Coronavirus Could Be Good News for Musk and Co.
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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