Good morning! It’s Tuesday, August 6, 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: Lucid Gets Another Lifeline Despite Cash Burn
Lucid just reported a second-quarter net loss of $790 million even though it recorded a record number of sales for its Air electric sedan in the April-June period. Somehow, the loss was 3.4 percent higher than it was during the same quarter last year. Second-quarter revenue was $201 million, which is a 33 percent improvement over the $151 million in the same timeframe a year earlier. Lucid says it ended the second quarter with cash, cash equivalents and investments of $4.3 billion.
Still, its biggest shareholder, Saudi Arabia’s Public Investment Fund is sending the California-based automaker another $1.5 billion to shore up its finances. From Automotive News:
Ayar Third Investment, an affiliate of the Saudi fund, has agreed to buy $750 million worth of convertible preferred stock and provide a similar amount as a credit line, Lucid said in a news release.
“The additional $1.5 billion commitment by an affiliate of the PIF announced today is expected to provide sufficient liquidity into at least the fourth quarter of 2025,” said Gagan Dhingra, Lucid’s interim CFO.
The Newark, Calif., startup, which launched the Air in 2021, said it delivered a record 2,394 cars in the quarter. But Lucid also boosted sales incentives to $16,537 per vehicle, according to Motor Intelligence.
The large sedan, Lucid’s lone model, starts at $71,400 including shipping. Lucid said it will begin production of a three-row crossover, the Gravity, this year. It has a starting price just under $80,000 before shipping.
Prior to the second-quarter earnings report, Lucid said it would seek additional investment for its future product plans. The automaker plans to launch vehicles below $50,000 on a midsize platform starting in late 2026.
“This is a capital intensive business and we do need to raise more money,” Lucid CEO Peter Rawlinson told Bloomberg in mid-July. Rawlinson said Saudi Arabia’s Public Investment Fund remained a long-term partner as Lucid develops new electric models.
Lucid’s main factory is in Casa Grande, Arizona, but it has a small facility in Saudi Arabia that does final assembly on pre-assembled Airs shipped from the United States.
Rawlinson has high hopes for the Gravity, saying it could reach a potential market six times larger than the Air because of Americans’ affinity for crossovers. Pre-production Gravities just started rolling off Lucid’s production line in Arizona on July 31.
2nd Gear: Mercedes To Test L4 Self-Driving In Beijing
Mercedes-Benz says it has become the first international automaker that is allowed to test advanced autonomous driving in Beijing. It comes at a time when domestic and global automakers are racing to develop the technology.
The newly granted approval allows Mercedes to start trials of its Level 4 self-driving systems on Beijing’s highways and urban roads. Basically, that means these cars can perform all driving tasks within certain conditions as long as human override is still an option. Some of the maneuvers that’ll be tested include parking, reversing and turning left in busy traffic without driver intervention. From Bloomberg:
With intense competition in China’s auto market, manufacturers are betting on autonomous driving to gain an edge over competitors and attract customers. Tesla Inc. is working to bring the advanced driver-assistance technology it calls Full Self-Driving to China, gaining permission to test in some areas of Shanghai. General Motors Co. received approval last year to trial self-driving Cadillacs in Shanghai.
Meanwhile, technology companies such as Alphabet Inc.’s Waymo and Baidu Inc.’s Apollo Go are developing robotaxis as the future of mobility, testing driverless services on the streets of cities including San Francisco and Wuhan.
Currently, Chinese regulation allows advanced driver-assistance systems at Level 2 automation, which means that a car can perform steering, acceleration and lane changes, but a human needs to monitor the driving at all times and keep their hands on the steering wheel.
Level 4 autonomy is not going to be an easy one to crack, but I feel like if any automaker’s engineers could do it, it’s Mercedes.
3rd Gear: Kenya’s Mobius Shutters Operations
Mobius, a Kenyan automaker that aimed to make low-priced and rugged SUVs for Africa’s roads, has decided to pull the plug on operations due to financial issues. From Reuters:
Mobius, founded by a London-born investor who experienced the continent’s bumpy roads while working for a forestry company in Kenya, found tax hikes in the East African country meant its business model was no longer sustainable, the source at one of the company’s shareholders told Reuters.
“The business could not sustain itself. There were some challenges,” said the source, asking not to be named.
The owners considered moving production to a different country, but that option was rejected due to the logistical challenges of moving the existing assembly line from Nairobi, the shareholder added.
Mobius initially produced a boxy, no-frills SUV designed for the modest budgets of African consumers, going for 1.3 million Kenyan shillings, equivalent to about $13,000 at the time and roughly half the price of an imported second-hand SUV.
It later launched updated editions with extra features.
Mobius, whose investors include Britain’s Playfair Capital, was part of a push by investors and governments on the continent to create jobs by launching home-grown vehicle manufacturers. They included Uganda’s Kiira Motors, Ghana’s Kantanka and Nigeria-based Innoson Motors.
Unfortunately for Mobius, at the same time, much larger automakers like Toyota and Volkswagen boosted their investments in markets like Kenya and Rwanda to tap into their growing economies and rising consumer demand.
To make matters even more difficult for the company, all new cars have faced some really stiff competition from used cars that are imported from abroad.
On August 15, creditors will vote on the voluntary liquidation.
4th Gear: Nissan Offers Buyout To Some Workers
Nissan is cutting its U.S. salaried workforce through a voluntary severance program as the Japanese automaker deals with a slide in the U.S. market. It will offer buyout packages to white-collar Nissan and Infiniti employees who are at least 52 years old in certain non-manufacturing business units and to those 55 and older in the manufacturing organization. Hourly production workers won’t be impacted. From Automotive News:
In the U.S., Nissan employs about 21,000 people, including about 9,000 hourly workers at three Southeast factories.
Spokesperson Kyle Bazemore declined to say how many salaried jobs Nissan intends to cut or how many employees the company expects to take the severance package. He said a “small percentage” of the salaried workforce is eligible.
Nissan seeks to “optimize business operations and remain competitive for the future,” Bazemore said. “We continue to evolve to meet the needs of the global automotive industry.”
The automaker offered similar buyouts in the U.S. in 2019 and 2020 alongside factory layoffs. It cut employee travel budgets by half in late 2019 and put the U.S. organization on two days of unpaid furlough in January 2020. Bazemore said Nissan does not plan layoffs or other expense reduction measures.
Nissan, like some of its peers, is tapping the brakes on spending as new-vehicle demand cools and market competition heats up.
Nissan’s U.S.-based business has fallen in the post-pandemic era. Its market share dropped 5.8 percent last year from 7.9 percent in 2019. Operating profit has also dropped 99 percent to $6.9 million in the three months ending on June 30. Additionally, net income fell 73 percent to $199 million, and worldwide sales pretty much stalled at 787,000 vehicles in the second quarter.