The company that makes the Miata has pulled the veil off its plan for the 2020s, Toyota isn’t meeting its goals for the year but you shouldn’t shed a tear for them, and weeks of Tesla’s struggles — and those of its owner — are reflecting in the EV maker’s stock price. All that and more in this Tuesday installment of The Morning Shift for November 22, 2022.
1st Gear: Meet Mazda’s Future
A few weeks after Mazda hinted at a grand electrification strategy, the Japanese automaker let us in on its vision of the future on Tuesday. It’ll involve a $10.6 billion investment, involving tie-ups with battery and chip makers, and potentially even U.S. production if everything goes according to plan. Courtesy Automotive News:
Mazda now expects EVs to comprise between 25 percent to 40 percent of its global sales in 2030. That is up from Mazda’s early outlook of EVs accounting for just a quarter of all volume. The roll out ramps up from 2028 with the major push of battery electrics.
“Up to 2030, we will undertake a full-fledged launch of battery EVs,” [CEO Akira] Marumoto said, adding that the shift will include EV introductions in China and other global markets.
Mazda pins most of this need to invest in EVs on the North American market. How well it can do that of course depends on how well it understands and navigates the terms of the Inflation Reduction Act, and CEO Akira Marumoto admits that the company is still investigating the bill. Regardless, Mazda will eventually need to build EVs here to qualify for tax credits, and that doesn’t appear to be in the cards for about another four years:
Mazda is also considering U.S. production of electric vehicles in this timeframe, Marumoto said. It is studying the requirements set forth by the recently introduced Inflation Reduction Act, or IRA, to see how it can qualify for the EV tax credits afforded makers of domestically produced EVs.
“North America is the most important market for us,” Marumoto said. “There are still some unclear things about the IRA, and we need to have a better understanding of it.”
Added Marumoto: “Given the importance of the market, we hope to manufacture EVs in North America at some point. But at the moment, we are thinking of the possibility in the second half of the phase 2.”
That time frame would put it in the latter half of Mazda’s 2025-2027 phase two.
In the meantime, Mazda will continue developing hybrids, and may even introduce a new enthusiast model to spur interest in its next-generation offerings. The manufacturer teased renders of a new concept, called the Vision Study Model, that draws some inspiration from the Miata as well as the gorgeous RX Vision coupe from the middle of the past decade. By 2025, the company expects to have a modular EV platform ready. It’d be a shame to waste it exclusively on more CX crossovers.
2nd Gear: Toyota’s Down But Hardly Out
In October, Toyota indicated it wouldn’t achieve its estimated full-year output, but refrained from shedding light on what the shortfall would be. Not terribly long after, the company revealed a projection of 9.2 million cars in the current fiscal year, down from 9.7 million. It’s worth noting that Toyota’s fiscal year ends in March.
Still, December isn’t looking too hot for the brand. Toyota believes it will come out of next month having built 700,000 cars, which Automotive News notes is about 100,000 shy of its average monthly rate as of late.
The world’s biggest automaker said on Tuesday that it expects to make only 700,000 vehicles worldwide next month, including 250,000 in Japan and 500,000 overseas.
Production suspensions will affect four lines in three plants in Japan alone.
Interrupted products include the RAV4 crossover and 4Runner SUV, as well as a slew of Lexus nameplates such as the Lexus GX, NX, UX and RX utility vehicles, and the ES sedan.
Toyota blamed the downgrade on “future risks, such as the shortage of semiconductors.”
This is all pretty downtrodden, but here’s the thing: 9.2 million cars would still make for a record for Toyota. The previous high was 9.08 million cars, back in 2017. No growth — even in the face of unending, intertwined global market disruptions — is ever enough, is it?
3rd Gear: Life’s Good to Be a Battery Supplier
LG Chem will open a new battery plant in the Volunteer State over the coming years, with an eye toward beginning production in 2025. Its primary client will be Ultium Cells — itself a joint venture between LG and General Motors. Take it away, Auto News:
Mass production at the plant in Clarksville, Tenn., is set to start in the second half of 2025 and the plant will create more than 850 jobs, LG Chem said in a statement.
The plant is slated to have an annual production capacity of 120,000 tons of cathode materials by 2027, enough to power about 1.2 million EVs, it added.
LG Chem added that it is also pursuing cooperation with mining firms and recycling companies to better support its customers so that requirements of the new law, the Inflation Reduction Act, can be met.
With the Inflation Reduction Act mandating that an increasing percentage of battery raw materials originate from the U.S. or U.S. free trade partners if automakers want their products to qualify for federal tax credits, it’s pretty important that LG Chem and GM both get this going by the latter half of the decade.
4th Gear: Tesla Tumbles
Twitter, the threat of COVID shutdowns in China and recalls have left Tesla trading at the lowest price it has since the end of 2020 — $167.87 at closing on Monday, a 6.8-percent drop on the day. Per Bloomberg:
Tesla’s shares have lost nearly half of their value in less than two months as supply-chain snarls mount, raw-material costs soar and potential buyers feel the squeeze of stubborn inflation and rising interest rates.
On top of that, Musk has been preoccupied by his newly acquired social-media platform, leaving some investors worrying that Tesla’s strategy might fall by the wayside.
“Weakening macro data in China is leading to concerns on Tesla, who has already lowered price once to stimulate demand and has a heavy export output in the first half of fourth quarter,” Cowen analyst Jeffrey Osborne wrote in a Friday note.
This also comes at a time when the company seems to have hit headwinds in China — those headwinds being an onslaught of domestic EVs. Tesla responded to flagging demand with price cuts in the region, and further cuts were rumored as well until the automaker’s public relations office in China quashed them. Lucky China — they still get a Tesla PR team.
5th Gear: Backing Away From BYD
Warren Buffett’s Berkshire Hathaway has once again sold a small chunk of Chinese EV maker BYD’s overall shares, Reuters reported Tuesday:
Berkshire Hathaway, the investment company owned by Warren Buffett, has sold 3.23 million Hong Kong-listed shares of electric vehicle maker BYD for HK$630.33 million ($80.67 million), a stock exchange filing showed.
The sale lowered Berkshire’s holdings in BYD’s total issued H-shares to 15.99% on Nov. 17, down from 16.28%, a filing to the Hong Kong Stock Exchange showed on Tuesday.
After divesting half a percent in late August, Buffett’s investment dropped another 3.23 million shares this week, amounting to $80.7 million. Buffett also sold off another bit only a few weeks ago. Taken together, however, the firm owns about 5 percent less of the automaker now than it did before July.
Reverse: I Shall Commission a Vehicle of a Grand Design
On The Radio: Casiopea — ‘Midnight Rendevouz’
Credit: Terminal Passage via YouTube
With a cover like this, how could I not? The back is even better:
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