Electric Vehicles

What happened

Shares of quite a few electric vehicle and self-driving-related stocks, including some high-flying names, were trading lower on Thursday afternoon on growing economic concerns in the United States.

Here’s where things stood as of 2:30 p.m. EST for these companies’ stocks, relative to their closing prices on Wednesday.

• Canoo Holdings (NASDAQ:GOEV) was down about 13.7%.
• Churchill Capital IV (NYSE:CCIV), the special purpose acquisition company preparing to merge with Lucid Motors, was down about 5.3%.
• Electrameccanica Vehicles (NASDAQ:SOLO) was down about 8.1%.
• GreenPower Motor (NASDAQ:GP) was down about 8.4%.
• Hyliion Holdings (NYSE:HYLN) was down about 11.1%.
• InterPrivate Acquisition (NYSE:IPV), the special purpose acquisition company preparing to merge with lidar chip maker Aeva, was down about 10.8%.
• Lordstown Motors (NASDAQ:RIDE) was down about 9%.
• Luminar Technologies (NASDAQ:LAZR) was down about 5.6%.
• Northern Genesis Acquisition (NYSE:NGA), the special purpose acquisition company preparing to merge with electric bus maker Lion Electric, was down about 12.6%.

So what

None of these companies’ stocks were moving lower on company-related news, as there wasn’t any aside from a minor announcement from Lucid Motors. What appears to be going on is a so-called “risk-off” movement in the broader market, driven by a few separate, but related, concerns.

First, the $1.9 trillion COVID-19 relief bill is moving through the U.S. Congress. Some investors are concerned that the huge amount of money could trigger inflation, which has been low for a long time. Rising inflation is bearish for high-growth stocks, which include all of the names here. 

Second, the rate on the benchmark 10-year U.S. Treasury bond has been rising, hitting 1.5% earlier today — its highest mark in over a year. 

10 Year Treasury Rate data by YCharts.

While it’s still low by historical standards, rising rates mean that it could cost companies more to borrow money in the future. For companies like those here, all of which are some distance from profitability, that’s bearish. 

Now what

There’s one more factor that might be contributing to today’s sell-off. Tesla (NASDAQ:TSLA), the leader of the electric vehicle category, has been trading lower on a number of concerns. Some are unique to Tesla, but it’s likely feeling the macroeconomic pressure as well. And given that many of the electric vehicle stocks traded up on hopes that they might follow in Tesla’s high-flying footsteps, it’s no surprise to see them trading down as Tesla sinks.

This week, six large-scale utility companies, including two that serve most of South Carolina, said they are banding together to address the electric vehicle infrastructure problem.

When you buy a car that burns gas or compresses diesel, finding a filling station is usually just a matter of tapping on your phone to find the nearest convenience store. But electric vehicles are different.

Part of the reluctance to adopt EVs includes a fear of running out of juice on the side of the highway.

That infrastructure, where it exists, is somewhat fragmented in the U.S. Tesla built a nationwide charging network to help address some of those concerns. The electric car manufacturer owns more than 20,000 charging stations, including eight Superchargers in South Carolina. But there are so few places to recharge an electric car that it generally makes news when one pops up, especially in less populated areas.

The Electric Highway Coalition plans to put a system of electric charging stations across the Atlantic Coast, Midwest, South, Gulf and Central Plains region, the partners said in a joint news release.

The coalition includes American Electric Power, Dominion Energy, Duke Energy, Entergy Corp., Southern Co., and the Tennessee Valley Authority.

The news release also included a map that shows where this electric highway would run, including through Charleston, Columbia and Greenville, along with Florence, Rock Hill, Augusta and Savannah. Sorry, Myrtle Beach, Horry County isn’t on the list … yet … but you have a Tesla Supercharger already.

The goal is to offer options to allow drivers to travel without concern of not being able to recharge their electric vehicles. The system of chargers are going to be relatively fast, the coalition says, with an anticipated 20 to 30 minute recharge. That’s still not as fast as a 5-minute fill-up at a gas station, but better than charging your EV using an extension cord overnight.

Dominion Energy’s President and CEO Robert M. Blue said in a statement the company is committed to “equitable and reliable charging access” to help customers and reduce carbon emissions into the environment.

“We’re excited to collaborate with our utility partners on this important initiative to connect customers to charging resources and encourage electric vehicle travel,” Blue said in the news release.

The Electric Highway Coalition also is looking for other utilities who want to become members and extend the reach of the highway.

ASHEVILLE – A long-time Buncombe County manufacturer that has shifted to electric and hybrid vehicle technology will get $460,000 in local taxpayer funded incentives.

In return, BorgWarner has agreed to make a $62 million expansion to its Arden plant that will keep 500 current jobs and add 100 new ones with pay averaging $24.85 annually.

Buncombe County Board of Commissioners voted 7-0 at a March 3 meeting to award the incentives that will be paid over six years. 

“We appreciate the great work that company’s done in buncombe County (and) the workforce that you have here,” said board Chair Brownie Newman.

The promised county payout comes after a 2020 deal to give aircraft engine maker Pratt & Whitney $27 million to build a plant county leaders said would bring generational change but that opponents panned as taxpayer funding for a war profiteer.

The one caller for the public hearing, Rachel Bliss, said she found the BorgWarner agreement “more acceptable” but disagreed with the idea giving large businesses taxpayer-funded incentives.

The company has had manufacturing operations in Western North Carolina since 1975, with a long-time focus on classic fossil-fuel powered vehicles. That emphasis has changed over the last eight years, said Facilities Manager Brian Leising.

Telecoms equipment maker ZTE is joining a number of Chinese technology companies entering the electric vehicle market as it looks to build a team for a new product line, a company spokeswoman told Reuters.

The Shenzhen-based company did not say whether the product line will supply parts for partner companies, or whether the company would be producing its own branded vehicles.

Chinese technology firms have been stepping up their focus on electric vehicles (EVs) in the world’s biggest car market, as Beijing promotes greener vehicles as a means of reducing air pollution.

Earlier this month Reuters reported that ZTE’s rival Huawei is planning to make EVs under its own brand and could launch some models this year.

A Huawei spokesman denied it had EV ambitions of its own, beyond supplying technology to partners.

Asian technology companies, including Baidu, have announced plans to make their own cars, while Shenzhen-based dronemaker DJI is building an engineering team to work on self-driving technologies.

Sales of new energy vehicles (NEVs), including pure battery electric vehicles as well as plug-in hybrid and hydrogen fuel cell vehicles, are expected to make up 20 percent of China’s overall annual auto sales by 2025.

Industry forecasts put China’s NEV sales at 1.8 million units this year, up from about 1.3 million in 2020.

© Thomson Reuters 2021

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Geely Automobile Holdings Ltd., a leading carmaker in the world’s biggest market, is calling on the government to amend the country’s transport rules to allow batteries used in electric vehicles (EV) to be shipped by railway, as domestic manufacturers seek to cut logistics costs as they push into the booming European market.

Rules that ban lithium batteries from China’s railways — which were made decades ago due to safety concerns — lengthen shipment times and greatly increase transport costs, specifically since they mean carmakers can’t load their products onto the continent-spanning Sino-Euro Railway, said a proposal by Li Shufu, chairman of Geely, published Tuesday.

“This has impacted the export of new-energy vehicles — including components such as lithium batteries — of all major auto companies,” said the proposal. “Compared with sea and road transportation, shipment by rail has huge advantages, especially over long distances, in terms of economy, stability and carbon emissions.”

Geely’s plea comes after the European market for electric vehicles soared past China in 2020 to become the world’s largest, as generous incentives and new models fueled buying, according to a January report by S&P Global citing EV-volumes.com. China shipped a total of 222,900 EV units aboard last year, with over 30% exported to Europe, according to Cui Dongshu, secretary general of the China Passenger Car Association.

Li, who is also a delegate of the National People’s Congress, will submit the proposal to the legislature’s annual meeting that begins on Friday. A new five-year plan shaping national policy through 2025 will be approved during the meeting.

The problem facing carmakers is that lithium batteries used in EVs are classified as dangerous goods in China because of the combustible metals they contain, relegating them to shipment by sea or road for now, a battery industry insider told Caixin.

However, Li argues in the proposal that major carmakers have met all technology requirements and manufacturing standards to ensure safety when shipping electric vehicles, adding that European manufacturers have begun transporting products by rail thanks to the “friendly regulatory environment regarding transport of EVs” in the European Union.

Li recommended amending the existing rules to let lithium battery parts and EVs to be shipped by rail and the government could consider establishing dedicated lines for the transport of new electric vehicles to assist domestic manufacturers’ expansion into the global market.

Hong Kong-listed Geely launched a plan last year aiming to tap into the European market. In a monthly sales report for January, the company said its first batch of Lynk & Co 01 plug-in hybrid EVs is heading to Belgium by sea. Other startups including the high-profile Nio Inc. and Xpeng Inc. have also announced plans to enter the European market.

“With the increase in sales of new-energy vehicles in overseas markets such as Europe, China’s new-energy vehicles are expected to gain more growth opportunities overseas,” said Li’s proposal.

Contact reporter Lu Yutong (yutonglu@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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• Tesla will be the most profitable EV maker in 2025 by far, UBS analysts say. 
• Elon Musk’s automaker will realize $20 billion in operating profits that year, analysts estimate.
• Volkswagen will come in second, they say, but Tesla’s software gives it a major advantage.
• Visit the Business section of Insider for more stories.

Even as its competition in the electric-vehicle space heats up, Tesla will be its most profitable player for years to come, analysts at UBS said in a Wednesday report on the future of the auto industry. 

The team of analysts, led by Patrick Hummel, project that Tesla and Volkswagen will easily be the two largest producers of EVs by 2025, but that Elon Musk’s automaker will vastly outperform every other electric car company in terms of profits. 

They estimate that Tesla will sell 2.3 million EVs that year and turn an operating profit (OP) of $20 billion. Volkswagen, they project, will sell 2.6 million electric cars for a roughly $7 billion profit. The next closest competitor, by UBS’ estimation, will be General Motors with 800,000 EVs sold and approximately $2 billion in earnings from them. 

In 2020, Tesla’s first full year in the black, it sold just shy of 500,000 vehicles and netted $721 million. But roughly $1.6 billion of its $31.1 billion in revenue came from selling regulatory credits to competing automakers that need them to meet emissions standards. 

Tesla’s massive profitability advantage won’t come from its cars, but rather from its software offerings, the analysts said. 

Tesla is the only automaker that is able to beam out meaningful software updates to its vehicles, and its Autopilot driver-assistance system — which can be continually improved via over-the-air updates — is among the best the industry has to offer. An even more advanced automated-driving feature, “full self-driving” mode (FSD), is on the way. 

“We estimate that $9 billion of the $20 billion OP is directly related to the monetization of Tesla’s software capabilities (mainly full self-driving),” the analysts said. “VW should be well ahead of all other legacy OEMs, thanks to scale, but with a much smaller upside from software vs. Tesla.”

Although FSD isn’t capable of making cars fully autonomous yet, Tesla bulls say it has the potential to dramatically boost the company’s profits. For instance, Tesla could realize huge gains if it follows through on its promise to establish a network of autonomous taxis. 

In Wednesday’s report, the analysts predicted that in the long term, EV-focused companies like Tesla will continue to widen their technology lead over traditional automakers. Legacy manufacturers will lose market share as consumers choose more advanced products, ultimately leading to consolidation.

“All large global OEMs including VW have accelerated software/digitization investments, but it remains to be seen if their strategies succeed. Tech companies and EV pure-plays are potentially in a better position to be the leading innovators,” they said, adding, “Players with a fully functional autonomous driving stack own the key to financial success.”

Electric vehicles account for a tiny fraction of the cars on the road today, but electric utility AES Indiana wants to boost that number by offering a raft of rebates and other incentives to customers who drive them.

The utility, known until last month as Indianapolis Power & Light Co., filed a petition Tuesday with state regulators that would set up a wide-ranging package of rebates and incentives for people who buy electricity for rechargeable vehicles.

The utility also wants permission to pass along the cost of those incentives to all of its 500,000 customers in the state in the form of higher rates in coming years, whether or not they drive an electric vehicle.

The move comes as the nation is slow to warm up to electric vehicles, which accounted for less than 2% of the nation’s 146 million new, light-duty vehicle sales between 2011 and 2019. Whether people want them or not, automakers are rolling out more electric models in response to tougher pollution regulations and mandates to fight climate change.

Indiana sold 2,036 electric vehicles in 2018, accounting for 0.82% of all vehicles sold, according to EV Adoption, an industry blog.

AES Indiana is proposing that customers of electric vehicles who plug in during off-peak hours (generally between 10 p.m. and 9 a.m.) get a sharply lower rate for electricity. That rate would be 6 cents per kilowatt hours, a sizable discount to the standard electricity rate of 11 cents.

The utility also wants to offer rebates of up to $250 for an electric charger, which typically costs as much as $800, plus up to another $1,000 to install. It also wants to offer annual incentives of up to $150 for people who participate.

The utility says it would cost about $5.4 million to set up the program, which would cover vendor fees, customer incentives, and other costs. It wants to pass along those costs to all customers in the form of higher rates in coming years.

It’s anyone’s guess if AES Indiana will get a favorable reception from state regulators. Last year, state regulators rejected a similar proposal by Duke Energy Indiana.

Regulators said Duke Energy’s pitch was “essentially a customer-funded proposal to further a utility/company policy” that did not reflect at a similar scale Indiana’s policies on energy and electric vehicle development.

The Indiana Legislature has not adopted any statewide policy for encouraging the development of EV projects. A bill drafted this year by Rep. Ethan Manning, R-Denver, would have authorized rebates and incentives for electric vehicle pilot programs, but the legislation, House Bill 1385, died last month in committee without a vote.

AES Indiana said it hopes to boost EV usage in the Hoosier state in conjunction with Motor EV LLC, an electric car subscription service that is a subsidiary of AES Corp., the parent company of AES Indiana.

Motor EV offers monthly subscriptions on electric vehicles that range in price from $649 for a Chevrolet Bolt to $1,399 for a Tesla Model X.

FRANKFURT (Reuters) – The number of charging points for electric vehicles in Germany has increased by more than 10% in the past three months to reach 39,538, energy industry association BDEW said on Wednesday.

Policymakers in Europe’s biggest economy aim to cut emissions from transport by expanding the use of electric vehicles. Addressing drivers’ concerns about where they can be charged is seen as vital to encouraging wider usage.

“The expansion of public charging points continues unabated,” BDEW said, adding that government efforts to boost demand for electric vehicles and equipment were bearing fruit.

BDEW data showed one in seven of the 3,788 charging points added since December were fast-chargers, which now make up about 10% of the total around the country.

The expanding number of charge points would ease public concerns about using electric vehicles, even though 90% of charging was conducted at home or the workplace, BDEW said.

It said a national target of 1 million charging points by 2030 might not be achieved but that number might not be necessary if enough fast charging points were included in the rollout.

Germany launched a 3 billion euro ($3.6 billion) scheme in November to extend consumer rebates for buying electric vehicles and wallbox chargers, and supporting programmes for scrapping old vehicles and investing in innovation.

BDEW said the number of applications for subsidies to install private wallboxes had risen to 300,000.

($1 = 0.8275 euros)

Baidu has completed registration of a new smart electric vehicle company with domestic automaker Geely, a source from Baidu said on Tuesday. The tech giant is focusing more on non-search businesses such as autonomous driving in an attempt to diversify its revenue streams beyond online advertising sales.

The new firm, named Jidu Auto, currently has five board members including its chief executive officer Xia Yiping, according to the source who asked not to be named. The other three are from Baidu and one from Geely, the source said.

On Feb. 21, Xia, an industry veteran with extensive management experience in the fields of smart vehicles and mobility services, was named as Jidu Auto’s CEO. Xia’s appointment came a month after the pairing between Baidu and Geely was announced.

The tie-up with Geely marks a significant milestone in Baidu’s efforts to monetize its Apollo autonomous driving platform. According to the new venture, Baidu will provide its intelligent driving technology to Jidu Auto while Geely will oversee the manufacture of actual cars.

On the eve of China’s annual “Two Sessions”, which will commence in Beijing later this week, Baidu CEO Robin Li, also a member of the Chinese People’s Political Consultative Conference, submitted a proposal. Li’s proposal called for more government policies to accelerate the commercial use of self-driving cars as Beijing aims to build a smart transport system powered by technologies including artificial intelligence, big data and 5G.

Contact reporter Ding Yi (yiding@caixin.com)

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