Weekly Newsletter Issue #5

Good morning and welcome back from the holiday weekend.

In today's newsletter:⚡ Headlines: California's Grid in Crisis | GM Offers Buick Buyout 🚨 In Other News: Ford and Kia EV sales up, Porsche IPO, Tesla FSD hike🇨🇳 The China Report: NIO AR glasses, BYD takes #2 spot, CATL in Europe🗓️ Last Week Today: EV news you might have missed

California Grid Crisis Has State Telling EV Owners Not to Charge

Just one week after California approved a plan to end the sale of new gasoline-powered cars by 2035, the grid operator is now telling EV owners not to charge their vehicles.

The request from the California Independent System Operator (ISO), which manages the flow of the state's electricity and operates a wholesale energy market, comes amid a record heat wave across the state. Relentless triple-digit temperatures have driven power use on the state's grid to an all-time high and now threaten rolling blackouts.

Today's peak demand is expected to be over 51 gigawatts (one gigawatt can power 750,000 California homes), breaking the previous record set in 2006.

With the EV mandate now set, the current energy crisis calls into question the California grid's ability to meet the task. And this in a state with some of the country's highest electricity prices.

GM Offers to Buy Out Buick Dealers Ahead of EV Transition

General Motors is offering buyouts to all ~2,000 U.S. dealers who do not want to make the requirement investments to sell EVs. The offer was made on a call to the Buick dealer network on Friday. Buick will stop selling ICE models in 2024, when its first EV is scheduled to arrive.

Buick has only 13 standalone stores in the U.S. The vast majority have dual showrooms with GMC. This means that nearly all dealers who accept a buyout will continue to sell other GM brands.

GM used a similar approach with its Cadillac dealers in 2020, eliminating approximately one-third of its 900 U.S. dealerships. Buyouts were on average in the rage of $300,000 to $500,000. Cadillac dealers that are staying with the brand through the EV transition will be expected to invest about $200,000 on chargers, tooling and training.

🚨 In Other News 🚨

Ford ($F) EV sales up fourfold in August. The company cited interest in the new F-150 Lightning truck, which is being sold, on average, eight days after arriving on dealer lots. Meanwhile, Ford sold 3,120 Mach-E vehicles in August, up 115% year-over-year. Overall U.S. sales for Ford were up 27% from a year ago as it recovered from production shortages.

Kia America reports surge in EV sales. August sales of EV and hybrids models were up 151% over last year. Kia has sold over 16,000 of its all-electric EV6s in the U.S. so far this year. The company is also preparing to launch its flagship EV9, a 300-mile range electric SUV, which will go on sale in the first quarter of 2023. Kia plans to debut eight EVs in the U.S. by 2029.

Porsche plans new EVs with IPO in sight. Porsche will introduce a Panamera EV to compete with the AMG EQS, Lucid Air and Tesla Plaid. It also plans to electrify the Macan and match the combustion engine version's current production levels, which stand at 80,000 per year. Porsche currently sells the all-electric Taycan, and delivered 18,900 units in the first half of 2022. The IPO of the Porsche brand could have the company listed as early as late September or early October at a valuation between $60 billion - $85 billion.

Tesla ($TSLA) raises full-self driving price. As promised, Tesla has raised the price of FSD to $15,000 as it rolls out FSD Beta 10.69. The capability is also available on a subscription basis for $199 per month. Tesla is currently in hot water with the California DMV over accusations of false advertising for its Autopilot and FSD features.

Faraday Future ($FFIE) employees in revolt. Around 140 employees signed a letter dated August 23 saying they believe board executive chair Sue Swenson is pushing the company towards bankruptcy. The employees asked the board to make public findings from an ongoing investigation of whistleblower reports concerning four directors. In a business update, Faraday pushed start of production for the FF91 back to Q4 2022.

🇨🇳 The China Report 🇨🇳

NIO ($NIO) launches AR Glasses. The NIO Air AR Glasses, developed with AR company Nreal, are now available for owners of the ET7, ES7 and ET5. The new AR glasses are part of NIO's PanoCinema ecosystem, and are controlled by the Air Smart Ring. The launch comes on the heels of news that pre-orders for the ET5 stand at nearly 200,000 and that NIO users in China have collectively driven 5 billion kilometers.

BYD ($BYDDY) leaps over LG Energy to take #2 Battery Spot. In July, BYD supplied 6.4 gigawatt-hours of batteries, behind CATL's 13.3 GWh. CATL holds a 35% market share. BYD's battery capacity will primarily go to the company's own vehicles in 2023, and expects to significantly grow the proportion sent to other automakers starting in 2024. Yesterday, BYD announced it had sold 1 million passenger vehicles this year.

CATL makes progress on second European plant. Meanwhile, CATL marked the formal launch of its second European plant with the signing of a real estate preliminary sale and purchase agreement with the city of Debrecen, Hungary. The company expects to invest 7.34 billion euros in the 100 GWh battery plant, which will be situated near major customers including Mercedes, BMW, Stellantis and Volkswagen.

Owner outrage as Li Auto ($LI) discontinues Li ONE. Li Auto will stop production of the Li ONE in October in order to make way for the Li L8, the company's large premium smart SUV scheduled to launch in November. The company is offering a RMB 20,000 (~$2,900) discount to those who upgrade. Li Auto delivered 4,571 vehicles in August, down 56% from July.

Huawei, SERES-backed AITO breaks 10k monthly deliveries, unveils Model Y Challenger. The AITO brand delivered 10,045 vehicles in August, up 39% over July. The brand sells two range-extender electric vehicles (REEVs), the M5 and M7. At the M7 launch event last week, AITO revealed that it had opened over 700 user and experience centers in 121 cities. It aims to have more than 1,200 by the end of the year. Huawei unveiled the BEV version of the AITO M5 at its new product launch today in a shot at the Tesla Model Y.

China August wholesale sales of passenger NEVs expected to break records. The China Passenger Car Association estimated NEV wholesale sales to be 625,000 units. This is despite the halving of purchase taxes on mainstream ICE vehicles. More data is expected to be released later in the week.

Last Week Today

• Polestar ($PSNY) revenue surges but operating loss widens. The EV maker posted revenues of $1.04 billion for the first six months, up 95%. But operating losses more than doubled. It expects to deliver 50k vehicles for the full year.

• Canoo ($GOEV) loses manufacturing chief. The departure of John Mocny comes as Canoo plans to outsource production of its EVs for Walmart. Mocny joins a wave of exec departures, including the former CHRO and former Tesla exec Rich Schmidt.

• Lucid ($LCID) makes a dash for cash. The EV maker announced an $8 billion universal shelf to build more working capital as it works to ramp production. Lucid isn’t alone – Nikola $NKLA said it will sell up to $400m in an ATM offering.

• Buffett’s Berkshire trims stake in BYD ($BYDDY). Berkshire Hathaway reduced its shares from 20.04% to 19.92%. The news sent BYD shares down more than 12%, making it the worst performer in the Hang Seng Index Wednesday.

• Toyota plans big spending in the U.S. following the IRA. The company laid out plans to spend $5.6 billion on EV battery capacity. $2.5 billion would be spent in the U.S. at its North Carolina plant to scale production.

• Honda and LG Energy Announce U.S. EV battery factory. The tie-up calls for a $4.4 billion battery factory in Ohio, where Honda already as an auto plant. The move is Honda’s first major investment in its own EV battery supply chain.

• Ford ($F) and Rivian ($RIVN) push for faster permitting process for critical EV minerals. A Ford executive told the U.S. Department of Interior that the process should take no longer than three years. Today it can take up to 10. The move follows IRA content requirements.

• General Motors’ $GM China JV launches tiny EV. The Cabrio, a two-seater EV convertible, will be made by SAIC-GM-Wuling Automobile Co. The price hasn’t been disclosed but is expected to start at around $14,500.

For making it to the end, here's a cool (and thorough) TikTok review of the Rivian R1S:

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