We May Have Already Reached 'Peak Tesla'

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Tesla isn’t doing so hot, the United Automobile Workers is going after opioid addiction, Fiat Chrysler is mulling mergers, and much more for The Morning Shift of Monday, March 25, 2019.


1st Gear: Tesla’s Raising Some Prices, and Could Soon Be in a World of Hurt

CEO Elon Musk tweeted some news yesterday, as he does.

It’s a bit hard to know what to make of this, since “inventory cars” aren’t cars that people customize and order online, they are cars that already made, sitting in a lot somewhere. But in any case, The New York Times said Friday that we already might have reached Peak Tesla, with the automaker in the midst of a sales slump.

Recently compiled data on new-car registrations from a large portion of the United States seems to offer further support for that view. According to the Dominion Cross-Sell Report, a compilation drawn from state motor vehicle records, registrations of new Tesla vehicles fell significantly from January to February in the 23 states the report covers. The states include California, which accounts for about half of Tesla’s sales, as well as Texas, Florida and Washington, three other big markets for the carmaker.

Last month, 6,252 Teslas were registered with motor vehicle agencies in the 23 states, compared with 23,310 in January and a monthly average of 13,000 to 17,000 in the fourth quarter. The totals tend to reflect a lag because cars are often not registered until the month after purchase.

Tesla, in its defense, said that the data wasn’t very meaningful.

A Tesla spokesman said a single month of vehicle registrations did not necessarily reflect the company’s delivery totals. He said registrations in individual states can fluctuate significantly from month to month because the automaker delivers batches of cars to different areas at different times.

But as a place holder for Tesla’s official sales figures, such data is already having an impact. Jeffrey Osborne, an analyst at Cowen & Company, issued a research note on Friday saying the firm was lowering its Tesla price target to $180, from $200, “to reflect both state-government and third-party data that suggests deliveries during the quarter will be weaker than our prior expectations even with the typical end-of-quarter frantic push.”


Tesla has put a lot of expectations on the boring new Model Y, and, well, at some point I begin to wonder whether this is the beginning of the end.

2nd Gear: Fiat Chrysler Is Open to a Merger

Its chairman, John Elkann, has been holding talks with Korean and Chinese automakers and Peugeot, according to the Financial Times. Fiat Chrysler is in a weird space, the smallest of the Big Three, and has less firepower when it comes to taking on the a future that includes autonomous vehicles and full electrification, so a merger would make sense. (Also relevant: Renault’s partnership with Nissan and Mitsubishi.)

The push by American-Italian Mr Elkann, 42, one of Europe’s most high-profile industrialists whose family’s holding company also controls US insurer Partner Re, football club Juventus and the largest stakeholding in The Economist, comes less than a year after the death of his longstanding chief executive Sergio Marchionne and amid a slowdown in the key Chinese market for its Maserati cars.

Peugeot of France has been among potential suitors with whom Mr Elkann has discussed a deal recently, but nothing is imminent, said several people familiar with the discussions. Mr Agnelli has also held talks with Korean and Chinese automakers, according to people familiar with those talks.

Mr Elkann and Mr Marchionne, prior to his death last summer, had made clear for several years their openness to a merger as they sought to confront pressures of tech disruption and consumer saturation in FCA’s home car markets.


FCA is a weird company, but, sort of like Mazda, it does its niches really, really well, like Jeep. Long-term, though, that might not be enough, which Elkann seems to realize. Peugeot seems to make the most sense, at least for Peugeot.

The appeal for Peugeot of a deal with FCA is strong, giving the French company access to the highly profitable US market and a significantly enlarged position in the booming sport utility vehicle segment.

Peugeot however holds less appeal for FCA, in part because it is so heavily exposed to the stagnating European volume market.

Both groups are also considered technological laggards in developing electric vehicles.


I think this is all probably less urgent for FCA than it seems, as our electric and autonomous future is still likely decades off. But company executives report to shareholders, not bloggers.

3rd Gear: Henrik Fisker Remains Ever Optimistic

The car designer behind the Fisker Karma—which Justin Bieber tastelessly drove—the BMW Z8, and Aston Martin DB9 is hopeful about his future, and that of his company, Fisker Inc. Fisker said in an interview with Bloomberg last week that he’ll essentially be taking the Polestar route, producing a $40,000 electric SUV to take on Tesla.

Fisker says that “lessons learned” since then indicate it’s better to sell a more versatile, more affordable SUV before moving on to a ritzy sedan.

“This time we wanted to go directly to a volume segment where we can have a long-term business where you can actually make money,” he says, noting that while sedans have likely peaked, SUVs remain the fastest-growing market in the world. By 2022 more than 65 percent of new-vehicle sales will be trucks and SUVs. “It’s about partnering in the right places, not spending hundreds of millions where you don’t have to. Now I have this experience and lessons learned and have figured out what is the best way to do this.”


The car certainly sounds intriguing.

The as-yet-unnamed SUV would come from a new corporate entity called Fisker Inc. Fisker says it will use an 80-kilowatt-hour lithium-ion battery pack, two electric motors, and optional four-wheel drive for a range of 300 miles on one charge. It will come with variants, including one tentatively called the “California Edition” that sheds its walls and top to open up like a Jeep—but does so at the push of a button. A drivable prototype will be finished by the end of 2019, he says.


Fisker’s sort of an Elon Musk type, but with a bit more cred. The last time I talked to him, he sounded many of the same notes. Drivable prototype by the end of 2019? We’ll see!

4th Gear: Lotus Is Gearing Up for Brexit

Will Brexit ever happen? We don’t really know. But companies have to prepare for the possibility regardless, which, in Lotus’s case, means stockpiling a bunch of parts. That’s in case Britain opts to leave the European Union with no trade deals in place, which might mean a bunch of tariffs on imported goods but would definitely mean chaos.


From Automotive News:

“We’re going to get our heads down and deliver it,” [CEO Phil Popham] said during a visit to Automotive News here last week. “In talking with our owners, in talking with our board, [Brexit] doesn’t change the long term. We all think a deal will get done at some point, whatever that is, and it may be a different world, but there’ll be some normality that comes back again.”

That plan starts with a new sports car and extends to include a new platform, possibly new body types and probably a second factory.


Interestingly, Popham sees Volvo as a role model:

Volvo can be looked at as a model for the brand’s future.

“I would suggest they’re more Swedish now than they were eight or nine years ago,” when Geely bought Volvo from Ford, Popham said. “The DNA of the brand, the personality of the brand hasn’t changed. What has changed is the infrastructure in China and in Europe and the investment they’ve made in fantastic product, good-quality product. They’re expanding their range. They’ve more than doubled their sales in that time. That’s a success story for me. We’re different — our brand is different — but that sort of model is what we should see with Lotus.”


I’m a bit skeptical a hard Brexit will occur—possibly idiotically, I think everyone will come to their senses eventually—but Lotus is doing things a lot of British companies are doing, and should be doing, which is preparing for the worst.

5th Gear: Mitsubishi Is Doing ... All Right?

No one really knows what the hell Mitsubishi is doing these days, as its neither here nor there when it comes to relevance, its alliance with Renault and Nissan being one of the few things that keeps it in the conversation. But according to Automotive News, all of that hasn’t hurt sales.

In the U.S., the brand is riding a six-year streak of sales increases and a second consecutive year of sales surpassing 100,000 vehicles. Last year’s volume of 118,074, boosted by the introduction of the new Eclipse Cross crossover, was good for a 14 percent improvement. It was the brand’s best sales year since 2007.

Meanwhile, Mitsubishi is making headway on a pair of key priorities underscored by Mitsubishi Motors North America CEO Fred Diaz, who took over in April 2018: making dealerships more responsive to customers and making headquarters more responsive to dealer concerns as it prepares to expand its retail network.

The company finished third among nonpremium brands and 12th overall in the latest J.D. Power Customer Service Index Study, extending a run of improvements in dealer service.


Who is buying all these Mitsus?! God bless you, whoever you are.

Revers: Danica Patrick Is Alive


Neutral: Will Tesla Make It?

I feel like I ask the question once a week, and I probably do, but do you think Tesla will make it long-term? It’s still in startup mode, despite being a public company, in that it still does not have a reliable revenue stream or consistent profitability. Will it ever get there? I honestly don’t know!


Hayden Lorell


Full disclosure: I don’t care for Tesla. I’ve driven a Model S and X both in p95D and P100D trims respectively. They’re impressive cars from an American “lets go from stoplight to stoplight really quickly”.

But other than that? Meh.

With other manufacturers getting their shit together and introducing a bunch of new EV models, some of which are arguably better value than a Model 3 or Y, it begs the question why people would keep buying them. But Tesla is one hell of a hype machine. Literally the Fyre festival of auto manufacturers and lord knows how this will play out.

Whether they make it or not? Tesla will go down in the history books as one of the most influential auto makers of the 21st century. They put electric vehicles back on the map as a regular source of transportation, after nearly 100 year hiatus. And they fully deserve credit for giving the established aristocracy of auto makers a good kick in the ass and say “hey you know that technology that you guys said you couldn’t make commercially viable? yea......check this shit out”. We obviously won’t know for many years the impact that the EV boom has had on our society and our planet, but I think we will be able to look back and give Tesla a large amount of credit for whatever the future of mobility looks like.