Intel Report | Dec 9 | The Weekly Automotive & Mobility News That Matters

An introduction to the “Power Law” and why funds like ours need to underwrite every individual investment to (potentially) achieve a 50x+ return. | LINK

🚗  Automotive 

The US Environmental Protection Agency (EPA) has published their 2024 "Automotive Trends Report." Model year 2004 was an inflection point, after which fuel economy, horsepower, and weight have all generally increased together, to historic highs in model year 2023. | EPA

There have never been as many automobiles on the road—around 290 million light vehicles—and they have never been so old. One reason for that is good news: They are better made. Getting the odometer past 100,000 miles has gone from being noteworthy to normal. Thirty years ago the average passenger car was about 8.4 years old and today that is 13.6 years. | The Wall Street Journal ($)

European and American carmakers could lose up to 17% of their combined annual core profits if the U.S. imposes import tariffs on Europe, Mexico and Canada, S&P Global said in a report, warning of potential credit downgrades. | Automotive News ($)

Auto insurance is poised to become even more expensive under President-elect Donald Trump’s plan to impose new tariffs on top US trading partners. About 60% of replacement parts used to repair cars in the US are imported, mainly from Mexico, China and Canada. New tariffs would increase the cost of parts, which account for about 40% of the average total repair bills borne by insurers, and would prompt them to eventually increase rates. | Bloomberg ($)

Europe’s carmakers used to rule the world. Now they are fighting battles on every front. At home, tougher emissions rules are forcing them to sell more electric vehicles, which are less profitable. In China, the rise of local competition is bringing the curtain down on a golden era for German brands. The latest threat is in the U.S., where President-elect Donald Trump champions tariffs. | The Wall Street Journal ($)

Lotus Cars Europe is the latest automaker to drop the agency sales model. Lotus’s new Europe boss, Dan Balmer, said the agency model created too much pressure on the automaker. Under the agency model, automakers set a vehicle’s selling price and retail it directly to buyers. Dealers receive a fixed fee for a sale. Lotus initially planned to take over the sales process and make its dealers “agents.” Under the plan, used cars as well as new cars would also become the property of Lotus with the aim of maintaining residuals. | Automotive News ($)

The Insurance Institute for Highway Safety’s (IIHS) data shows that headlight brightness has roughly doubled since 2015. | The Ringer

A Delaware judge ruled on Monday that Tesla CEO Elon Musk still is not entitled to receive a $56 billion compensation package despite shareholders of the electric vehicle company voting in June to reinstate it. The pay package had awarded Musk stock options if the company hit performance and valuation goals. While the award originally was valued at up to $56 billion, Tesla's shares have surged 42% since Nov. 5, when Republican candidate Donald Trump, supported by Musk, won the U.S. presidential election. Following that rally, the pay package is worth about $101 billion. | Reuters ($)  

⚡️ Electric Vehicles (EVs)

America is likely to fall further behind in its green transition, given President-elect Donald Trump’s promises to kill the generous subsidies for electric vehicles. Despite President Joe Biden’s ambitious target of having EVs make up half of all new cars sold in the US by 2030, they were only 10% of the market last year. The industry’s capacity to build EVs is expected to fall further next year with carmakers having revised their EV production plans by 50% in the US and 29% in Europe, according to Bernstein estimates. The penetration of EVs is expected to reach 23% in Europe, and 13% in the US in 2025. | Financial Times ($)

Electric vehicle startups were struggling before the election. Donald Trump’s victory could send them into a tailspin. Several high-profile companies, including electric SUV maker Fisker and bus manufacturer Arrival, filed for bankruptcy earlier this year. Swedish-based battery maker Northvolt became the latest casualty last week, filing for Chapter 11 after BMW Group canceled a key order. At least a dozen other startups, specializing in electric vehicles or batteries, are at risk of running out of cash by next summer, according to a Wall Street Journal analysis of their most recent filings. | The Wall Street Journal ($)  

🇨🇳  China

A restructuring of General Motors’ troubled business in China will reduce the automaker’s reported earnings by more than $5 billion, to account for the diminished value of an equity stake in a 50-50 joint venture with China’s SAIC Motor. | Automotive News ($)  

🚘  Sharing & Subscription

Uber and Lyft drivers say wages are down in cities that allow self-driving taxis. “We’ve seen this movie before: When Uber first showed up, it reduced traditional taxi drivers’ earnings by about 10%.” |  Business Insider ($)  

✈️  Aviation & Space

The ram-rotor detonation engine: a self-propagating series of explosions, contained between the blades of a high-speed rotor, promises a leap in power and efficiency during hypersonic flight – provided this radical new engine can be built strong enough to withstand its own power. | New Atlas

Security experts say SpaceX has leapfrogged so far ahead in several critical technologies that it could deter major rivals like China from engaging in a war with the United States — or tip the balance if one breaks out. Others worry that it could provoke an untimely response. Musk is in the first camp. In recent days he has remarked on X that his ambition to send crews to Mars as soon as 2028 would result in “alien-level technology that is crushingly better than competitors,” along with making an oblique reference to averting a war against China. That prospect may not be imminent, but it has become the focus of U.S. defense preparations as China rises. | The Washington Post ($)

The United States Air Force is leaving a decision on the future of the next jet fighter to the incoming Trump administration, a move that comes shortly after billionaire Elon Musk called for pursuing drones over piloted combat aircraft. The Air Force is still building F-35 stealth jet fighters, a program whose total costs are expected to exceed $2 trillion over several decades. At the same time, the service is pushing forward with a combat drone system, as well as a next-generation crewed fighter. | The Wall Street Journal ($)  

🚘  Car of the Week

Our Automotive Ventures "Car of the Week": a 1983 Ferrari 512 BBi. | Bring A Trailer

Have a great week,

Steve Greenfield