Thought provoking video regarding automakers worldwide

[gustafson]

yeah, with the depreciation on new cars it is hard to beat a 3-5 year old car. Lots of off lease low mile cars. I have I have bought/leased new the last 3 times because I just don't have the time to go look at used cars or even deal with potential problems, but paid for it

 

[Ries]

I have consistently bought new cars cheaper than the average used version of the same car SINCE the 70s. Most recently a bit over five years ago.
granted, I dont want all the crap they put on modern cars- so less luxury option groups is a good thing for me. And the cheaper versions of new cars, while hard to find, are just what I want. So, for example, an average new pickup truck in the USA right now is about $42,000. Thats what people pay, every day. Half the people pay more!
But if you nag a dealer, and dont put up with their "salesmanship", there are actually trucks that are right around $30,000. The "fully loaded" F150 is $85,000.
And the expensive ones outnumber the cheap ones, new or used, about 20 to 1.
Remember, earlier in the thread, the figure of 4% of new cars sold last year at or under $25,000.
A $30,000 new truck is a much better deal, for ME, than a 3 year old $85,000 truck that is now selling for $50,000 not far from my house, for a fully loaded 2 owner 2018 truck.
I bought my last new pickup with rubber floor mats, bench seats, and windup windows, for about half the average cost of a 2 or 3 year old similar sized, but heavily optioned truck, at the time.
This sort of thing is very common- 90% of the used market is outlandishly expensive, because the salesman saw those customers coming from a mile away.
Again, the average cost of a used car in the USA right now is $29,000.
Me, I can find new cars in that price range, and prefer to do this when I buy.

 

[Ries]

I just read this, and I found it pretty interesting- Volkswagen is saying they will spend $193 Billion dollars globally in the next five years in electric car technology-a big chunk of it on battery factories.

Volkswagen invests in batteries, raw materials in race for affordable EV

Volkswagen plans to invest 180 billion euros ($193 billion) over five years in areas including battery production and raw material sourcing in a bid to cut electric vehicle costs and protect its market share, it said on Tuesday.

www.reuters.com

this includes one new factory in Canada.

Thats real money.

 

[hanermo]

Yeah, it´s interesting, and if in fact it was true it would mean VW is actually really going to get into EVs in a meaningful way.

The VW group has about 60B-260B€ in pension and or firing liabilities if they retire their 56 engine+powertrain plants worldwide.
They also have 33B€ in cash. Give or take.

vw group cash - Google Search

And they sell about 270B per year, at 8% margin --
but their actual total sales fell about 7% last year, 2022, mostly due to Tsla and a few other electric car startups, and china (mostly EV sales growth).

VW does not have and cannot fund 180B$ in EV tech or batteries or factories or anything else over 5 years.
Most-all of their cash and equities are locked up due to bond covenants, bonds rated on the open market.

At decreasing sales of 7% y/y VW will be out of free cash within about 2-3 years, but will go BK much before that.
VW group has about 431B$ in debt.
Over 2.2 times it´s annual sales.

vw group debts - Google Search

The same applies to mostly all of US Big Auto, Ford excepted.
Big debts, big liabilities, everything relying on sales growing 1-2-3% y/y exponential.

At this time EVs have taken about 12% of the global, and increasingly the US market, and are growing 40-50% y/y exponential.
Passenger non EV aka sedan cars sales fell about 7% in the US last year - and EVs grew globally about 40-50%.

Within approximately 2 years, at current 45% growth rates, EVs will be the dominant car companies that *get funded*.
Markets are very much forward looking.

This means the bonds of VW, toyota, Big Auto, will start to be downgraded as their sales volume slows down, as does their free cash flow.
This has already happened, in that the sales volume and the margin and free cash flow has slowed down, markedly.

I just read this, and I found it pretty interesting- Volkswagen is saying they will spend $193 Billion dollars globally in the next five years in electric car technology-a big chunk of it on battery factories.

Volkswagen invests in batteries, raw materials in race for affordable EV

Volkswagen plans to invest 180 billion euros ($193 billion) over five years in areas including battery production and raw material sourcing in a bid to cut electric vehicle costs and protect its market share, it said on Tuesday.

www.reuters.com

this includes one new factory in Canada.

Thats real money.

 

[gustafson]

I think it is unwise to make longer term judgements based on sales over the last 2-3 years
Volumes and profits have been uneven and supply limited.
Volkswagen is saying they will invest in EVs and you say investors are forward looking and will invest in EVs
OK

 

[hanermo]

Of course it´s unwise to look at 2 years sales.
But for 12-14 years, tsla has been growing sales 45% y/y exponential.
For 3-4-5-6 years byd and geely in china have also been growing sales 50% y/y exponential, give or take.

VW is saying and has been saying stuff about EVs -- for at least 7 years.
At leat 5-7 prototype VW EVs never appeared.
Several VW battery factories never appeared.

VW has been big in press releases -- but the cash does not appear in their quarterly 10Q statements as reserves and planned investments.
VW does not have 190B in cash to invest.

EV sales went from 0.02% globally to about 12% currently, oecd.
This is about 600x growth.
The tsla gigafactory about 7-9 years ago, 35 GWh / yr planned output, was more than the global total supply at that time.
In 2022 global motive lion output was about 650 GWh, about 20x growth.

I am NOT so much a cheerleader for tsla.
I AM pointing out technical facts that no existing shipping EV product we know of has anywhere near the performance of tsla power electronics in their inverter-combo.
11 kW home charging, cabin heating, 93% efficiency, under 500$ build cost, 1700 amps 400 V peak output, excellent regen.

The real point is that tsla, and in the future others, perhaps polestar, can deliver excellent premium vehicles for much less cost than anyone else.
Tsla has the worlds highest margins around 12.000$/vehicle, +, about 5x higher than toyota, on about 55.000$ avg ticket size.

Within a few years tsla, and or others, will have a cheap mass market premium product like a bmw 2 series.
Or golf Gti.
For 10.000$ less retail, and 1/5 the use cost in fuel, globally.

I think it is unwise to make longer term judgements based on sales over the last 2-3 years
Volumes and profits have been uneven and supply limited.
Volkswagen is saying they will invest in EVs and you say investors are forward looking and will invest in EVs
OK