⚡ Carmakers’ EV anxiety

Monday, November 13, 2023 by Snacks
Parked and waiting for a buyer (John Paraskevas/Getty Images)

Parked and waiting for a buyer (John Paraskevas/Getty Images)

Parked and waiting for a buyer (John Paraskevas/Getty Images)

Parked and waiting for a buyer (John Paraskevas/Getty Images)

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Last Week’s Market Moves
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Hey Snackers,

The newest streamer in town is... NASA? The space agency launched NASA+, featuring original shows and classic footage, for the out-of-this-world price of $0/month. Netflix is shaking.

It was a bullish week for the market: the S&P 500 and the techy Nasdaq notched their longest win streaks in two years as Treasury yields fell, while the Nasdaq popped 2% Friday. Bitcoin hit an 18-month high as investors eyed the possible approval of a spot bitcoin ETF.


1. After committing $100B to the EV transition, top carmakers shift out of the fast lane

Foot off the electric pedal… US automakers have said in recent years that they’d spend billions on EV production. That seemed like a good bet, especially after the Biden admin introduced financial incentives to aid in its goal that half of all new-vehicle sales should be electric by 2030. But lately they’ve been downshifting: GM, Ford, and even Tesla said they’d delay spending on electric models and factories, citing slower sales and econ jitters as they put tens of billions in investments on ice.

  • GM ditched its goal of building 400K EVs by next summer and is delaying the release of some new models as automakers second-guess electric financials.

  • Ford pushed back its plan to spend $12B on EV factories, saying customers are reluctant to pay extra for e-whips.

  • Tesla (which accounts for half of all EV sales) might delay building a $1B plant in Mexico. Despite steep price cuts, Tesla’s Q3 sales fell from Q2.

Fast but not furious (enough)… Last quarter, US EV sales were up 50% from a year ago, growing faster than any other major car category (like: gas, hybrid) and accounting for 8% of all new cars sold. Still, execs expected even stronger growth to validate the major moolah they’re investing. EV sales growth has cooled, despite price cuts to fuel demand. Not to mention: federal tax credits of up to $7.5K for buyers.

  • Car cos say they’re still committed to the electric transition, but intense competition has pushed prices down.

  • The EV-price-slashing race has cut into profits, while demand (though strong) isn’t enough to offset the hits.

  • FYI: Tesla is the only US carmaker with a profitable EV business, and its profit plunged 44% last quarter after it cut prices by ~25%.


The price is still not right… For carmakers, repeatedly dropping prices could be a losing game. For Main Street buyers, prices (and loan rates) are still too high, even with generous gov’t incentives. The average price paid for an EV in the US last month was about $51K, down from $65K last year. Range anxiety is easing, thanks to investments in charging networks, but price is still the top concern for folks considering going electric.

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2. Coming up this week

’Tis the holiday decor szn… Wall Street thinks Walmart's stocking could have more treats than Target’s when both report this week. In August the grocery leader upped its annual sales forecast as its low prices attracted thrifty shoppers, lifting quarterly profits up 53% to $7.8B. Meanwhile, Target cut its outlook after sales fell 5%. Now it plans to roll out more affordable store brands to lure festive shoppers. And for good reason: US holiday retail spend is expected to hit a record $966B as folks snap up eggnog and reindeer pillows.

If Xi’s going to San Francisco… he likely won’t wear flowers in his hair. China’s president is visiting the US this week for the first time since 2017. He and Biden are set to meet Wednesday in the SF area for a chat that could help thaw an icy rivalry. Biz-related topics could include Western firms pulling $$ out of China, and US sanctions on exporting advanced tech to China. Xi’s also expected to be the guest of honor at a dinner with top US biz execs, who just can’t turn their backs on the world’s No. 2 economy.

Zoom Out

3. Stories we’re watching

55 burgers, 55 fries… Booths are going the way of the McDLT as fast-food chains pour $$ into drive-thru innovation (which apparently didn’t peak with the second window). Drive-thru visitors rose 30% from 2019 to 2022, while indoor dining dropped 47% from 2019. Now chains are in a to-go space race. McDonald’s and Taco Bell have opened drive-thru-only stores. Chick-fil-A is building a drive-thru highway: a four-lane location that serves 75 cars at once. And AI chatbots have taken orders at chains like Carl’s Jr. and Wendy’s.

Mine your business… Bitcoin transaction fees are up 1,000% since August as a boom in NFT minting on the OG blockchain (aka ordinals) drives on-chain action. For publicly traded miners like Marathon Digital, Riot Platforms, and Hut 8, higher transaction fees = more $$. Hut 8’s earnings tomorrow could provide a clue whether those fees are meaningful enough to cushion the blow of next year’s bitcoin halving — when the # of BTC that miners earn for the same amount of work will be cut in (you guessed it) half.

What else we’re Snackin’

  • Fuel: AI data centers are electricity guzzlers. Now Amazon, Microsoft, and Google are looking for alt-energy sources as the AI boom strains the grid (AI could consume up to 3.5% of the world's electricity by 2030).

  • Clash: ~300 factories in Bangladesh have closed as thousands of workers who make clothes for brands like H&M and Zara parent Inditex protest over wages as low as $75/month. They’re seeking a 3X pay increase.

Snack Fact of the Day

Before 1941, Thanksgiving was observed on whatever date the president decided

This Week

  • Monday: Asia-Pacific Economic Cooperation summit. Earnings expected from Tyson Foods and Grindr

  • Tuesday: October consumer-inflation report. Earnings expected from Home Depot, Getty Images, and Sonder

  • Wednesday: Earnings expected from Target, TJ Maxx, and Cisco

  • Thursday: Earnings expected from Alibaba, Walmart, Macy’s, Warner Music Group, Dole, Ross, and Gap

  • Friday: Earnings expected from BJ’s Wholesale Club

Authors of this Snacks own bitcoin and shares of: Alphabet, Amazon, GM, Microsoft, Riot Platforms, Tesla, Walmart, Warner Music, and Yum Brands

*Source: Deloitte.

Advertiser's disclosure: Please read the offering circular and related risks at invest.modemobile.com. This is a paid advertisement for Mode Mobile’s Regulation CF Offering.

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