Yahoo Autos Ferrari Couldn't Be Stopped Last Year
Ferrari can do no wrong, Tesla’s suppliers are peeved at its price shenanigans and electric semis have a big problem. All that and more in this Thursday edition of The Morning Shift for February 2, 2023.
1st Gear: Never Bet Against the Horse
It must be a ball running Ferrari, the one manufacturer that can truly claim an insatiable, undying demand for its products. No need to advertise, nor follow the lead of competitors; all Ferrari ever has to do is make the best sports cars it can, and maybe one SUV. The rest always sorts itself out, as it did last year. The company just reported its 2022 earnings, and it capped the year with a 13 percent jump in annual profits. Courtesy CNBC:
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For the full year, Ferrari earned 939 million euros, or 5.09 euros per share, on revenue of 5.095 billion euros. Both were above expectations: Wall Street analysts polled by Refinitiv had expected full-year earnings per share of 4.94 euros on revenue of 4.977 billion euros.
The results also beat Ferrari’s own guidance. Ferrari had raised its 2022 guidance in August and again in November, most recently telling investors to expect revenue of about 5 billion euros and adjusted earnings per share of about 5 euros for the full year.
Despite the strong results, Ferrari’s fourth-quarter operating margin slipped to 21.8% from 22.6% in the year-ago period. That year-ago profit margin was boosted by the first of Ferrari’s seven-figure Icona models, the Monza SP1 and SP2; shipments of the Monza’s successor, the Daytona SP3, didn’t begin until the very end of 2022.
Altogether Ferrari moved 13,221 cars last year — a record, and 19 percent better than its 2021 full-year shipments. The 2022 performance was bolstered by the Portofino M, SF90 Stradale, and Spider. The 296 GTB and 812 Competizione helped as well, though those are only coming out of the ramp-up phase now.
Given that Ferrari shattered its own guidance and had to raise its full-year expectations twice last year, it’s perhaps no surprise that the company sees further growth in 2023, with projected revenue of 5.7 billion euros — about 600 million higher than the 2022 figure. Need I remind you the Purosangue hasn’t even started rolling out of Maranello yet.
2nd Gear: Tesla’s Suppliers Hate This
“There’s no such thing as a free lunch,” my high-school economics teacher — indeed, every high-school economics teacher — used to say. When Tesla obliterates prices on a whim, it not only pulls a smaller profit; its suppliers and partners have no choice but to walk away with less, too. You could probably guess how they’re feeling these days, but thanks to a Reuters story, you don’t have to.
While Tesla and other automakers enjoyed higher vehicle prices and strong margins during the pandemic, suppliers were not able to fully pass along higher costs and their margins fell, according to a study by consultancy Bain. Automakers’ profit margins were nearly 3 percentage points higher than suppliers in the third quarter of last year.
More price cuts could be painful in a sector where some suppliers are already struggling, industry officials said.
For example, Gissing North America, which had counted Tesla as its biggest customer, filed for bankruptcy last year, partly due to high labor costs and commodity pricing, said Steven Wybo, chief restructuring officer of the Michigan-based maker of acoustic systems and headliners for car ceilings.
“There’s certain things that I think will ease, but there’s this labor component that’s built in to the price of everything, and I don’t see that easing any time soon and potentially never,” he said.
[Dan] Sharkey, [an attorney who represents suppliers to Tesla and other automakers] warned: “All of these suppliers are not charities. They need to make money and if they lose money, then they’re in financial distress.”
One semiconductor manufacturer which has not disclosed Tesla as a client but appears to work with the EV maker told Reuters that it hasn’t received much pushback from the car companies it works with, despite having to raise prices due to material cost inflation. Elsewhere, Tesla reportedly haggled with a supplier in China to reduce the cost to the automaker by 10 percent, according to an anonymous source who spoke to the news agency. If other car companies decide to follow Tesla down this path — as only Ford has so far — things could get really ugly.
3rd Gear: Honda Won’t Let Hydrogen Go
Honda retired the Clarity fuel-cell vehicle in 2021, but don’t think for a minute that the company has bid farewell to fuel cells for good. Quite the contrary, actually — it’s now dragged General Motors into it, to develop a hydrogen-powered CR-V to be sold in the U.S. and Japan. From Automotive News:
The fuel cell CR-V will be built in Ohio and will launch in in the U.S. and Japan by the end of next year. Europe sales are still under consideration, Honda said in a statement.
Honda executives said engineers have cut the cost of the next-generation system to one-third that of the system used in Honda’s previous fuel cell car, the Clarity sedan that debuted in 2016.
Among other improvements, the durability of the system will be doubled and the low-temperature performance will be boosted, executives said at a briefing here.
The new system starts up significantly faster at temperatures as low as minus 22 degrees Fahrenheit (minus 30 degrees Centigrade).
The new technology is an outgrowth of a joint development between Honda and GM dating back to 2013.
Honda and GM have been pooling resources on hydrogen fuel cell development to defray the high costs of the technology, which is seen as a critical stepping stone toward carbon neutrality goals.
Honda expects to sell 60,000 fuel-cell cars globally by the end of this decade, while expanding the technology to “commercial vehicles, construction equipment and even to companies using fuel cells as station power plants.” It’s worth noting that 15,000 fuel-cell vehicles have been sold in the U.S. in the past 11 years, per data from InsideEVs.
What’s especially weird about this news is that Honda’s CEO has gone on record saying hydrogen’s applications are limited, and Toyota’s bet on it as a mainstream energy source is misguided. Somehow that attitude has manifested as putting a fuel-cell powertrain in the brand’s biggest seller, and tapping GM for support.
