Elon Musk’s Tesla Commits To ‘Core Socialist Values’ In China

It turns out people do have their limits when every new car is, for some reason, a midsize crossover that costs $50,000 and $60,000. Enter two lone heroes, here to lead us out of the darkness and into the light: the Nissan Sentra and Hyundai Elantra, which were among Q2’s biggest sales growth winners as the car industry finally begins shaking off some of the supply chain nightmares it’s endured for years.

Congrats on making it to another Friday, Autopia. Also on today’s menu: Elon Musk’s warm welcome in France sparks jealousy in the heart of another car executive, even while he contends with “core socialist values” in his most important market; and Ford’s got some EV production woes while gas trucks pay the bills. Let’s hit it.

Stellantis’ Tavares Has Musk Envy But Begrudgingly Rolls Out More EVs

Of all the major automotive CEOs, Stellantis’ Carlos Tavares—who oversees a sweeping 14 brands across multiple major markets—is one of the bigger EV skeptics. I never got the sense there were complex energy and carbon-related reasons behind this, as has been the case with, say, Toyota, but more because he just didn’t want to bother with implementing this paradigm shift.

But that’s costing him on his own turf. When Elon Musk went to France in May, he got the red carpet treatment from President Emmanuel Macron, who begged him to set up production in that country. (Which, side note: I would love to see how Musk’s “I sleep on the factory floor and also everyone else should sleep on the floor” work ethos tracks with France’s “Yeah, we’re not coming to work at all in August” vibes.) Here’s Tavares’ reaction, according to Bloomberg, which reports he’s adamant about the roadblocks to EVs, small cars and everything else:

This seems to have irked Carlos Tavares, the CEO of Stellantis NV, France’s top carmaker. The Portuguese national has had a chillier relationship with Le Maire, clashing with him over plans to expand production in lower-cost countries. Tavares’s warnings about the influx of cheap Chinese cars, and concerns about Tesla rival BYD Co. also being warmly welcomed as it mulls European factories, apparently have fallen on deaf ears.

On Wednesday, Le Maire called for Tavares to show some “economic patriotism” and follow archrival Renault SA in producing a small electric car in France. The CEO hit back before day’s end, reiterating his view that carmakers without legacy combustion-engine assets are getting favorable treatment relative to companies that have made greater contributions to the wealth of western Europe.

“There is no reason why we should take an additional risk by making compact cars in a high-cost country,” Tavares told reporters during a conference call. “If the country is trying to attract newcomers with the investments of new plants, please ask them to take that risk.”

Now, Tavares has some legit gripes. This current move to electrification is rocky, expensive, difficult to figure out, will take longer than everybody’s saying and will generally be a giant pain in the ass if you’re the kind of dude who has to answer to shareholders and runs a huge global operation with different needs in different markets. But critics say: tough baguettes, bro.

The CEO is overseeing a sprawling empire of 14 brands and dozens of factories around the world, many of which will need to be retooled. He’s embarked on the overhaul by taking stringent cost-cutting measures at a time when governments are trying to protect jobs. Unions have griped that Stellantis isn’t investing enough in maintaining factories, citing clogged toilets and un-mowed grass.

Looming large behind the squabbles is the realization that the EV shift will require significantly fewer workers, and the concern that those “newcomers” will make matters all the more challenging.

[…] It’s a similar picture in France. Stellantis has pledged to make a dozen EVs in the country, but they’re mostly larger, higher-end models like the e-308 sedan and e-408 crossover. Le Maire wants Stellantis to expand production of the electric version of the compact Peugeot 208, one of Europe’s best-selling cars, in France to retain jobs and help counter inflation.

Sergio Marchionne (RIP)’s thesis was that car companies could survive this moment if they merged operations, consolidated and achieved scale together. Stellantis is more or less a reflection of that philosophy. But now it’s having trouble doing that and being all things to all people.

But Musk Has To Commit To Fair Play In China

Here’s the thing about Musk, though. He can happily tell California, the SEC, American regulators or even his landlords to eat shit and generally, he’ll skate. But the Chinese government? You don’t get to say no to those people. If you do, they’re happy to find you a nice gulag somewhere until you learn your lesson, or for the rest of your life, whichever comes first. Funny how that works.

In China right now, you basically have a ton of new EV brands springing up and competing viciously with each other. Margins are razor-thin. It’s part of why Chinese automakers want in on Europe and other places. But now, the government’s cracking down on a price war that companies like Tesla, BYD and maybe a couple of others could easily win, and in doing so would tank a bunch of smaller players.

And when the Chinese government asks you to do something, they don’t want you to half-ass it. From the Financial Times:

Elon Musk’s Tesla has joined Chinese automakers in pledging to enhance “core socialist values” and compete fairly in the country’s car market after Beijing directed the industry to rein in a months-long price war.

Folks, I’m wheezing. The idea of Mr. Destroy The Woke Mind Virus signing a “socialist values pledge” is giving me so much energy, I don’t need any more coffee this morning. I don’t even need lunch later. My body will draw life force directly from this moment and this moment alone, like Superman getting power from the Earth’s yellow sun. I’m not even sure I can die anymore.

More on that:

The joint letter, which came at the behest of the Ministry of Industry and Information Technology, appeared to signal a truce among the top EV makers in the world’s biggest car market.

Miao Changxing, a senior inspector at the ministry, said China’s car industry needed to avoid “reckless” price-cutting.

The letter — which uses language popular with Chinese president Xi Jinping and the ruling Communist party — also highlights how Tesla is navigating an increasingly fraught US-China business landscape and rising competitiveness in the world’s biggest EV market. Tesla was the only foreign carmaker to sign.

[…] The episode is the latest reminder of the tightrope many multinationals must walk amid increasing assertiveness from the Chinese government and hawkishness in their home markets. In recent years, accusations of obeisance to Beijing have hit countless companies from HSBC and Nike to the hotel group Marriott and car company Daimler.

You wanna play in the world’s biggest car market? You play by Xi Jinping’s rules. And don’t forget it.

Small Cars Win Big As Industry Roars To Comeback

The U.S. auto industry’s sales results for Q2 2023 (from what we’ve seen of the companies that report them) have been some of the most positive ones I’ve literally seen in a few years. Since the spring of 2020, for obvious reasons, sales results have been a fairly unreliable predictor of normal trends like production capacity, popularity, discounts—all the usual data we use to know how things are going.

This quarter, as the business really starts to rebound from the chip shortages and similar disruptions, was full of wins across the board. Some losses, too, which we’ll get to. But one notable thing I found from Automotive News was that two smaller cars are having a moment. Sentra sales were up 103% in just Q2 and the also-small Versa and Kicks are doing so well they’re calling in backup:

The Nissan division sold 227,824 vehicles in the second quarter, 32 percent more than a year earlier. Infiniti’s volume climbed 57 percent to 16,529 vehicles.

“There’s still some pent-up demand out there of consumers that waited,” [U.S. Nissan sales chief Judy Wheeler] told Automotive News on Monday. “Although, they are being more particular than they were two years ago.”

Nissan’s robust lineup of small, fuel-efficient models is lifting sales.

“The demand is large enough that it is outstripping our supply,” Wheeler said. “It also means that we need to continue to increase our Versa, Sentra, Kicks production now and into the near future.”

On the Hyundai side, the Elantra was up 60% in June and 58% overall in Q2. I haven’t driven the new Sentra yet but I’m a big fan of the current Elantra, especially in hybrid form, where the car’s such a champion I wrote a blog post in praise of it after I rented one for a road trip. It wasn’t even a press loaner. You’re welcome, Hyundai.

Cars like the Corolla and Civic tend to be perennially strong sellers, but it’s interesting to see this trend spread to other small cars too. Can you blame people? Everyone’s sick of the sky-high car prices.

Ford Wins The Usual Way While EV Sales Are Up And Down

“Ford Motor Co.’s U.S. sales increased 9.9 percent in the second quarter, as F-Series pickup volume jumped to the highest level in nearly three years,” Automotive News‘ Nick Bunkley writes. Folks, that’s how you know things are getting back to normal. In detail, that means Ford moved 212,516 F-Series trucks in Q2, up 34% from the same time last year and the best for any quarter since 2020.

But EV production and sales have had their ups and downs, literally. Ford’s got ambitious EV plans and the Mustang Mach-E and F-150 Lightning represent the tip of the spear for that, but both have had production and supply issues—as well as Ford trying to iron out the kinks. According to Electrek, the Lightning was up:

F-150 Lightning sales reached 4,466 in the second quarter, up 118.7% compared to just over 2K last year. Keep in mind, however, Ford began delivering the electric pickup last May, so doubling sales over the previous year is to be expected.

The automaker says it continues attracting new customers, with 50% of buyers coming from different brands.

That last stat is a very big deal. But the Mach-E was down much of Q2, only to spring to a last-minute comeback:

On the other hand, Ford’s first electric car, the Mustang Mach-E, saw sales fall 21.1% YOY. The decline comes after Mach-E sales were down 20% in the first three months of the year. Year-to-date (YTD) sales of the electric SUV are down 20.6%.

Andrew Frick, VP of sales distribution, said, “Improved Mustang Mach E inventory flow began to hit at the end of Q2 following the retooling of our plant earlier this year.”

Ford announced last year it would be retooling its Mexico plant, where the Mustang Mach-E is built, which would result in downtime at the facility. Frick said the move “helped Mustang Mach-E sales climb 110% in June.” Overall, Ford’s EV sales were up 35.5% in June, despite a slow start to the quarter.

Electrek’s takeaway is the same as mine here: the “legacy” automakers have spent a lot of time getting their supply chains in place for EVs and still are running into production challenges, while the ones like Tesla, Polestar and Rivian that have always been doing this could be in a more reliable position in the immediate term. If the supply chain’s indeed righting itself, the rest of this year is going to be very interesting on the Ford and General Motors EV front—and it may rest on their ability to produce these cars without issue more than anything else.

Your Turn

If you bought a new car right now, what would you be shopping for? A Mustang Mach-E has been discussed at our house, especially if the tax credits play in our favor somehow. But I think that’s a ways off for now.