Fisker, an electric vehicle (EV) manufacturer, warned of facing “another difficult year,” while Tesla adjusted its pricing strategy in China to increase demand. This comes amidst a challenging period for several EV makers, with some scaling back their EV projects and reporting earnings that unsettled investors.
Additionally, Apple reportedly scrapped its plans to produce an EV earlier this week. The U.S. government initiated an investigation into potential national security risks linked to connected vehicles using Chinese technology. This move might lead U.S. automakers to reconsider their suppliers to lessen dependence on Chinese components.
Tesla Lowers Prices in China to Boost Sales
Elon Musk’s Tesla introduced fresh offers for certain Tesla models in China this week to encourage more purchases and stay competitive against Chinese EV makers such as BYD (BYDDY).
Tesla announced that customers in China who buy before the end of March could get a discount of up to 34,600 yuan ($4,800) on the Model 3 and Model Y, along with other advantages.
This isn’t the first time Tesla has reduced vehicle prices to stimulate sluggish EV demand in a competitive market. Moreover, government backing for Chinese firms further complicates matters for American EV makers vying in the Chinese market.
US Investigates Risks of Smart Cars Using Chinese Technology
Earlier this week, the Biden administration unveiled an inquiry into the potential national security threats linked to smart vehicles using Chinese technology.
This action is part of a broader effort by the U.S. government to encourage American automakers to lessen their dependence on Chinese suppliers. Incentives such as tax credits aim to boost demand for electric vehicles (EVs) with restricted use of Chinese components.
Despite the imposition of tariffs limiting the importation of Chinese cars into the U.S., Chinese automakers have significantly increased their exports in recent years, intensifying competition in the global automotive market.
Rivian and Lucid Experience Record-Low Stock Prices Following Earnings Shortfalls
Shares of Rivian (RIVN) and Lucid (LCID) plummeted to historic lows following disappointing earnings reports from both electric vehicle manufacturers.
Rivian’s latest quarterly per-share loss of $1.58 exceeded analyst predictions, accompanied by a pessimistic 2024 production outlook of 57,000 vehicles, significantly below expectations and last year’s output of 57,232 vehicles. UBS analysts downgraded Rivian’s rating from “buy” to “sell,” citing concerns over the company’s profitability and cash flow amidst rapid changes in the EV market landscape.
Similarly, Lucid fell short of its production targets, delivering 8,428 Air sedans in 2023, below the anticipated range of 10,000 to 14,000 units. Bank of America adjusted its price objective for Lucid from $7 to $4.50, highlighting concerns about softer demand and the potential need for additional capital, despite recognizing the company’s innovative powertrain technology and appealing products.
Volvo Pulls Back from Polestar Investment
Earlier this month, Volvo declared its intention to reduce its investment in Swedish EV manufacturer Polestar. Volvo is contemplating a reorganization of its ownership in the EV startup, intending to transfer 62.7% of its shareholding to China’s Geely (GELYF). If approved, Volvo would retain only 18% ownership in Polestar.
Following suit with other automakers, Volvo’s decision reflects a recent trend of scaling back EV ambitions due to subdued demand for EVs in the U.S. and heightened competition from Chinese EV manufacturers.
In response to Volvo’s restructuring announcement, Polestar shares initially plummeted but partially recovered after the EV maker secured nearly $1 billion in funding from 12 international banks.
Fisker Warns of Another Challenging Year Ahead
This week, Fisker (FSR) issued a cautionary note regarding the company’s ongoing viability, citing negotiations with a major automaker. CEO Henrik Fisker attributed challenges in 2023 to supplier delays and various obstacles hindering the timely delivery of the Ocean SUV.
He highlighted unforeseen difficulties such as escalating interest rates, labor shortages, and the necessity to secure suitable real estate for effective Direct-to-Consumer (DTC) operations.
Fisker anticipates another tough year ahead and has adjusted its 2024 outlook to be notably more conservative than the previous year. Consequently, Fisker shares plummeted by 34% to 48 cents on Friday, marking a staggering 93% decline in stock value over the past year.
Report: Apple Abandons Electric Vehicle (EV) Plans
Apple has reportedly halted its electric vehicle (EV) projects after nearly a decade of discreet development.
Commenting on this development, CFRA analyst Angelo Zino remarked, “Ditching the car initiative could be seen as a near-term positive, in our view, as the news allows AAPL to improve cost efficiencies.” CFRA maintains a Buy opinion on Apple Inc. [AAPL].
Zino further noted that while the firm believed “the car initiative likely offered the greatest long-term upside to AAPL’s revenue trajectory, it was also likely to erode margins,” describing the project as a ‘pie in the sky’ opportunity.
The decision by the iPhone maker to scrap its EV project underscores its shifting focus towards artificial intelligence (AI) initiatives.
