Good morning! It’s Friday, March 29, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
1st Gear: Tesla And The Terrible, Horrible, No Good, Very Bad Quarter
Tesla is having an awful first quarter. In fact, the EV maker may not even match the 422,875 deliveries it made in January through March of last year when it reports its quarterly volume next week. This could end up being the first year-over-year decline in sales Tesla has suffered since the pandemic lockdowns in the middle of 2020.
Right now, these numbers are just estimates, because there’s still a tiny bit of time left in the first quarter. But, analysts have given their best guesstimates. From the Wall Street Journal:
In the U.S., Tesla delivered roughly 108,000 vehicles in the first two months of the year, according to estimates by Motor Intelligence, down from 114,000 a year ago. Insurance data tracked by EV website CnEVPost point to a similar 5% year-over-year decline in China for the first 12 weeks of the quarter. These are Tesla’s two largest markets.
Can the rest of the world save the day? In Europe, sales for January and February were roughly 46,000, according to the European Automobile Manufacturers’ Association—up 41% year over year, but a step down from the sales rate at the end of last year.
This isn’t just about weak demand for Tesla, though that does appear to be a problem despite the brand’s aggressive price cuts last year and an enhanced U.S. subsidy regime this year. Production has also flagged, because of an update to the Model 3 production line in Fremont, Calif. and an arson attack in Berlin.
Investors and analysts are getting worried. On March 28, a Deutsche Bank analyst who rates Tesla’s stock as a “buy” trimmed back his delivery forecast to 414,000 vehicles. At the other end of the spectrum, another analyst cut his estimate to just 406,500 vehicles.
The analyst consensus given by FactSet has fallen a lot in recent weeks, but at 457,000 it remains much higher than the latest estimates. That is likely because the average takes into account many stale estimates from analysts who aren’t looking at the most-recent data.
One hint of where the actual consensus among investors sits—the number that might determine whether the stock falls or rises on the report—comes from Kalshi, which runs a so-called prediction market that allows bettors to wager directly on Tesla’s delivery numbers and other trading events. As of Thursday, the consensus indicated by bets on the platform was for sales a bit below 420,000.
Delivery numbers aren’t the only thing Tesla investors focus on, of course. Right now, the company’s automated-driving software is causing a lot of excitement, though progress is hard to pin down. Still, sales remain the bedrock of the company’s growth prospects, including for software: The more vehicles Tesla sells, the more potential customers for digital subscriptions later. That helps explain why the stock is down almost 30% this year.
As it stands right now, Tesla’s numbers aren’t looking to great. We will, of course, keep you folks updated when the Austin, Texas-based automaker releases its official first quarter results in the coming days.
2nd Gear: Other Automakers Are Doing Just Fine
So, Tesla isn’t doing too hot, but apparently just about everybody else is. Analysts are expected March to be one of the strongest months in terms of car sales in the last three years. They can thank increased incentives and rising inventories for their good fortune. Of course, these numbers are just estimates. We’ll get official numbers next week. From Automotive News:
Estimates from Cox Automotive, S&P Global Mobility, Edmunds and GlobalData put sales volumes over 1.4 million vehicles in March, up 5 to 6 percent from a year ago and only the second time since May 2021 that monthly sales have topped that level.
Cox estimates quarterly sales will come in at 3.76 million, which would be a 5.5 percent increase over a year ago when inventories were tighter, but down slightly from the fourth quarter of last year because of seasonality. Cox pegged the seasonally adjusted, annualized rate of sales would reach 15.5 million in March. S&P Global Mobility projected volumes to reach 1.47 million in March and also estimated the month’s selling rate would reach 15.8 million. GlobalData predicted an even more robust SAAR of between 16 and 16.4 million.
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Despite the relatively strong market, individual automaker results are expected to be mixed, thanks in large part to comparisons with last year, when several Japanese automakers were still struggling to rebuild their inventories. Cox predicted quarterly gains of 14 to 22 percent for Toyota, Honda and Mazda, while predicting year-over-year losses at Stellantis, General Motors and Hyundai. Other automakers were forecast to finish up in single digits.
More factors helping automakers move vehicles? Prices and high interest rates are actually coming down a bit. Cox Automotive told AutoNews that average transaction prices in March dropped to $47,244. That’s down two percent from a year ago and five percent from their peak in December 2022.
Here’s the latest on EV sales:
Within the electric vehicle market, Cox said days’ supply declined in March to 114 days, down from 159 in February. Meanwhile, EV prices continue to decline, thanks largely to price drops from Tesla and greater incentives, while growth in EV sales slows. Cox said EV sales were up 15 percent compared with the first quarter of last year but may have declined from the fourth quarter of 2023.
It seems that we’re heading to a bit of a boom time when it comes to auto sales. Like Tesla’s news, we’ll be sure to bring you official first quarter results when they’re actually published.
3rd Gear: Mercedes Takes Hit In Diesel Cheating Suit
On March 28 a German court ruled partly in favor of consumers in a class action lawsuit against Mercedes-Benz alleging the German automaker used diesel emissions defeat devices. From Reuters:
Some of the German luxury carmaker’s diesel models with the Euro 6 grade engines built between 2012-2016 had cheat devices, the Stuttgart court said. It found no violations in the older Euro 5 models, however.
Owners can return the cars and count on a refund minus wear and tear, provided the intended violation is confirmed, the court said in its verdict.
“An important course for damages claims has now been set,” said the Federal Association of Consumer Organizations (VZBV), representing around 2,800 consumers in the case.
Mercedes said it would fine an appeal and has denied any wrongdoing.
“We continue to believe that the claims asserted against our company are unfounded and will defend ourselves against them” a spokesperson for the automaker told Reuters.
4th Gear: 427,000 Kia Tellurides Recalled For Rollaway Risk
Kia is recalling about 427,000 2020-2024 Telluride mid-size SUVs (that’s all of them) in the U.S. over a potential defect that could cause them to roll away while in park. from Automotive News:
The intermediate shaft and right front driveshaft on those vehicles might not be fully engaged because of “suspected improper assembly by the supplier,” according to a recall report submitted Tuesday to NHTSA.
“Over time, partial engagement can cause damage to the intermediate shaft splines,” the report states. “Damaged shaft splines may result in unintended vehicle movement while in ‘park’ if the parking brake is not engaged.”
To prevent vehicle rollaway, Kia is advising owners to move the gear shifter to the “park” position and manually engage the electronic parking brake before exiting their vehicles.
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Mobis Alabama supplies the bearing bracket and shaft assembly, according to the report.
To fix the issue, dealers will install updated electronic parking brake software. If damage to the intermediate shaft is found after the update, dealers will replace the part.
Dealers will be notified starting May 13. Owners will be notified starting May 15.
Luckily, Kia told NHTSA that there haven’t been any crashes, injuries or deaths related to the Telluride fault.