Elon Musk’s will-he won’t-he Twitter saga is giving Wall Street indigestion, Volkswagen’s volume-seller EV is taking root in most of the world except the States, and Stellantis wants to ask that you hang on for the electric Ram. All that and more in this Friday edition of The Morning Shift for April 15, 2022.
1st Gear: Twitter Is Just Too Far
Tesla’s stock price ebbs and flows on Elon Musk’s every tweet, and the guy sure loves to tweet. Unsurprisingly, the phenomenon is exacerbated when Musk tweets about what he plans to do with his money. The latest thing he might do is buy Twitter, because something about free speech.
His shareholders would rather he didn’t. From Reuters:
The idea of Musk working to close that deal, possibly by selling even more of his Tesla stake, and then overseeing yet another company has Tesla observers worried.
“Elon is distracted. He’s got a lot of things going on. He’s involved in a lot of different endeavors,” said Gene Munster, managing partner at venture capital firm Loup Ventures, which owns shares in Tesla. “This is a one to three months headwind to Tesla’s stock.”
Shares of Tesla, the world’s most valuable automaker, fell more than 9% since he disclosed his more than 9% stake in Twitter last Monday. On Thursday, Tesla’s stock fell 3.7%.
While Musk has talked about potential changes he would like to see Twitter make, Tesla faces its own challenges - the need to boost production at new assembly plants in Berlin and Texas, analysts said. Meanwhile, Tesla’s Shanghai factory - its largest - has been idled by the COVID-19 crackdown in China.
“Musk is Tesla, and investors don’t want to see Tesla lose that leadership edge,” Roth Capital Partners analyst Craig Irwin said.
Musk may be Tesla, but he’s also said that he hates running it. And he does indeed have a full plate, between the cars, the rockets, the tunnels and the brain implants. It’s somewhat surprising that it’s taken the possibility of adding Twitter to the mix to finally convince analysts that Musk’s attention swings dramatically. Even then, the arguably larger concern is how he’d pay for it. Again, Reuters:
Wells Fargo analyst Colin Langan said Musk, who holds over a 9% stake in Twitter, would need $39 billion to complete the deal and the sale of more Tesla shares could pressure the stock further.
Tesla executives may pledge their company stock as collateral for loans, but the maximum loan does not exceed 25% of the total value of the pledged stock, according to company policy.
This means that he could borrow $42.5 billion by pledging all of his shares worth $170 billion. But he already pledged over half of his Tesla shares as collateral to secure certain personal indebtedness, according to a Tesla filing last year.
Musk said on Thursday he has the assets to buy Twitter, but has not provided details.
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For what it’s worth, Musk’s offer is “pretty low,” in the words of Bloomberg’s Matt Levine — so maybe this all fizzles out. That’s surely what Tesla stock holders are hoping for, but that’ll only buy them time until the next distraction.
2nd Gear: Volkswagen’s EV Sales Jumped, Mostly Not Here
The Volkswagen Group — so we’re including Porsche, Audi and the like in this — is patting itself on the back after a strong showing for electric vehicles in the first quarter of 2022. It sold 65 percent more EVs at the start of this year as it did in the same period in 2021, off the back of the new ID.4 which wasn’t really out at the time. More details, courtesy Carscoops:
Sales were led by the ID.4, of which VW sold 30,300. Out of a total of 99,100 EVs sold globally, the crossover made up 30.5 percent of all-electric sales for all of the automaking giant’s brands.
It was followed by the VW ID.3, of which it sold 13,000; the Audi Q4 e-tron, of which 10,700 were sold; the Audi e-tron, with 10,300 sales; and the Porsche Taycan, of which 9,500 were sold in all.
Unsurprisingly, its weakest market for EVs is North America, where it moved just 7,900 electric cars in the first three months of 2022. It’s little surprise why the company is taking its sweet time bringing more of its ID range to this side of the Atlantic.
3rd Gear: BMW Is Banging This Drum Hard
BMW wants to be known as the German luxury brand that’s a little more conservative, some would say realistic, about the industry-wide EV push. The latest comments from CEO Oliver Zipse indicate the company’s attitude isn’t changing. From Reuters:
“When you look at the technology coming out, the EV push, we must be careful because at the same time, you increase dependency on very few countries,” Zipse said at a roundtable in New York, highlighting that the supply of raw materials for batteries was controlled mostly by China.
“If someone cannot buy an EV for some reason but needs a car, would you rather propose he continues to drive his old car forever? If you are not selling combustion engines anymore, someone else will,” said Zipse.
Zipse’s predecessor reportedly lost his job in 2019 because he wasn’t bullish enough on electric cars. Things are a little different now than they were then — OK, a lot different. The squeeze on raw materials is less of a threat hanging out in the horizon and very much here now. Zipse is also right to recognize that what works for Europe probably won’t for North America, at least right away — something Volkswagen’s aforementioned earnings report backs up. BMW has every reason to talk a different tune, but for how long?
4th Gear: It’s Coming
That would be the electric Ram 1500. We’ll be treated to a concept of it at some point this year, per Automotive News, ahead of a 2024 release.
The Stellantis truck brand has shown a few images of what its first battery-electric pickup could look like, but it’s preparing to take the next step with a live concept ahead of the truck’s slated 2024 release, said Ram CEO Mike Koval.
Koval said the company is consulting the public about the electric pickup’s design through its Ram Real Talk Tour, a series of conversations with consumers at various events. The brand says these interactions will help it better understand what the next generation of Ram pickups and vans “must do to meet their needs.”
Koval revealed last summer that a battery-electric 1500 was in the works, adding another contestant to the burgeoning electric pickup space.
Stellantis has dragged its feet with EVs relative to its Detroit rivals, which has in turn forced it to tease cars like the Chrysler Airflow, this Ram and all-electric muscle cars years before they’re ready. It’s an unenviable position to be in, especially as the F-150 Lightning is expected to start making deliveries before the end of this month. But the Ram brand is also very strong, so when it does show up, it’ll probably still be a hit — along with whatever Jeep does.
5th Gear: Acura Was In China?
Acura is exiting China — a country it only sold vehicles in for six years — in 2023, per CarNewsChina. The brand’s presence in the region was the result of a joint venture with domestic automaker GAC, and it has ended quietly after failing to catch steam against products from German luxury marques.
Acura only entered the Chinese market in 2016 with the first model, the CDX, charged with establishing the upmarket brand. The China-only TLX-L sedan, now discontinued, and the RDX, joined the line-up in later years but sales have been sluggish.
Annual sales peaked in 2019 when 14,701 vehicles found a home, but plummeted to just 6,554 last year.
A two-model brand in recent years, Acura’s range faced stiff competition from popular German rivals. The compact CDX SUV went head-to-head with the vastly more popular BMW X1 and Audi Q3. Its larger RDX sibling fared no better, needing to overcome the omnipresent Mercedes-Benz GLC and BMW X3.
It probably doesn’t help that Acura — and, to a certain extent, Honda — has little to offer in the EV realm, and those happen to be quite popular in the region. CarNewsChina notes the door’s open for a potential second wind, once the brand makes up for that. Honda’s nascent partnership with GM to utilize its Ultium EV tech will probably help that along.
Today is the 110th anniversary of the Titanic’s sinking; it struck the iceberg on April 14 just before midnight, and went down less than three hours later. The answer of why it sank is more complex than you might think, so check out Adrian Covert’s classic Boatlopnik if you’re curious.
Neutral: Are You Happy Now?
They’re doing a manual Supra, finally. I for one am happy now. Because I’ve driven the Supra and while it was swell, a third pedal is how you make it swell-er. It’s also nice to see companies capitulate to public opinion every now and again.