The last four years in the automotive industry have been dominated not by electric cars or hybrids, but by the search for chips. For most automakers, this meant the kind of cheaper, less advanced chips designated for automotive use. Now, Elon Musk might be in trouble after reportedly taking the most advanced chips used for AI and designating them for X/Twitter instead of Tesla.
What a weird world we live in, where instead of horsepower we’re having to think about floating-point operation per second.
All that being said, electric cars are still important, and we have two somewhat competing views in Detroit on EVs and hybrids playing out right now. I’m going to take them individually and we can see where we’re going to land.
And, let’s end this hump day Morning Dump with cranky Senator Joe Manchin trying to get someone to sue the Treasury Department.
Chips Rule Everything Around Me, CREAM
I think I keep making variations of this Wu-Tang joke because I’m a Millennial. A Wu-Tang joke is the ultimate Millennial flex, I suppose.
You can read my very long article on Trimflation to understand how, early in the pandemic, automakers canceled orders for the microprocessors that are required for their cars in anticipation of shrinking demand. That’s not what happened. Demand soared, production slowed, and prices went way up.
I wrote that a reason why Tesla CEO Elon Musk might be rolling back his plans for a $25,000 car was that he’s more interested in AI and robotaxis and autonomy. This was only bolstered by Musk’s earnings call, wherein he explained:
“If somebody doesn’t believe Tesla’s going to solve autonomy, I think they should not be an investor in the company.”
To “solve autonomy” it’s assumed that Tesla is going to need a lot of chipmaker Nvidia’s H100 GPUs, which is sort of the Garrett Turbo of computing. And, in fact, Tesla ordered a bunch of them.
At the same time X/Twitter, also run by Elon Musk, has been touting its Grok AI as an alternative to services from OpenAI, Google, and Meta AI platforms. What does it need for that? Super fast GPUs. Nvidia’s stock has gone to the moon because the company can’t make them fast enough.
What’s a Musk to do? According to some great reporting from CNBC, the move might be to kick some of those Nvidia chips to X/Twitter first:
But emails written by Nvidia senior staff and widely shared inside the company suggest that Musk presented an exaggerated picture of Tesla’s procurement to shareholders. Correspondence from Nvidia staffers also indicates that Musk diverted a sizable shipment of AI processors that had been reserved for Tesla to his social media company X, formerly known as Twitter.
Tesla shares slipped as much as 1% on the news Tuesday morning.
By ordering Nvidia to let privately held X jump the line ahead of Tesla, Musk pushed back the automaker’s receipt of more than $500 million in graphics processing units, or GPUs, by months, likely adding to delays in setting up the supercomputers Tesla says it needs to develop autonomous vehicles and humanoid robots.
That’s, uh, not good. One of the big complaints that Tesla investors have is that Elon Musk is splitting his time between too many of his companies (Starlink, X, Neuralink, Cracker Barrel, SpaceX). This seriously bolsters that argument.
At the same time, Tesla is asking shareholders to give Musk a huge payout, and Musk has loudly said he wants more control/money or maybe he’ll stop caring about Tesla:
I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned.
Unless that is the case, I would prefer to build products outside of Tesla. You don’t seem to understand…
— Elon Musk (@elonmusk) January 15, 2024
Just to get one more reference that David might not understand in this post, this is basically the scene in Blazing Saddles where Clevon Little points a gun at his own head and threatens to shoot himself.
“Oh baby, you are so talented… and they are so dumb”
[Ed Note: Yeah, I got nothin’. -DT]
Ford Keeps Selling EVs At A Record Rate
If you put me in a footrace with Usain Bolt and three toddlers I could say that I came in 2nd in a race with Usain Bolt. That is roughly how it feels when Ford proclaims that it is the 2nd biggest EV brand in the United States after Tesla.
The gap is pretty large, though Ford keeps narrowing it (Tesla’s market share from Q1 2023 to Q1 2024 dropped from 62.4% to 52.1% whereas Ford’s increased from 4.2% to 7.4% over the same period). Also, if you count Genesis-Hyundai-Kia together it’s second at 8.5% market share.
Ford has made it clear it’s going all-in on hybrids in the near term while focusing on building a cheap EV for the long term. Nevertheless, Ford’s EV sales were up 64.7% in May of 2024 over last May. That compares to a 64.5% increase in hybrid sales for the month (to 17,631) and just a 5.6% increase in traditional ICE vehicles.
Leading the way is the Mustang Mach-E with 4,255 cars sold, up 45.9% year-over-year. At the same time, F-150 Lightning sales were up almost double with 3,260 trucks moved. Even the E-Transit broke into four-figures with 1,451 vans sold.
Ford has long said its current EVs are not profitable and, while it wouldn’t mind you buying one, its target is a cheaper, skunkworks car that is apparently coming.
GM Is Slowly Coming Around
GM is in a different position. It made its big EV investment earlier than Ford and we’re just now seeing all its efforts play out in the market. While GM is reluctantly coming around to hybrids, the company could also be EV profitable if it managed to sell enough of its current crop of electric vehicles.
CEO Mary Barra spoke to investors and there were a lot of questions about the EV transition, with Barra indicating that the company’s goals were a bit more of a moving target than they seemed a few years ago.
As reported by the Detroit Free Press, the first question was about how GM might adapt to the changes in consumer preferences.
Barra answered that GM leaders anticipated there would be “ebbs and flows in EV adoption,” which is why GM offers a diverse portfolio of gasoline-powered vehicles, electric and soon plug-in hybrid vehicles.
That’s a long way from GM’s initial (and abandoned) goal of making 400,000 EVs by the middle of this year.
Senator Joe Manchin Wants Companies To Sue U.S. Over Bill He Made Happen
There would be no Inflation Reduction Act without West Virginia Senator Joe Manchin. His surprise embrace of Joe Biden’s green initiative included a number of requirements, including ones focused on keeping content from China and other countries out of batteries.
While a lot of his requirements are being acknowledged and written into law, there are a number of caveats being pursued by the U.S. Treasury Department that get around these requirements. This has made Senator Manchin a wee bit upset, as one interpretation of what happened is that President Biden played the senator.
That’s a fun interpretation. The other way to look at it is that President Biden has to balance concerns from allies and certain realities in order to govern, and Senator Manchin isn’t the president so he gets to ignore reality a bit and act big mad.
Anyway, U.S. Treasury Secretary Janet Yellen was testifying before the U.S. Senate Appropriations Committee about the bill and this happened according to Reuters (you can also see it in the video above):
Manchin told U.S. Treasury Secretary Janet Yellen during a hearing of the Senate Appropriations Committee that U.S. manufacturers were being damaged by the content rules, which he said Treasury had halved from the original language in the law.
“I’m encouraging every manufacturer to sue you, and I will do the amicus brief on (their) behalf …. and you’ll lose every suit,” he said, holding up posters comparing the content requirements included in the legislation with those set in final rules by Treasury, which is implementing the IRA.
Yellen, always chill, said she shared his concerns and would love to chat with the senator about his issues.
What I’m Listening To This Morning
All Wu-Tang Clan videos are wonderful and chaotic, but not all start with a minty Infiniti Q45 and include a Mazda MPV shoutout.
The Big Question
Who will be the #2 EV brand in the United States in Q4 2024?
Top photo: The David Lynch “Dune”
See, Elon’s mouth reminds me more of this scene from Blazing Saddles: https://www.youtube.com/watch?v=FXHkFZ-nG4Y
As for the #2 largest EV maker, maybe Hyundai? Hyundai, Genesis and Kia seem to be the most committed to putting out new electric models at the moment, and they’re pretty compelling ones: long-ranges, a three-row SUV, luxe Genesis models, relatively reasonable pricing on its mass-market options and funky styling that isn’t eye-searing (…bcc: BMW).
See, Elon’s mouth reminds me more of this scene from Blazing Saddles: https://www.youtube.com/watch?v=FXHkFZ-nG4Y
As for the #2 largest EV maker, maybe Hyundai? Hyundai, Genesis and Kia seem to be the most committed to putting out new electric models at the moment, and they’re pretty compelling ones: long-ranges, a three-row SUV, luxe Genesis models, relatively reasonable pricing on its mass-market options and funky styling that isn’t eye-searing (…bcc: BMW).
I can’t help but feel that the hybrids are going to win out not just in the immediate near-term, but also in the medium-term. seems that there are so many people out there who are ready for partial electrification but can’t swing a BEV in their current situation. We’ve seen how the hybrid strategy has worked out for Toyota (really really well). Honestly Stellantis seems to have a really good idea on their hands with the new range-extended RAM truck, will be interesting to see how it performs on the open market
I can’t help but feel that the hybrids are going to win out not just in the immediate near-term, but also in the medium-term. seems that there are so many people out there who are ready for partial electrification but can’t swing a BEV in their current situation. We’ve seen how the hybrid strategy has worked out for Toyota (really really well). Honestly Stellantis seems to have a really good idea on their hands with the new range-extended RAM truck, will be interesting to see how it performs on the open market
#2: KIA/Hyundai.
Musk – going MAGA – will turn Tesla to sh*t. Now supports a criminally convicted candidate who promised Oil execs he’d ban EV sales if they gave him a billion bucks. Musk has to go, he has no idea what it means to run a publicly traded company, and other peoples’ money is not just his entitled due.
#2: KIA/Hyundai.
Musk – going MAGA – will turn Tesla to sh*t. Now supports a criminally convicted candidate who promised Oil execs he’d ban EV sales if they gave him a billion bucks. Musk has to go, he has no idea what it means to run a publicly traded company, and other peoples’ money is not just his entitled due.
Given that Manchin was trying to play Biden during that whole IRA “discussion”, I find it hard to have much sympathy for him if he was the one who got played instead.
I’m also curious which manufacturer he thinks is going to sue because the restrictions were too loose. There’s already been a huge influx of new factories in the US because of this bill, and the foreign manufacturers were pissed because it excluded them. The IRA did exactly what it was supposed to (at least in this specific instance).
I don’t often agree with Musk these days, but he’s spot on about that. Tesla is valued as something other than a car company, so if you think they’re just going to keep making cars you should run away. Like I did.
When car sales dip – tesla stock dips. That’s the reality no matter what dystopian dreamscape occupies what is left of Musk’s brain. He can play in his sandbox, but either he develops a coherent car strategy or he leaves and lets someone else do it. I thought geeeneeusses could do more than one thing at once.
But if it is valued as an AI company, how do explain his poaching AI employees from tesla to AIx, losing his Tesla head of AI, and diverting resources from Tesla AI? Breach of corporate duty. Cake and eat it too? Entitled POS pouting expensively?
Given that Manchin was trying to play Biden during that whole IRA “discussion”, I find it hard to have much sympathy for him if he was the one who got played instead.
I’m also curious which manufacturer he thinks is going to sue because the restrictions were too loose. There’s already been a huge influx of new factories in the US because of this bill, and the foreign manufacturers were pissed because it excluded them. The IRA did exactly what it was supposed to (at least in this specific instance).
I don’t often agree with Musk these days, but he’s spot on about that. Tesla is valued as something other than a car company, so if you think they’re just going to keep making cars you should run away. Like I did.
When car sales dip – tesla stock dips. That’s the reality no matter what dystopian dreamscape occupies what is left of Musk’s brain. He can play in his sandbox, but either he develops a coherent car strategy or he leaves and lets someone else do it. I thought geeeneeusses could do more than one thing at once.
But if it is valued as an AI company, how do explain his poaching AI employees from tesla to AIx, losing his Tesla head of AI, and diverting resources from Tesla AI? Breach of corporate duty. Cake and eat it too? Entitled POS pouting expensively?
So where in the process did Tesla get delayed again? Does Tesla already have the building to house and setup these supercomputers? Or are they just going to sit in a warehouse and Tesla will have to pay for storage? If so, I got get me some TSLA so I can join the lawsuit!
So where in the process did Tesla get delayed again? Does Tesla already have the building to house and setup these supercomputers? Or are they just going to sit in a warehouse and Tesla will have to pay for storage? If so, I got get me some TSLA so I can join the lawsuit!
If GM didnt stop selling the Chevy Bolt and expanded their portfolio how they are doing today with the Equinox EV, Blazer EV, Lyriq and Silverado EV, they will be number #2. They are a little late to the game compare to Ford but they are covering a lot of segments with electrification options.
It’s an interesting point. I do think they can catch up quite a bit with the Silverado. I think that Ford’s lead is largely the F150 but there are also aspects that Make the Mach E a more compelling option than the Blazer so I’m sure that’s a factor too. If GM can just get production up on the Lyriq and the Equinox has fairly good adoption, I could see them catching up since those are two spaces Ford doesn’t have an option yet.
If GM didnt stop selling the Chevy Bolt and expanded their portfolio how they are doing today with the Equinox EV, Blazer EV, Lyriq and Silverado EV, they will be number #2. They are a little late to the game compare to Ford but they are covering a lot of segments with electrification options.
It’s an interesting point. I do think they can catch up quite a bit with the Silverado. I think that Ford’s lead is largely the F150 but there are also aspects that Make the Mach E a more compelling option than the Blazer so I’m sure that’s a factor too. If GM can just get production up on the Lyriq and the Equinox has fairly good adoption, I could see them catching up since those are two spaces Ford doesn’t have an option yet.
Where’s the sky blue Land at?
Wait for the Millenia green to pull up
Where’s the sky blue Land at?
Wait for the Millenia green to pull up
The state pension funds (yes, government sponsored pensions still exist and control many billions of dollars) that are shareholders in Tesla are likely readying their lawsuits now.
Also, if you invest in a 401k, it’s likely that some mutual fund you own has a stake in Tesla. That may give the fund company standing to sue. IANAL.
Musk needs to shoot himself off to Mars yesterday. Then we won’t have to deal with his toddlerish behavior.
The state pension funds (yes, government sponsored pensions still exist and control many billions of dollars) that are shareholders in Tesla are likely readying their lawsuits now.
Also, if you invest in a 401k, it’s likely that some mutual fund you own has a stake in Tesla. That may give the fund company standing to sue. IANAL.
Musk needs to shoot himself off to Mars yesterday. Then we won’t have to deal with his toddlerish behavior.
The
spicechips must flow! Wow, prioritizing one of his companies over another is bad, but Musk prioritizing his privately held company is worse. Between that and threatening to ignore Tesla if he doesn’t get his way, If I were an investor I would consider a lawsuit, but I don’t believe Tesla will solve autonomy, so I’m not an investor and I have no standing to sue. (Is that sentence long enough? Meh, I could probably add a couple more words.) All I can do is sit back with myspicepopcorn and watch it unfold.