Elon Musk has slashed the price of a new Tesla by 9%, but only if it’s made and sold in China; Hyundai wants you to know it’s now a luxury automaker; and the United States is going to have to extract a lot more lithium for all these electric vehicles to come. All this and more in The morning shift for Monday, October 24, 2022.
1st Gear: Tesla lowers prices in China
There are always complaints about the lack of an affordable electric vehicle and the cost of cars, overall, go up and up. But, after years of gradually raising the prices of its cars, Tesla has started to lower them again – but there’s a catch.
According to Bloomberg, Tesla is cutting the cars it makes and sells by up to 9%, but only in China. Bloomberg reports:
Tesla Inc. has lowered prices for its lineup in China, seeking to stimulate demand in a market where competitive and economic pressures are intensifying.
The automaker slashed the cost of the cheapest locally-built Model 3 sedan by 5% to 265,900 yuan ($36,774), Tesla’s website showed on Monday. The company lowered the starting price of the Model Y SUV by 8.8% to 288,900 yuan.
The discounts only apply to Model 3 and Model Y cars produced in China, but include Performance, Rear-Wheel-Drive and Long-Range variants. The company attributes the price drop to “better utilization of the company’s Shanghai factory and the ‘relative stability’ of the supply chain.”
Here in the United States, there has been no such reduction so far. The Model 3 still starts at $48,490 and the Y starts at $67,990.
2nd Gear: Toyota rethinks its EV tactics
Toyota likes to remind everyone that it was one of the first companies to mass-produce a hybrid car. The Prius, when it was launched in 2000, quickly won the hearts of many environmentally conscious drivers and continues to do so with its fourth generation.
But times have changed and drivers worried about their impact on the environment have sold off their Prius (Prii, Prius?) and switched to electric vehicles. Toyota, however, did not receive this memo and so seemed reluctant to switch to battery-powered cars. Now the company is trying to remedy that with a new approach to electrification. Reuters reports:
The proposals under consideration, if passed, would represent a sea change for Toyota and rewrite the $38 billion EV rollout plan announced by the Japanese automaker last year to better compete with Tesla.
A task force within Toyota has been tasked with defining plans by early next year to improve its existing electric vehicle platform or for a new architecture, the four people said.
While the proposals are being considered, Toyota is said to have suspended work on some of the 30 electric vehicle projects announced in December, whose Reuters reports could include the Toyota Compact Cruiser crossover and the battery-electric Crown.
So Toyota is delaying EVs while it decides how it wants to deploy EVs. This definitely resembles the behavior of a company engaged in the manufacture of electric vehicles.
3rd gear: Hyundai wants to be a luxury car manufacturer
The automaker of the moment, Hyundai, has cut its teeth making affordable cars that offer something for everyone. But now the Korean automaker wants you to know it’s serious about something, and something is luxury electric vehicles.
It’s true, Bloomberg reports that Hyundai is focusing on high growth segments such as “luxury models, SUVs and electric vehicles” because he is aiming for “record revenues”. The announcement came after the automaker missed its sales and profit targets for the third quarter of 2022. According to Bloomberg:
Hyundai cut its 2022 sales target to 4.01 million vehicles from 4.32 million, and also cut its planned investment for the year to 8.9 trillion won from 9.2 trillion won.
The company said it will “focus on recovering sales” through a plan that will “improve its product mix with SUVs and luxury models.” Its Grandeur EV, named Azera in markets outside Korea, is in high demand after its launch this month and will help boost domestic sales momentum, Hyundai said. The Ioniq 6, introduced in Korea in the third quarter, is also selling well, he added.
Despite difficulties for its global sales, Hyundai had a very good third quarter in the United States. Sales increased by 3% compared to the same period last year.
4th gear: we need to extract more lithium
But if Hyundai and other traditional automakers want to focus on electric vehicles, they’ll need more supplies, a lot more supplies. Foremost among these supplies are all the components needed to make larger batteries, including lithium.
Here in the United States, miners extract about 1,000 tonnes of lithium every year –accounting for only one percent of global lithium production. But, after the Inflation Reduction Act added stipulations for electric vehicles made with components sourced and assembled here in America, that production is going to have to increase dramatically.
According to Automotive News, the electric car industry needs “about 50 more lithium mines” to open around the world to meet demand. Steps are being taken to try to increase lithium production to meet the demands of electric vehicles, as Automotive News reports:
Over the past year and a half, the Biden administration has attempted to answer this question by further stimulating domestic mining and processing of critical battery materials, both of which are dominated by China and other countries. This year, the administration invoked the Defense Production Act of 1950 to encourage companies to mine lithium, nickel, graphite, cobalt and manganese domestically, allowing companies to access financing federal to do so.
This followed the approval of $6 billion to strengthen the battery supply chain in the United States, as part of last year’s bipartisan infrastructure bill. It predated the passage of the Cut Inflation Act, which included incentives for companies to manufacture electric vehicles and batteries in the United States and created local sourcing requirements for vehicles to benefit from tax credits for electric vehicles.
But, the site warns that new mines face a series of hurdles before they can be operational. Chief among them is how the United States distributes mining permits to companies hoping to extract lithium from the Earth.
That, he warns, can mean it takes up to a decade to open a new lithium mine here in America. And if that process can’t be streamlined, we could soon be talking about a shortage of lithium as well as a shortage of chips, a shortage of aluminum, and the shortage of titanium.
5th gear: “flying taxis” apparently go into production
Another week, another flying taxi prototype that will definitely exist. The world’s rich and powerful seem obsessed with zipping around cities in personal quadcopters that they like to pretend steal cars. Now there’s a new one that promises it might make it to production.
A company called Archer Aviation says it will build 250 battery-electric air taxis in 2025, before ramping up production in subsequent years. Reuters reports that the company hopes to have its machine certified to fly before all that, with a target of 2024 for this stage.
When this, and all the other aircraft designs, go into production, the electric flying taxi market, or whatever people want to call it, should be a pretty crowded space. As Reuters reports:
“Once certified, the California start-up’s electric vertical take-off and landing planes will compete in a crowded market with dozens of other developers such as Joby Aviation Inc and Vertical Aerospace Ltd vying to revamp urban transportation.
“The fledgling industry, which is backed by industrial heavyweights such as Toyota Motor Corp and Delta Air Lines, still faces significant challenges related to certification, developing a suitable air traffic management system and improved battery technology, among others.”
Me, and many other people remain skeptical of all these personal flying machines. Will they ever hit the market? And, if they do, will the rules and regulations governing flights around cities quickly adapt? enough to follow?
Reverse: Barrel of Laughs
Neutral: the car
How was your week end? I hope it was fun! I passed my dog-sitting and listening to the new Arctic Monkeys album, which is coincidentally called The car. In my opinion, there are four tracks there that talk about cars, and that seems enough to warrant a mention here.. Go listen; it’s perfect.
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