I disagree…the numbers do as well.
GM is massively growing it’s EV business - how can a 46% sequential growth in Q3 be viewed as “not growing”?? And they are ramping up Ultium production with no uncertainly introduced as far as I can see.
In Q3 2024 GM EV sales set another record for the quarter, up 60% year-over-year to 32,195 total deliveries, up 46% from the second quarter. As a result, GM’s share of the total U.S. EV market increased to 9.5% from 7.1% in Q2. That’s a 2.4% share gain in one quarter!
Here is the source. I was posted by @Happyhunting as well.
And this is what the GM CEO said on 23 July in their ER:
As I said before our EV portfolio is growing faster than the market now that our module issues are resolved and we are scaling production. Our early sales are mostly incremental - about 54% of customers are new to GM and we’re working to increase our conquest rate by raising awareness and launching new models. Our best-selling EV so far this year is the Cadillac LYRIQ and it is now the market leading luxury EV in 22 states including Florida, Texas, and Michigan. The GMC Hummer EV and the Chevrolet Blazer EV are also building momentum.
To unleash the next cycle of EV growth we’re scaling production of the Chevrolet Equinox EV with its unique combination of performance, technology, range, and affordability. We delivered our first 1,000 units late in the second quarter and the reaction from customers, dealers, and the media is very strong. One product reviewer said, Chevy seems positioned to grab a piece of the pie that no one else has quite grabbed onto yet, and we think that is spot on.
Then over the next several months, GMC will launch the Sierra EV, and the Cadillac LYRIQ will be joined by the OPTIQ, Escalade IQ and CELESTIQ. We’re especially excited about the OPTIQ. Car and driver said it nails the compact luxury SUV formula. Then next year, when we follow with the CELESTIQ, Cadillac will have a beautifully designed EV in every global luxury SUV segment. We’re going to focus on winning new customers with these nameplates, as well as with the next generation Chevrolet Bolt EV because they represent the largest growth opportunities for us.
But we’ve also made adjustments to ensure we have a balanced approach as the market develops. This includes deferring Buick’s first EV which had been planned for 2024. As we’re expanding choice, other barriers to EV adoption like public charging access are also improving. We are working to finalize commercial agreements with Tesla to give our customers access to their charging network. The IONNA fast charging venture we joined is expected to bring its first chargers online before the end of the year, and customers are telling us the drive-through plazas we’re rolling out with Pilot company are the best public charging experience out there.
As excited as we are about our portfolio, we are committed to growing responsibly and profitably in any demand environment. Over the next few years, third-party forecasters now see the EV market growing steadily, but more slowly than it did over the last few years. As a result, we are adjusting our spending plans to make sure we’re capital efficient and moving in lockstep with customers. For example, our Ultium cells joint venture continues to ramp up domestic battery cell supply this year, which is helping drive profit improvement in our EV portfolio.
As we go forward, we’re going to bring additional capacity online in a measured cadence. This will enable us to better optimize our battery chemistry and form factors to meet our customers’ needs on cost and range. We’ve also decided to reopen the Orion assembly as a battery electric truck plant in mid-2026. The new timing is six months later than our plan heading into the year. We’re confident that we can meet customer demand for standout EV trucks in the interim by leveraging the production capability and flexibility we have in factory zero. We will also continue to take advantage of the flexibility we have to mix production between ICE and EV at key plants.
That does not sound like a company who is “not growing its EV business”!! I don’t know where the narrative comes from.
The US EV market is growing slower than the heightened expectations that prevailed a while ago imo, but that is in line with the rest of the auto business. high interest rates dampen demand for big ticket purchases like cars. Has always been the case and this time was no different. But ASPN didn’t have heightened expectations in their recent forecasts. And now interest rates are coming down. Which will have the opposite effect on big ticket purchases.
Also globally EVs are still growing massively. This is a secular shift that is happening. Here is a global view that I managed to find. with a google sheet with the detailed info. Note that this excludes hybrids and so won’t tally with market-wide numbers for the US.
Also remember that GM is just getting going with their EV launches - they are starting from a very low base and now ramping aggressively, albeit less agressively than they would have done a couple months back. But still, they are taking share in a secular growth market. So yes, there is customer concentration for ASPN. But that customer is ramping quite nicely.
In addition, ASPN have other customers that are even earlier in the ramp-up: Honda, Toyota, which should in time reduce customer concentration.
And then we have other nameplates that have not even started registering in the ASPN numbers but are already in the planning/rollout phases: Stellantis, Scania. And then we have the potential of another OEM using ASPN (BMW? Mercedes?).
I’m going to finish my response by pointing all who wish to make a decision about owning ASPN to this (fairly long) comment in the Q2 ER from the CFO about the longer term. I think that is the investment thesis in a nutshell. If you believe him - buy. If not - don’t.
Before handing the call back to Don, we thought it’s important to take a look at what’s happening in the US electric vehicle market, our in-production OEMs mostly participate in, so that we aren’t rattled by the day-to-day headlines of exuberance or gloom. There just doesn’t seem to be an even keeled view out there. So we spent some time looking at the year-to-date market ourselves.
Let’s just face it. The US EV market didn’t grow year-to-date through the end of July relative to last year in the US. It’s only up around 1%, which is comparable to the growth rate of overall new vehicle sales. We foresaw this in early 2023 as we were planning for 2024, considering the effect of rising interest rates.
This fact is a key ingredient in developing our 2024 revenue baseline. Still though, EVs made up around 7% of the market and over 1.3 million EVs are expected to be sold in the US this year. So this has become a meaningful part of the market. Within it, there are some obvious share winners and losers. And as we started our EV thermal barrier business from zero in 2021, supplying newly developed platform in nameplates, we are benefiting from the demand gains of the OEMs that we supply.
PyroThin is equipped on six out of 10 new EV nameplates that have been introduced in the US in 2024 and those vehicles that were developed before we had a cell-to-cell solution are aging and losing share versus a range of fresh nameplates from OEMs that are gaining share. At this point, PyroThin is equipped on 100% of EVs sold by GM, Toyota and Honda in the US. These OEMs are only scratching the surface of what their share can be relative to their overall position in the entire new car market and the scale of their distribution. We believe that they will continue making gains as they launch new nameplates and offer attractive incentives on these vehicles to drive volume.
The need to produce EVs at a rate that properly enables the absorption of fixed manufacturing costs is, in our mind, expected to drive production rates in the second half of 2024 more than demand. The only thing more expensive than incentives up to a point is running at below 50% of one’s capacity.
I’ll let you spend more time with this slide on your own time. But when we look at the EV market in 2024, we continue seeing opportunities for additional sell-through within the OEMs that we supply, thanks to an interesting circular reference of higher production volumes needed to deliver profitability and higher incentives needed to drive those volumes.
Yes, what @stewaj1 said above is exactly what the CFO spent quite a bit of time on the most recent ER:
Thinking longer term and moving to slide 8, it’s worth remembering why OEMs built up all of this capacity to make EVs in the first place. Understanding the regulatory environment in the U.S. around emissions and fuel economy standards is important. As a guided investment that was made over the last four to five years within OEMs in preparation of tighter standards that will ramp up this next year.
I won’t bore you with all the details but U.S. new vehicle emissions and fuel economy regulation is driven by 2 major federal regulatory agencies. The Environmental Protection Agency or EPA and the National Highway Traffic Safety Administration or NHTSA. At the state level for 18 states that make up over 40% of new vehicle sales, including California this is driven within the California Air Resources Board or CARB standards.
Neal would be happy to point you in the direction of good reading material to understand these standards in detail. These agencies can enforce fines, sue or enforce penalties on OEMs who do not comply with their standards, and, therefore, impact the profit potential of currently lucrative sales.
Focusing on the EPA, when looking at 2026 to be minimum compliant with these regulations, the industry would need to reach roughly 15% EV sales mix, up about 7 percentage points from the current penetration or more than doubling. This includes the exhaustion and rollover of emissions credits purchased or generated from the sale of EVs in prior years.
General Motors, for example, would need to quadruple the CV penetration from 4% in July of 2024 to around 16% by 2026 to be barely compliant. It is estimated that Ford would need to triple its CD mix from its current levels also barely comply with the EPA submissions regulations.
If we go to what will be our next most important market after the US, Europe, the CO2 emissions there get even more stringent for OEMs, and that is why we see a lot of new programs from those OEMs in our core pipeline.
As we built up our thermal barrier business, we’ve met not only with teams inside the OEMs that are working to address thermal runaway in batteries for all form factors and chemistries but we’ve also met planning teams that are making sure that OEMs are positioned to comply with these regulations in 2025, 2026 and beyond.
OEMs take these regulations more seriously than one would think from reading the press or investor relations materials. And this is what continues giving us the conviction to keep investing in this market, particularly now that our operating model is being validated on quarter after another.
So, in summary here is my view:
- GM, ASPN’s key customer, is massively growing their EV business and taking share in a growth market
- Ultium production is scaling up big-time.
- ASPN’s pyrothin will be used in other form factors and chemistries of batteries too, because thermal runaway is a risk in all batteries. So GM deciding that a one-size fits all approach to batteries is not their future, is a nothing burger.
- GM’s move towards non-Ultium batteries will take time
- Toyota and Honda are customers in the very early phases of rolling out their EVs and that will scale up in the quarters and years ahead
- Stellantis and Scania will come after that, and at least one other German OEM after that.
- The move to EV’s is a secular trend and has only had a minor hiccup in terms of growth in some markets, caused by high interest rates.
- The move to EVs away from ICE is underpinned by widespread regulations in both the US and EU, which will force the change to EV’s.
- Interest rates are coming down in the US adn EU, which will cause big ticket purchases to return to an upward trend
-wsm.
(long ASPN 8%).
