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By Joseph White, Global Automotive Correspondent

Greetings from the Motor City!

We’re midway through the spring financial results season, and by now you may be wondering:

Why are auto stocks in the ditch when the big companies are meeting or beating investor expectations, reaffirming or raising 2023 profit forecasts and still getting away with charging stupid money for new cars and trucks?

Great questions, as industry executives like to say during conference calls when an analyst brings up a sensitive subject.

Let’s get some answers. Today –

• • Tesla v. Ford: The electric vehicle price games

  • The recession-defying American auto market?

  • Mercedes taps its F1 team to catch Tesla 

One more thing: I’m looking forward to interviewing industry executives at the Reuters Events Automotive Europe conference in Munich, May 16 and 17. The only drawback is that I cannot at the same time attend the Reuters Events Automotive Retail USA conference in Las Vegas. But you could. It bears repeating: It is really great to go see people in person again.

And now, on with the show.

How much is that EV in the window?

Ford on Tuesday slashed prices for its Mustang Mach-E electric SUVs by as much as $3,000 to $4,000 as it accelerated production following an overhaul at the Mexican factory that builds them.

Tesla bumped up prices for its Model Y SUVs and Model 3 sedans by about $250-$290, backtracking a touch on previous, larger price cuts. It also lowered prices for the Model 3 Long Range, once again available for ordering by North American customers.

Welcome to the new world of automotive pricing, where automakers tweak prices for electric vehicles on a daily basis, responding to real-time information on demand hoovered up by their websites.

The “manufacturer’s suggested retail prices” printed on window stickers have been meaningless for decades. Dealers could sell for less (or more) depending on their reading of demand in their local market and the size of the rebates offered that month by the automakers.

Tesla is leading the industry to a new level, dialing prices up and down on its websites without having to consult dealers. Tesla is now playing cat-and-mouse with customers – especially in China where BYD, Zeekr and other domestic EV brands are aggressive competitors.

Are the latest price increases meant to push people to order a new Tesla now instead of waiting for another price cut? Great question!

Can Tesla’s rivals sustain premium pricing for their EVs if Elon Musk is creating everyday price chaos?

Ford CEO Jim Farley said the answer is no for vehicles that compete directly with Tesla’s models, but maybe yes for vehicles that do not.

Even as it has cut Mach-E prices, Ford has been able to raise prices for its F-150 Lightning electric pickup by $11,000 since its launch, Farley said. The Lightning is the only large, electric pickup available in volume right now.

Will Ford have to back-track once General Motors starts shipping electric Silverados in volume, and Tesla gets the Cybertruck on the road?

Another great question!

U.S. auto sales keep on trucking.

Interest rates are rising. Inflation won’t go away. Regional banks are staggering. Congress and the White House are playing chicken with defaulting on the nation’s debts.

And amid all this, U.S. consumers pushed car and light truck sales in April to a 15.9 million vehicle annualized rate, well ahead of expectations, according to Wards Intelligence and Cox Automotive.

Ford said Wednesday its April sales rose 4%, powered by a 35% lift in sales of F-series trucks like the Super Duty above.

If Fed Chairman Jay Powell wants another reason to raise rates later today, the auto industry just supplied one.

Auto industry executives are worried the U.S. market cannot defy gravity forever.

Ford’s CFO called the macroeconomic outlook “opaque” and told analysts during Tuesday’s call on first quarter results that prices will come under pressure as the year goes on.

Stellantis executives are wary despite strong first quarter revenues.

Pent-up demand is a big gust of wind beneath the U.S. auto industry’s wings, Reuters Breakingviews notes.

Another source of strength in the United States and globally: The rich.

Porsche said it plans to raise prices for its sports cars, responding to strong demand. Volvo reported robust demand in China.

Inspiration for your future EV?

Mercedes is using lessons from its Formula One team to slash months out of the process of developing new electric vehicles, and making them lighter and more efficient.

The challenge from Tesla to Mercedes’ S-Class franchise is reason enough. The ability of Chinese EV makers to put new models on the road in just 2.5 years adds urgency to the German stalwart’s efforts to get the lead out.

Chinese consumers switching to domestic brand electric vehicles are leaving Japanese automakers out in the cold. Total sales of Japanese brand vehicles in China fell by 32% during the first quarter, according to a Reuters analysis.

Foreign brands are under pressure in China as government policy and consumers increasingly get behind domestic brands such as BYD.

Ford CEO Jim Farley on Tuesday outlined plans for a “lower investment, leaner, much more focused business in China.” Ford will concentrate on commercial vehicles and use China as an export hub, Farley said.

But Japanese brands are getting hit especially hard. Toyota, Nissan and Honda all vow to catch up in China. But their decisions to go slow on EV investment look like bad calls. The future promises more tough decisions like Mitsubishi’s call to halt production of its Outlander SUV in China for three months.

Auto parts suppliers putting their chips on black – betting that the shift away from ICE (Internal Combustion Engines) vehicles will move more slowly than automakers claim – are headed for a shakeout. That’s the warning in a new study of the auto supplier sector from S&P Global Mobility.

Big automakers are slashing investment in new combustion powertrains and vehicles, according to S&P Global. `“Back in 2015, the number of new engine combinations (family/program) launched for production in North America reached 13,” according to the S&P forecast. “In 2025, this will plummet to two.” 

Suppliers that haven’t made the move to electric vehicle technology may already be too late, said S&P Global’s Michael Robinet. Automakers have locked in suppliers for their next generations of EVs – and could run those architectures with the selected suppliers for more years than a typical combustion vehicle.

“If you missed that train, you will be waiting at the station,” he said.

Another force that will drive a North American supplier shakeout, Robinet said, are local and regional banks. They finance many smaller and medium-sized auto parts makers. “It’s the banks that will knock on your door and say, I don’t like what I’m seeing,” he said.

Next up: More ICE suppliers will look for deals – like this one – to gain scale, or cash out while they still can.

The ride hailing market in the United States is technically a duopoly. Uber’s better-than-forecast first quarter results – and No. 2 U.S. ride hailing company Lyft’s on Thursday – show that Uber is now The One.

Uber’s $8.8 billion in first quarter revenue was more than double Lyft’s revenues for all of 2022. Uber reported 130 million active users during the first quarter. Lyft reported 20.4 million at the end of December – flat with the prior quarter.

Investors will tune in to Lyft’s results on Thursday mainly to hear what new CEO David Risher will do to keep Lyft on the road – in some form.

EV startup Fisker Motors said it will partner with another small startup, Ample, to develop swappable batteries for the Fisker Ocean electric SUV. Chinese EV makers Nio and Xpeng are also pushing swappable batteries as a solution to inadequate public charging networks.

U.S. fuel taxes are lower than fuel levies in other developed countries, according to a Department of Energy study. So stop your griping!

Lordstown Motors warned it is on the brink of bankruptcy, sending its shares into a nosedive. The EV truck startup’s future depends on bargaining with Foxconn, which is refusing to go through with a deal to invest another $170 million to keep Lordstown afloat. If Lordstown Motors does not continue, Foxconn would still own the assembly factory Lordstown once hoped to use to mass produce electric pickups. Lordstown’s largest shareholder is former CEO Stephen Burns, with a 9% stake according to Refinitiv data. Burns has been selling shares over the past six months.

Lithium producer Albemarle will double capacity at a Western Australia processing facility, investing $1 billion. Australian lithium  helps automakers qualify for U.S. government battery subsidies. Lithium prices have been dropping as investors fear new supply will come on stream faster than new demand.

Ford signaled more staff cuts are in the offing, disclosing in an SEC filing that it has set aside $1.5 billion to $2 billion for employee separations and supplier settlements this year.

Former Audi chief Rupert Stadler will confess to his role in Volkswagen’s diesel emissions cheating, his lawyers told a German court.

Nikola and Volterra announced plans to build hydrogen fueling stations.

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