Auto File:  Is China’s EV Market Slowing Down?

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 Auto File:  Is China’s EV Market Slowing Down?
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Nov 16 - Joe White Global Autos Correspondent

Greetings from the Motor City! Would you believe Detroit is one of the 50 Best Places to visit in North America? No joke. The D is No. 10 on a list compiled by the website Should I tell them there’s snow on the ground and the sky is battleship gray this morning? Shhhh!!! Clearly, anything is possible these days. With that in mind, we will read the latest signs that China’s electric vehicle boom is slowing down, look at how the flurry of new electric vehicles is boosting an overlooked corner of the U.S. manufacturing economy and, yes, check in on the rock and roll party that is Elon Musk’s Twitter.

China’s EV market engine sputters

Mercedes-Benz shares fell nearly 7% Wednesday after the luxury automaker said it is cutting prices in China by up to 9% for its recently launched EQE and EQS electric vehicles. The move follows Tesla’s decision to cut prices by a similar percentage in China for its Model 3 and Model Y EVs. Other data point to a slowdown in China’s march toward an EV-dominated market.

Tesla cut waiting times to one week for Model 3 and Y vehicles in China. (Wait times to get a new Tesla are dropping in the United States as well, and Tesla’s website shows a number of “demo” and “connectivity trial” models for sale with low-mileage.)

Goldman Sachs rattled world lithium markets with a report forecasting that prices for the battery mineral will drop as Chinese EV demand starts falling short of supply next year. Chinese government subsidies juiced EV demand this year. Next year comes the payback, in Goldman’s view. At the same time, more capacity to produce EV battery minerals and cells is coming online. “With downstream overcapacity and slowing EV sales likely to become increasingly apparent over the course of the next year, we expect downward pressure on the lithium price to build on surplus cues particularly from H2-23 onward,” Goldman analysts wrote. China’s CN Media reported that lithium producers were slashing forward prices. A slowdown in Chinese EV demand could hit a wide range of companies, including international automakers such as Tesla, Mercedes, Volkswagen and General Motors, Chinese EV manufacturers such as BYD, Xpeng, Nio and Geely and big miners and battery makers who are pouring billions into new production operations. A caveat: The EV materials market is volatile and complex.

Fitch Solutions warns graphite - another important battery material - could be in short supply over the next four years,

Battery makers try to skirt China’s lithium fortress

Here’s another potential source of disruption in the global battery-industrial complex: The lithium-nickel-cobalt chemistries that currently dominate world EV battery production could be replaced. Companies are hammering away at R&D for batteries that don’t rely on the lithium, nickel and cobalt chemistries now dominated by Chinese manufacturers. Salt - sodium chloride - is one material getting a workout in the labs. Sulfur is another. Spoiler alert: Sodium and sulfur chemistries aren’t ready for mass production.

Asian battery makers - and lithium - will dominate the market in the meantime.

U.S. inventories hit a 17-month high

U.S. automakers are sitting on the heaviest supplies of unsold vehicles since May 2021, Cox Automotive reported Wednesday. Cox reckons there’s 49 days’ supply of unsold vehicles on hand in the U.S. market - still well below pre-pandemic, pre-semiconductor crunch levels.

Can the grid handle electric trucks?

A truck stop of the future built to recharge electric trucks could pull as much power from the electric grid as a small town, according to a report by National Grid, a utility operator. The study projected charging and grid infrastructure needs on a route from eastern Massachusetts to Western New York.

Automated braking cuts rear-enders in half

Automatic emergency braking systems cut front-to-rear crashes in half, according to a new study from a group formed by the U.S. Transportation Department and automakers. Lane departure warning systems reduced single vehicle crashes by 8%, the study found. The full study is here.

NHTSA falls behind on safety rules

U.S. auto safety regulators are under fire from a group of lawmakers for failing to deliver new safety standards for crash avoidance technologies and other new technology. NHTSA has missed Congressional deadlines for writing new rules, and is once again without an administrator.

EV semiconductor maker Wolfspeed raises $1.3 billion

Wolfspeed, a maker of silicon carbine semiconductors for EVs, is raising $1.3 billion, including $500 million from electric inverter manufacturer Borg Warner.

It’s Tool Time! North American companies that make special tools required to produce a vehicle are getting a strong lift from a surge in new electric vehicle programs and jitters about China. Money spent with North American manufacturing tooling companies will rise by an average of 13.4% year over year through 2025, lifting the total spent in 2025 to $8.3 billion, according to a new forecast by Harbour Results, a consulting firm. That would be a 45% increase over 2022, according to the forecast. North American production tooling makers are benefiting as automakers reconsider the wisdom of buying equipment from Chinese producers, said Laurie Harbour, CEO of Harbour Results. At the same time, Harbour said “every OEM is tearing apart Tesla vehicles” to study how the electric vehicle company is eliminating hundreds of individual parts by using large “mega-castings.” Long-term, mega-castings could mean fewer individual molds and dies. The money spent on average for electric vehicle production tooling is 30% less than for combustion vehicles, according to the Harbour Results study. Between now and 2025, Harbour said, a major driver of revenue for North American production tool makers will be new pickup trucks - combustion and electric - coming from the Detroit automakers.

Hardcore Twitter Mania!

Elon Musk is in a deep financial hole at Twitter, Breakingviews reckons. That’s the No. 1 thing to remember as you scan what’s below.

Musk told remaining Twitter staffers to sign up for “hardcore” work or leave.

Tesla investors are worried that Musk is being consumed by the morass at Twitter. One indicator: Tesla topics accounted for just 3% of Musk’s tweets since Nov. 1, down from an average of 16% over the previous eight months.

Musk is scheduled to testify today in a Delaware court in a suit challenging his $56 billion pay deal at Tesla, in part on grounds that he is a part-time CEO at the EV company.

GM’s drive to EV profits

The North American battery supply chain General Motors has built with some 20 different deals and investments will be central to the company’s efforts to turn a profit on EVs by mid-decade.

Significant federal subsidies under the Inflation Reduction Act are tied to domestic battery production. Add those to subsidies offered for new U.S. EV manufacturing operations, and red ink generated by costly batteries gets closer to black ink. GM CEO Mary Barra and other top executives are expected to get more specific near-term EV profit goals during an investor day tomorrow. The event will be streamed here.

To save jobs, Ford goes back to its past

Electric vehicles require 40% less labor to build, and that’s why Ford plans to build more of the parts for EVs in-house, CEO Jim Farley told an audience in Detroit. Ford is “going our Model A,” Farley said. The reference is to the vertically integrated system Henry Ford built at the sprawling Rouge production complex in Dearborn, Mich. to take iron ore in at one end and churn out cars at the other. Why not just cut the Ford manufacturing workforce by 40%? Union opposition and political backlash are two reasons. Farley cited a third: Capturing more of the value of building an EV through in-sourcing could help Ford control technology, optimize costs and make a profit. That’s how Tesla does it.

A sexy Prius?

Toyota unveiled the new look for its Prius hybrid car, and it looks like the Marian the Librarian of fuel-efficient vehicles is trying to spice things up. The new Prius represents Toyota’s latest effort to persuade consumers (and regulators) that gas-electric hybrids are a better way to cut CO2 output in the global mass market than selling expensive battery electric vehicles to a wealthy few. Kelley Blue Book reports hybrids are more popular among U.S. car shoppers than pure electric vehicles.

Jaguar Land Rover chief steps down

Thierry Bollore has resigned as CEO of Jaguar Land Rover.

Jay Leno suffers burns while working in his garage

Jay Leno said he suffered “serious burns” to his face after a car he was working on burst into flames. “Just need a week or two to get back on my feet,” Leno said in a statement. The former impresario of the “Tonight Show” hosts the CNBC series “Jay Leno’s Garage,” which is centered around his expansive collection of classic automobiles.

Essential Reading

What it’s like behind the wheel of a “self-driving” Tesla

What’s hot at the Los Angeles Auto Show. - Automotive News

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