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Business

U.S. seeks Tesla driver-assist documents; company hikes capex forecast

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WASHINGTON, Jan 31 (Reuters) – Tesla Inc (TSLA.O) disclosed on Tuesday the U.S. Justice Department has sought documents related to its Full Self-Driving (FSD) and Autopilot driver-assistance systems as regulatory scrutiny intensifies.

The automaker said in a filing it “has received requests from the DOJ for documents related to Tesla’s Autopilot and FSD features.”

Reuters reported in October Tesla is under criminal investigation over claims that the company’s electric vehicles could drive themselves. Reuters said the U.S. Justice Department launched the probe in 2021 following more than a dozen crashes, some of them fatal, involving Autopilot.

Tesla did not respond to a request for comment.

Chief Executive Officer Elon Musk has championed the systems as innovations that will both improve road safety and position the company as a technology leader.

Regulators are examining if Autopilot’s design and claims about its capabilities provide users a false sense of security, leading to complacency behind the wheel with possibly fatal results.

Acting National Highway Traffic Safety Administration (NHTSA) chief Ann Carlson said this month the agency is “working really fast” on the Tesla Autopilot investigation it opened in August 2021 that she termed “very extensive.” In June, NHTSA upgraded to an engineering analysis its defect probe into 830,000 Tesla vehicles with Autopilot, a step that was necessary before the agency could demand a recall.

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Autopilot is designed to assist with steering, braking, speed and lane changes. The function currently requires active driver supervision and does not make the vehicle autonomous. Tesla separately sells the $15,000 full self-driving (FSD) software as an add-on that enables its vehicles to change lanes and park autonomously.

The automaker’s shares rose 2% in early trading.

The Wall Street Journal reported in October that the Securities and Exchange Commission is conducting a civil investigation into Tesla’s Autopilot statements, citing sources.

Tesla also forecast Tuesday capital expenditure between $7 billion and $9 billion in 2024 and 2025. The midpoint of that expectation is $1 billion higher than the $6.00 billion to $8.00 billion range provided for this year.

Reuters Graphics

Some of the spending will go toward a $3.6 billion expansion of its Nevada Gigafactory complex, where Tesla will mass produce its long-delayed Semi truck and build a plant for the 4680 cell that would be able to make enough batteries for 2 million light-duty vehicles annually.

Tesla said it recorded an impairment loss of $204 million on the bitcoin it holds, while booking a gain of $64 million from converting the token into fiat currency.

Cryptocurrencies such as bitcoin were hammered last year as rising interest rates and the collapse of major industry players such as crypto exchange FTX shook investor confidence.

Reporting by Akash Sriram in Bengaluru and David Shepardson; Editing by Sriraj Kalluvila and Bernadette Baum

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Business

EV maker Lucid surges on report Saudi PIF to buy remaining stake

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Jan 27 (Reuters) – Lucid Group’s (LCID.O) shares surged 43% on Friday, paring gains after doubling on market speculation that Saudi Arabia’s Public Investment Fund (PIF) wanted to buy out the electric vehicle maker.

The speculation originated from an “uncooked” alert attributed to deals website Betaville, using its term for market gossip. Lucid was the sixth-most traded stock on U.S. exchanges and third top mover on the Nasdaq mid-afternoon.

The PIF, the sovereign wealth fund that owns more than 65% of Newark, California-based Lucid, did not immediately respond to a request for comment. Lucid declined to comment.

In 2018, PIF was interested in taking Tesla private, but the deal did not materialize. Tesla chief Elon Musk is under trial for allegedly misleading investors with his tweet “funding secured” for taking the company private.

Lucid has been struggling to deliver its sleek Air luxury EVs after delivering 4,369 vehicles last year.

With Tesla’s price cuts, money-losing U.S. startups like Rivian Automotive Inc (RIVN.O) and Lucid will find it difficult to grab share in an industry competing for shrinking consumer wallets.

Lucid’s short interest as a percentage of its total float is around 37% versus only 3.5% for Tesla. Still, in dollar amounts, Lucid’s short interest totals $1.6 billion, versus $15.01 billion of Musk’s car maker.

Short sellers dealt a mark-to-market loss of $685 million with Lucid’s shares spike on Friday, analytics firm S3 Partners added. Losses, however, only materialize if short sellers close out their positions.

“With Lucid short sellers’ mark-to-market losses climbing, we should expect short covering to begin in earnest after today’s short-side blood bath,” said Ihor Dusaniwsky, managing director of S3, adding it has become a popular trading position.

One long-short fund manager who had no previous exposure to Lucid said it decided to short it as this person believes the spike was solely based on rumors.

Reporting by Carolina Mandl, in New York, Chavi Mehta in Bengaluru and Hyun Joo Jin; Editing by Maju Samuel and Josie Kao

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Business

New suppliers race to plug in to electric car market

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WOKING, England, Jan 23 (Reuters) – The global auto industry has committed $1.2 trillion to developing electric vehicles (EVs), providing a golden opportunity for new suppliers to grab contracts providing everything from battery packs to motors and inverters.

Startups specialising in batteries and coatings to protect EV parts, and suppliers traditionally focused on niche motorsports or Formula One (F1) racing, have been chasing EV contracts. Carmakers design platforms to last a decade, so high-volume models can generate large revenues for years.

The next generation of EVs is due to hit around 2025 and many carmakers have sought help plugging gaps in their expertise, providing a window of opportunity for new suppliers.

“We’ve gone back to the days of Henry Ford where everyone is asking ‘how do you make these things work properly?’,” says Nick Fry, CEO of F1 engineering and technology firm McLaren Applied.

“That’s a huge opportunity for companies like us.”

Bought from McLaren by private equity firm Greybull Capital in 2021, McLaren Applied has adapted an efficient inverter developed for F1 racing for EVs. An inverter helps control the flow of electricity to and from the battery pack.

The silicon carbide IPG5 inverter weighs just 5.5 kg (12 lb) and can extend an EV’s range by over 7%. Fry says McLaren Applied is working with around 20 carmakers and suppliers, and the inverter will appear in high-volume luxury EV models starting January 2025.

Mass-market carmakers often prefer to develop EV components in-house and own the technology themselves. After years of pandemic-related parts shortages, they are wary of over-reliance on suppliers.

“We just can’t afford to be reliant on third parties making those investments for us,” said Tim Slatter, head of Ford (F.N) in Britain.

Traditional suppliers, such as German heavyweights Bosch and Continental (CONG.DE), are also investing heavily in EVs and other technologies to stay ahead in a fast-changing industry.

But smaller companies say there are still opportunities, particularly with low-volume manufacturers that cannot afford huge EV investments, or luxury and high-performance carmakers seeking an edge.

Croatia’s Rimac, an electric hypercar maker part-owned by Germany’s Porsche AG (P911_p.DE) that also supplies battery systems and powertrain components to other automakers, says an undisclosed German carmaker will use a Rimac battery system in a high-performance model – with annual production of around 40,000 units – starting this year, with more signed up.

“We need to be 20%, 30% better than what they can do and then they work with us,” CEO Mate Rimac says. “If they can make a 100-kilowatt hour battery pack, we must make a 130-kilowatt pack in the same dimensions for the same cost.”

NO TIME TO LOSE

Some suppliers like Cambridge, Massachusetts-based Actnano have had long relationships with EV pioneer Tesla (TSLA.O). Actnano has developed a coating that protects EV parts from condensation and its business has spread to advanced driver-assistance systems (ADAS), as well as other carmakers including Volvo (VOLCARb.ST), Ford, BMW (BMWG.DE) and Porsche.

California-based startup CelLink has developed an entirely automated, flat and easy-to-install “flex harness”, instead of a wire harness to group and guide cables in a vehicle. CEO Kevin Coakley would not identify customers but said CelLink’s harnesses had been installed in around a million EVs. Only Tesla has that scale.

Coakley said CelLink was working with U.S. and European carmakers, and with a European battery maker on battery wiring.

Others are focused on low-volume manufacturers, like UK startup Ionetic, which develops battery packs that would be too expensive for smaller companies to make themselves.

“Currently it costs just too much to electrify, which is why you see some manufacturers delaying their electrification launch,” CEO James Eaton said.

Since 1971, Swindon Powertrain has developed powerful motorsports engines. But it has now also developed battery packs, electric powertrains, e-axles and is working with around 20 customers, including carmakers and an electric vertical take-off and landing (eVTOL) aircraft maker.

“I realized if we don’t embrace this, we’re going to end up working for museums,” said managing director Raphael Caille.

But time may be running out.

Mate Rimac says major carmakers scrambled in the last three years to roll out EVs and now have strategies largely in place.

“For those who haven’t signed projects, I’m not sure how long the window of opportunity will remain open,” he said.

($1 = 0.8226 pounds)

Reporting by Nick Carey
Editing by Mark Potter

Our Standards: The Thomson Reuters Trust Principles.

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Business

Exclusive: Geely plans to turn maker of London black cabs into EV powerhouse

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COVENTRY, England, Jan 23 (Reuters) – China’s Geely (0175.HK) is planning a big investment to turn the maker of London’s iconic black taxis into a high-volume, all-electric brand with a range of commercial and passenger vehicles, executives at the unit told Reuters.

London Electric Vehicle Company (LEVC) also aims to expand its suite of services, which include cars arranging their own maintenance and recognising their owner’s interests to help them book activities.

“We need a developed product portfolio. We need to make big investments in terms of the technology and infrastructure,” LEVC Chief Executive Alex Nan said at the taxi maker’s headquarters in Coventry, central England. “Geely will make consistent investments into LEVC because this is a very unique project.”

LEVC builds a hybrid taxi model that starts at around 66,000 pounds ($81,500), which has a battery providing 64 miles (103 km) of range and a petrol range-extender giving it a total range of over 300 miles. The company’s business was hit hard by the pandemic and it laid off 140 staff in October.

Nan said LEVC and Geely would seek to attract other investors to its zero-emission portfolio and would look to partner with other carmakers to develop new technology.

Executives said the size of Geely’s investment would be disclosed later. So far the Chinese group, which took full control of LEVC in 2013, has invested 500 million pounds in it.

“Geely fully supports the new transition strategy laid out by LEVC’s board and executive team,” Geely said in a statement.

In 2021, Geely launched a 2 billion pound investment in another unit, niche British luxury sports carmaker Lotus, to massively expand production of its sports cars and build high-end SUVs and sedans in Britain and China. Geely is following a similar path in its plans to grow LEVC, executives said.

Britain’s EV ambitions were dealt a blow last week when startup Britishvolt, which had planned to build a major battery factory in northeast England, filed for administration.

“We need to make sure the UK environment as a whole is competitive and has its position on the world stage,” said LEVC managing director Chris Allen.

READY TO ACCELERATE

Geely owns multiple brands including Volvo (VOLCARb.ST) and – via a joint venture with Volvo – Polestar . Zeekr, another brand in the group, filed for a U.S. initial public offering last month.

As such, Geely faces a complexity that larger EV makers BYD (002594.SZ) and Tesla (TSLA.O) have avoided.

Allen said LEVC was exploring a range of commercial and passenger car models on a common electric platform. It can lean on other group brands that already have EVs to “move forward in a fast, agile way”.

The company already uses an infotainment system and software developed by Volvo and a steering wheel from the Swedish carmaker, allowing it to cut costs, Allen said.

“There’s nothing we couldn’t deliver in a very short time period if we needed to, but it’s just a question of timing,” he said, adding LEVC could easily have a full range of EVs on the road within five years.

“But in two years time, is the industry going to be ready, is the charging infrastructure going to be there, is consumer confidence going to be there?”

LEVC currently has the capacity to build 3,000 taxis a year running on a single shift at its Coventry factory. Allen said that could easily be increased to 20,000 and the plant had room to expand. It could also lean on production in China as Lotus has, Allen said. A major car plant produces on average around 300,000 vehicles per year.

“There’s a huge amount of value in our product that hasn’t ever really been maximised,” Allen said. “This is about growing LEVC into a much more recognizable brand on a global scale and expanding our product offering into as many spaces as we can.”

($1 = 0.8095 pounds)

Reporting by Nick Carey, Additional reporting by Zoey Zhange in Shanghai and Norihiko Shirouzu in Beijing
Editing by Mark Potter

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Business

Tesla slashes prices in U.S., Europe to drive demand

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  • Tesla cuts prices in U.S., Europe by up to 20%
  • Move follows price cuts across Asia last week
  • Some models now qualify for U.S. tax credits
  • Model 3 price in Germany in line with Volkswagen’s ID.3

Jan 13 (Reuters) – Tesla (TSLA.O) has slashed prices on its electric vehicles in the United States and Europe by as much as 20%, extending a strategy of aggressive discounting after missing Wall Street estimates for 2022 deliveries.

The move, which prompted a 3.8% fall in Tesla’s shares in Frankfurt, came after CEO Elon Musk warned that the prospect of recession and higher interest rates meant it could lower vehicle pricing to sustain volume growth at the expense of profit.

The lower pricing across Tesla’s major markets marks a reversal from the strategy the automaker had pursued through much of 2021 and 2022 when orders for new vehicles exceeded supply. Musk acknowledged last year that prices had become “embarrassingly high” and could hurt demand.

The U.S. price cuts, announced late Thursday in U.S. time on the Model 3 sedan and Model Y crossover SUV, ranged between 6% and 20% compared with prices before the discount, according to Reuters calculations.

That is before an up to $7,500 federal tax credit that took effect for many electric vehicle models at the start of January.

Following is a table of the price cuts by model in Germany and the United States:

Reuters Graphics

Tesla also cut prices for its Model X luxury crossover SUV and Model S sedan in the United States.

In Germany, it cut prices on the Model 3 and the Model Y – its global top-sellers – by between about 1% and almost 17% depending on the configuration. It also cut prices in Austria, Switzerland and France.

For a U.S. buyer of the long-range Model Y, the new Tesla price combined with the U.S. subsidy that took effect this month amounts to a discount of 31%. In addition, the Tesla move broadened the vehicles in its line-up eligible for the Biden administration tax credit.

Before the price cut, the five-seat version of the Model Y had been ineligible for that credit, a designation Musk had called “messed up”. After the price cut, the long-range version of the Model Y will qualify for the $7,500 federal credit.

“This should really boost 2023 (Tesla) volumes,” Gary Black, a Tesla investor who has remained bullish on the company and its prospects through the recent, sharp share price decline, said in a tweet. “It’s the right move.”

Still, some users on Tesla fan forums online complained the price cuts disadvantaged customers who had recently bought their vehicle, leaving them with a lower-valued item on the second-hand car market.

“I’m not very pleased with these huge price sways. Just reducing 10,000 euros like that – definitely makes you feel that you just paid far too much,” one user wrote on a ‘Tesla Drivers and Friends’ forum on Friday.

In China, where Tesla cut prices last week by 6-13.5%, owners protested at delivery centres across the country, pressing Tesla for compensation.

Before the price cut, Tesla inventory in the United States, as tracked by the models its website shows as immediately available, had been trending higher. Prices on used Tesla models had also been declining, increasing the pressure on it to adjust new-car sticker prices.

For 2021, the United States and China combined had accounted for about 75% of Tesla sales, although the automaker has been growing sales in Europe, where its Berlin factory has been ramping up production.

Reuters Graphics

NEW SALES LEADERSHIP

The shift is the first major move by Tesla since appointing its lead executive for China and Asia, Tom Zhu, to oversee U.S. output and sales.

Tesla cut prices in China and other Asian markets last week. Along with previous price cuts announced in October and recent incentives, the Chinese price for a Model 3 or Model Y was down 13% to 24% from September after the recent move, Reuters calculations showed.

Tesla has also cut prices in South Korea, Japan, Australia and Singapore.

Analysts had said the Chinese price cuts would boost demand and increase pressure on its rivals there, including BYD (002594.SZ), to follow suit in what could become a price war in the largest single market for electric vehicles.

That pressure could be building in Europe as well.

Tesla’s Model 3 was the best-selling electric vehicle in Germany last month, followed by the Model Y, beating Volkswagen’s (VOWG_p.DE) all-electric ID.4. Volkswagen recently raised the price of its entry-level ID.3, putting it at parity with the now-discounted Model 3.

Tesla missed Wall Street estimates for fourth quarter deliveries. Full year growth in deliveries was 40% – also short of Musk’s own forecast of 50%.

Tesla shares under pressure

Reporting by Zhang Yan in Shanghai, Hyunjoo Jin in Seoul, Victoria Waldersee in Berlin; Writing by Kevin Krolicki in Singapore; Editing by Lincoln Feast, Kenneth Maxwell, Mark Potter and Alexander Smith

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Business

Tesla delivery time is longer on some China models after discounts

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SHANGHAI, Jan 9 (Reuters) – Prospective Tesla Inc (TSLA.O) buyers in China are waiting longer for certain versions of its Model Y car, suggesting the electric-vehicle maker’s decision to cut prices is stoking demand in its second-largest market.

The waiting time for orders of the rear-wheel-drive and long-range versions of Model Y was a week longer on Monday than it had been on Friday, Tesla’s website showed.

The company’s shares rose about 8% to $122.20 on Monday after losing 68% in the past 12 months.

The wait as of Monday was two to five weeks on those models. The wait time for all versions of the Model 3 and the performance version of the Model Y remained at one to four weeks as of Monday.

Tesla cut prices by 6% to 13.5% on Friday in discounts that brought some of its cars to near BYD’s (1211.HK) best-selling models in a step analysts read as a sign that a price war could be building at a time when demand in China has faltered.

As of Monday, Tesla had not made any adjustment to its January production plan for its Shanghai plant, with suspension of the assembly lines to start from Jan. 20 through the end of the month, a person with knowledge of the matter said.

“It (the wait time) is an early indication that the price cuts are having their intended impact, which is to boost demand,” said CFRA Research analyst Garrett Nelson.

Nelson added that Tesla’s vehicle production has exceeded sales for three straight quarters and the company has chosen to lower prices and take some additional downtime at the Shanghai factory to bring supply and demand back in balance.

People check a Tesla Model Y electric vehicle (EV) displayed at its booth during the 2021 China International Fair for Trade in Services (CIFTIS) in Beijing, China September 4, 2021. REUTERS/Florence Lo
Reuters Graphics

Angry Chinese owners who bought Tesla cars in late 2022 and missed out on the additional discount said they were waiting for a response from the company for their demand for some kind of compensation after a flurry of impromptu protests.

A Tesla representative told Reuters on Saturday that the company has no plan to compensate those buyers for price cuts they had missed. The company did not respond to a request for comment on Monday.

Some of the buyers in China said they had been led to believe that the further discounts would not be coming. Many were also looking to take advantage of a nation-wide EV subsidy that expired at year end.

Chinese state media have largely opted not to cover the protests, which online videos showed happened in cities including Beijing, Shenzhen, Chengdu and Xi’an. Reuters witnessed a protest at a Tesla facility in Shanghai.

Comments on Chinese social media were largely negative toward the Tesla buyers who have protested, with many saying online they should have understood the terms of the contract.

“I feel ashamed for them protesting after Tesla cut the prices,” a popular law blogger named “Wind Blows” commented on his Weibo social media.

Separately, Tesla began offering discounts to buyers in Singapore as of Monday who agreed to purchase existing inventory, adding that market to China, South Korea, Japan and Australia to those where it has offered new incentives.

Reporting by Zhang Yan, Brenda Goh; Additional reporting by Akash Sriram in Bengaluru; Editing by Muralikumar Anantharaman and Shounak Dasgupta

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Business

Tesla owners in China protest against surprise price cuts they missed

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SHANGHAI, Jan 7 (Reuters) – Hundreds of Tesla (TSLA.O) owners gathered at the automaker’s showrooms and distribution centres in China over the weekend, demanding rebates and credit after sudden price cuts they said meant they had overpaid for electric cars they bought earlier.

On Saturday, about 200 recent buyers of the Tesla Model Y and Model 3 gathered at a Tesla delivery centre in Shanghai to protest against the U.S. carmaker’s decision to slash prices for the second time in three months on Friday.

Many said they had believed that prices Tesla charged for its cars late last year would not be cut as abruptly or as deeply as the automaker just announced in a move to spur sales and support production at its Shanghai plant. The scheduled expiration of a government subsidy at the end of 2022 also drove many to finalize their purchases.

Videos posted on social media showed crowds at Tesla stores and delivery centres in other Chinese cities from Chengdu to Shenzhen, suggesting wider consumer backlash.

After Friday’s surprise discounts, Tesla’s EV prices in China are now between 13% and 24% below their September levels.

Analysts have said Tesla’s move was likely to boost its sales, which tumbled in December, and force other EV makers to cut prices too at a time of faltering demand in the world’s largest market for battery-powered cars.

While established automakers often discount to manage inventory and keep factories running when demand weakens, Tesla operates without dealerships and transparent pricing has been part of its brand image.

“It may be a normal business practice but this is not how a responsible enterprise should behave,” said one Tesla owner protesting at the company’s delivery centre in Shanghai’s Minhang suburb on Saturday who gave his surname as Zhang.

He and the other Tesla owners, who said they had taken delivery in the final months of 2022, said they were frustrated with the abruptness of Friday’s price cut and Tesla’s lack of an explanation to recent buyers.

Zhang said police facilitated a meeting between Tesla staff and the assembled owners at which the owners handed over a list of demands, including an apology and compensation or other credits. He added the Tesla staff had agreed to respond by Tuesday.

About a dozen police officers could be seen at the Shanghai protest and most of the videos of the other demonstrations also showed a large police presence at the Tesla sites.

Protests are not a rare occurrence in China, which has over the years seen people come out in large numbers over issues such as financial or property scams, but authorities have been on higher alert after widespread protests in Chinese cities and top universities at the end of November against COVID-19 restrictions.

‘RETURN THE MONEY’

Other videos appearing to be of Tesla owners protesting were also posted to Chinese social media platforms on Saturday.

One video, which Reuters verified was filmed at a Tesla store in the southwestern city of Chengdu, showed a crowd chanting, “Return the money, refund our cars.”

Another, which appeared to be filmed in Beijing, showed police cars arriving to disperse crowds outside a Tesla store.

Reuters was unable to verify the content of either video.

Tesla does not plan to compensate buyers who took delivery before the most recent price cut, a spokesman for Tesla China told Reuters on Saturday.

He did not respond when asked to comment on the protests.

China accounted for about a third of Tesla’s global sales in 2021 and its Shanghai factory, which employs about 20,000 workers, is its single most productive and profitable plant.

Analysts have been positive about the potential for Tesla’s price cuts to drive sales growth at a time when it is a year from announcing its next new vehicle, the Cybertruck.

“Nowhere else in the world is Tesla faced with the kind of competitors that they have here [in China],” said Bill Russo, head of consultancy Automobility Ltd in Shanghai.

“They are in a much bigger EV market with companies that can price more aggressively than they can, until now.”

In 2021, Tesla faced a public relations storm after an unhappy customer climbed on a car at the Shanghai auto show to protest against the company’s handling of her complaints about her car’s brakes.

Tesla responded by apologising to Chinese consumers for not addressing the complaints in a timely way.

Reporting by Brenda Goh, Zhang Yan and Casey Hall
Editing by Kevin Krolicki and Tomasz Janowski

Our Standards: The Thomson Reuters Trust Principles.

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Business

Tesla slashes car prices in China for second time in 3 months

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SHANGHAI, Jan 6 (Reuters) – Tesla (TSLA.O) cut car prices in China for the second time in less than three months on Friday, fuelling a price war amid a darkening demand outlook in the world’s largest auto market.

The latest cut, along with a reduction in October as well as various incentives that amount to as much as 10,000 yuan extended to Chinese buyers over the past three months, mean a 13% to 24% reduction in Tesla’s prices from September, according to Reuters calculations.

On Friday, the U.S. electric vehicles (EV) maker slashed prices for all versions of its Model 3 and Model Y cars in China by between 6% to 13.5%, according to Reuters calculations based on the prices shown on its website. The starting price for Model 3, for instance, was cut to 229,900 yuan ($33,427) from 265,900 yuan. It cut prices in Japan on the same day.

“Tesla’s price adjustments are backed by innumerous engineering innovations,” Grace Tao, Tesla’s vice president in charge of external communications in China, posted on her Weibo social media account on Friday. “(They) answer the government’s call to promote economic development and encourage consumption.”

The price cuts come after December deliveries of Tesla’s China-made cars hit their lowest in five months, and also just days after Beijing ended a subsidy programme that helped build the world’s largest EV market. Softening demand has forced Tesla and its rivals to absorb the brunt of that decision.

China Merchants Bank International (CMBI), which warned in July that China’s EV sector was headed for a price war, said Tesla’s price reduction affirmed the prediction, adding that the U.S. firm may have to do more, especially as competition with its Chinese rivals intensifies.

The Model 3 and Y have been the only models Tesla delivers in China, though on Friday it announced prices for the Model S and Model X in China.

“Tesla needs to further cut prices and expand its sales network in China’s lower-tier cities amid ageing models,” said CMBI analyst Shi Ji.

“We expect new EV production capacity in China to outpace new demand in 2023 and Tesla Shanghai’s capacity utilisation could drop to about or even below 80% this year if its Berlin plant ramps up.”

BYD (002594.SZ), which has a much larger variety of offerings that comprise both plug-in and pure electric vehicles, saw its retail sales in China double in December while Tesla’s fell 42%, according to data from CMBI.

Tesla did not offer any additional comment when contacted by Reuters. A spokesperson referred to Tao’s Weibo post.

The car maker’s discounts have brought the starting price of Model 3 to the same level of BYD’s best-selling Han EV sedan, which is sold from 219,800 yuan. The Chinese EV maker recently raised the prices for its best-selling models after losing the central government subsidies.

Sales of BYD’s Han series, including the plug-in hybrid versions, were more than double that of Model 3’s in China in the first 11 months, according to the China Passenger Car Association.

The China prices of the Model 3 and Model Y cars are now 24% to 32% lower than those in the United States, Tesla’s largest market, Reuters calculations showed, due to reasons including different material and labour costs.

Tesla also cut the prices of Model 3 and Model Y cars by about 10% each in Japan, the first time it had done so since 2021. The price for the Model 3 rear wheel drive version is now 5.369 million yen ($40,091), down from 5.964 million yen.

($1 = 6.8775 Chinese yuan)

($1 = 133.9200 yen)

Reporting by Zhang Yan and Brenda Goh; Editing by Kim Coghill and Muralikumar Anantharaman

Our Standards: The Thomson Reuters Trust Principles.

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Technology

Sony, Honda roll out prototype of ‘Afeela’ EV that uses Qualcomm tech

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Jan 4 (Reuters) – Japan’s Sony (6758.T) on Wednesday unveiled a prototype of the new “Afeela” electric vehicles it will build together with Honda (7267.T), saying it would harness its vast entertainment content as it looks to become a player in next-generation cars.

Sony gave a glimpse of the Afeela, which sports rounded corners and a sleek black roof, at the CES 2023 technology trade show in Las Vegas. The car will use technology from hardware maker Qualcomm Inc (QCOM.O), including its “Snapdragon” digital chassis.

Sony’s long-awaited push into electric vehicles – it announced the venture with Honda in March – shows how manufacturers are increasingly focused on the cockpit experience in cars, which offers the potential to sell content via subscription services cars, especially as autonomous driving capabilities improve.

“In order to realise intelligent mobility, continuous software updates and high-performance computing are required,” Yashuhide Mizuno, the chief executive of Sony Honda Mobility, told the trade show. “To that end, we will work closely with Qualcomm.”

Qualcomm on Wednesday launched a new processor, the Snapdragon Ride Flex SoC, that handles both assisted driving and cockpit functions, including entertainment. Previously those functions were handled on different chips, and bringing them together can help bring down costs, a Qualcomm executive told Reuters.

Sony is also looking to harness its traditional strengths in sensors. The Afeela will be equipped with more than 40 sensors, Mizuno said. The car will use the “Unreal Engine” 3-D creation tool from Epic Games, the maker of the “Fortnite” series of games.

For Honda, the venture with Sony may allow it to speed up what has so far been a slow shift to electric. It has also struggled over the years to make gains in the luxury vehicle market with its Acura brand. The new EV will be priced at a premium, the venture has said.

The venture between Sony Group Corp and Honda Motor Co Ltd aims to deliver its first electric vehicles by early 2026 in North America.

Shares of Sony were up 1.6% in Tokyo trade, while Honda shares were flat. The benchmark Nikkei 225 (.N225) was little changed.

Reporting by Kiyoshi Takenaka; Additional reporting by Jane Lanhee Lee in San Francisco; Writing by David Dolan; Editing by Chang-Ran Kim and Muralikumar Anantharaman

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Business

Tesla shares suffer New Year’s hangover on demand worries, delivery issues

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  • Stock top S&P 500 loser on first trading day of 2023
  • Selloff knocks off $50 billion from market cap
  • Tesla misses Q4 vehicle deliveries estimate
  • EV company is still the world’s most valuable automaker

Jan 3 (Reuters) – Tesla Inc (TSLA.O) shares kicked off 2023 with a thud, plunging more than 12% on Tuesday on growing worries about weakening demand and logistical problems that have hampered deliveries for the world’s most valuable automaker.

Once worth more than $1 trillion, Tesla lost more than 65% in market value in a tumultuous 2022 that saw it increasingly challenged by other automakers and face production issues stemming from COVID lockdowns in China.

Tuesday’s slide knocked off nearly $50 billion in market value, roughly equal to the valuation of rival Ford Motor Co (F.N), which last year sold three times as many cars as Tesla.

The sell-off came after Tesla missed market expectations for fourth-quarter deliveries despite shipping a record number of vehicles.

Reuters Graphics

“Tesla, as it has grown is now entering a phase of still solid but slower growth,” Morningstar analyst Seth Goldstein said. Being a major auto producer, it “is likely to feel more of an impact from an economic slowdown”, he added.

Several Wall Street analysts said they expected more pressure on the stock in the coming months from increasing competition and weaker global demand.

Global automakers have in the past few months battled a demand downturn in China, the world’s top auto market where the spread of COVID-19 has hit economic growth and consumer spending. Tesla is offering hefty discounts there and a subsidy for insurance costs.

At least four brokerages cut their price targets and earnings estimates on Tuesday, pointing to the deliveries miss and Tesla’s decision to offer more incentives to boost demand in China and the United States, the two largest global auto markets.

The company’s stock was the worst performer on the benchmark S&P 500 index (.SPX) on Tuesday as it fell as low as $104.64 a share – the lowest since August 2020. More than 220 million shares exchanged hands during regular trading hours.

The electric-vehicle maker’s performance in 2022 was among the worst on the S&P 500 index.

Members of media and guests surround the Tesla Model Y and Model 3 during Thailand Tesla’s official launch event in Bangkok, Thailand, December 7, 2022. REUTERS/Athit Perawongmetha

“You have so many things working against the stock. One obviously is Musk’s involvement in Twitter,” said Dennis Dick, market structure analyst and trader at Triple D Trading.

Tesla’s market value has declined by about $370 billion since Chief Executive Elon Musk closed the deal to buy social media firm Twitter.

Some of that drop has come from his share sale to fund the $44 billion deal, while the stock also declined due to worries among investors that Musk has been distracted by the social media company.

At a value of about $341 billion, Tesla is still the world’s most valuable automaker, even though its production is a fraction of rivals such as Toyota Motor Corp (7203.T).

Tesla shares biggest loser among Big Tech Tesla shares biggest loser among Big Tech since April

Tesla delivered 405,278 vehicles in the fourth quarter, short of analysts’ estimates of 431,117. For all of 2022, its deliveries rose by 40%, missing Musk’s 50% annual target.

The result “came at the cost of higher incentives, suggesting lower pricing and margin,” brokerage J.P.Morgan said in a note, lowering its price target by $25 to $125.

The median price target of 41 analysts on the stock was $250, more than double the current price, according to Refinitiv data. The lowest price is $85, from Roth Capital Partners.

The shortfall highlighted the logistics hurdles facing the company which is known for its end-of-quarter delivery rush. The gap between production and deliveries has widened to 34,000 vehicles as more cars got stuck in transit.

The automaker plans to run a reduced production schedule in January at its Shanghai plant, extending the lowered output it began in December into 2023, Reuters reported.

Meanwhile, California-based electric vehicle maker Rivian Automotive Inc (RIVN.O) narrowly missed its 25,000-unit production target for 2022.

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Reporting by Aditya Soni, Eva Mathews and Akash Sriram in Bengaluru; Additional reporting by Amruta Khandekar; Editing by Tomasz Janowski, Shounak Dasgupta and Arun Koyyur

Our Standards: The Thomson Reuters Trust Principles.

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