Tesla Investors Are Pissed at Musk for Focusing Solely on Twitter

Plus, Ford adds another shift to the F-150 Lightning assembly line, Mercedes-Benz ramps up for electric car production, and more.

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Tesla investors are left wondering who’s really running the electric vehicle maker as the stock continues to fall, Ford is adding another crew to a Michigan plant to bolster EV pickup truck output, and Tesla is falling well short of Musk’s end-of-year sales projections. All that and more in The Morning Shift for Wednesday, December 14, 2022.

1st Gear: Tesla Investors Think Musk Should Stop Obsessing Over Twitter

Tesla’s stock continues to fall, and now individual investors are getting worried over Elon Musk’s focus on his newest acquisition, Twitter. The situation has left some wondering who’s actually making the decisions at the Texas-based electric vehicle maker.

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Gary Black, a managing partner of Future Fund LLC, which owns about $50 million in Tesla stock, recently tweeted, “There is no TSLA CEO today.” That’s an extremely glaring indictment of a company’s CEO. From the Wall Street Journal:

Mr. Black voiced frustration after another sharp selloff in Tesla’s stock Monday. Shares in the world’s largest car company by market value fell more than 6% in Monday trading after a tumultuous weekend for Mr. Musk on Twitter, including the billionaire taking aim at the company’s former head of trust and safety; calling for the prosecution of top U.S. government medical adviser Anthony Fauci; and criticizing people who offer their pronouns without being asked.

Mr. Black said, “The market voted today that the $TSLA brand has been negatively impacted by the Twitter drama. Where before EV buyers were proud to drive their Teslas to their friends or show off Teslas in their driveways, now the Twitter controversy is hurting Tesla’s brand equity.”

Ross Gerber, a longtime backer of Tesla, on Monday tweeted a question directed at Tesla’s board of directors. “Who is running tesla day to day during this critical time for the company,” Mr. Gerber said.

He separately tweeted, “There is nothing wrong at tesla at all. Other than the CEO working at another company, certainly tesla deserves a focused ceo. It would be helpful to know what Elon’s plans are.”

Mr. Musk, at a trial about his Tesla compensation package last month, said he had been spending most of his time of late focusing on Twitter, which he acquired for $44 billion. “I expect to reduce my time at Twitter and find somebody else to run Twitter over time,” he testified.

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Shares of Tesla stock are already down over 50 percent this year alone, which has caused Musk to lose his status as the world’s richest person.

On top of all this, it’s reported that the automaker’s brand image has taken a big hit in recent months. WSJ reports that self-identifying Democrats have especially soured on the brand since Musk’s Twitter takeover. Crazy, I know.

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2nd Gear: Ford is Cranking Out F-150 Lightnings

Ford is adding a third crew to its assembly plant near Detroit in order to boost production of the F-150 Lightning electric pickup truck. All in all, the move for a third shift adds 250 jobs to the factory in Rouge.

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The company had previously said it was targeting a production number around 150,000 Lightnings per year by the fall of 2023. From Reuters:

Later on Tuesday, Ted Cannis, head of Ford’s commercial vehicle business, told reporters that the unit was seeing “huge demand.”

Ford expects electric vehicle subsidies available under the U.S. Inflation Reduction Act could propel even more demand for the company’s electric trucks and vans, Cannis said. But many businesses and fleet management companies are still unsure if they qualify for those subsidies, he said.

Ford is the U.S. market share leader for commercial vehicles, which includes the Lightning and an electric version of its Transit van.

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Reuters reports the automaker’s fleet and commercial division, Ford Pro, is targeting annual revenue of $45 billion by 2025. That would be a 67 percent increase over 2019.

3rd Gear: Elon Was Wrong About His Tesla Sales Predictions

Tesla is running out of time to reach CEO Elon Musk’s forecast that the automaker would have an “epic” end of the year in 2022. The issue seems to come down to demand. From Bloomberg:

The ebullient outlook the CEO offered during the carmaker’s last earnings call has given way to price and production cuts in China. In the US, Tesla is offering consumers something previously unthinkable: a $3,750 incentive to take delivery of certain vehicles now, rather than wait for the new year.

“Tesla increasingly appears to have a demand issue,” Toni Sacconaghi, a Bernstein analyst with the equivalent of a sell rating on the stock, wrote in a report last week. He believes Tesla will need to slash prices further to stimulate demand in China, plus make permanent cuts to the cost of models in the US to qualify for perks tucked in the Inflation Reduction Act.

[...]

It’s still the dominant seller of electric cars globally and carried just eight days’ worth of vehicles in inventory at the end of September. No other auto manufacturer is as well-positioned to take advantage of the IRA’s tax credits for battery cell manufacturing and locally assembled EVs.

But in order to meet its goal to grow deliveries by 50% annually over several years — an objective Tesla already has said it will fall just short of in 2022 — it looks increasingly likely that Musk will have to make some compromises. Cutting the sticker prices of models in the lineup even as battery costs creep up may shrink profit margins.

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Musk is assuring people that this isn’t all Tesla’s fault, nor his own. He has frequently brought up headwinds beyond Tesla’s control. Some of the issues, outlined by Bloomberg, include China’s slowing property market, Europe’s energy crisis, and the U.S. Federal Reserve’s interest rate hike.

The first sign of trouble for Tesla this quarter came when the company reported that its production exceeded deliveries by more than 22,000 vehicles during the prior three months. CFO Zachary Kirkhorn warned during the Oct. 19 earnings call that investors should expect another “gap” at the end of the year, with more cars manufactured and still in transit as the quarter comes to an end.

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Back in April, Musk said that Tesla would produce over 1.5 million vehicles in 2022, but it looks like the company will fall well short of that goal. Through the first three quarters of the year, the company built just a tick under 930,000 cars, so it would have to build an additional 570,000 in the fourth quarter alone to hit that goal.

4th Gear: Mercedes-Benz is Beefing Up Its EV Powertrain Network

Mercedes-Benz has just laid out its plan (costing north of $1 billion) to get its global production network ready for widespread electric powertrain manufacturing starting in 2024. That manufacturing will include battery assembly, electric drive units and axles. From Reuters:

Plants in Kamenz and Untertuerkheim in Germany as well as Beijing, which already assemble batteries for electric and hybrid models, will assemble batteries for models on the upcoming MMA and MB.EA platforms, with another battery assembly site in Koelleda pending support from regional government.

Untertuerkheim, Beijing and Sebes in Romania will build electric drive units for cars on the new platforms, with Hamburg and Untertuerkheim to remain the lead plants for assembling electric axles and components.

“There is no site that is not included,” production chief Joerg Burzer said on a press call.

Management and employee representatives reached an agreement in June on shifting European car plants towards EVs, making Sindelfingen the home for high-end vehicles on the AMG.EA platform, Bremen and Kecskemet in Hungary for core luxury models and Rastatt and Kecskemet for entry-level vehicles.

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Mercedes has set up its car plants in a way that will allow it to build both internal-combustion vehicles and EVs on the same production line, but Burzer says that building batteries and motors on the same line is a lot more complex than constructing conventional vehicles.

Reuters reports that many of the component-making plants will still carry on making parts for ICE vehicles as long as there is a demand for them. Mercedes reportedly plans to have all-electric sales by the start of the next decade “where market conditions allow.”

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5th Gear: The Management Shakeup at VW Group

Volkswagen Group has appointed a number of new bosses for the company’s quality and design divisions in a reported effort to speed up decision-making and improve coordination between VW, Audi and Porsche. From Automotive News:

Effective Jan. 1, Michael Neumayer will be in charge of VW Group’s quality management division while retaining his position as Audi’s head of quality. He will replace Frank Welsch, as VW Group’s quality chief. Welsch is retiring after nearly 30 years of service with VW.

Also on Jan. 1, Michael Mauer will become VW Group design chief, while also retaining the same role at Porsche. He will replace Klaus Zyciora who is leaving the automaker.

The latest management shuffle follows a leadership restructuring announced by new VW Group CEO Oliver Blume in September.

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This move means all key functions have been assigned to the group’s leading brands. Basically, Volkswagen (the brand, not the parent company) will oversee group production and procurement. Audi is now in charge of sales and quality, and Porsche is taking the lead on design and development.

The new structure will lead to clearer priority setting and faster implementation amid the sweeping changes being experienced by the industry, VW said.

Managing the key functions of quality and design via the Audi and Porsche brands also will allow VW Group to intensify its customer focus, Blume said in the statement.

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It must be a difficult task to operate an automaker with the sheer size of VW Group. I do not envy these people.

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