Carvana has already made its father-son owners billionaires. What it hasn’t done is made a profit. All that and more in The Morning Shift for September 23, 2020.
That’s a joke. We all knew. But dealership lobbies across the country conspired to kill past shots at online-only sales state by state.
That wasn’t enough to stop the quarantine momentum of Carvana, which is now worth tens of billions, has made its founders billionaires, and still hasn’t turned a profit since 2017, as Bloomberg reports in an article titled “Father and son used-car sellers get $5B richer in one day:”
Carvana Co. has yet to post a post a quarterly profit since going public in 2017, but it’s made Ernest Garcia II and his son Ernest Garcia III two of the richest people in America.
The elder Garcia is the largest shareholder of Phoenix-based Carvana, the online retailer that sells cars out of massive vending machines. His son, Garcia III, is the company’s chief executive officer. Together they’re worth $21.6 billion, according to the Bloomberg Billionaires Index.
Shares of the company surged 32% as of 1:45 p.m. in New York on Tuesday after it projected record revenue and profit margins. The stock has rallied almost 150% this year as Americans have turned to buying household essentials, entertainment and, increasingly, used cars online.
So what’s different about Carvana? Well, there’s the pandemic, first and foremost. Let us not discount, however, Americans’ desire for novelty, per Bloomberg:
Carvana lets customers choose from more than 19,000 cars and complete purchases in as little as 10 minutes, according to its website. Buyers have the option of picking up their car at more than a dozen vending machines located around the country, using a giant coin. Its revenue doubled to $3.9 billion last year as it sold about 200,000 cars. It now sees a path to 2 million sales a year.
I think it’s the coins.
We’ll get to Tesla in a moment, but Geely was not one to miss out on a moment of good press, claiming to have a new architecture good for more than 700 km (430 miles) of range. It even got written up in the Financial Times:
Geely has developed a system for building electric cars that it plans to sell to rivals, aiming to provide one of a handful of global battery systems expected to dominate the industry in the coming decades.
The Chinese carmaker behind Volvo and Lotus is already in talks with several other car manufacturers to license the technology, including Mercedes-Benz owner Daimler, in which Geely holds a stake.
The new architecture offers higher driving ranges of up to 700km and lighter vehicles and can be used to make any size of car from two-seaters to large minibuses carrying a dozen people.
The article explains that this is a platform designed to be all-electric from the start rather than modified from an internal-combustion layout. Other than that we get no details on the tech.
Talks between Canadian auto workers and Ford have reached a tentative deal, as The Detroit News reports:
The union representing Canadian auto workers has reached a tentative three-year contract agreement with Ford Motor Co. of Canada to build five new electric vehicles at a factory near Toronto, securing the future of the plant and marking what union leaders say is the first major investment in electric vehicles in Canada.
The deal was reached early Tuesday after an all-night bargaining session, Unifor President Jerry Dias said at a news conference.
If we’re getting anything good these days, it’s from unions.
The moment I heard that Tesla’s new plant construction was going to involve cutting down some forest outside Berlin, I knew this was going to be a shitshow. Germans love their forests, almost as much as they love, uh, doing 97 mph in a 15-year-old Opel, or, hm, refusing to make a bun as long as the sausage. Go to any German event and you will know what I mean. In any case, here’s a roundup from Bloomberg:
Tesla’s push to build its first European car factory is facing a key test this week at a public hearing near Berlin, where local residents have filed hundreds of complaints about a range of issues from water usage to noise pollution.
Authorities in the state of Brandenburg, where Tesla is building a plant in Gruenheide to assemble as many as 500,000 cars a year, have received more than 400 objections to the project.
They center around the increase in truck traffic in the region, the hundreds of trees cleared to make way for the factory, and scarce water resources.
“My concerns are manifold,” local resident Frank Gersdorf said while lining up to get into the town hall for the start of the hearing on Wednesday. “The problem is that the end result of the proceedings, a green light for Tesla, looks like it’s already predetermined.”
Germans hate predetermined construction boondoggles almost as much as they hate eating fries with their hands and not those tiny little forks.
We have a ton of Battery Day coverage up on the site, including questions of whether or not it is right and proper for people to buy nine-second cars for $150,000. Check them out below:
Why do you think Carvana has gotten away with selling cars online while, say, Tesla has struggled state-to-state? What’s the Carvana trick?