining sharp metrics to track progress and being hyper-focused on costs. He sometimes flies budget airlines over the private jets favored by other auto executives.
That focus on restraining costs has continued into his tenure at Stellantis, which has maintained double-digit profit margins since its inception in 2021, among the highest in the industry.
Tavares said the setup is particularly advantageous as the U.S. and Europe face political elections this year that could upend the regulatory environment for electric vehicles.
If regulators after those elections want fewer EVs, Stellantis can slow down until consumer demand increases, he said. If they want more, it can speed production up.”
To have such high confidence levels in the face of brutal competition is refreshing. And to have the STLA suite of BEV native platforms across the board could be its real advantage.
Several Stellantis EVs will be on sale in the U.S. this year. That includes the recently unveiled Dodge Charger Daytona EVs set for a mid-2024 delivery timeline, the Rivian R1S-rivalling Jeep Wagoneer S due in the fall of this year and the Ram 1500 REV which will also go on sale by the end of the year.
100%: Do We Need To Be Anxious About Tesla?
Free Supercharging miles, one month of free FSD, and a disruptive price war—Tesla is trying everything to maintain its dominance in the U.S. and across the globe. But as competition spruces up, and demand somewhat wanes in the short-term, do you think Tesla will have more tricks up its sleeve to keep the throne?
Tomorrow’s sales call will make things clear, but in the meantime, let us know what you think in the comments.
Contact the author: suvrat.kothari@insideevs.com
