By on May 1, 2020

Tesla, if you haven’t heard, posted a first-quarter profit on Wednesday — a slim one, to be sure ($16 million), but black ink nonetheless. Compare that to the likes of much larger automakers like Ford. Of course, Tesla waited longer to shut down its sole American assembly plant, and it can chalk up its surprising financial buoyancy to hundreds of millions of dollars of emissions credits sold to rival automakers with far dirtier footprints.

While Q2 is widely expected to be a bad one for all involved, including Tesla, the electric automaker might see a silver lining from the coronavirus pandemic.

Namely, decreased R&D investment and delayed or deferred product launches. Belt-tightening was already all the rage before the virus hit, but so to was getting out in front of legacy rivals with an all-electric vehicle. For many, such products are already too far down the development road to axe, while others are far enough away to keep on the books.

With hard economic times upon us, guaranteed money makers like trucks and SUVs will take on an even greater importance for OEMs.

All of this could work in Tesla’s favor, CNBC reports. According to IHS Markit’s Matteo Fini, head of the firm’s supply chain and technology forecasting, EVs “are not the core focus of consumers.” With profit generation being top of mind more than ever, “Some things have to give, and e-mobility deployment might be some,” Fini said.

After surveying 140 automakers and suppliers, IHS claims automotive R&D spending will decrease 17 percent his year and 12 percent in 2021. Software development is expected to see the biggest bite.

We’ve already seen one future vehicle fall victim t the pandemic; that being Lincoln’s Rivian-based SUV, which the automaker scrapped earlier this week. A collaborative project is still expected to reach the market, just on a later timeline. CNBC reports that the upgraded Chevrolet Bolt’s introduction will be pushed back a year, to 2022.

Elsewhere, product launches are in disarray following the North American auto industry’s shuttering during the Great Lockdown. Many will be pushed back, giving Tesla more time on the market with only existing EV products. To be sure, the automaker has more competition that ever, but the company’s name is still found on roughly three out of every four EVs sold in the U.S.

It also has a rapturous fan base that shuns any rival EV as being impure, helping it retain customers and attract new ones.

All that said, new rivals are on the way, coronavirus or not. GM has no plans to deep-six its proposed GMC Hummer EV, nor does Ford intend to do away with its Mustang Mach-E.

[Image: Aleksei Potov/Shutterstock]

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21 Comments on “Coronavirus Could Be Good News for Musk and Co....”


  • avatar
    incautious

    lol teslas “profits” came from selling ev credits not from the manufacture of cars.

  • avatar
    Imagefont

    A 16 million dollar profit is barely a rounding error. This profit was penciled into existence solely by accounting.

    • 0 avatar
      SCE to AUX

      “This profit was penciled into existence solely by accounting.”

      So was Ford’s $2 billion loss, and both used GAAP. Neither number matters under the current circumstances.

  • avatar
    SCE to AUX

    Tesla was also profitable for 2019, but Q1 results for any mfr should be considered an aberration.

    The only story here is that Tesla will continue its EV market lead by default, simply because everyone else’s EV programs are stalled or slowed. No surprise.

  • avatar
    el scotto

    Evil genius stuff going on there. Don’t actually make money off building cars, make money off selling emission credits. Tesla becomes the de facto electric car manufacturer for the rest of the world’s car manufacturers. Some manufacturers may say; “We’ll make V-8’s and lots of money and just pay Tesla for emission credits.” How many board of directors approve?

    • 0 avatar
      mcs

      el scotto: Don’t forget owning all of the “gas stations”.

      • 0 avatar
        el scotto

        Yeppers, my local Wal-Mart is getting electric car chargers. Some may see this as a sign of an upcoming apocalypse. Or for many; gotta go to Wally-world anyway. https://www.foxbusiness.com/retail/walmart-electric-vehicle-charging-stations-us-stores

        • 0 avatar
          indi500fan

          Our local Meijer (a midwest chain similar to a super WalMart but with higher line grub) has Tesla chargers.
          There’s always a few Model 3s there during the day.
          It’s right next to the Meijer gas station with 1.33 regular.

  • avatar
    ToolGuy

    If Elon Musk loved me, he would offer a choice of three different grilles.

  • avatar
    Art Vandelay

    Bring Back Bertel Schmidt!

  • avatar
    Vulpine

    “It also has a rapturous fan base that shuns any rival EV as being impure, helping it retain customers and attract new ones.”

    — I might be part of Tesla’s fan base but it is NOT due to thoughts like the one above. That denigrates and belittles the people who see Tesla as the technology leader in BEVs at this time, despite the efforts of other brands. “Impurity” has nothing to do with it; practicality does.

    When you look at the so-called ‘competition’, you either have cars attempting to directly compete with the Model S, X or 3 in either performance or range–rarely both.

    The Porsche Taycan is a strong competitor in performance, rated better by many for its ability to handle multiple full-power launches without overheating; which is a good thing even in my eyes. However, at double the price it only gets a little over half of the range AND lacks a comprehensive recharging network that would permit it to take on road trips longer than 200-300 miles round-trip.

    Then you have the Jaguar iPace (or is it I-Pace?) attempting to compete with the Model X. Oh, in interior cubic footage it may have the advantage and I won’t argue that a square back design is more efficient for carrying bulk cargo but its performance is lacking somewhat despite their advertising while it still faces both the range and the recharging issues that every brand so far faces compared to their Tesla ‘equivalents.’

    The Chevy Bolt is no different, matching the base-model 3 in range but is much lower in MPGe due to its shape and much lower in performance due to using smaller motors for roughly the same size battery to achieve that range. Plus… it lacks any real fast-charging capability AND the limited OTR recharging infrastructure effectively limiting it to city-car functionality with limited fun factor for cruisin’.

    No, Tesla’s strongest competition is going to be seen in the other dedicated BEV companies that are all in startup mode–all of which are promoting pickup trucks and SUVs over sedans and wagons and a very popular class of vehicles here in the States. These appear ready to compete in performance and range, though they may still lack the accessible recharging infrastructure that Tesla has been installing now for almost 10 years.

    Honestly, that is the competition’s biggest drawback and VW’s attempt to build such an infrastructure is lacking simply because of their placement of chargers. Rather than selecting Walmart* lots which are often miles away from an Interstate exit ramp, they should have contracted with more convenient truck stops and convenience stores that tend to cluster around said exit ramps. Many of Tesla’s own Supercharger stations are directly on the Interstate Highway network at state-constructed rest centers such as those seen on I-95 through Maryland, Delaware, New Jersey, etc. Of course, not all of Tesla’s charging stations are in such places but they are all placed more conveniently than the majority of the third-party charging sites which tend to be in more congested locations closer to cities while at best stretching the range capabilities of most BEVs between cities.

    No, this has nothing to do with “purity” and everything to do with functionality.

    • 0 avatar
      mcs

      @vulpine: Exactly. One of the problems I’ve seen with VW’s network is the number of ports at each charger. They’ll have 2 or 4 where the Tesla chargers might have 8 or 10. As far as the Taycan goes, the Model 3 can handle multiple launches without overheating. Plus, the aftermarket has come to the rescue and has things like carbon-ceramic brakes and coil-overs for the Model 3. Even a different nose if you want it. Gets the 3 a bit closer to Taycan specs for a lot less money.

      Another factor is that you don’t have a dealer network that really doesn’t want to deal with EVs. There is also the recent battery patent for 4,000 cycle capable batteries. Don’t know when they’re going into production, but that would be a huge factor.

    • 0 avatar
      el scotto

      @ Vulpine For normal people, not so much the B&B if you listen to them, a stop while doing long distance driving includes a bathroom break, eating something or a snack, more caffeine of some sort, fuel, depart. Will one of the major truck stop franchises be the 1st to put in chargers? Slide the plastic card of choice, plug in, bathroom break, food/snack, more caffeine, unplug, depart. Yeah just off the interstate truck stops/mini marts aren’t travel destinations, they serve their purpose.

      • 0 avatar
        Vulpine

        Some of those truck stops ARE “travel destinations” in their own right. Look up “World’s Largest Truck Stop” and “South of the Border” as examples. Most certainly they would install chargers, if they haven’t already. Truck stops are centered around the need to actually take a break after 8 to 10 hours of driving and get some real food in your belly, take an extended bathroom break and yes, even browse the ‘convenience store’, which tends to have a lot more than just snack foods and soda.

  • avatar
    jmo

    With the collapse of the oil industry, mass unemployment in the oil patch, the state of Texas on the hook for 10s of billion to cap the abandoned wells of bankrupt drillers – how much of a hit will that take out of the traditional truck and SUV market.

    • 0 avatar
      Imagefont

      You’re exaggerating just a little there. I do a lot of work in west Texas and I assure you that if anyone goes bankrupt it’s just a buying opportunity for bigger players. No wells are being capped, they are in a mad rush to drill more and frack them. Oil companies know better and they know this is all temporary. Pioneer Natural Resources is begging the railroad commission to put a cap on production but it’s not going to happen. Hard times just mean consolidation as small players go broke.

      • 0 avatar
        addm

        All the fracking companies have high debt and no profits to show for. Their survivability was questioned even at Crude oil price of 50 dollars. Do you care to explain which fracking company is in good financial condition

        • 0 avatar
          Imagefont

          addm
          I couldn’t name a single fracking company. A lot of them are small operations. I was told a few years ago that lifting costs are in the high $20’s to low $30 range, per barrel. It depends on the well. Big players are well capitalized and they use dips in the market to build more infrastructure at lower cost. Fracking requires fresh(er) water, not the horrible salt water produced that is re-injected, and frack sand. Usable water is in tight supply and sand operations are everywhere. Midland is practically lit up at night by flares and the road from Pecos to Orla is the most dangerous road in Texas. There is a LOT of oil in this area and drilling and production operations are continuing unabated. The landscape is almost unrecognizable compared to even just 10 years ago. I dare you to find me one well that’s being capped. A short term price collapse from a temporary pandemic is not going to scare anyone out of business. I do think it’s funny though that WTI went negative for a while there due to storage capacity issues.

  • avatar
    addm

    All the fracking companies have high debt and no profits to show for. Their survivability was questioned even at Crude oil price of 50 dollars. Do you care to explain which fracking company is in good financial condition

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