EVDigest Weekly Newsletter

Good morning and welcome to the first issue of the EVDigest's weekly newsletter covering the business and policy of EVs.

In today's newsletter:- Headlines: Senate passes sweeping tax bill | California DMV goes after Tesla FSD - Earnings Season: Arrival, Canoo and XOS reporting this week - In Other News: Polestar analyst coverage, Fisker tries for credits, and more- The China Report: BYD's tear continues and CATL's Vice Chairman leaves - Last Week Today: EV news you might have missed

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Automakers Unhappy with Senate Bill EV Tax Credit Requirements

Automakers continue to lobby for changes to the EV tax credits included in The Inflation Reduction Act. The Alliance for Automotive Innovation, which represents Ford, General Motors and Toyota, claimed that 70% of EVs, plug-in hybrids and fuel-cell vehicles would be ineligible for the full $7,500 tax credit due to the sourcing requirements.

Per the bill, vehicles must be assembled in North America in order to be eligible for the credit. The bill also sets restrictions on Chinese-sourced materials and includes phased-in percentages of North American-sourced components for batteries for eligible vehicles.

Set to expire in 2032, the new EV credits would be limited to trucks, vans and SUVs under $80,000 and cars under $50,000. These price caps make the tax credits out of reach for certain emerging automakers, including Rivian. The bill also includes a $4,000 tax credit for used EVs and a provision for dealerships to claim credits.

The bill is set to go to the Democratic majority House on Friday, where it is expected to pass.

California DMV Says Tesla is Falsely Advertising FSD Features

A report from The LA Times reveals that the California DMV has accused Tesla of false advertising regarding the promotion of the company's autopilot and FSD technologies. The complaint was filed on July 28 with the Office of Administrative Hearings.

According to a DMV spokesperson, Tesla "will be required to advertise to consumers and better educate Tesla drivers about the capabilities of its ‘Autopilot’ and ‘Full Self-Driving’ features, including cautionary warnings regarding the limitations of the features, and for other actions as appropriate given the violations” if the action succeeds.

A response from Tesla, which has no media relations office, has not yet been made public (if it has responded at all).

Earnings Season

Earnings season continues with Canoo, Arrival and XOS reporting Q2 results this week:

  • $GOEV: Canoo will announce earnings following its announcement to provide at least 4,500 (and up to 10,000) of its electric vans to Walmart. The earnings call may shed light on the terms of the deal, which haven't been disclosed. Canoo vans are expected to enter service next year, and will be made at the company's Oklahoma factory.

  • $ARVL: More expected on the company's recent announcement that it has paused its bus and car programs in order to cut costs and focus on delivering its electric van. Arrival's restructuring plan targets a 30% reduction in spending across the business, potentially impacting 30% of employees globally. It hopes these moves will keep start of production of its van on track for the third quarter this year.

  • $XOS: XOS Trucks will announce earnings on the heels of production and delivery announcements. The company recently signed a dealership and delivery agreement with Gabrielli Truck Sales to target customers in New Jersey, Connecticut and New York. In good company, XOS also laid off staff in the second quarter to preserve cash. The layoffs impacted about 8% of the company's workforce as it focused on strategic hires.

In Other News

Polestar ($PSNY) gets analyst coverage and a big buy. With its SPAC merger and listing behind it, Polestar received initiating coverage from Citi's Italy Michaeli (Buy rating with $13 price target) and Deutsche Bank's Emmanuel Rosner (Hold rating with $10 price target). A 13-F filing from BNP Paribas, a major shareholder of many EV SPACs, filed last Thursday showed that the asset manager added 3.4 million shares in June.

Fisker ($FSR) works to qualify the Ocean. On track for a November 17th SOP, Fisker is now working to qualify Ocean reservation holders for the new EV tax credits included in The Inflation Reduction Act. The Ocean is contract manufactured by Magna in Graz, Austria, making it ineligible under the current language. The Fisker Ocean One launch edition vehicle has 5,000 reservation, with each reservation holder having committed $5,000.

Ford ($F) hits a new record for its BEV sales. July 2022 was a record month for Ford's all-electric vehicles sales, with 7,669 BEVs sold. That's up 169% over last year. EV sales still make up just 4% of the total volume, but Ford is hoping to change that with the ramp of its F-150 Lightning and E-Transit (4,469 and 3,534 sold to YTD, respectively).

GM ($GM) penalizes customers who flip. GM is asking dealers to help stop customers from acquiring and then flipping high-demand vehicles at extraordinary markups. Customers who do flip within 12 months of purchase will be barred from placing orders or future reservations. These terms apply to the "high-demand" vehicles, namely the Hummer EV, Cadillac Escalade-V and Corvette Z06.

The China Report

XPENG ranks no. 1 in emerging auto brands in China. The company delivered over 80,000 EVs in the first seven months of the year, a 108% YOY increase. Cumulative deliveries reached nearly 220,000 vehicles by the end of July 2022. XPENG also announced that it will open reservations in August for its flagship G9 SUV, followed by an official launch in September.

BYD's dominance continues. The Company announced a staggering 183% increase in YOY sales, with plug-in sales reaching 162,000 July alone. BEV sales for the month totaled 81,223, up 239% YOY. Over 408,000 BEVs were delivered in the first seven months of the year.

CATL's Vice Chairman is out. Huang Shilin resigned to pursue opportunities in battery charging and energy storage. The second-in-command after CATL founder and Chairman Zeng Yuqun, Huang holds an 10.6% stake in the company and has an estimated fortune worth $20 billion, according to Forbes. Huang will be replaced by Zhou Jia, who will assume one of the two Vice Chairman roles at the company.

Nio reportedly developing a smartphone. In addition to planning a new, lower-priced brand, Nio appears to have plans to launch a smartphone. CEO William Li suggested that the company was looking into smartphone development back in March, and may even have been inspired by Apple's (still rumored) entry into the automotive space. According to a Weibo post, the phone is expected to arrive sometime next year.

Last Week Today

  • Lucid discovers of production hell. Blaming supply chain chaos, Lucid cut its FY production target from 12k to 6k units. It was originally 20k. Steven David joined from Stellantis as SVP of Ops to help ramp manufacturing.

  • Fisker stays on course. In its earnings announcement, Fisker doubled down on its SOP date of Nov. 17. It reported $10k in revenue, $850M in cash and 5k Fisker Ocean One committed pre-orders. 55 prototypes have been built.

  • CATL debut delayed. Pelosi’s trip to Taiwan resulted in CATL pausing its planned announcement of an up to $5bn North American plant announcement. The proposed plant is meant to supply both Tesla and Ford.

  • Nikola acquires and delivers. A busy week for Nikola as it announced the $144m all-stock acquisition of Romeo Power in a battery play and the production and delivery of 50 and 48 Tre BEVs, respectively. Guidance was 50-60.

  • Nisan Leaf falls from the tree. Nisan’s is reportedly putting its pioneering (and only) EV on the chopping block. Later this year, Nissan will release the Ariya, its new crossover EV with up to 300 miles of range.

  • BMW sunsets the i3. The Nissan Leaf has company in the afterlife. After 250,000 deliveries, BMW discontinued the i3 in June and delivered the final 18 Galvanic Gold and black painted cars last week. Yet the i3 name lives on in China to represent an electric version of the 3-series.

  • NIO plans a new brand. A report suggests that NIO is planning to launch a third brand, priced as low as $14,820 (or RMB 100k – 200k). NIO also shared progress on its 1.3m-capacity NeoPark complex, which it started in April 2021. It delivered over 10,052 vehicles in July, a 22% YoY increase.

  • Tesla shareholder meeting or rock concert? A busy meeting for Musk and Tesla. Shareholders approved the 3:1 split. Cybertruck is targeted for Q1 23 with volume ramp by mid-year. Musk surprised if Tesla doesn’t make 100M vehicles in next decade.

  •  Vinfast goes on a hiring spree. Vinfast says it will hire an additional 8,000 employees to boost production at its plant in Vietnam as it works to deliver its first SUVs in the U.S. by the end of the year.