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Current State and Developments in the Autonomous and Electric Vehicle Industry

GOOVER DAILY REPORT July 18, 2024
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TABLE OF CONTENTS

  1. Summary
  2. Technological Innovations in Autonomous and Electric Vehicles
  3. Tesla’s Technological Developments and Challenges
  4. Market Performance and Financial Outlook
  5. Regulatory and Market Challenges
  6. Elon Musk’s Influence and Public Perception
  7. Competitive Landscape and Strategic Moves by Rivals
  8. Conclusion

1. Summary

  • The report titled 'Current State and Developments in the Autonomous and Electric Vehicle Industry' provides an in-depth overview of recent advancements and the present state of the autonomous and electric vehicle industry, highlighting leading companies like Tesla. It delves into technological innovations such as Google's Gemini AI model for office robots, progress by Chinese automakers in autonomous driving, and new product developments like the Zeekr CX1E. Tesla's contributions are particularly emphasized with updates on their self-driving software, the Cybertruck's sensor suite, and continuous software updates. Additionally, the report explores market performance, with analyses on Tesla's financial outlook and competitive landscape, including Li Auto's market growth and strategic moves by other automakers like Chery, Toyota, and General Motors. Regulatory and market challenges faced by Tesla and the impact of Elon Musk’s influence are also discussed, providing a comprehensive view of the industry's dynamic environment.

2. Technological Innovations in Autonomous and Electric Vehicles

  • 2-1. Google's Gemini AI Model for Office Robots

  • Google has demonstrated the capabilities of its Gemini AI model using a robot from Google's Everybody Robots Division. Despite the division being shut down last year, the robots are still operational. By using vision language models (VLMs), which are trained on images, videos, and text, Gemini enables the robot to respond to commands and navigate the DeepMind office space. Examples include the robot taking a Google employee to a whiteboard when asked to find a place to draw, and following directions from the whiteboard to a specified area. This showcases Google's progress in integrating AI models with physical robotics for practical tasks.

  • 2-2. Chinese Advancements in Autonomous Driving

  • Chinese automakers are making significant advancements in autonomous driving technology. A former Tesla engineer, now leading autonomous driving at China’s Chery, stated that domestic companies are 1.5 to 2 years behind Tesla in developing end-to-end neural network technology. Tesla's recent Full Self-Driving (FSD) software v12 has set a high standard, with users traveling a cumulative 1.2 billion miles and the latest version achieving 372 miles between critical disengagements. Meanwhile, Chinese companies like Li Auto, Xpeng Motors, and Huawei are integrating neural networks for tasks such as perception, planning, and action. Chery plans to incorporate advanced driver assistance systems (ADAS) in a significant number of new cars and is focusing on a partial end-to-end approach.

  • 2-3. Zeekr CX1E's Upcoming Competition with Tesla Model Y

  • The Zeekr CX1E, a new crossover SUV from Chinese EV maker Zeekr, is poised to compete with the Tesla Model Y. The vehicle is equipped with advanced technology, including a LiDAR sensor for autonomous driving and cameras for hands-free control. Reports indicate similarities between the Zeekr CX1E and the Zeekr 007, an electric saloon that some consider superior to the Tesla Model 3. The CX1E is expected to feature a 75kWh battery pack and potentially 600 horsepower. Its performance in comparison to the Tesla Model Y remains to be seen, especially since it may not be available outside China initially.

3. Tesla’s Technological Developments and Challenges

  • 3-1. Recent Tesla Self-Driving Software Advancements

  • Tesla has made significant progress in the domain of self-driving software. The release of Tesla’s Full Self-Driving (FSD) software v12 marked a considerable leap forward in applicability and user experience. According to former Tesla engineer Gu Junli, now with Chery, the software has achieved a milestone with FSD v12.3.6, being able to drive 372 miles between critical disengagements, a remarkable improvement from earlier versions. It indicates that the system meets most users' requirements for normal daily commutes.

  • 3-2. Cybertruck's Sensor Suite and Its Implications

  • Tesla Cybertruck has been seen with an advanced rooftop sensor suite, including LiDAR sensors. Spotted as a Release Candidate (RC) unit in San Jose, California, this setup can be seen as part of Tesla's efforts to improve and validate vision data. Despite Elon Musk's public stance against using LiDAR in production vehicles, these test vehicles help collect data to train machine learning models. This effort suggests that Tesla is focused on enhancing the Cybertruck’s driver-assist features before a full deployment.

  • 3-3. Tesla’s Continuous Software and Feature Updates

  • Tesla continues to introduce software and feature updates to improve user experience and vehicle performance. For instance, the recent software update version 2024.26 has introduced automations for climate control and charging, along with new music services integration. Such consistent updates ensure that Tesla's vehicles remain at the forefront of technological innovation in the electric vehicle sector, providing enhanced functionality and safety features. Additionally, features like the ‘Avoid Highways’ option, parental controls for teen driving, and enhanced connectivity options are part of these updates.

4. Market Performance and Financial Outlook

  • 4-1. Wells Fargo’s bearish outlook on Tesla

  • Wells Fargo analysts have retained a pessimistic outlook on Tesla stock, reiterating an Underweight rating with a price target of $120, implying a potential downside of more than 50% from current levels. Analysts pointed out that despite a roughly 40% rise in Tesla stock over the past month driven by positive headlines, the fundamentals remain weak. Q2 deliveries were down 5% year-over-year, despite financing promotions. Analysts also noted delays in the anticipated robotaxi reveal and highlighted significant tariff risks in Europe. They also cautioned that while Tesla’s energy storage business is promising with a record 9.4 MWh deployed in Q2, it is largely project-based and can be volatile. Moreover, new US and EU tariffs are expected to add substantial costs, further impacting Tesla's financial outlook.

  • 4-2. Tesla’s stock valuation concerns

  • Concerns have been raised about Tesla’s current stock valuation, despite its remarkable growth in the past decade. Tesla has seen its revenues grow by more than 29 times and its stock by over 1,500%, but challenges such as its capital-intensive business model, intensifying competition, and an unpredictable regulatory environment cast doubt on its future valuation. Analysts noted that Tesla's historical guidance on product pipelines and technological rollouts have not always been accurate, making it difficult to predict future growth. Moreover, Tesla faces increasing competition from established automakers and Chinese EV manufacturers, which could affect its market dominance and future growth prospects. The company's ambitious product pipeline remains uncertain, given its tendency for overpromising and underdelivering.

  • 4-3. Li Auto’s strong performance in China’s new energy vehicle market

  • Li Auto, a prominent player in China's new energy vehicle market, announced delivering 47,774 vehicles in June 2024, a 46.7% increase year-over-year. This brought its second-quarter deliveries to 108,581, up 25.5% from the previous year. As of June 30, 2024, Li Auto's cumulative deliveries reached 822,345 vehicles, making it a leading brand among China's emerging new energy auto companies. Li Auto has demonstrated strong sales momentum, notably with its Li L6 model, reflecting the growing demand and robust performance in the Chinese market.

5. Regulatory and Market Challenges

  • 5-1. Regulatory hurdles for Tesla's autonomous vehicles

  • Tesla faces significant regulatory challenges in pushing forward its autonomous vehicle technology. Countries are implementing stricter emission standards and offering incentives to promote EV adoption, which generally benefit Tesla. However, changes in these regulations could disrupt Tesla's production plans and sales growth. For instance, the phase-out of EV tax credits could negatively impact EV demand. Research found that for every $1,000 decrease in EV tax credits, there is a 2.6% decrease in sales. Moreover, Tesla’s self-driving technology is under intense scrutiny, with the NHTSA opening several investigations into crashes involving Autopilot. Additionally, a 2021 DOJ investigation into Tesla's claims about its self-driving capabilities is ongoing, focusing on whether Tesla misled investors and consumers.

  • 5-2. Challenges from the EV market competition

  • The EV market is becoming highly competitive, posing challenges to Tesla’s dominance. Established automakers like Ford, General Motors, Volkswagen, and Hyundai are heavily investing in EV development and offer competitive or lower-priced models compared to Tesla. In the U.S., despite Tesla selling over 140k cars in Q1 2024, new entrants like Chinese companies BYD, NIO, XPeng, and Li Auto are rapidly expanding their global presence. These companies are introducing models with advanced technology, extended ranges, and competitive prices, which could potentially disrupt Tesla's market share. BYD, for example, sold over 300k EVs in China in Q1 2024, and its Seal sedan rivals Tesla's Model 3 at a lower price point. Li Auto's EREV models address range anxiety, appealing to markets with limited charging infrastructure. Although Tesla leads the U.S. market, the intense global competition from Chinese automakers underscores the challenges it faces.

  • 5-3. Impact of global tariff and regulation changes on Tesla

  • Global tariff and regulatory changes significantly impact Tesla’s operations. Tariffs, especially those imposed on Chinese-made EVs by the U.S. and EU, can influence Tesla’s competitiveness outside China. On the other hand, China remains the world’s largest EV market, with local brands accounting for 81% of domestic EV sales in 2023. As of the last recorded period, Tesla's revenue growth from China has slowed to 20%, compared to BYD's more than 40% growth. Policies supporting EV adoption, such as emission standards and EV incentives, also play a crucial role. However, any adverse changes could affect Tesla’s sales growth and operational efficiency. The anticipated rollout of Tesla’s autonomous vehicles also faces regulatory scrutiny, which might delay widespread adoption and hamper growth potential.

6. Elon Musk’s Influence and Public Perception

  • 6-1. Elon Musk’s Support for Dogecoin

  • Elon Musk has demonstrated continued support for Dogecoin, highlighted by another tweet endorsing the cryptocurrency. His endorsement resulted in a 17% increase in Dogecoin's value over a weekend, following a midweek slump. Musk has historically influenced the crypto market; his previous comments about Dogecoin during a Saturday Night Live appearance caused its value to fluctuate sharply. Despite criticisms, Musk's influence remains evident, as seen when Dogecoin's value soared 29% after he revealed efforts to improve its environmental impact. These activities reflect Musk's ongoing engagement with cryptocurrency, impacting both Tesla's market dynamics and public perception.

  • 6-2. Musk’s Political Endorsements Impacting Tesla

  • Elon Musk's political activities have drawn significant attention and controversy. Recently, Musk pledged $45 million per month to support Donald Trump's presidential campaign, a candidate known for his anti-EV stance and promises to end EV incentives. This decision comes shortly after Musk secured a substantial stock grant from Tesla shareholders. His political involvement, particularly with figures opposing EV advancements, conflicts with Tesla's core mission to accelerate the transition to sustainable energy. Additionally, Musk's political engagements appear to have diverted his focus from Tesla's operations, contributing to market volatility and fluctuating public trust in his leadership.

  • 6-3. Musk’s Strategic Focus and Its Impact on Tesla’s Market Share

  • Elon Musk's strategic decisions significantly influence Tesla's market position. Despite his established success in the EV sector, recent actions have raised questions about his priorities. Musk's acquisition of Twitter and subsequent management choices, including selling large tranches of Tesla stock and focusing on political causes, have led to declines in Tesla's stock price. This shift in focus away from Tesla has caused concern among stakeholders. Furthermore, Musk's commitment to supporting a political campaign that opposes EV incentives directly contradicts Tesla's interests, potentially undermining both the company's market share and its strategic objectives.

7. Competitive Landscape and Strategic Moves by Rivals

  • 7-1. Chery and XPeng’s expansion into international markets

  • Chery Auto has been making significant strides in the autonomous and electric vehicle sector. On April 2024, Chery reached a joint venture agreement with Spain’s EV Motors to produce vehicles at a former Nissan plant in Barcelona. Chery also sold nearly 1.9 million cars last year, and plans to incorporate Level 2 ADAS systems into approximately 500,000 new vehicles sold this year, including 150,000 units designated for overseas markets. Meanwhile, XPeng Motors is also making headway in expanding its reach. According to XPeng president Brian Gu, customers from some overseas markets could access XPeng’s XNGP ADAS capabilities as early as next year.

  • 7-2. Toyota’s strategy to open charging stations to all EV brands

  • Toyota Motor Corporation has recently made strategic moves to enhance its position in the electric vehicle market by opening its Lexus charging stations to all EV brands in Japan. These stations, featuring 150kW max quick chargers, were initially exclusive to Lexus owners but will now be accessible to a broader range of EV users for ¥120 per minute. Users can book reservations online, access complimentary refreshments, workspaces, and enjoy other benefits. Currently, Toyota has two Lexus rapid charging stations located in Tokyo Midtown Hibiya and Karuiza Common Grounds in Nagano Prefecture, with plans to add more stations in Osaka and Nagoya by March 2025. Toyota aims to expand to 100 stations throughout Japan by 2030.

  • 7-3. General Motors’ development of affordable electric cars

  • General Motors is actively working on making electric vehicles more affordable. The company is developing an electric car that can cover 200 miles on a single charge and is expected to be priced around $30,000. This development positions GM to better compete in the EV market by offering a more cost-effective electric vehicle option to consumers, potentially challenging other automakers including Tesla.

8. Conclusion

  • The autonomous and electric vehicle industry is currently experiencing significant technological and market shifts, with leaders like Tesla, Google, and key Chinese automakers driving these changes. Tesla remains at the forefront with its innovative self-driving technology and continuous software enhancements, but it faces formidable challenges, including stringent regulatory scrutiny, stiffening competition, and uncertain market dynamics. Elon Musk's diverse activities, ranging from his endorsement of Dogecoin to political involvement, add further complexity to Tesla's market resilience. Furthermore, the rapid advancements by Chinese companies like Li Auto and new players entering the electric vehicle space underscore the growing competition. Although the industry is poised for a future largely dominated by autonomous and electric technologies, the path forward will require navigating regulatory hurdles, competitive pressures, and evolving market conditions. To maintain leadership, companies must strategically leverage technological advancements while adapting to changing global market and regulatory landscapes. The practical applicability of these findings suggests that continuous innovation and strategic positioning will be critical for long-term success in this fast-evolving industry.

9. Glossary

  • 9-1. Tesla [Company]

  • Tesla, Inc. is a leading EV manufacturer, known for its innovative approach to electric vehicles and self-driving technology. Tesla faces both opportunities and challenges in maintaining its market dominance amidst intensifying competition and fluctuating regulatory landscapes.

  • 9-2. Elon Musk [Person]

  • Elon Musk is the CEO of Tesla and a pivotal figure in the EV and autonomous vehicle industry. His business decisions, public endorsements, and political activities exert significant influence on Tesla's market performance and public perception.

  • 9-3. Google Gemini [Technology]

  • Google Gemini is an AI model used to teach robots to navigate office spaces. Its implementation exhibits Google's commitment to advancing AI-driven robotics in both domestic and professional settings.

  • 9-4. Zeekr CX1E [Product]

  • The Zeekr CX1E is an upcoming electric crossover SUV from the Chinese automaker Zeekr. It boasts advanced technology features and aims to compete with the Tesla Model Y in the market.

  • 9-5. Li Auto [Company]

  • Li Auto is a prominent Chinese new energy vehicle manufacturer known for its strong market performance and rapid growth in electric vehicle sales.

10. Source Documents