Overview
Toyota’s new CEO (Mr Sato) has doubled down on the company’s pledge to accelerate its EV push, in China. This follows on from a string of recent news flow that Toyota will ramp up overall EV production. Toyota has forecasted a 10% increase in annual operating profit to $22bn. Ramping up EV production is one of the main objectives for Mr. Sato and he has promised to sell 1.5m BEVs by 2026 alongside rolling out 10 new models. This is an ambitious target, considering the company sold 38,000 BEVs in the latest fiscal year. This lofty target is being questioned by analysts, as Mr Sato also stated he is sticking to his predecessor’s scattergun strategy of betting on multiple technologies, including gasoline, hybrid, and hydrogen fuel-powered cars.
Rivian has released robust Q1 23 results, producing 9,395 EVs and delivering 7,946 EVs. The company has reaffirmed its stance that it is on track to hit its 50,000-production target by the end of the year. Rivian’s revenue increased from $95m to $661m and net loss narrowed to $1.35bn from $1.59bn (in Q1 22). Revenue beat analyst consensus whilst all other result metrics were in line with market consensus. The company is in the midst of retooling its EDV assembly line, which will add capacity for in-house drive units. This will allow Rivian to ramp up output in subsequent quarters, to hit its 50k production target.
Lucid Motors posted poor Q1 23 results, posting a net loss of $780m, which is much wider when compared to $81.3m in Q1 22. Revenue, however, jumped YoY to $149.4m from $57.7m however this was well below analyst consensus which had $209.9m pencilled in. Although Lucid has stated it has enough cash to carry on operations, it has cut its production forecast to over 10,000 this year from its previous estimate of 10,000 to 14,000. The company cited challenging macroeconomic conditions coupled with higher interest rates, as the main drivers for the forecast cut.
BYD continues its march to gain EV market share, as it has launched 5 lower-priced versions of its Seal sedan. The price of the rear-wheel drive Seal Champion Edition (550km driving range) starts at $27,459.09, which is 10% lower than the previous version with the same driving range. Impressively, this is 18% cheaper than the rear-wheel drive version of Tesla’s Model 3 in China with a driving range of 556 km, which the Seal model is competing against. This is yet another impressive response by BYD to Tesla’s Price War and we believe that this will help BYD eat up some of Tesla’s EV market share this year.
Tesla has begun construction on its in-house lithium refinery in Southwest Texas, representing a $1bn investment. This project aims to substantially increase the supply of battery-grade lithium hydroxide available in America. This refinery will support around 1m EVs worth of battery-grade lithium per year. This facility will also focus on having the first industrial deployment of an acid-free lithium refining route, eliminating the use of hazardous reagents and by-products in favour of more inert options.
Iveco and Nikola are entering into a new phase of their partnership, which began in 2019. The partnership aims to leverage each company’s expertise to deploy zero-emission heavy-duty (Class 8) trucks in North America and Europe. In this new phase, Iveco will concentrate on Europe for further development and commercialization of its own BEVs and FCEVs. While Nikola will focus on North America, offering BEV, FCEV, and hydrogen infrastructure, through its HYLA brand.
NIO is close to integrating higher-capacity semi-solid-state batteries, in its models. The latest regulatory filings show that 3 models (2 SUVs and 1 sedan) will be adding semi-solid-state batteries to the battery information.
Deals
Joby Aviation will receive $180bn in capital, from Baillie Gifford buying c44m newly issued shares in Joby. This capital will be used to continue to develop its all-electric aircraft for commercial passenger service.
Lilium, which is developing an all-electric vertical take-off and landing Lilium jet, has announced a capital raise of up to $250m. This capital raise would allow the company to continue the development of its Lilium Jet and it should cover most of the estimated capital required to achieve the first manned flight of the type-conforming aircraft.
Daimler Truck North America has announced a JV with NextEra Energy and BlackRock Alternatives, to build EV charging infrastructure and hydrogen fuelling network, across the US for medium and heavy-duty vehicles.
Paccar (a US Truck manufacturer) and Toyota are extending their collaborative efforts to bring hydrogen-fuelled Kenworth and Peterbilt trucks on the road. These will be equipped with Toyota’s next-generation hydrogen fuel cell modules.
Spotlight: Greenhouse Gas Reduction Fund (GGRF)
The Inflation Reduction Act authorized the EPA to implement the GGRF, a historic $27bn investment fund, to mobilize financing and private capital to combat the climate crisis. The GGRF will deliver lower energy costs and economic revival to communities, particularly those that have historically been left behind. There is an emphasis on projects that benefit low-income and disadvantaged communities.
Programs
The GGRF will be implemented via three grant competitions: National Clean Investment Fund, Clean Communities Investment Accelerator and Solar for All. At present, the portioned amounts (stated below) are in a state of flux**.** It appears that the EPA is still deciding how to portion the $27bn however, by summer 2023, the EPA will release granular detail about the various programs.
The GGRF mandate for these grants is to facilitate access to financing (and technical assistance) across the country, enabling communities to realize the cost-saving benefits of clean technologies. The goal is to build more resilient communities, and strengthen local economies, especially in low-income and disadvantaged communities.
National Clean Investment Fund
The $14bn National Clean Investment Fund competition will fund 2-3 national non-profits that will partner with private capital providers to deliver financing at scale to businesses, communities, community lenders, etc. This Fund will catalyse clean technology projects to accelerate progress towards energy independence and a net-zero economic future.
Clean Communities Investment Accelerator
The $6bn Clean Communities Investment Accelerator competitionwill fund 2-7 hub non-profits with the plans and capabilities to rapidly build the clean financing capacity of specific networks of public, quasi-public and non-profit community lenders. The lenders targeted will be:
- Native CDFIs,
- Credit unions,
- Green banks,
- Housing finance agencies,
- Minority depository institutions.
Again, the mandate is to ensure that small businesses, schools, and community institutions in low-income and disadvantaged communities have access to financing for cost-saving and pollution-reducing clean technology projects.
Early Program Design Factors
The Greenhouse Gas Reduction Fund will be designed to achieve the following program objectives:
- Reduce greenhouse gas emissions and other air pollutants.
- Deliver the benefits of greenhouse gas and air pollution-reducing projects to American communities, particularly low-income and disadvantaged communities.
- Mobilize financing and private capital to stimulate additional deployment of greenhouse gas and air pollution-reducing projects.
Implementation of Programs
Unlike traditional (US) grant programs, the EPA will not provide grants directly to projects. Instead, the EPA will provide grants to (eligible) states, tribes, territories, municipalities, and non-profits. These grantees will then provide and distribute the funding to projects that tackle reducing emissions and air pollution.
The EPA is currently designing the grant competitions, in a way that is transparent and inclusive, that also attracts private investment going forward. The EPA has pencilled early summer 2023 to release its Notice of Funding Opportunities document and provide further details about project eligibility.