I want to start today with a quote from Bob Lutz, who is a longtime car exec credited with a lot of BMW’s success in the second half of the 20th century. Lutz has variously been a skeptic of green cars, a proponent of EREVs, and a late supporter of EV companies that mostly never went anywhere. Because it’s Lutz, just imagine him saying this with a cigar the length and breadth of an Ohio-class submarine dangling from his lips:
“What makes Faraday think they can produce an electric vehicle cheaper than Tesla?” asked Bob Lutz, the longtime industry executive who has been involved with several small automotive ventures since retiring in 2010 as vice chairman of General Motors. “And Tesla is losing their shirt.”
This is a quote from Bob Lutz in 2015, in an Automotive News feature about upcoming electric cars, which included Elio, Local Motors, Bollinger, Tesla, Faraday Future, and Lucid. Tesla ended up being fine, and Lucid is still around, though the rest of them have variously flamed out or are heading quickly towards such a fate.
Tesla had its Q2 Earnings Call yesterday, and it sounds like it’s not going great. Even worse for investors, it’s possibly going to be rough until the second half of next year, according to Musk. Not like anyone else has it quite figured out. The closest is probably a company like Hyundai, which is still reporting decent profits above expectations as its mix of products is fine for now. Even they’re worried.
Mitsubishi? The company currently makes no cars in the United States and is taking on new competition in its key ASEAN markets. Porsche’s woes are well known to readers of The Morning Dump, and CEO Oliver Blume is taking on a very Alan Mulally approach to the future by selling stuff. It’s worked before!
Elon Musk Was Sort Of Honest About His Company, And It Did Not Go Well
Again, Elon is committing unforced errors on the conference call, in the end this likely won’t matter and is semantic, but it’s completely unnecessary to parade out negatives on the call. Stick to achievements, metrics, and questions on the call, do an all encompassing long…
— Jesse Miller (@jmiller_dot_com) July 23, 2025
Elon Musk’s businesses have always been fueled by a mix of technological achievement and, uh, enthusiastic prognostications that eventually appear. Sometimes. The company did build an electric car that was, for a time, the best-selling car in the world. Every conversation about how Elon Musk’s companies have fallen short requires an admission, right up front, that Tesla did what basically every other car company said was either impossible or a trillion years in the future.
All that being said, optimistic viewpoints of the future require achieving at least some of the things you set out to do, and the results have been mixed lately. According to Elon Musk on last night’s Q2 investor call, the results will continue to be mixed for a little while.
Full disclosure: I did not listen to it live on account of having an early Ultimate Frisbee pickup game on the backup field, which doesn’t have lights. Half of the field was Ultimate, and the other half was a pre-teen softball game. If I’m being totally honest, I think the girls had the better game. So I’ve been listening to it this morning, and it takes me back to what I wrote a year ago after the Q2 2024 call: “Elon Musk Sounds Bummed Tesla Still Has To Make Cars.”
The vibe I got then was that the carmaking business was running into the usual problems of a mature business, including increased competition globally. Rather than talk about cars, he seemed quite interested in robots, AI, et cetera. Shortly after the call, Musk got super involved in politics, with mixed results for himself personally. On last night’s call, he was back to talking about cars a bit more and about all the challenges that will be forthcoming. He also opened with a dick joke, I think.
While there were a lot of positives that Musk talked about related to xAI, Optimus, and robotaxis, he was a bit more blunt when answering a question about the challenges of the car business:
Well, we’re in this like weird transition period where we will lose a lot of incentives in the U.S. We have incentives actually in many other parts of the world, but we’ll lose some in the U.S. Look, we’re still a bit at the relatively early stages of autonomy. On the other hand, autonomy is most advanced and most available from a regulatory standpoint in the U.S. So I mean, does that mean like we could have a few rough quarters? Yes, we probably could have a few rough quarters. And I’m not saying we will, but we could, Q4, Q1, maybe Q2. But once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I think I would be surprised if Tesla’s economics are not very compelling.
That’s fairly straightforward, right? The entire hand-wave of the autonomous car gambit Tesla is undertaking is that the technology will work at a massive scale and that the current government will support it, neither of which is obvious at this point. So far as I can tell, Elon Musk also never mentioned the Cybertruck. It’s the company’s newest all-new product. That’s strange.
Also, the “affordable Tesla” has all but been confirmed to be a decontented Model Y, which is maybe a good idea. Unfortunately, it’s likely not the $25,000 car everyone hoped it would be.
The market is not taking the call well. Tesla is already down this morning and, as you can see in the tweet above, the stans are mad! That specific Tweet/X/Whatever is particularly amusing because the poster is explicitly mad that Musk committed “unforced errors” by not being blindly positive about everything. Musk has both a legal and moral responsibility to be at least somewhat honest on these calls, though it’s clear in the eyes of some that they perceive Musk’s job as making the little number on a stock chat become a bigger number.
What’s also notable is that Tesla’s actual earnings were mediocre by the company’s historical standards, but weren’t that far away from analyst projections. Some have called Tesla a “meme” stock, which isn’t fair. It’s a successful business, selling both cars and regulatory credits. Now that it’s doing neither as well as it has in the past, the stock should reasonably go down. It’s not a “meme” stock, but given how many small-time investors the company has, it might be fair to call it a “vibe” stock. And the vibes are bad.
Building cars has always been hard, and it’s getting harder.
Mitsubishi Is Getting Battered By Tariffs, ASEAN Competition
Mitsubishi Motors is the one Japanese automaker that always seems to be able to quietly keep going, getting neither too big nor too small. It just makes cars for Southeast Asia and the United States that cost neither too much to build nor too much to buy. It’s been a good enough business for a while.
This last quarter (which is Q1 for Japanese companies) was a little less-than-good enough as operating profits fell to just $35.5 million, down by 84% year-over-year. Why? A big deal is that Mitsubishi makes no cars in the United States, so it’s been particularly hit by tariffs. But there’s more, as Nikkei Asia reports:
Kentaro Matsuoka, Mitsubishi Motors’ vice president and CFO, told an online news conference, “Competition for global sales is intensifying as other companies focus on exports to other regions.” He cited Europe and Southeast Asia as new focal points as carmakers shift their gaze away from the U.S.
In Southeast Asia, the company’s most important market, Mitsubishi Motors sold 54,000 vehicles in the three months, down 8.5% from the previous year.
Matsuoka welcomed the lowering of the U.S. tariff rate, saying “both positive factors and negative factors” are affecting the business. But, he added, “the impact of [U.S.] tariffs on our business is wide-ranging, and we cannot view the situation optimistically.”
As for the Japan-U.S. trade deal, he said, “It is unclear how things will move following the agreement. We need to assess carefully. We may need to consider the possibility that the economic outlook could deteriorate structurally and environmentally in some cases.”
It’s hard out there for EV automakers, smaller Japanese automakers, and basically everyone. Is anyone doing well?
Hyundai Beats Estimates, Because Hybrids
Every time I drive a hybrid Hyundai product, I think to myself: “Oh, yeah, this is nice. I could do this.” While I bought a Honda CR-V Hybrid, I think I’d have been happy with a Tucson or a Santa Fe. Everyone else seems to agree, as Hyundai and its various offshoots have had a good year so far.
Hyundai Motor Co. second-quarter earnings beat analyst expectations, propelled by solid hybrid vehicle sales in North America that helped alleviate concerns over slowing global demand and intensifying tariff pressure.
Operating profit was 3.6 trillion won ($2.6 billion) for the three months ended June 30, slightly exceeding the 3.5 trillion won median estimate compiled by Bloomberg. Revenue rose 7.3% from a year earlier to a record 48.3 trillion won, South Korea’s top automaker said in a statement Thursday.
The stock dropped 2% in late afternoon trading, paring some of the immediate losses after the earnings were released.
The results reflect Hyundai’s efforts to diversify its product lineup and shore up profitability despite slowing overall sales and mounting tariff risks, showing robust performance in North America and strong demand for hybrid and electric models.
I’m not sure if this is a perfectly future-proof plan, and Hyunadi doesn’t seem quite so sure either, but it’s working for the moment.
VW CEO Reportedly Wants To Start Selling Stuff
As a company, when money is cheap and profits are up, it’s often a good time to acquire. This is a mantra that Volkswagen has long held, and so the company is sitting on brands (Lamborghini, Ducati), industrial companies (Everllence), and even an IT consultancy (MHP, which is owned by Porsche).
Cash flow is starting to become a concern for companies like Volkswagen, and, according to Manager Magazin, it’s maybe not the worst time to start offloading some of these side projects:
Oliver Blume is now taking a more strategic approach. “Audi needs money. Porsche needs money. VW needs money,” one source explains the situation. The group and its brands are investing tens of billions of euros annually in autonomous driving, battery cells, and new electric and combustion engine models. At the same time, business is modest, particularly at Audi and Porsche, with share prices for the Volkswagen family and the major shareholder holding company Porsche SE depressingly low. Net cash flow is sinking toward zero; CFO Arno Antlitz (55) and his team are exerting pressure, according to the company.
Does Porsche need an IT company? Does Volkswagen’s truck arm need a marine diesel engine subsidiary? Is it worth it to keep losing money on bicycles?
Money is expensive and profits are down, which means it’s a good time to sell.
What I’m Listening To While Writing TMD
If David thinks Coldplay are the new Beatles, who does he think are the new The Rolling Stones? I’m not sure anyone could provide as funky a cobwell line as the Stones do here on “Honky Tonk Women.” Maybe I don’t want an answer to that question, now that I think about it.
The Big Question
What’s the most undervalued automaker right now?
Credit: Tesla
Honestly probably Slate. Most of the criticisms I see for it are along the lines of ‘It’s a 2 door, noone buys a 2 door pickup nowadays’.
They may be right, but for regular civilians. I’d argue Slates are perfect for Businesses, small and large, for in town use.
That being said the transportation business I think will make the most waves is Regent with the Seagliders (Wing In Ground Effect aircraft with hydrofoils). They’re much better than a bus, train, or commercial flight for short flights, all electric (though there are plans for electric hybrid ones as well), and they can be flown by ship captains (with the appropriate training).
Agree with Slate. The size, type, and price of this vehicle has no competition in the US. A lot of doubt in the press and interwebs about the $25K starting price, but maybe some people have forgotten about early Amazon and Bezos’ willingness to sacrifice profit for marketshare.
I still see tons of older Ford Rangers and Chevy Colorado’s as parts delivery trucks. Single cab long box fleet trim, with tons of miles on them. There’s not much to replace them with that isn’t massively more expensive.
Elio is definitely undervalued.
“Well, we’re in this like weird transition period where we will lose a lot of incentives in the U.S”
Hey Elon… don’t forget… you’re losing those incentives BECAUSE OF WHO YOU HELPED GET ELECTED.
“So I mean, does that mean like we could have a few rough quarters? Yes, we probably could have a few rough quarters. And I’m not saying we will, but we could, “
Nah.. you absolutely WILL have SEVERAL rough quarters going forward.
“But once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I think I would be surprised if Tesla’s economics are not very compelling.”
Prepare to be surprised Elon… VERY surprised.
“Help us sell your stock to idiots so we make money! LIE if you have to!!” — Brokers.
Note they say this to every company ever.
I’ve really loved what Hyundai/Kia have done with their product lines the last 10ish years. If only they didn’t have all the horrific engine failure issues they’d maybe be my favorite brands right now…
My partner surprised me the other day saying she really likes the look of the latest Santa Fe (which I’ve always been fond of) and we strolled through the Hyundai lot looking at them. They’re pretty nice and on paper the hybrid would be a contender for eventual replacement of the Mazda5, but I won’t spend any amount of money on a Hyundai engine at this point.
I also peeked into an Ioniq9 and really liked it, but even the Hyundai EV’s are suspect, and with an even bigger price tag.
Yeah it is most unfortunate
“What’s the most undervalued automaker right now?”
None are, “Building Cars Is Harder Than It’s Ever Been” because they are all chasing squirrels instead of KISS. Acknowledging I’m prehistoric, never buy new, nor anything after 2017. Really no idea how people justify buying new with so many “features” I’m repulsed by.
If the car company, Tesla, which makes cars, and derives almost all of their revenue from cars (as opposed to their energy, ai, or robotics businesses), is worth $1T in market cap, literally every single other car company is hilariously undervalued.
You know, or it’s a meme stock.
Occam’s razor.
Agreed.
But whose cat is that in the box?
The headline is almost exactly what I was going to comment on the Nissan closing factories story. The only way for a car company to remain profitable/relevant is to either make a huge amount of cars for the masses, or few cars for the wealthy. And the average consumer really only wants maybe 3-4 (or even just 2-3) options when shopping for something expensive, not 5-6, so if your product doesn’t put you in the the top 2-4 you just can’t sell enough to stay relevant.
Nissan, multiple Stellantis brands, Audi, Maserati, even VW, just aren’t in the top 2-3 for vehicles that sell best in the American market specifically. Just being fine doesn’t cut it when making a “fine” product still costs nearly as much as making a best-in-class product.
GM has been undervalued for a long time. They have the profits, a good lineup, they invested heavily on electrification, they are doing partnerships with Energy companies , they are moving production to the US, but because how the market seems them, they have to squeeze everyone in the organization just to continue moving forward.
Ford and GM are the most undervalued, because no force on earth seems able to disrupt their full size truck sales, and there appears to be no upper limit on how fancy/nice/expensive they can go, with associated profit margins.
This gives them enormous freedom to gamble on EVs and hybrids which may not be profitable right away, but might pay dividends down the road.
I am not an EV guy, as most probably know, but GM’s newest crop of them seem to be quite good. They’d be my bet to succeed in that space ahead of any other legacy automaker.
RIP founding father(ish?) of The Autopian
https://www.nbcnews.com/news/obituaries/hulk-hogan-wrestling-icon-pop-culture-mainstay-dies-71-rcna220822
Rest in Peace, brother
Not really. He was a racist PoS who used the n word frequently and proudly.
Most undervalued automaker right now? Well, I heard that Yugo is making a comeback this year. I just drove my buddy’s 87 GVX that had a 2JZ-GTE swapped in there. Forgot how fun those cars were once you threw away the engine they shipped with.
My take is that pretty much all car companies are overvalued right now, perhaps with the exception of some Chinese companies whose real values aren’t clear.
Hot take: within 15-20 years, 75% of cars sold outside the US will be either made in China, or made abroad by Chinese-owned factories. Inside the US, where Chinese cars are effectively banned, all you will be able to buy is pickups and SUV, all priced over $150k.
Arctic Monkeys are the modern-day Stones.
Counter point, The Rolling Stones are still the modern-day Stones
Just not nearly as good.
Funny, saw them in 81, then again in 89- thought they’re getting old, wondered how much longer they’d keep touring.
’89- The Steel Wheels tour! I caught them in Tampa with Living Colour!
Same here but saw in New Orleans Superdome. It was obvious by then that time was not on on anyone’s side.
Except for Keith that is.
We can all get taken out by SkyNet and Keith would still roam the wasteland searching for drugs, women, and fried chicken…
I was arrested at the local Steel Wheels tour! High school friends and I were selling unlicensed merch. One of the friends is an amazing artist, and he had created a poster, and we chipped in to get it screen printed.
I kinda read that as “saw them at 81” and thought “yeah, that’s about how old they are”.
Which is the reality in more than just the auto market. While some believe the US market is essential to the world and we can charge for admission that simply is no longer the case. This is not helped by insisting on using our own regulations for everything instead of using global standards. That just adds additional costs and non-tariff barriers to doing business in the USA.
Coldplay ARE the new Beatles, 100%, but instead of Yoko Paltrow breaking up the band, there was a divorce and they mysteriously pivoted to electronic music and made like 10 extra albums.
You’d all be sick of the Beatles if they were doing glam rock and synth-pop in 1985, too!
Cowbell. 🙂
(Should he fix it, he originally wrote ‘cobwell’, which took me a moment to figure out.)
Those initial eighteen seconds of intro are some of the best to ever be recorded. Just pure magic.
Most undervalued: Rivian. Because I need the stock to go up. 🙂
Really, I would normally say Kiundai because they were nailing it across the board until a couple years ago. I think their lineup is too confusing and bloated to keep up this pace, honestly. I see some model culling in their near future, but they’re still my answer.
Battered Mitsubishi sounds like a really fancy 3-piece tempura platter.
Wait, I thought Tesla’s sales didn’t really matter because they were a software company whose value derived from a batter ecosystem and telematics/cloud data. You mean people pay attention to the car numbers?!
What’s the most undervalued automaker right now?
Mazda, because they’re absolutely killing it at design and execution. And, they’re not chasing trendy (and expensive) fads.
I sadly have to disagree. The giant screen, no physical buttons, and “M a z d a” lettering on the back of the new CX-5 are absolutely chasing trends.
5 year old trends. It’s like their AV division is still off doing things while the rest of the design teams are killing it right now.
I meant diving into EVs, subscription services, etc. Mazda seems to be laser-focused on just building good cars.
Fair.
Probably not far off, they have increased profit per dealer in the past year.
Fascinating question. I’m gonna’ guess the one with the least amount of debt to service right now.
Oh we’re doing this again? Same exact story heard quarter after quarter for a decade, all without a meaningful improvement in actual capability. All while Musk actively sabotages any chance of success by mandating Vision-Only autonomy.
Let me say it for the thousandth time, Vision-Only Autonomy is a fools errand. Period. If Autonomy rollout is truly the fix-all solution to Tesla’s finances, then Tesla is doomed.
I just closed my eyes, walked around the room, and immediately stubbed my toe.
It is fair because the value of Tesla stock significantly outstrips its revenue and assets. Tesla’s stock value, as a Price/Sales ratio, is ten times that of Ford or GM, despite being on a downward trajectory, having shown zero aptitude for product development, and having the subsidies on which it is dependent eliminated.
When the speculative nature of the stock exceeds its fundamental value or any real prospects, labeling it a meme stock is justified.
Exactly this. It’s a massively overhyped stock given the underlying fundamentals. Pretty much always has been.
I won’t argue they haven’t done a few great things, but overall that stock is massively overpriced.
The short sellers have lost tons of money on it because it’s being artificially propped up by buyers that don’t care about reality. That’s pretty much the very definition of a meme stock.
It’s why Musk continues to push AI, Autonomy, and robotics as the future of the Tesla portfolio, they are all highly valued in the market with unproven pathways to market, and an unverified future market cap. This while the car business has it’s clear limits and ceilings. Throw in the incorrect assessment that “betting on Tesla is a bet on all of Elon’s companies” (Which are all else privately held, so there is no economic or financial correlation here) and you have the perfect storm for a hype/meme/vibe driven Titanic/Chernobyl/Exon Valdez level failure on your hands.
Their cars all look the same because Elon wanted to be prepared for people to say “I’ll tell you where you can stick those cars!” and he’s very literal about things like that.
You’re right! They do look like suppositories!
The Mitsubishi Mirage has been overpriced for awhile now. How could they possibly make it an even worse value proposition than it already is?
Odd take. Mitsubishi killed the Mirage because it didn’t make any money.
and it was literally the cheapest new car available on the market for quite a while.
Being the cheapest doesn’t necessarily mean it’s the best value for the money.
… and still didn’t sell in high enough volume to make any money or even fill a full shift of production on an assembly line.
That is a good example of the noisy people that always say they want cheap basic transpo. What they say they is rarely reality. Also it is almost never reality that high volume, and cheap prices net a lot of profit. Profit percentages are probably fixed by the bean counters, but 30%(if lucky) for a 20K Car means you have to sell 2.5 of them to net the same dollars of a basic crossover these days.
I want basic transportation the way the French used to do it: sure, cheap, but also blisteringly fun to drive and packed with charm. Check out the Citroën AX, Peugeot 205, or Renault Super 5 – excepting the GTis and Turbos, the low-end models were the pick of the bunch.
I own a kei car and have had two Chevrolet Sprints; I love cheap and tinny little cars. But I would never buy a Mirage as it is the definition of a penalty box.
Of course, any car manufacturer that builds a car I want is going to lose billions, so, please, no one take my advice.
And of course Cheep is a relative term. It was not that long ago that I would cringe mightily at the though of paying more than 10K for any car, now used crap is starting at 5K for absolute rubbish, and the used stuff that is my usual norm is commanding nearly the same price as a heavily discounted new vehicle. Weird times right now.
I get what you are saying – small cars have small margins but 30% operating margin is a fantasy in the automotive sector. Ferrari makes that but no regular automaker. Toyota does the best at 15%. Mitsubishi is down at 6.5%
Top automakers by operating margin
30% is the market standard fro corporations beholden to the stock market. Though you are correct, these “villainous” car companies are usually in the low teens at best. Though when sales are in the billions, the optics of even 5 percent can make decent clickbait for the uninformed.
Which is a bit of a pet peeve for me as I work for an automaker. We make margins that most people wouldn’t take for a guaranteed CD or government bond yet all I hear is how automakers are “making billions” and screwing the little guy. Despite cars being cheaper adjusted for inflation that when I started driving in the early 90’s.
There is also a big difference between operating margin and the actual bottom line – net profit margin – which is below 10% for pretty much everyone.
Mitsubishi made 1.4% last year and a 30 day Treasury is paying out 4.37%.
In my opinion, that means they’re doing something wrong. If they can’t sell it at the price it’s marked for and make money, that’s a problem. At the current average list price of $19,000, it’s still a poor value proposition as long as the Versa exists.
This is the last year for the Versa and Nissan has already stopped making the manual version.
That was part of their recent move to stop making base trims they lose money on. They have also discontinued building base trims of the Kicks Play and Sentra.
Its interesting that a lot of these japanese automakers are killing off their cheapo econoboxes that have historically been used to attract young people into the brand, even if that means low/no profit margins short term.
What other way do they expect to attract young people into their showrooms? Maybe its no longer worth it to manufacturers? Maybe its because many young people can’t afford new cars?
Used cars have replaced cheap new cars as an entry level into a brand. That started in luxury segment as dealers had lots of CPO lease returns that were 2 to 3 years old. Most buyers given a choice between a new economy car or a nicer but 3 year old CPO crossover will take the used car.
Then there is the fact that the auto industry is getting pinched right now. There are massive investments needed for regulations, autonomous, EVs and companies don’t have the staff or budgets to develop and sell cars at a loss with the hope that buyer will buy a car later at a profit. That is especially true for a company like Nissan that is teetering on the edge of bankruptcy again or Mitsubishi that is realistically to small to last a decade as an independent company.
Same is true for sports cars, regular cab trucks, or anything else with little or negative margins.
I kind of think the kids that are not driving until their twenties these day anyway are holding out for something they desire. probably still getting hand me downs form parents if they truly need a car, but so many these days just don’t want the hassle of driving and the rideshare systems and electric bikes/scooters fill in a lot of the rest when hoofing it is not the best option. I know I would much prefer a 2019 G70 2.0 T for 21K from Carvana over say a similar priced new with warranty Versa or Mirage. I would probably learn the hard way why an extended warranty is important, but I know I would go that route over the CVT nightmare crap boxes.
Elon Musk played to the coal rolling demographic, but didn’t think things through.
Exile On Main St. is one of the best country albums ever made and that’s a hill I’ll fight on. As far as automakers being under valued? Eh, none are.
The Stones were a better country band than most actual country acts of the late 60’s and early 70’s. Dead Flowers is an absolute banger.
Dead Flowers is indeed a banger
I like Country Honk but you could argue that more bluegrass than country. And then there’s Sweet Virginia
The Stones were really good at synthesizing delta blues and gospel with honkytonk and bluegrass to create something that felt more true to the original spirit of country music than the Nashville sound and “countrypolitan” trends that were big at the time. Their contribution to country music isn’t widely recognized and it’s vastly underrated.
I’ll spot you Dead Flowers and raise you a “Some Girls” Far Away Eyes!
I was driving home early Sunday morning through Bakersfield
Listening to gospel music on the colored radio station
And the preacher said, “You know, you always have the
Lord by your side,”
And I was so pleased to be informed of this
That I ran twenty red light in his honor
Thank you Jesus, thank you Lord
I had an arrangement to meet a girl, and I was kind of late
And I thought by the time I got there she’d be be off
She’d be off with the nearest truck driver she could find!
And Mick really lays on the “country” accent for this one.
Got to scrape the shit right off your shoes. Iconic.