Lucid Group Inc – TheNewsHub

The auto industry is pulling back on its ‘capital junkie’ tendencies after unprecedented spending on EVs, self-driving

suimt — Mon, 25 Nov 2024 11:00:01 +0000

Electric vehicle start-up Lucid on Sept. 28, 2021 said production of its first cars for customers has started at its factory in in Casa Grande, Arizona.

Lucid

DETROIT — The auto industry has an addiction. It’s a “capital junkie” that’s been on a yearslong binge of unprecedented spending on all-electric and autonomous vehicles. And now, it’s waking up from the bender and entering rehab.

Automakers from Detroit to Japan and Germany are attempting to lower costs and reduce expenses amid economic concerns, billions of dollars wasted on self-driving vehicles and a prolonged, if not uncertain, return on investment of EVs amid slower-than-expected adoption.

Those issues come in addition to weakening consumer demand, higher commodity costs and some Wall Street analysts sounding the alarm about global automotive sales and profits peaking, as China’s industry continues to expand.

General Motors and Ford Motor are cutting billion in fixed costs, including laying off thousands of workers, while other automakers such as Nissan Motor, Volkswagen Group and Chrysler parent Stellantis are taking even more drastic measures to reduce headcounts and trim spending.

“Western [automakers] are increasingly focusing on capital efficiency, meaning likely lower spending, more collaboration, and restructured EV portfolios to prioritize profits,” Morgan Stanley analyst Adam Jonas said in a September investor note.

The automotive industry is a global web of companies producing tens of thousands of parts to assemble a new vehicle. It requires significant capital investment every time an automaker launches a new product or updates current models, causing a spending ripple effect throughout the global supply chain.

But in recent years, automakers have put such investments in overdrive with self-driving and electric vehicles. Companies invested tens of billions of dollars into the technologies, most with little to no short- to midterm returns on their investments.

Research and development costs, as well as capital spending for the top 25 automotive companies, have increased 33% from roughly $200 billion in 2015 to $266 billion in 2023, according to auto consulting firm AlixPartners.

Such costs for GM have increased roughly 62% from 2015 to 2023, to $20.6 billion (excluding sold European operations), despite a 38% drop in global sales during that time. That compares to other increases during that timeframe of 42% for Volkswagen; 37% for Toyota Motor; 27% for Fiat Chrysler’s successor Stellantis; and 18% for Ford.

EV startups Rivian Automotive and Lucid Group have burned through $16 billion and $8.8 billion, respectively, in free cash flow since 2022. Both companies are attempting to ramp up vehicle production and narrow their losses.

It’s not the first time the auto industry has blown through money to then attempt quickly to cut costs. These kinds of periods happen in cyclical industries such as autos, but could the spending have potentially been avoided — or at least alleviated — this time around?

“Confessions of a Capital Junkie.” The April 2015 report highlighted the industry’s massive capital spending on overlapping or niche products that Marchionne was convinced could be solved through consolidation and shared capital spending.

Fiat Chrysler CEO Sergio Marchionne

Brendan McDermid | Reuters

The report, made by Marchionne amid failed merger attempts with Fiat Chrysler that included GM, has re-emerged as automakers cut costs and announce tie-ups between companies such as Volkswagen and Rivian Automotive as well as GM and Hyundai Motor to share costs.

“We believe the concepts within this deck [are] highly insightful and as relevant today as ever,” Jonas said in a November 2023 investor note invoking Marchionne’s junkie manifesto, which he has continued to reference.

Jonas points out that the average S&P 500 company spends its market cap in capex plus research and development in about 50 years.

GM and Ford spend their market cap in 1.9 and 2.6 years, respectively. Only Volkswagen, at 1.8 years, was lower than GM among traditional automakers. Toyota was the best suited, at 14.4 years.

As of September, Ford and GM ranked 402 and 403 out of 406 non-financials companies in the S&P 500 regarding their capital spend compared to their market cap.

Former Ford executive Joe Hinrichs brought up Marchionne’s 2015 manifesto during an automotive conference this summer, condemning the industry for its capital waste.

“The auto industry is famous for destroying capital. That’s a bad thing,” said Hinrichs, now CEO of railroad company CSX Corp. “If you waste billions of dollars on autonomous vehicles or billions of dollars on electrification, you should be held accountable. That’s shareholder money.”

Most capital spending by automakers isn’t wasted, but the industry isn’t as efficient as other sectors, with minimal return on invested capital.

The ROIC of traditional, mainstream automakers is roughly seven or less, while tech companies such as Google parent Alphabet are at roughly 22, according to FactSet.

“We’ve seen major CapEx spend with extended ROIs, given the slowdown … and low utilization in manufacturing plants,” said Rebecca Evans, a principal at management consulting firm Roland Berger. “We have been looking extensively at cost.”

In particular, automakers have not seen ROIC on autonomous vehicles and EVs.

GM continues to invest in its embattled autonomous vehicle unit Cruise despite already spending more than $10 billion on it since acquiring the company in 2016.

Ford also has wasted billions of dollars on warranty and recall costs as well as strategy shifts. It recently canceled production of a three-row electric SUV after significant development cost the automaker roughly $1.9 billion in expenses and cash expenditures. That included $400 million for the write-down of certain product-specific manufacturing assets.

told CNBC in October, citing the company’s cost-cutting task force. “We’re working assiduously on that.”

Lucid Motors CEO Peter Rawlinson poses at the Nasdaq MarketSite as Lucid Motors (Nasdaq: LCID) begins trading on the Nasdaq stock exchange after completing its business combination with Churchill Capital Corp IV in New York City, New York, July 26, 2021.

Andrew Kelly | Reuters

Volkswagen is in the midst of a massive cost-cutting program that uncharacteristically involves layoffs and potential plans to shutter plants in its home country of Germany.

VW Chairman and CEO Oliver Blume said in an interview published earlier this month that such actions are needed to remedy years of ongoing problems at the German carmaker, which reportedly expects to spend 900 million euros ($975.06 million) to execute the turnaround.

“The weak market demand in Europe and significantly lower earnings from China reveal decades of structural problems at VW,” Blume told German paper Bild am Sonntag, according to Reuters.

The rise of Chinese automakers has been eating away at the profits of traditional automakers such as VW, GM and others that were once dominant players in China – the world’s largest car market that has quickly moved from being a consumer of vehicles to exporter.

Nissan, Honda and BMW, among others, also blamed declines in China for missing earnings expectations or restructuring needs. GM, which has raked in billions from China, is restructuring operations there, including attempting to renegotiate with its major Chinese partner, SAIC.

Stock Chart IconStock chart icon

Stocks of GM, Ford and Chrysler parent Stellantis in 2024.

While losing ground in China, GM has been among the most aggressive in spending on EVs and self-driving vehicles. But, to its credit, remains highly profitable and had roughly $27 billion of free cash flow at the end of the third quarter. It remains one of the standouts in balancing investment and cost-cutting efforts, while remaining profitable.

GM CFO Paul Jacobson on Wednesday reconfirmed plans for the automaker to level capex to around $11 billion going forward.

“What we’ve established over the last couple of years, I think, is a pretty disciplined track record of capital expenditures,” Jacobson said during a Barclays conference. “You want to be in an organization that has more ideas than it can fund. Our job is to allocate that and prioritize it.”

invested billions of dollars into the company, while Rivian has teamed up with Volkswagen for an up to $5.8 billion software deal, which is expected to close by the end of this year.

A provided image of Oliver Blume, CEO of Volkswagen Group and RJ Scaringe, founder and CEO of Rivian, as the companies announce joint venture plans on June 25, 2024.

Courtesy: Business Wire

GM and Hyundai this summer entered into an agreement to explore “future collaboration across key strategic areas” in an effort to reduce capital spending and increase efficiencies. The companies have not announced any actions since then.

Marchionne argued such partnerships were effective but not enough going forward. He said companies could save billions of dollars annually in capital by sharing costs involving commoditized parts such as transmissions, standardized safety equipment and advanced driver-assistance systems.

“It’s fundamentally immoral to allow for that waste to continue unchecked,” Marchionne said in the three-hour conference call with global industry analysts in 2015. “Something needs to give. It cannot continue like this.”

Mary Barra, chair and CEO of General Motors, and Euisun Chung, executive chair of Hyundai Motor Group, during the signing of an agreement between the two companies to explore future collaboration across key strategic areas.

Courtesy image

Some things have changed, but there have not been large systemic shifts. Major automotive industry mergers and joint ventures don’t always result in long-term successes. Many fall apart before producing significant results.

Both VW and Rivian have experienced such failures with Ford in recent years. Rivian and the Detroit automaker canceled plans to codevelop EVs two years after Ford took a 12% stake in the startup in 2019. Around that time, VW also announced a $2.6 billion deal with Ford for autonomous vehicles that didn’t pan out.

through the merger of Fiat Chrysler and French automaker PSA Groupe in January 2021 — has proven that not all mergers enacted to produce scale guarantee a profitable company. After a record profit last year, the company has struggled in 2024.

While Stellantis CEO Carlos Tavares has touted achieving roughly $9 billion in cost reductions following the merger, the automaker has mismanaged the U.S. market — its prime cash generator — with a lack of investment in new or updated products, historically high prices and extreme cost-cutting measures.

Carlos Tavares, chief executive officer of Stellantis NV, speaks during a news conference at the Fiat automobile manufacturing plant in Kragujevac, Serbia, on Monday, July 22, 2024.

Oliver Bunic | Bloomberg | Getty Images

When asked by Bernstein analyst Daniel Roeska about Stellantis not performing to “capital junkie” standards despite the massive merger, Tavares said the company achieved the scale needed to be more efficient but it’s still working on a product blitz and correcting mistakes in North America.

Tavares said Stellantis remains more profitable than Fiat Chrysler and PSA were on their own. He also cited impacts of “regulatory chaos,” a reference to U.S. and Europe standards for EVs and emissions.

“Stellantis is the concrete expression of the scale that you need to have to use the resources of your shareholders in a meaningful way. So, that’s what we did. FCA was too small,” Tavares said when discussing first half results in July. “PSA was too small. Stellantis has the right scale. That’s an answer that I’m sure Sergio would recognize.”

Wall Street analysts explain why Tesla is booming postelection while other EV makers struggle

Aseem — Mon, 18 Nov 2024 16:29:30 +0000

Lucid slightly tops Wall Street's third-quarter expectations amid widening losses

suimt — Thu, 07 Nov 2024 22:02:15 +0000

Brand new Lucid electric cars sit parked in front of a Lucid Studio showroom in San Francisco on May 24, 2024.

Justin Sullivan | Getty Images

Lucid Group slightly beat Wall Street’s third-quarter expectations as the electric carmaker cuts costs ahead of plans to begin consumer production of a new SUV by the end of this year.

Here is how the company performed in the quarter, compared with average estimates compiled by LSEG:

Loss per share: 28 cents adjusted vs. a loss of 30 cents expected
Revenue: $200 million vs. $198 million expected

Shares of Lucid increased more than 8% during after-hours trading Thursday. The stock closed regular trading at $2.22 per share, up 4.2%.

The company’s net loss for the third quarter widened to $992.5 million. That compares to a loss of $630.9 million a year earlier.

Lucid CEO Peter Rawlinson described the quarter as a “landmark” for the company, citing record deliveries of 2,781 units as well as cost-cutting measures. He also noted that the company hit financial and production targets.

The automaker’s costs of $324.4 million in research and development and $233.6 million in selling, general and administrative during the third quarter were up 40.1% and 23.1%, respectively, compared with a year earlier. Others, such as cost of revenue and restructuring, notably declined from a year earlier.

The company reaffirmed plans to produce roughly 9,000 vehicles this year, which would mark a 6.8% increase compared to 8,428 units in 2023.

Lucid said it had $5.16 billion in total liquidity to end the quarter. That excludes a $1.75 billion stock offering and capital raise last month that surprised many investors.

Lucid, Rivian and Tesla stocks in 2024.

Lucid’s stock has been under pressure this year amid widening losses, slower-than-expected sales and significant cash burn. Shares of the company are off by about 45% this year, including an 18% decline — its worst daily loss since December 2021 — following the recent capital raise.

Rawlinson previously told CNBC the public offering of nearly 262.5 million shares of its common stock was a timely, strategic business decision to ensure the electric vehicle company has enough capital for its ongoing operations and growth plans.

The company reiterated Thursday that its current funds now secure its capital into 2026, ahead of it launching a new midsize platform later that year.

Lucid is currently in a highly capital-intensive investment period as it expands its sole U.S. factory in Arizona; builds a second plant in Saudi Arabia; prepares to launch its second product, an SUV called Gravity; develops its next-generation powertrain; and builds out its retail and service network.

The company during its second-quarter earnings call said capital expenditures this year were expected to be $1.3 billion, down from previous guidance of $1.5 billion amid cost-cutting actions.

Gagan Dhingra, Lucid interim chief financial officer and principal accounting officer, said cost cuts are occurring across the automaker: “We are not leaving any corner. It’s across the board.”

Lucid reported third-quarter results Thursday afternoon after opening up orders for its upcoming Gravity SUV that is expected to begin consumer production by the end of this year.

What Trump's election to the White House could mean for EVs

suimt — Wed, 06 Nov 2024 21:19:02 +0000

Production is now set to begin at the former Detroit-Hamtramck assembly plant, less than two years after GM announced the massive $2.2 billion investment to fully renovate the facility to build a variety of all-electric trucks and SUVs.

Photo by Jeffrey Sauger for General Motors

DETROIT – President-elect Donald Trump’s victory over Vice President Kamala Harris is expected to send the U.S. electric vehicle industry into a period of uncertainty.

Republicans, led by the former president, have largely condemned EVs, claiming they are being forced upon consumers. Trump has vowed to roll back or eliminate many vehicle emissions standards under the Environmental Protection Agency as well as incentives to promote production and adoption of the vehicles such as the Biden administration’s Inflation Reduction Act of 2022.

Auto industry insiders and other officials have said it would be difficult for Trump to completely gut the IRA, but he could defund or limit EV subsidies through executive orders or other policy actions.

Several people said they would expect Trump to target federal consumer credits that currently offer up to $7,500 for the purchase of an EV rather than target industrial production credits for companies.

“The IRA will probably have some adjustments … I don’t think the IRA will go away,” David Rubenstein, co-founder and co-chairman of The Carlyle Group investment firm, told CNBC on Wednesday. “It has some really good things in it that I think Republicans and Democrats will like.”

Many of the investments into EV production under the IRA having been taking place in Republican states such as Ohio, South Carolina and Georgia.

Automotive executives are also quick to say they don’t base investment decisions on who holds the White House, but there are natural adjustments with new administrations.

“Anytime there’s an administration change, it’s an interesting time for the industry because we have to go through new policies and regulations and have to bring new people up to speed on who we are and what we do,” David Christ, group vice president and general manager of the Toyota Division in North America, said Wednesday during an Automotive Press Association event near Detroit. “Administrations sometimes change every four years, so we don’t really do a lot of modifying the strategy.”

General Motors, Ford Motor and Chrysler parent Stellantis — would be the biggest winners of a second Trump term and Republican control of Congress.

“We see F and GM as the main beneficiaries from the Trump administration,” BofA Securities analyst John Murphy said in a Wednesday investor note. “The current environmental regime would pressure the core business of legacy [automakers, trucks,] to decarbonize by the end of the decade while shifting quickly to an EV portfolio.”

GM’s aspirations for an “all-electric future” and profitable EV business in the near term are highly reliant on federal tax credits.

Analysts had indicated EV startups such as Rivian Automotive and Lucid Group would benefit more with a Democratic win.

Toyota could also be a winner if EV regulations are reduced or eliminated, as the Japanese automaker has been slow to invest in all-electric models compared to hybrid vehicles.

Shares of GM and Ford closed Wednesday up 2.5% and 5.6%, respectively. Stock prices for Toyota and Stellantis, which is experiencing significant problems in the U.S., were essentially level. Lucid and Rivian were each down, 5.3% and 8.3%, respectively.

Shares of automakers after President-elect Donald Trump’s victory.

An outlier is U.S. electric vehicle leader Tesla. CEO Elon Musk heavily campaigned in swing states for Trump, who has discussed making the billionaire a government efficiency czar.

Shares of Tesla soared Wednesday by 15% and earlier notched a new 52-week high.

“We see RIVN and LCID challenged, which is largely reflected in the stocks,” Murphy said. “We don’t expect meaningful issues for TSLA since it has already reached profitability and will introduce more entry level products that could be attractive for the larger public.”

Several automakers did not immediately return request for comment after NBC News and several other media outlets called the election for Trump.

Others such as the Detroit automakers and Hyundai Motor congratulated Trump and the newly elected officials across all levels of government.

“We look forward to working with the new Administration and Congress on policies that strengthen the U.S. automotive industry, which supports 9.7 million American jobs and drives more than $1 trillion into the economy each year,” Ford said.

“We congratulate and look forward to working with the President-elect, Congress, and all elected officials to ensure that the U.S. continues to lead the world in technology and innovation, to the benefit of American workers and consumers alike,” GM said.

“Advanced Clean Cars II” regulations of 2022 call for 35% of 2026 model year vehicles, which will begin to be introduced next year, to be zero-emission vehicles. Battery-electric, fuel cell and, to an extent, plug-in hybrid electric vehicles qualify as zero emission.

Before the election, automotive officials said regardless of who won the White House, many automakers will push for the mandates to be postponed.

The California Air Resources Board reports 12 states and Washington, D.C., have adopted the rules; however, roughly half of them did so starting with the 2027 model year. They are part of CARB’s Advanced Clean Cars regulations that require 100% of new vehicle sales in the state of California to be zero-emission models by 2035.

EVs made up 10% or more of local market shares in just 11 states and the District of Columbia to begin this year, according to the Alliance for Automotive Innovation, a trade association and lobby group that represents most major automakers operating in the U.S.

Auto executives and industry experts also expect Trump could roll back or freeze the Corporate Average Fuel Economy, or CAFE, standards for model years 2027-2031.

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Harris vs. Trump: Auto insiders weigh in on both candidates, top issues

suimt — Tue, 29 Oct 2024 17:00:01 +0000

New Ford F-150 trucks go through the assembly line at the Ford Dearborn Plant on April 11, 2024 in Dearborn, Michigan.

Bill Pugliano | Getty Images

DETROIT — The automotive industry has become a crucial topic during the 2024 presidential election as Michigan — home of the Motor City and 1.1 million automotive jobs — remains a critical swing state.

Vice President Kamala Harris, former President Donald Trump, and their running mates and supporters have made Michigan a second home in recent weeks as the campaigns attempt to win over undecided voters in the Great Lakes State.

Since 2008, whichever candidate has won the state has moved into the White House, including Trump in 2016 and President Joe Biden in 2020.

“Michigan’s 16 electoral votes have helped thrust Autos into the debate. Between Trump’s hyperactive and contradictory statements and Harris’ quieter views lay deep differences but also convergence,” Jefferies analyst Philippe Houchois wrote in an investor note Monday.

While major automakers and suppliers have shied away from publicly endorsing either presidential candidate, executives and lobbyists from several companies spoke to CNBC on the condition of anonymity to discuss how they’re preparing for each candidate, as well as a likely divided Congress.

Electric vehicles, trade, tariffs, China, emissions regulations and labor are among the top issues automakers are monitoring, according to industry executives and policy experts.

union President Shawn Fain who has been a combative foe to automakers, is concerning to some.

US Vice President and Democratic presidential nominee Kamala Harris greets union workers as she tours an International Union of Painters and Allied Trades training facility in Macomb, Michigan, on October 28, 2024.

Drew Angerer | AFP | Getty Images

If Trump wins reelection, automotive industry officials largely expect that he’ll return to policies and actions from his first presidential term, but those stances could be potentially more aggressive than they were before.

If he’s in office, insiders expect he would roll back or eliminate tightening federal emissions and fuel economy like he did during his first term; renew a battle between California and other states that set their own standards; and potentially enact funding changes to the Biden administration’s key Inflation Reduction Act of 2022 legislation.

Officials said it would be difficult for Trump to completely gut the IRA, but he could defund or limit EV subsidies through executive orders or other policy actions.

Automakers, suppliers and other auto-related companies are preparing for both outcomes as well as a split in Congress, insiders said.

Republican presidential nominee and former U.S. President Donald Trump speaks as he visits a campaign office in Hamtramck, Michigan, U.S. October 18, 2024.

Brian Snyder | Reuters

“There’s no perfect scenario. Both candidates offer some opportunities and challenges,” said a leading lobbyist and public policy expert for a major automaker. “Everyone in our business has to look at the gamut of scenarios.”

Some Wall Street analysts speculate legacy automakers — specifically the “Detroit” companies General Motors, Ford Motor and Chrysler parent Stellantis — would benefit most with Trump and Republican control of Congress.

EV startups such as Rivian Automotive and Lucid Group would benefit more with a Democratic win, largely due to expected plans involving EVs and fuel economy requirements. That’s despite Tesla CEO Elon Musk‘s continued support for Trump.

“Advanced Clean Cars II” regulations of 2022 call for 35% of 2026 model year vehicles, which will begin to be introduced next year, to be zero-emission vehicles. Battery-electric, fuel cell and, to an extent, plug-in hybrid electric vehicles qualify as zero emission.

The California Air Resources Board reports 12 states and Washington, D.C., have adopted the rules; however, roughly half have them starting for the 2027 model year. They are part of CARB’s Advanced Clean Cars regulations that include mandating 100% of new vehicle sales be zero-emission models by 2035.

Only 11 states and the District of Columbia had an EV market share above 10% to begin this year, according to the Alliance for Automotive Innovation, a trade association and lobby group that represents most major automakers operating in the U.S.

Officials said regardless of who wins the White House, many automakers will push for the CARB mandates to be postponed. They also would expect Trump to roll back or freeze the Corporate Average Fuel Economy, or CAFE, standards for model years 2027-2031.

Several automotive insiders said they expect Harris would work on a middle ground for such standard with the automakers, much like Biden, to an extent, has done.

talking point for Democrats four years ago to a rallying call for Republicans.

Republicans, led by Trump, have largely condemned EVs, saying that they are being forced upon consumers and that they will ruin the U.S. automotive industry. Trump has vowed to roll back or eliminate many vehicle emissions standards under the Environmental Protection Agency and incentives to promote production and adoption of the vehicles.

In contrast, Democrats, including Harris, have historically supported EVs and related incentives.

Harris hasn’t been as vocal about backing EVs lately amid slower-than-expected consumer adoption of the vehicles and consumer pushback. She has said she does not support an EV mandate such as the Zero-Emission Vehicles Act of 2019, which she co-sponsored during her time as a senator, that would have required automakers to sell only electrified vehicles by 2040.

Lucid Group CEO Peter Rawlinson told CNBC on Monday that regardless of which presidential candidate wins the election, he believes America’s EV industry is still in its infancy and needs to continue to be “nurtured.”

Rawlinson, whose company has the most efficient EVs on sale, also argues the IRA should favor not just the size of a battery, like it currently does, but the efficiency of the vehicles.

“That’s effectively incentivizing electron-guzzling EVs,” he said. “It actually incentivized to put more batteries in and be less efficient.”

negotiated under Trump’s first term in office and took effect in 2020. However, the former president and Democrats have said it needs to be improved to better support American automotive production.

While Trump touted the deal when it was renegotiated, Harris was one of 10 U.S. senators who voted against USMCA at the time.

GM CEO Mary Barra last week said the automaker is “paying careful attention” to the election, including how potential changes in trade and tariffs could impact the company.

“We have and we’ll continue to engage constructively with the policymaking process regardless of the election outcome. When you look at the number of jobs created in the U.S., even with some vehicles that are manufactured outside, a lot of them are in our partners from an ally perspective,” she said. “It’s a very complex situation.”

Tariffs are central to Trump’s plan for the auto industry. He has said he would be willing to increase tariffs dramatically to prevent Chinese automakers from importing cars into the U.S. from factories in Mexico.

Chinese automakers are not currently doing that, but are expected to attempt to use that method of importing in the years ahead, as they expand sales and build localized production plants in the country.

Harris has reportedly called Trump’s tariff proposals “a sales tax on the American people.” The vice president hasn’t outlined any specific changes she’d make to the current tariff structure if elected, including on Biden’s announcement of raising the tariff rate on EVs imported from China from 25% to 100%.

Non-U.S.-based automakers, which together account for 48% of U.S. production and 52% of USMCA production, look more positively leveraged to Harris winning, according to Jefferies.

speech at the Democratic National Convention.

The UAW arguably has more political clout than any time in a generation, led by Fain and his top advisors who he brought in from outside the union’s ranks. But there has been a divide in the UAW and other unions regarding the historically Democratic-backed organizations and their members.

While the Teamsters declined to endorse a candidate due to a divide in the union, UAW leaders not only endorsed Harris but have been a driving force for her election campaign in Michigan and other states.

The UAW last week said internal polling showed increasingly “strong support for Kamala Harris over Donald Trump, with Harris’ lead over Trump surging in the last month.”

Meanwhile, Trump and Fain have consistently criticized one another over the past year, as the union attempts to organize as many auto plants as possible following major contract gains won during negotiations last year with the traditional Detroit automakers.

Blue-collar workers such as UAW members were viewed as crucial supporters for Trump’s first presidential election over Democratic candidate Hillary Clinton in 2016.

— CNBC’s Michael Bloom contributed to this report.

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Volkswagen's Scout Motors reveals first EVs as it shifts to include plug-in hybrids

suimt — Fri, 25 Oct 2024 00:49:43 +0000

Scout Terra pickup truck and Scout Traveler SUV concepts

Scout

NASHVILLE, Tenn. — Volkswagen-backed Scout Motors revealed its first electric vehicles Thursday and announced plans for the brand to expand its lineup to include an emerging type of plug-in hybrid electric vehicle in addition to EV models.

Scout, a former American vehicle brand from 1961 to 1980, was expected to exclusively offer EVs in a bid for the German automaker to expand its presence in the U.S. However, slower-than-expected adoption of EVs and higher costs have led it to change course and include extended-range electric vehicles, or EREVs.

“Being a startup that moves quickly, we can pivot,” Scout CEO Scott Keogh, a longtime auto executive who previously led VW’s operations in the U.S., told CNBC. “The pivot that we made a number of months ago into offering range extender definitely was a smart play.”

EREVs are basically a type of plug-in hybrid electric vehicle. They include EV motors and battery cells, as well as a traditional internal combustion engine to power the vehicle’s electric components when the battery loses its energy. The engine essentially acts as a generator to power the EV components when needed.

Scout Terra pickup truck concept

Keogh said Scout added EREVs to better protect the brand from any market volatility amid less-than-expected consumer demand for EVs.

“We think electrification is the future. Range extender sets it up as an EV car, so it introduces people to electrification, yet it has a super smart, let’s say, ‘backup plan,'” he said during an interview Thursday. “It will drive like an EV.”

He said Scout has no plans to offer a traditional, non-electric vehicle with only an internal combustion engine.

The company’s first vehicles — a full-size pickup truck and large SUV — will cover about 40% of the highly profitable U.S. sales market.

Keogh said the company targets to be profitable on an operational basis within the first full calendar year after initial production of the vehicles, which will be built at a $2 billion plant that’s under construction in South Carolina.

“If you look at these profit pools, these two areas, from this size pickup truck to this sized SUV … these are the largest profit pools in the world,” Keogh said.

Scout Traveler SUV concept

Scout

Being profitable during that timeframe would be quite a success, as current EV startups such as Rivian Automotive and Lucid Group lose tens of thousands of dollars on each vehicle they produce after several years.

Meanwhile, Keogh said an announced software deal between VW and Rivian will not impact Scout’s operations. He described the $5 billion software deal, which includes the establishment of a joint venture, as an “exciting opportunity” for Scout.

“It’s good for scaling. It’s good for technology. It’s good for everything,” Keogh said.

Scout’s South Carolina plant is planned to have a production capacity of 200,000 vehicles. Scout expects to use batteries — the most expensive part of an electric vehicle — from VW’s joint venture battery cell manufacturer in Canada.

The company opened reservations for the vehicles Thursday night on its website. Scout plans to sell the vehicles directly to consumers instead of through a traditional franchised dealer network like VW does in the U.S.

North American Charging Standard, an 800-volt architecture with up to 350-kilowatt charging capability, and will be capable of bi-directional charging that will allow the vehicle to act as a generator.

Toyota Land Cruiser. It’s larger than Jeep’s well-known Wrangler, which is currently available as a plug-in hybrid electric vehicle.

The truck is a full-size pickup — a segment currently dominated by Ford, General Motors and Stellantis’ Ram brand. But the electric pickup market where Scout will compete remains a developing market.

Automakers such as GM and Ford rushed to release all-electric pickup trucks early in this decade to compete against several EV startups, many of which never materialized, as well as Tesla. Stellantis is expected to release all-electric and EREV full-size pickups by next year.

Scout Traveler SUV concept

But after rushing the vehicles to market, sales slowed. Much like the overall EV industry, the large vehicles went from commanding significant price premiums to being highly incentivized.

Overall, this electric “truck” market, including the SUVs, accounted for nearly 58,000 vehicles sold during the first half of this year, according to estimates from Motor Intelligence. That’s less than 1% of the roughly 7.9 million light-duty new vehicles sold during that time in the U.S., but a 35% quarterly increase from the first to the second quarter, according to the data.

Keogh believes Scout can differentiate itself in the market with its products, lower pricing and brand appeal. Additional Scout products are expected to follow in the years ahead, Keogh said.

“Can we consider some point in the future sizing down? Absolutely,” he said. “You want to throw the dart at the best place first. And I think we’ve done that between these two vehicles.”

Lucid CEO says Wall Street misinterpreted $1.75 billion capital raise

suimt — Mon, 21 Oct 2024 20:21:18 +0000

Lucid Motors CEO Peter Rawlinson poses at the Nasdaq MarketSite as Lucid Motors (Nasdaq: LCID) begins trading on the Nasdaq stock exchange after completing its business combination with Churchill Capital Corp IV in New York City, New York, July 26, 2021.

Andrew Kelly | Reuters

DETROIT — Investors misinterpreted a public offering on Wednesday by Lucid Group that raised roughly $1.75 billion — and led to the stock’s worst daily performance in nearly three years, CEO Peter Rawlinson told CNBC.

Rawlinson said the raise, which included a public offering of nearly 262.5 million shares of its common stock, was a timely, strategic business decision to ensure the electric vehicle company has enough capital for its ongoing operations and growth plans. It also should alleviate any potential worries that the company would need to issue a “going concern” disclosure regarding its operations, he said.

“We’d signaled that we had a cash runway to Q4 next year. As a Nasdaq company, we have to avoid a going concern. And a going concern is issued within 12 months of your financial runway,” Rawlinson said Monday from the company’s newly opened offices in suburban Detroit. “So, it should have been no surprise to anybody.”

But Wall Street analysts largely took a negative view of the move due to its timing. Several said the raise was unnecessary or came earlier than expected for the company, which had $5.16 billion of total liquidity to end the third quarter. That included more than $4 billion in cash, cash equivalents and investment balances.

The announced transactions also come two months after Lucid said Saudi Arabia’s Public Investment Fund had agreed to supply the company with $1.5 billion in cash, as the EV maker looks to add new models to its product line.

“A cap raise was slightly larger and earlier than we had expected,” Morgan Stanley analyst Adam Jonas wrote following the raise being announced Wednesday after markets closed.

Lucid’s stock

RBC Capital Markets analyst Tom Narayan shared similar thoughts: “We suspect that investors will wonder why LCID is raising more capital just after it secured the PIF capital in August, and at currently depressed share price levels. We expect Lucid shares to trade sharply lower as a result,” he wrote in an investor note Wednesday night.

Rawlinson on Monday reiterated that the company would raise capital “opportunistically.” He said the company’s current funds now secure its capital into 2026, ahead of it launching a new midsize platform later that year.

“This is exactly as expected. It is exactly to the playbook. It should have come as zero surprise to anyone,” he said. “And why did I choose this moment? Because I didn’t want to string it out to the end, because I didn’t have to.”

Shares of Lucid declined about 18% on Thursday after the announcement — marking the worst daily decline for the company since December 2021.

Rawlinson said Lucid is currently in a highly capital-intensive investment period as it expands its sole U.S. factory in Arizona; builds a second plant in Saudi Arabia; prepares to launch its second product, an SUV called Gravity; develops its next-generation powertrain; and builds out its retail and service network.

“Those five categories are the long-term investment for the future that we’re making now,” Rawlinson said. “Have we got to cut costs with every car we’re making? Absolutely.”

Wednesday’s announcement was made in conjunction with plans for Lucid’s majority stockholder and affiliate of PIF, Ayar Third Investment Co., to purchase more than 374.7 million shares of common stock from Lucid to maintain its roughly 59% ownership of the company.

Such a transaction is called pro rata, which allows an investor such as PIF to participate in future rounds of financing and retain its ownership stake. It’s something the PIF has routinely done with Lucid.

Individual investors were likely concerned by share dilution following the action, but Rawlinson said the continued support of the PIF should be viewed as a positive.

“I think it’s been misinterpreted and misreported,” Rawlinson said. “The norm is to go pro rata. If we didn’t go pro rata, it surely would be a signal that the PIF were losing faith in us.”

Lucid last week said the public offering was expected to raise about $1.67 billion, with a 30-day option for underwriter BofA Securities to purchase up to nearly 39.37 million additional shares of Lucid’s common stock as well.

Lucid has reported record deliveries in 2024 of its current model, an all-electric sedan called Air. The company expects to produce 9,000 vehicles this year. Production of its Gravity SUV is expected to start by the end of this year.

However, Lucid’s sales and financial performance have not scaled as quickly as expected following higher costs, slower-than-expected demand for EVs, and marketing and awareness problems for the company.