Bernstein highlights hybrid auto distribution, fast EV charging

On Monday, Bernstein analyst Daniel Roeska introduced a new weekly format aimed at providing insights into the rapidly evolving automotive industry. The update combines the expertise of Bernstein’s global autos and luxury teams and discusses key trends, client discussions, and future outlooks in the sector.

Roeska highlighted the shift in the auto industry’s approach to distribution, noting that while there has been a significant push towards direct-to-consumer (D2C) models, the importance of dealerships is being rediscovered. Despite the luxury goods industry’s move to direct retail, Ferrari (NYSE:RACE)’s wholesale model remains an outlier, suggesting a more nuanced approach may be necessary. Bernstein anticipates a persistent hybrid distribution model in the automotive industry.

In the realm of electric vehicles (EVs), BYD’s announcement of its 10C fast-charging technology marks a significant advancement. The technology, which promises a 400km range extension with just a 5-minute charge, is based on a new Super-E BEV platform with 1,000V and 1,000A architecture, allowing for a 1,000kW power output.

Rivian (NASDAQ:RIVN)’s challenge to scale up in the U.S. market was also discussed. With low BEV penetration and a limited product range, Rivian’s addressable market is confined. Although projections suggest the U.S. BEV market could grow to 1.3m - 1.5m units by 2030 and potentially 6.7m units by 2040, doubts remain about whether this will be enough for Rivian to achieve long-term business scale.

The report also touched on the ongoing tariff issues within the auto industry, with little progress ahead of the April 2nd deadline. The current U.S. tariffs include 25% on imports from Mexico and Canada (excluding USMCA compliant goods), 10% on Canadian energy exports, 20% on Chinese imports, and a general 25% tariff on all steel and aluminum imports. These tariffs are expected to increase cost pressures for the U.S. auto sector.

Lastly, General Motors (NYSE:GM) has entered a partnership with NVIDIA (NASDAQ:NVDA) to enhance autonomous vehicle technology, integrating NVIDIA’s AI computing platform into GM’s future vehicles. This collaboration follows GM’s strategy shift after shutting down its Cruise unit and indicates a move towards an outsourced model for self-driving and autonomous vehicle development. For investors seeking deeper insights into the automotive sector’s technological transitions, InvestingPro offers comprehensive analysis of major players in the autonomous driving space.

In a separate note on Tesla (NASDAQ:TSLA), Roeska addressed concerns about declining sales, pointing out that while regional sales data for February 2025 showed a drop, the six-month average sales performance year-over-year remained flat. This was attributed to higher sales in the last quarter and inventory reductions. Tesla faces production shutdowns in Q1 2025, but sales and production are still balanced. The question remains whether Tesla can ramp up production by nearly 20% by the end of 2025 amidst a potentially sluggish car buying environment.According to InvestingPro data, Tesla’s revenue growth has slowed to just 1% over the last twelve months, though the company maintains strong financials with a current ratio of 2.02 and more cash than debt on its balance sheet. With a market capitalization of approximately $800 billion and trading at a P/E ratio of 110, Tesla appears to be trading near its Fair Value based on InvestingPro’s proprietary valuation model. Analysts maintain a mixed outlook, with a consensus recommendation of 2.6 (on a scale of 1-5) and price targets ranging from $120 to $550. Want to dive deeper? InvestingPro offers 18 additional investment tips for Tesla and a comprehensive Pro Research Report, providing crucial insights for investors navigating this volatile automotive landscape. The platform’s advanced analytics and expert analysis can help you make more informed investment decisions in the rapidly evolving EV market.

In other recent news, BYD Co (SZ:002594). reported annual revenue of $107 billion, surpassing Tesla Inc.’s revenue of $97.7 billion for 2024. BYD’s net income also saw a significant increase, rising 34% year-on-year to 40.3 billion yuan, exceeding the projected 39.5 billion yuan. Meanwhile, Tesla’s electric vehicle sales in Europe have declined, with the company falling behind competitors like Volkswagen (ETR:VOWG_p) and BMW (ETR:BMWG) in February, according to JATO Dynamics. Tesla’s market share in Europe dropped to 9.6%, marking the lowest February figure in the past five years.

Additionally, Tesla has announced plans to launch its smart driving-assistance feature in China, pending regulatory approval. The company had paused a free trial of its Full Self-Driving service due to new regulations requiring approval for autonomous driving-related software upgrades. Despite these challenges, Tesla continues to see strong interest from retail investors, with significant net buying of its shares over 13 consecutive sessions, according to JPMorgan Chase (NYSE:JPM). The company is also collaborating with Chinese tech giant Baidu (NASDAQ:BIDU) to enhance its driving-assistance system’s performance.

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