The European Automobile Manufacturers Association (“ACEA”) released data on passenger car registrations for January 2023. The European Union (“EU”) passenger vehicle market rose 11.3% last month to 760,041 units, marking the sixth straight month of growth. Registrations in Italy, France and Spain witnessed a year-over-year rise of 19%. 8.8% and 51.4%, respectively. Meanwhile, Germany saw registrations decline 2.6% last month. Registrations of battery-powered electric vehicles (BEVs) rose 22.9% to 71,984 cars. Most of the EU markets witnessed double- and triple-digit percentage gains. 

On the news front, U.S. auto giant Ford (F Quick QuoteF - Free Report) made headlines last week by betting big on a lithium iron phosphate battery (LFP) plant to rev up its electric vehicle (EV) game. With that, Ford became the first automaker pledging to set up both nickel-cobalt-manganese (NCM) battery and LFP battery production plants in the United States. Jim Farley, president, and CEO of Ford said, “We’re delivering on our commitments as we scale LFP and NCM batteries, and thousands and soon millions, of customers, will begin to reap the benefits of Ford EVs with cutting-edge, durable battery technologies that are growing more affordable over time.”

Close peer General Motors (GM Quick QuoteGM - Free Report) deepened ties with auto equipment provider MagnaInternational for battery enclosures. Meanwhile, EV king Tesla (TSLA Quick QuoteTSLA - Free Report) has been adjusting its model prices frequently. It hiked the price of the Model Y crossover in the United States, the fourth price change in two months, to keep up with surging demand.

Meanwhile, the earnings season for the auto industry continued. Auto retailer Lithia Motors (LAD Quick QuoteLAD - Free Report) failed to pull off an earnings surprise in the fourth quarter of 2022, owing to lower-than-expected revenues from used vehicle retail and F&I units. Lithia’s peer Sonic Automotive (SAH Quick QuoteSAH - Free Report) beat fourth-quarter earnings estimates due to better-than-expected sales performance in the EchoPark segment

Last Week’s Top Stories

Ford announced a massive investment of $3.5 billion in a LFP plant, which will add nearly 35-gigawatt hours/year of new battery capacity for the auto giant in the United States. With this capacity, Ford can power as many as 400,000 future EVs. LFP batteries are more durable and use low-demand and cost-effective materials. The inclusion of these low-cost batteries in its EV lineup will help Ford gain scalability and make EVs accessible and affordable for customers.With this new battery chemistry, in addition to the existing NCM battery, customers will get a chance to choose an EV with a range of different battery performances more specific to their needs (Ford to Invest $3.5 Billion to Build LFP Battery Plant)

In another development, Ford doesn’t expect to resume the production of its popular e-truck F-150 Lightning at least till this week’s end. The auto giant has stalled the production of its mainstream electric pickup truck after encountering a potential battery issue that caused a vehicle fire on Feb 4. The automaker said that it believes the engineers may have detected the cause of the fire that led to the suspension of production. The investigation will complete by the end of this week. The adjustment to the truck’s battery production, which requires another few weeks, will take place post-investigation. (Ford Halts F-150 Lightning Production, Plans to Cut Jobs)

General Motors expanded its partnership with Magna, which has already been producing GMC Hummer EV battery enclosures, to produce battery enclosures for its new Chevy Silverado EV in Michigan. Magna set up its St. Clair, MI facility in 2021 to tap the opportunities created by the EV revolution. It produced battery enclosures for Hummer EV in the plant. The battery enclosures for the new Chevrolet Silverado EV will be produced at the same facility. Also, the Silverado EV is expected to enter production stage later this year and will release in different variants.

After a long wait, GM finally unleashed two Chevrolet Silverado EV models, which it also likes to call “category-defying, boundary-breaking game changers,” namely the Work Truck and RST editions. The Silverado EV WT comes with 510 horsepower and an 8,000 lbs towing capacity and costs around $41,595. The optional features will include up to 20,000 lbs. (General Motors Magna Deepen Ties for Battery Enclosures)

Tesla raised its Model Y’s price for the second time in February after consecutively slashing prices in January. According to Tesla’s website, the model Y performance crossover will now be priced at $58,990, still 16% cheaper than the price in January. Meanwhile, it cut the price of the rear-wheel-drive model 3, which will now cost $42,990. Elon Musk, CEO of Tesla, pointed out rising demand as the prime reason behind the price hike. Soon after the automaker slashed prices this year, it experienced an outburst of demand. It increased the price to strike the right balance between demand and supply.

Tesla hiked the prices of the high-demand EV Model Y Long Range and Model Y Performance by $1,000 each early this month. In the latest price change, Tesla increased the price of the Model Y performance crossover by another $1,000. However, it slashed the price of its cheapest model, the rear-wheel-drive Model 3 sedan, by $500 to make it 9% cheaper. (Tesla on Price-Changing Spree, Hikes Price for Model Y)

Lithia reported fourth-quarter 2022 adjusted earnings of $9.05 per share, which decreased from the prior-year quarter’s $11.39. The bottom line also missed the Zacks Consensus Estimate of $10.11 per share. Lower-than-expected revenues from used vehicle retail and F&I segments resulted in the downslide. Total revenues jumped 10.8% year over year to $6,990.2 million. The top line also topped the Zacks Consensus Estimate of $6,893 million.

The company approved a dividend of 42 cents per share, which will be paid out on Mar 24, 2032, to shareholders of record on Mar 10, 2023. During the quarter under review, Lithia bought back 174,000 shares at an average price of $198. In 2022, it repurchased 2.4 million shares at a weighted average price of roughly $276. Under the current share repurchase authorization, approximately $501 million remains available. Lithia had cash/cash equivalents/restricted cash of $246.7 million as of Dec 31, 2022, up from $174.8 million as of Dec 31, 2021. Long-term debt was $5,088.3 million as of 2022-end, marking an increase from $2,868.1 million as of Dec 31, 2021. (Lithia's Q4 Earnings Miss Estimates, Fall 20% Y/Y)

Sonic registered fourth-quarter 2022 adjusted earnings per share of $2.61, which outperformed the Zacks Consensus Estimate of $2.26. Better-than-expected sales from the EchoPark segment led to the outperformance. The EchoPark segment reported quarterly revenues of $589.3 million, reflecting a 2% decline from the year-ago figure. However, the figure came ahead of the consensus estimate of $562 million. The bottom line, however, fell nearly 1.8% from $2.66 per share reported in the year-ago quarter. Total revenues amounted to $3,591 million, an increase of 13%. The figure also surpassed the Zacks Consensus Estimate of $3,453 million.

Selling, general and administrative expenses rose 7% year over year to $366.3 million in the quarter. The board of directors approved a quarterly cash dividend of 28 cents, the same as the prior payout. The dividend will be paid out on Apr 14, 2023, to all stockholders of record as of Mar 15, 2022.  During the fourth quarter of 2022, Sonic repurchased around 0.7 million shares of its Class A Common Stock for an aggregate purchase price of nearly $35.8 million. (Sonic's Q4 Earnings Surpass Estimates, Struggle On Y/Y Basis)

Price Performance

The following table shows the price movement of some of the major auto players over the last week and six-month period.

Image Source: Zacks Investment Research

What's Next in the Auto Space?

Industry watchers will keep a tab on January commercial vehicle registrations to be released by the ACEA.