Good morning! It’s Wednesday, November 13, 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: VinFast Gets Another $3.5 Billion To Burn
It’s safe to say that VinFast’s rollout of its portfolio of electric cars hasn’t been smooth. The Vietnamese automaker has faced negative reception here in the U.S., recalls of its new cars and mounting losses. Now, the automaker has been handed a massive funding boost in an attempt to finally make its EV business a success.
The Vietnamese automaker has so far burned through more than $1 billion of its founder’s money this year alone, and the automaker was handed an extra $1 billion by the Emirates Driving Co. just last month. The VF8 manufacturer has now been given a $1.4 billion loan from parent company Vingroup, plus a $2.1 billion sponsorship from its chairman, reports Electrek:
Vietnamese EV automaker VinFast has just secured more funding to continue its operations. VinFast has been offered a loan for billions more from its parent company, Vingroup, including a $2.1 billion “sponsorship” from the Group’s chairman, Pham Nhat Vuong. All this is to achieve a break-even point and cash flow balance by the end of 2026.
As a young EV automaker out of Vietnam, VinFast remains the new kid on the block. To make a name for itself out of the gate, however, the automotive business entity under Vietnam’s largest conglomerate, Vingroup, came out absolutely sprinting off the starting line.
The “move fast and break stuff” strategy has worked for other new companies in the past, but part of that wreckage usually includes the bank. Scaling is not easy (or cheap), and at the rate VinFast has been moving, it’s even more expensive to do it so hastily.
According to a December 2022 filing with the SEC, VinFast reported whopping net losses of $1.3 billion in 2021 and $1.45 billion through September 30, 2022, with additional losses expected to incur “in the near term.”
The automakers losses continued into 2024, with VinFast reporting an unaudited loss of $224.1 million in the second quarter this year, marking a 42 percent increase over losses sustained in the first three months of the year.
The continued losses followed claims from Vingroup chairman Pham Nhat Vuong that he was done handing out cash to the struggling automaker. His promise didn’t last long, though, as the automaker has been handed more than $5 billion in extra support over the past year.
All this additional funding helped VinFast deliver just 13,000 cars in Q2 of this year as well as an additional 13,000 electric scooters. I’m pretty sure I’d be able to sell more than 13,000 cars if had a budget of $5 billion to play with.
2nd Gear: Depreciating Teslas Are Costing Hertz Big
VinFast isn’t the only global giant losing big on electric vehicles, as rental firm Hertz discovered the hard way what electric vehicles can do for its profits. Sure, the Florida-based rental giant isn’t burning cash developing EVs or the infrastructure to build them, but this hasn’t stopped Hertz from losing more than a billion dollars though its big bet on Tesla, reports Bloomberg.
American rental firm Hertz missed its earning targets and saw its share prices fall after revealing that its fleet of Tesla rental cars had cost it more than $1 billion in depreciation, reports Bloomberg. The losses made this the fourth straight quarter in which Hertz has lost money as a result of rollout of rental Teslas:
Hertz Global Holdings Inc. tumbled after the company reported a worse-than-expected loss stemming from the rental-car company’s failed bet on electric vehicles and heavy depreciation costs that have pummeled earnings for the past year.
The company posted an adjusted loss of 68 cents a share in the third quarter, more than the 46-cent average deficit estimated by analysts. Hertz also took a $1 billion non-cash impairment charge during the quarter, largely due to the lower value of the battery-electric and gas-powered vehicles in its fleet, the company said in a statement on Tuesday.
Hertz shares fell as much as 12% as of 11:33 a.m. in New York on Tuesday, the most intraday since June 6. The stock had declined 68% this year through Monday’s close.
Hertz began frantically offloading its fleet of rental Teslas earlier this year after the price of Elon Musk’s EVs began plummeting. The falling price of new Teslas meant that Hertz was stuck with an inventory full of cars that were “worth far less than it could fetch in the resale market,” adds Bloomberg.
As a result, Hertz has pledged to sell off around 30,000 Teslas by the end of 2024. The move, Hertz says, will mean its EV offering is more in line with the demands of renters across America. While that’s bad news for Hertz and its shareholders, it could be good news for anyone looking to pick up a bargain on a used EV.
3rd Gear: Rivian And Volkswagen Make It Official
Losses at Hertz and VinFast after betting big on EVs won’t put Volkswagen off its mission to go all-in on battery power. The German automaker has this week made its commitment to EV startup Rivian official and has boosted its investment in the American automaker to $5.8 billion.
Rivian and Volkswagen announced their ambition to work together earlier this year, with VW pledging $5 billion in support for the EV maker at the time. Now, the two companies have officially kicked off the partnership and VW has expanded its support for the electric truck maker, as Automotive News reports:
“The partnership with Rivian is the next logical step in our software strategy,” said Oliver Blume, CEO of Volkswagen Group. “With its implementation, we will strengthen our global competitive and technological position.”
In a joint statement, the automakers said the tie-up will aim to use the existing Rivian electrical architecture and software, enabling the launch of Rivian’s next vehicle, the R2 crossover, in 2026 and the first models from VW Group as early as 2027.
“Today’s finalization of our joint venture with Volkswagen Group marks an important step forward in helping transition the world to electric vehicles,” Rivian CEO RJ Scaringe said. “We’re thrilled to see our technology being integrated in vehicles outside of Rivian, and we’re excited for the future.”
After the initial phase of applying Rivian’s electrical system and related software to VW Group vehicles, the automakers will develop an architecture for software-defined vehicles that will find its way into a variety of brands, including Audi and Porsche, Blume said on a conference call with reporters.
The joint venture between the two companies will not include the use of Rivian’s in-house electric motors in VW cars, added Rivian boss Scaringe. While this might feel a little like buying vinyl just to look at it, the deal will at least offer up new electronics and technologies that can be shared between Rivian and the wider Volkswagen Group.
The deal follows similar tie-ins between other EV startups and legacy automakers around the world. Lucid inked a deal with Aston Martin that would allow the British brand to use its motor tech in an upcoming EV.
4th Gear: Global EV Sales Up 35 Percent
With stories of VinFast’s struggles to make its EV business work, tales of Tesla’s issues selling cars and falling investment in electric vehicles, you’d be forgiven for thinking that the sector was doomed. It isn’t, though, and is instead growing every month with global sales of EVs up by more than a third in October.
Sales of electric cars jumped by 35 percent in October, reports Reuters, with the sector boosted by an incredible 54 percent gain in China. It wasn’t just China that was growing, however, as Europe and the U.S. both saw sales of electric cars rise over the past month, as Reuters reports:
Sales of EVs – whether fully electric or plug-in hybrids – reached 1.72 million worldwide in October, Rho Motion data showed.
Sales in China hit a record high 1.2 million vehicles.
In the United States and Canada, EV sales were up 11.4% to 0.16 million, while in Europe, they reached 0.26 million, up slightly on the year but down 14% from September. In the rest of the world, sales increased 10.9%.
October marked the second consecutive month that EV sales were up in Europe, despite carmaker VW warning that the bloc was in dire straits and it would need to close factories as a result of the EV takeover.
Sales of EVs have been growing almost every month in 2024, with fewer than 1 million electrified cars sold around the world in January and now more than 1.7 million battery-powered cars were sold in October.
With positive momentum taking hold here in the U.S. it’ll be key to see how president elect Donald Trump and best bud Elon Musk will maintain interest in the sector despite the “Home Alone 2″ actor’s widely reported hatred of electrified vehicles.
