Happy Friday! It’s February 2, 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: Could Tesla Move To Texas?
After a Delaware court ruled that Elon Musk’s Tesla pay packet was obscene, the company’s boss is now looking to move his firm out of Delaware and into Texas, reports CNBC. The move must go before a shareholder vote and would see the EV maker transfer its state of incorporation to Texas.
To decide if it was a good idea to move the state of incorporation to Texas from Delaware, Musk obviously took to Twitter X and asked his army of loyal followers if they thought it was sensible move. The vote came back in favor of a switch to Texas and Musk said he would now put the move to the board. CNBC News reports:
Musk’s X post comes after a judge in Delaware voided the $56 billion pay package for the Tesla CEO granted in 2018, the largest compensation plan in public corporate history. Chancery Court Chancellor Kathaleen McCormick ruled that the company’s board of directors failed to prove “that the compensation plan was fair” or show much evidence that they had even negotiated with Musk.
Musk subsequently expressed dislike for the state.
“Never incorporate your company in the state of Delaware,” Musk posted on X this week.
The big attraction of a move to Texas, CNBC explains, is that the state “is more lax about paying large sums to CEOs.” However, the move is far from certain as shareholders may believe the switch from Delaware to Texas is “a choice made for Musk-selfish reasons.”
2nd Gear: Ferrari Made $1 Billion Last Year
It’s been a busy few days for Ferrari. Yesterday, the Italian supercar company announced that seven-time Formula 1 champion Lewis Hamilton would be joining its race team and now, the company shared details about how it’s able to afford his salary.
In its latest financial results, Ferrari revealed that it had a bumper year in 2023, topping profits of $1 billion after sales were boosted by new models and additional personalization options. According to the Financial Times, Ferrari’s 2023 revenue rose 17 percent to more than $3 billion. The FT reports:
More than €460m of Ferrari’s increased profits came from selling higher-priced cars, better sales in the Americas and China, as well as a rise in personalized features such as colored brake calipers or bespoke paint jobs.
Ferrari is now expecting annual adjusted earnings before interest, taxes, depreciation and amortization of at least €2.45bn for its current financial year, up from €2.28bn in 2023, although it warned that cost inflation would “persist”.
The boost in sales has been attributed to the addition of the Ferrari Purosangue SUV to the company’s range. The Italian firm’s first SUV went on sale last year, starting at $398,350. Sales were also bolstered by the 296 and the convertible version of the Roma. About 33 percent of the cars Ferrari sold last year also featured hybrid powertrains.
The positive results for the company did wonders for its share price yesterday, as did the news that Hamilton was joining the F1 team. At close of business yesterday, Autosport reported that Hamilton’s move to Ferrari had added roughly $7 billion to Ferrari’s market cap.
3rd Gear: Toyota Might Have Been Right About Hybrids
While automakers like Ford, Mercedes and BMW have been scrapping to electrify their offerings, Japanese manufacturer Toyota always seemed hesitant to hop on the plug-in bandwagon. Now, it looks like that reluctance might be about to pay off as U.S. consumers are increasingly choosing hybrid models over fully electric vehicles.
According to a report from Reuters, worries over EV ranges, charging infrastructure and higher prices are all pushing new car buyers away from electric models. Instead, they are looking to cut their emissions through hybrid models, which Toyota has stuck with while other automakers have switched to battery-powered lineups. Reuters reports:
“Pretty much every model we sell now is either exclusively hybrid or has a hybrid variant,” Greg Davis, general manager of Walser Toyota, a dealership in Minnesota, told Reuters.
He said his outlet is trying to get the number of hybrid vehicles it sells up to 40%-50% of total sales, as Toyota moves to make its best-selling sedan in the U.S. market, the Camry, available only in a hybrid version.
As it stands, Toyota’s lineup of hybrid models includes the Camry, Corolla Cross and the Highlander. In contrast, GM has only this week announced that it’s planning to finally bring more hybrid models than just the Corvette E-Ray to U.S. shores.
While banking on hybrids might be working for Toyota now, there is a risk that once battery power really takes off the company may be left in the dust. But only time will tell.
4th Gear: Used Car Prices Continue Falling
Sometimes it feels like the onslaught of bad news about the car market is never ending. First it’s delays on deliveries, then it’s rising prices of anything with four wheels. Now, it appears as if the tides are changing, as Automotive News reports that used car prices may be finally about to take a dip.
In a new report from the site, experts suggested that 2024 could see the average price of a used car in the U.S drop by almost six percent. The drop would be greater than the dip in used car prices seen in 2023, when the average price of a used car fell by 3.5 percent. Automotive News reports:
Despite the decline, consumers are still paying roughly 20 percent more for used vehicles than before 2020, Banks said. Prices averaged about $24,100 in 2019 and are at about $31,400 today.
And the number of affordable vehicles is disappearing. Banks said 41 percent of used vehicles sold in 2019 were under $20,000, but today that figure is 20 percent.
The drop in prices will be a step in the right direction for consumers, but many are still paying astronomical monthly fees to keep their cars on the road. Automotive News adds that average used-vehicle payments are $555 per month, an increase of $141 over 2019 levels.