Tesla Surges While VW Faces Crisis "A Year to Save the Brand”

today we have two stories about Tesla that are in direct contrast to two negative updates on Legacy auto Volkswagen and Volvo first there's a report that Tesla's model y might get a six-seater version next year in China second we'll show you a graph of the bestselling electric vehicles in Europe year today so for all those people out there still thinking there's a demand problem for Tesla think again third Volvo has now announced they will not be able to hit their previously stated goal of going fully electric by 2030 instead they can now only promise that $90 100% of annual sales will be hybrids and electric cars by end of the decade Volvo is the latest in a long string of automakers to backtrack from their electric goals in recent months we've seen Porsche Mercedes Bentley and Ford of Europe push back plans or in a recent meeting with thousands of employees Volkswagen's CFO said that they only have a year maybe two years to turn things around they now need to end job guarantees and close plans got Brian White joining me Brian is very good he knows so much so so so much about these other car makers uh and of course Tesla as well but uh thank you for joining me uh Brian yeah it's kind of somber news isn't it uh we were watching all these big bold aggressive plans and one by one it feels like the old guard is kind of stepping back a little and so I think we're going to discuss why that is yeah and if people want to check out uh you know Brian does really deep Dives on every single um automaker he's done one and every single one of them so you want to learn more about Volkswagen Volvo postar he's got it all uh rivan as well of course and Lucid okay so you know two contrasting stories first here's Tesla seems to be growing with new models and just U hitting all you know top sales and top brands all that loyalty meanwhile you've got Volkswagen and Volvo we'll talk about today but it seems like almost like you said every week there's always something that these automakers are failing at this point so hopefully that um we'll see what happens there but so the first one you know I don't know how real these are but these are you know rumors now that Tesla is preparing a model y uh next next year and next year in China we know that that might be happening but what we're hearing is that there plans to produce a six seat configuration of the model y uh as it aims to take back market share from competitors I love it you know it's it's the number one take back market share I guess sure when you're 100% And then somebody comes along and starts selling a couple thousand you know get that back 2025 T tessla plans to bring a new model y to China right we know that they're going to do the refresh model y but uh what we're hearing now it's going to be a six seat what do you think about this um idea of a six-seater when I first saw that I thought that can't be right you mean seven right it's got to be a typo so I read some I read up on on it and I found articles saying well they think that um maybe in the Chinese market that that buyers would feel that seven seats is too cramped and six is just right well I have a seven seat model Y and I don't know how eliminating the middle of the second row would make it more spacious unless you're planning on Spaghetti wrapping your legs around the middle row maybe uh they they do some fun things with engineering so it could be that six seat is the is The Sweet Spot but using that if you've got that space using that third row does give you a competitive advantage in the market especially uh for someone with you know small kids not that people in China frequently have uh that many children but there can be other reasons to want to have a third row to have that many passengers friends and family generally so um anything to differentiate yourself anything to offer and you know it's not like they're offering this for free it is a it is a an additional item with additional margin as long as it doesn't slow down the production line which it shouldn't uh go for it all right so last year um Tesla upgraded the model 3 brand new they said more than 50% of all new cars and it's a fantastic all new parts fantastic new uh car model 3 which I just bought and I have both now the old version and new version it is just a completely different car it's a mini Sports Car Mini roadster and it's just perfect like no sound ISS issues no rattles um it drives smoothly the suspension is amazing like you can drive over anything and you don't feel it it just everything about the car felt like it's um upgraded so Tesla's talking about refining the model y or having its upgraded version and Elon came out and said it's not going to come out until next year because he doesn't want people to stop buying the model y this year wait till next year but it's going to come out next year are you expecting it in January are you expecting the first when you when is your thinking based on your you know as you follow these uh supply chain rumors and what's going on in the factories so my supply chain guys uh I've lost some of my Bobs so I don't have as many parts uh insiders as I used to but even when I still did as expected because the parts uh commonality is so great um I'm not seeing the parts we know that they're being made we know that they exist but so many of them look like or are model three parts that I'm not seeing them um but but all of the timing lines up for q1 but the question is where is it going to be q1 in Fremont we did see recently the outbound Logistics lot completely devoid of model y's and that would suggest some things going on with the model y line but it could be anything and we do have EXs model y production capacity in the US if they had to pause Fremont for any other reason it wouldn't be a problem they could just just increase production in Texas to cover most of that shortfall uh so they would so yes I am expecting it in q1 somewhere uh certainly China uh but maybe more than just China it because they have four factories to switch over compared to just two for the model 3 it may be that they try to change it over more aggressively in terms of their timeline instead of going Factory by Factory by Factory by Factory because that would be I guess the question I've got is when would they actually um shut down the factory to be able to start creating the production line would they do it this year or would they do it next year I believe they would do it next year because they don't want the appearance of year-over-year sales decline which a which a shutdown of their biggest product line would absolutely cause and I I would think that this is the one car that they would have to do it secretly as much as they can they here's is because they have two factories in the US they could shut down one retool it while the other's going full steam so that there isn't a shortfall of production and then have it ready to go in q1 uh by for example closing Fremont and letting Texas fill up uh fill the Gap they could also overproduce they could put both factories to highest capacity output and start stuffing Lots so that when they do the change over they've still got inventory to clear and yeah I think it'll be I hope what they do and we didn't see this with the model 3 as much is make it a little bit more expensive for the first few months so that people will still be motivated to buy the older one especially fleets they don't care what the model year is they just want the best price next story so who do you think is the bestselling electric vehicle brand here today in Europe Brian I don't know if you know this you might not know this answer let me tell you though Brian is it a little is it a company out of California or Texas I know cuz that company's Global but uh it's not just okay anyways there's still people out there claiming Tesla's demand problem in Europe could it even be could it be even better sure but ask the competitors how they're doing so if you look you know of course there's been a a Slowdown in Tesla which is the Blue Line the dark blue line purple line at the top here but when you compare it to Volkswagen BMW Volvo Mercedes Benz Audi PUO and others this is what they look like this is year to date registrations uh the first you know up to September in Europe bestselling electric vehicles and comparing these guys so uh I think there people are saying there was a decline in Europe I mean sorry Germany but if you compare it all of the countries it's fine MH yeah and so ignore that last line because that's September and that data could only be through the second or third at most so that super flat spot but what they're showing is that through the end of August Tesla didn't go up as much as they might have wanted to but it still appears to be the largest increase of the brands listed here so yeah guys uh it's fun to zoom in to a single data point and pretend that a data point is a trend line and it's not you have to zoom back out and look at the whole picture uh it's easy to lie with Statistics I saw a great post yesterday a guy said if you'd put a million dollars in the stock market in 99 at uh and started drawing out 50,000 a year uh for you know your pension you'd be down to 300,000 today compared to if you put it in uh just a savings account and then of course uh AJ and some others said right why'd you choose 99 that's very dishonest go back three years heck go forward eight years and you're still extremely well off uh it's cherry-picking uh you got to zoom out and be honest okay well I'm going to need you to zoom out right now and be honest so we're talking about Tesla we talked about the two stories there about Tesla potential obviously going to get the new model y we talked about uh they're doing okay in Europe or you know not as great as they want to but uh compared to the others they're not struggling as much as everyone else the problem is looks like that the other car companies Volvo and Volkswagen we'll talk about them just this week they started to talk about things that are not good so here's Volvo you know I don't know if this sentence is right they're admitting defeat but it's not that that but they basically are pulling back on their plans that they're going to go fully electric by 2030 instead they're now saying that by that end of decade 90 100% of our sales will be a combination of hybrids and EVS we're not going to BU just do all electric vehicles so in me time before we get there and share more info there is good news and the good news is that they just released their NextGen semi truck 373 times 373 miles two times more than previous version oh thank goodness 373 miles for a semi- electric motors transmission integrating the rear axle more efficient batteries delivery start second half of 2025 that's next year no word in price yet that's what it looks like looks massive looks big but at least they're tching something what do you think about this specs I I think the size looks normal the range is exactly what is needed to get beyond the first wave of adoption I imagine the price tag is going to be pretty eye watering in the range of four to 500,000 but it all comes down oh yeah oh for sure uh an electric school bus from Bluebird is 350 so this would you know this has more capacity more capability than that so uh I think but it all comes down to your use case either it makes sense for for you or it doesn't this is this is a lot of what the market has needed um if you're I if you've got a a Deo with charging and a destination at the other side you you might need to not put in a second charging station you might need it to be able to do the round trip and if that round trip is 100 150 miles you need it uh what we haven't seen is the biggest question is how big is the battery U because it's Volvo uh I don't know if they'd be using uh lfp batteries which would increase the weight but the lfp batteries are getting very energy dense so that could be already workable and we will find out very soon the market for electric EVS is vast and virtually untapped and Commercial buyers exist at every price point so start them high get enough money in that it makes sense work on your efficiencies Drive the price down from there Volvo's on the right track on this one yeah thanks Brian I asked you to zoom but you went very specific at real data and facts please please zoom out dude sometimes smell the roses right so this is It's talk about Volvo unfortunately they're not able to smell roses right now that was one of their you know good news they announced that but here's the problem Volvo was one of the first automakers right to promise an electric only lineup so it says here if you recall the original announcement was made March 20121 you know that's great they came out and said we're going to go all electric but and even at this as as late as early as early as late as May 2024 which is like several months ago the CEO said an EV only portfolio is still very achievable at that point Jim Rowan was confident Volvo could end sales of vehicles with combustion engines in just five years so very confident but in the most recent quarterly investor webcast held in Late July um the CEO admitted that it'll take time to bridge different parts of the world for full electrification the initial goal to become a Pure EV brand by 2030 might not be achieved anymore fast forward to early September so Volvo is now officially re reusing its lofty electric goals so they had this year and so I just want to explain why they think it is the new Target is to build PL plug-in hybrids and electric cars they think that that will be what they'll do by the end of the decade um so what I see is uh their language was chosen very carefully it is still very achievable we could still do it doesn't mean we will where are the profits where's the margin they can make electric cars what they can't make is a profit on electric cars if you've got hybrids and people are buying them they're a very easy sell if you're selling hybrids you've got Toyota and a lot of Brands uh and all the US uh Legacy auto pushing hybrids it's not a hard sell you you everyone else is doing the advertising for you you just have to make them available and what am I going to do as a as a manufacturer am I going to beat my head against the wall trying to make electric cars profitably when I've got this hybrid right here that I can just sell right now easily without having to convince people of anything without having to take on this emotional liability of you having range anxiety I think it's just an easier sell and a more profitable product and that's why they're doing it I that's weird so you got a gas car you have a gas car now what you can to do is attach a little tiny battery to it call it a hybrid so now you've added two Drive TR you know two parts two more more parts to it and now you're telling me that that's going to be more um you know better of a car and better features and also cost effective no it's not you've just added grown it it's just their way to say I can't do pure electric I need to just slap on Pig Lipstick On a Pig kind of thing people do dumb things every day though people can be irrational they can't they have no option is the problem they can't build profitable EVS so they need to just stick with what they've got let's SLP it on and see if it works so this is why they think um they're they're having problems so first they said that they're slower than projected adoption of EVS that's true and it's also even slower for these legacies because people aren't buying their electric vehicles they didn't make it right the development of charging infrastructure is progressing at a slower Pace that's true but Tesla is doing just fine with the charging infrastructure that's in place now and in addition some countries have either reduced or completely eliminated in sensus RS that's true in Europe also blames newly applied tariffs on electric cars in certain markets so um they do think they're hoping that they call it charge cars with a charge Court that's basically bevs and hybrids right that they're going to account for 50 to 6% of deliveries by 2025 up from 48% during the second quarter of this year come on come on oh wow we're going to increase by 2% of our I mean come on Lazy Lazy B work Volvo they don't have time they don't have money from April through June fully electric cars account for 20% of total shipments so that's how many the bevs they're selling compared to everything just 1/4 of their cars are fully electric so they to continue investments in mild hybrid and plug-in hybrids models as part of its strategic adjustments yeah mild hybrid is just a car with a battery but you don't plug it in like a Prius right oh yeah yeah I I prefer the calente hybrids you do have to you do have to give it to them 26% EV is pretty good sure yeah I mean they were one that we thought was was going to go do it unfortunately we thought that they were going to succeed so they are the latest and the long string of automakers to backtrack from their original electric goals we've seen the likes of Porsche Mercedes Bentley Ford of Europe push back their aggressive electric agendas yeah I mean everybody agrees that the future is electric but they can't move along and so Tesla is going to be one of the only ones out there byd was they had more sales than Tesla in the fourth fourth quarter of 2024 of last year 23 but then the last several quarters they've just crashed and burned and everything's much much lower than they were previously so I'm that's while taking a much lower margin yeah I'm not saying that they're out of for the count but I'm just saying that it's not like you know everybody says these competitors are coming in and now they're overtaking Tesla that's not what's happening so okay next story here is Volkswagen so Volkswagen several stories cuz just a few days ago they talked about um you know having to cut workers they have to um also cut plants now you have the statement from the CFO of Volkswagen yeah Volkswagen warrants time running out uh this is the CFO and uh thank you AJ pulled out some of the quotes he actually told he had a you know presentation to thousands of employees they're talking to the union employees and what he said to them is we still have a year maybe two years to turn things around said we still I mean we only have a year to turn things around but we have to make use of this time simultaneously we need to reduce the complexity of our processes and leverage even more group synergies okay we're in trouble we have been spending more money at the brand then we earn for some time now means that when we spend money we're not getting sales this doesn't go well in the long term spending more than we spend are getting if we carry on like this we won't succeed in the transformation it is our joint responsibility telling the union to improve the cost efficiency of the German sites in particular we need to increase productivity and reduce cost anything here stand out to you no I mean it's good that they know what that they're in trouble a lot of a lot of a lot of GMS don't understand oh I mean a lot of car companies don't understand that they think everything is going great and it's not there's a lot of red flags out there um it's good that you can admit you have a problem my question is what on Earth are you doing to to to write the ship and that answer is less clear just layoffs plant closures it's it's I don't know I feel like it's aggressive in the wrong direction so you've got um this photo here right this is a it was a big meeting this isn't a small meeting um they're talking to the unions you can see those Union people um with the sign so it's um that's one of the issues that they have to face is working with the unions so it says here you know know the let me get this right so they met at the company headquarters they talked about having to end the job guarantees so that's bad news for the employees and they're going to have to close plants unions vow the resistance and one of the points that they made Brian and I know you have opinions on this is they said the unions said that why are you giving rivan five billion dollar when you're going to close plants you're going to cut you know benefits for employ EMP es oh what do you think be so they they're giving them up to 5 billion they haven't given them that much yet it's I think the first payment was maybe a billion what they're doing is getting from rivan things that they tried to get inhouse and couldn't Volkswagen famously hired 10,000 programmers to try and make their cars uh software that's the wrong number but even 10,000 couldn't get it done so they're turning to Rivia to say wow with with a very small team you've managed to make a very good like top three top five quality interface and management system that runs the whole car we'd like a little bit of that please and what would you pay for that well the answer is billions because apparently that's what it's worth so that's like complaining that you spent uh so well uh how how come you're mad at me for spending $500 on a novelty sword when you just spent $300 on groceries one is more important than the other just we got to got to have the software I think they they need the rivan uh as a Lifeline right they can't they can't do it here so they need to like have something maybe all right so just to wrap up the story right so he said that one maybe two years to turn its main car around that's what the CFO said um what hold on and uh and as the auto giant weighs its first ever plant closures in Germany H boy they're gonna have to cut plants now so this is why because um they he said that the Europe car market had shrunk after the pandemic and the company was facing a shortfall in demand of about 500,000 cars equivalent to about two plants apparently there's two plants that are just sitting there idle the Market's just not there or nobody's buying your cars we just showed you the the U the graph there earlier earlier uh he added he did not expect sales to recover and that the core Volkswagen brand had one maybe two years to cut spending and adjust output this is on top of what happened a few days ago last week where he said Volkswagen is going to have to try to get rid of some staff they need to cut 10 billion Euro they need to cut that so they're cutting staff they're paying them off to get out of there um massive cost clear out so six figure Payday for employees to get them get them out MH well and that's those are the rules I mean uh employment is a lot more secure in most of Europe and if you're it's not like in the US where you can just be fired just cut someone loose let the state give them a little bit of Unemployment uh employment contracts are stronger and uh the normal way a union shop reduces headcount is by either buying people out but a lot of times the reductions can be handled through regular attrition just give someone a much smaller amount of money to say why don't you retire a year early or you know why don't we just not hire to fill new vacancies uh but when you need to cut two plants worth of people you have to actually make some tough decisions okay and I I I think I know you and I've repeated this so many times but we just need to but put everything in context which is while we're watching electric vehicles and we're watching it clar carefully the market of sales of EVS going up like crazy globally it's the slowest here in the US but everywhere else it's just going like skyrocketing in the meantime you've got car companies like this struggling to even make an electric vehicle vehicles in the meantime you got Tesla now introducing full self-driving and that's coming and so if your car doesn't have advanced software that can actually have advanced Safety and it be able to drive itself in certain conditions like the parking lots and others it's like yet the other point it's like by the time you catch up in 2030 uh I've got EVS so that's the thing we're closing two plants but uh other companies are not doing that Tesla is not closing plants Tesla is at worst flat but realistically Tesla has taken between Tesla and the other electric car companies they're taking a lot of market share from the Legacy guys what Volkswagen should be doing is selling that half million electric cars why aren't they well we can't make enough money you know what if you made a half million maybe you'd have the economies of scale to make it profitably maybe then maybe you'd only Break Even but the next one would be the one that actually makes a profit guys the market is Shifting with or without you get on board um or I mean Die Trying die not trying I suppose it's going to happen soon maybe in the last five years or so and and to your point about a car without FSD I've test driven so many I've done reviews of so many electric cars some of them real fun drivers some of them with some real neat benefits but if I had to buy an electric car today a different one than the one I have it would still have to be a Tesla because the supercharging network is such a moat but the autonomy just the fact that I can do road trips without having to micromanage every every minute detail of my steering wheel it's it I can't go back okay thank you so much thank you Brian go go back to his channel future oza check him out there um great great Show's appreciate you Brian so much thank you for for joining me thanks everybody bye-bye I've created a website that is the most comprehensive resource for the Tesla investor please check it out Simply go to my website at herbert.com [Music]