The news from the car industry grows worse by the day. Not only have the three major German manufacturers—VW, BMW, and Mercedes—all confessed to the prospect of lower sales and profits, with China being a common factor along with weak demand in Europe, but the large U.S.-European automaker Stellantis seems to be facing deeper problems than this week's downgrade revealed.
On top of this, Toyota has just confirmed a significant cut in its EV production targets in the U.S. and a massive change in its manufacturing policy.
All this should be kept in mind as Elon Musk and Tesla try to convince us on Thursday (U.S. time) that the future is the “robotaxi.”
It will be yet another claim that robotaxis are the future, yet Musk should really be launching a new, cheaper model of the basic Tesla EV to capture the minds and wallets of consumers who obviously like the company’s cars.
This new, affordable Tesla should realistically include a plug-in option, as that is now the fastest-growing area of EV sales in China and some other markets, such as Australia.
And yes, Tesla’s third-quarter sales performed well—not up to the high figures Wall Street wanted, but enough to keep the company ahead of BYD as the world’s largest maker of battery-powered EVs.
Like the cheaper Tesla, the robotaxi has been promised for years as a version of the company’s self-driving technology, but each time the promise has not been fulfilled.
For Stellantis, the bad news keeps coming, with CEO Carlos Tavares leaving open the possibility of a dividend cut and no buyback in 2025 due to the automaker's growing woes.
From his comments in France late in the week, it seems the company’s problems are primarily with its U.S. brands—Chrysler, Jeep, and Ram—rather than in Europe, though supply chain issues are a concern.
Shares in the owner of the Chrysler, Jeep, Fiat, Citroën, and Peugeot brands have tumbled more than 55% since March, marking the worst performance among European auto stocks and slashing €47 billion ($52 billion) off the company’s valuation. The shares were down 15% in the four days leading up to Thursday alone.
While Stellantis is committed to its 2024 dividend, Tavares said it was too early to confirm next year’s plan. “The time for 2025 has not come; we will see what will happen at the end of 2024 for a discussion and a decision for 2025,” he added.
Now, while the idea of a dividend doesn’t seem to be a big deal in the U.S., it is significant in Europe. The CEO has built his reputation on effective management—especially operationally and financially—and ensuring the company handles the EV transition as painlessly as possible.
However, good earnings from conventional vehicles are essential for a smooth transition to an electrified car fleet in the future. Right now, that looks increasingly challenging, especially in the U.S. and Europe.
That said, there is some good news—General Motors seems to have shaken off its EV problems and reported a solid rise in sales for the September quarter, while in Europe, BMW is now outselling Tesla.
In fact, GM revealed a 60% rise in EV sales during the September quarter, ahead of Ford’s 12% gain. GM sold 32,095 EVs over the three months, outpacing Ford’s 23,509 EVs.
GM is second behind Tesla but ahead of Ford for the year ending September, with 70,450 units compared to Ford’s 67,689.
Both Ford and GM are now pivoting to smaller, cheaper EVs as they expand their range—something they should have focused on from the start. This is where Tesla could potentially be overtaken in a couple of years.
However, overall EV sales growth is slowing, especially for battery models, while the growth in hybrids—both regenerative and plug-in—continues, which is slowing the pace of the transition in every major market, including China, where BYD, the market leader, is selling more plug-ins each week than its robust lineup of BEVs.
This is not good news for the lithium mining, processing, and battery industries in China or South America.
Nor is the news from Toyota, which has been leaking information for the past month about its changing emphasis in the transition. It is well known as an opponent of relying too heavily on batteries and lithium.
The company is also facing problems in Japan, where a regulatory scandal continues to affect it and several rivals.
Now, Toyota has made a significant change to its transition plans in the U.S., implying a major cut in planned investment or a slower rollout and spending.
Toyota let it be known through the business newspaper Nikkei this week that it will delay electric vehicle production in North America by at least a year, pushing it to the first half of 2026 due to slowing EV sales and what it described as design adjustments. The company had planned to start assembling a three-row electric SUV at its $1.3 billion plant in Kentucky next year but recently informed suppliers that this timeline would be pushed back several months.
More importantly, Toyota will also scrap plans to manufacture new electric SUVs under its luxury Lexus brand in North America by 2030, opting instead to ship finished vehicles from Japan, according to Nikkei.
Even though Toyota aimed to produce 1.5 million electric SUVs globally by 2026, suppliers have been informed that the figure is now down to about 1 million—a cut of around one-third from the initial projection, according to the Nikkei report.
