Automotive News - May 9, 2022 - 60

60 * May 9, 2022
LIGHTNING
As Ford manages limited
chips, truck has priority
continued from Page 8
" We've done about three or four waves now,
and that was the end of the 2022 model year, " he
said. " We saw a really, really high conversion. At
the moment it would be meaningless if I said the
number because it wouldn't include those who
held on [for the 2023 model year]. But it's pretty
good. "
Protecting the launch
Ford has not divulged how many Lightnings it expects
to produce this year but says it anticipates it
will reach an annual run rate of 150,000 in 2023.
POLESTAR
Brand taps parent
company to scale
continued from Page 8
" Our business plan has been set
around a growth plan that needs a certain
funding, " Polestar CEO Thomas
Ingenlath told Automotive News last
year. Without that capital, he said, " we
would have to find it somewhere else,
or we would have to scale down and
change our plan. "
The Volvo affiliate has agreed to a reverse
merger with special-purpose acquisition
company Gores Guggenheim.
The deal, which would take
Polestar public, could peg the automaker's
market valuation as high as
$25 billion, according to analysts.
The transaction remains on schedule
to close next month.
LUCID
EV maker anticipates
increased parts costs
continued from Page 8
production guidance of 12,000 to 14,000 Air sedans
this year. That's significant because Lucid
had reduced its earlier guidance of 20,000 as part
of its earnings report in February.
Price hikes
Rawlinson also said last week that demand
continues to be strong, with more than 30,000
reservations for different trims of the Air, including
a healthy mix of the most expensive ones.
Lucid last month added a top-tier Grand Touring
Performance trim that will start at $180,650, including
shipping. The previous top trim was the limited-run
KAR
Some online units
might consolidate
continued from Page 8
both Carwave and BacklotCars, KAR's
online dealer-to-dealer site that operates
a so-called bid-ask marketplace
around the clock.
Kelly also has given notice that there's a
chance some of KAR's remaining brands
will be consolidated during a second
wave of integration. For instance, Carwave
might live on as a format within the
BacklotCars business, he said.
" We're dealing with network effect
both on the seller and buyer side of
those marketplaces, so fragmenting
that marketplace doesn't make sense, "
Kelly said.
BacklotCars, Carwave and TradeRev,
KAR's mobile app that mimics physical
The automaker continues to face production
setbacks because of the global semiconductor
shortage, but Palmer said the Lightning will be
prioritized.
He said the shortage has been focused not on
high-tech chips needed for connected electric
vehicles but rather on those that power ordinary
functions such as backup cameras and wipers.
He said Ford works daily to manage the supply of
chips it gets and direct them to its most important
products.
" The truck's the highest priority, but the electric
truck will be higher, " he said.
Since the Lightning shares a majority of its
parts with the gasoline-powered F-150 - the interior
is identical aside from the instrument panel
and cluster, as is the bed - Palmer said there's
less chance of something going wrong with the
early builds, a situation Ford is trying to avoid af " Polestar
has a stable business,
with the proof point of
delivering thousands of cars
monthly, " Ingenlath said in
an email last week. " Investors
can make their decisions
based on a growing, revenue-generating
business, not
market speculation. "
ter it bungled the 2019 launch of the redesigned
Explorer and supplier issues derailed the start of
Bronco production in 2020.
" It's not a risky launch, " he said.
He also said the Lightning factory in Dearborn,
Mich., known as the Rouge Electric Vehicle Center,
has new technologies meant to improve production,
including what he called the " gamification
of quality. " Workers there are scored on how
they perform their tasks, and those with the best
quality scores receive prizes and other incentives.
" The
pride [at the plant] is ridiculous, " Palmer
said. " That's a historic site, and now it gets our
most important new product. "
Specs updated
Buyers awaiting the first Lightnings will be getting
more capability than they expected.
of high-performance battery-powered
models.
" Investors are now considering
traditional OEMs that
they might have previously
written off, " Gianarikas said.
Even so, Polestar has
A different startup
George Gianarikas, a senior research
Ingenlath: Need
" certain funding "
analyst at Robert W. Baird & Co., believes
a shift has occurred in how the
world views EV startups.
" Part of it has to do with the change
in the market's mood - part of it with
operational issues the companies have
had getting things off the ground in a
global supply chain crisis, " he said.
Meanwhile, competition from rapidly
electrifying legacy automakers is
stiffening. Luxury marques BMW and
Mercedes-Benz are rolling out a fleet
something Rivian and Lucid
lack - a multiyear record of
revenues.
Polestar sold 29,000 sedans
globally last year and reported about
$1.5 billion in revenue. In April, the
company inked a deal to supply rental
giant Hertz with 65,000 battery-powered
vehicles. The five-year agreement
represents more than $3 billion of potential
revenue for Polestar.
" To call Polestar a startup is kind of a
misnomer, " said Sam Abuelsamid, principal
analyst at Guidehouse Insights.
As it scales up, Polestar is leaning on
the considerable production, supply
chain and retail infrastructure of its
Air Dream Edition that sold out at 520 vehicles.
CFO Sherry House said the price hikes for other
trims are coming in anticipation of increased
parts and shipping costs, as well as some higher
costs for the next phase of factory construction.
The price increases are effective June 1, leaving
a small window for new reservations to lock in at
current prices.
After this month, new reservations in the U.S.
will start at $155,650 for the regular version of the
Air Grand Touring, including shipping. That's up
from $140,500.
Lucid said it's on track to produce more inexpensive
trims later in the year. The Air Touring
will start at $109,050, up from $96,500 currently.
The base Air Pure will start at $89,050, up from its
current price of $78,900, the company said.
" Similar to many companies in our industry,
we continue to face global supply chain and logistics
challenges, including COVID-related facWhat's
next
KAR Global's digital
transformation entails:
 Divesting 56 U.S. physical
auction sites in sale of
ADESA U.S. to Carvana
 Emphasizing online auction
offerings such as Carwave,
BacklotCars, TradeRev and
Openlane
 Developing and deploying
new digital platforms wanted
by customers
auctions, sold about 550,000 vehicles
in North America in 2021, up 38 percent
from 2020. In the first quarter of
2022, the three units sold 133,000 vehicles,
up 6.4 percent from the year-earlier
period.
Another of KAR's crucial online busiThe
automaker said last week that the truck's
power numbers have improved over initial estimates
as engineers continued to tinker with the
product.
The extended-range battery pack now gets 580
hp, up from 563, while the standard-range battery
pack will get 452 hp, up from 426. Both produce
775 pound-feet of torque.
Ford also increased the maximum payload capacity
to 2,235 pounds from an original estimate
of 2,000.
Palmer said Ford's goal is to win over mainstream
buyers with the pickup's performance
and " take away the excuses " many use for not going
electric.
" That truck costs the same as a gas truck and
outperforms a Raptor, " Palmer said. " If that
doesn't get you excited about EVs, then you're
not ready yet. " a
Polestar rundown
Polestar will go public through
a merger with blank-check firm
Gores Guggenheim.
Headquarters: Gothenburg,
Sweden
Employees: About 1,600
Annual sales: 29,000 vehicles
Annual revenue: About
$1.5 billion
parent, Zhejiang Geely Holding, which
owns several auto brands, including
Volvo Cars.
Supply chain help
Volvo will build Polestar's third
model - a midsize crossover - at its
U.S. factory near Charleston, S.C.,
starting at the end of the year. Polestar
has said it will not need to add an assembly
plant to meet its 2025 volume
tory shutdowns in China, " House said.
In first-quarter financial results, Lucid posted a
$598 million operating loss on revenue of $57.6
million. House said the automaker's $5.4 billion
cash on hand would allow it to execute its expansion
plans into 2023 as it rolls out more inexpensive
versions of the Air and plans for the 2024
launch of the Gravity utility vehicle, the automaker's
second nameplate.
Avoiding mistakes
Lucid's Phoenix-area plant has capacity to
build 34,000 vehicles a year and is expanding to
90,000 a year by late 2023, the company said. By
mid-decade, House said, capacity will rise to
350,000 in Arizona and 150,000 at a new plant in
Saudi Arabia, which is a Lucid financial backer.
By respecting current prices for its vehicles, Lucid
is avoiding the uproar caused at another popular
California EV startup this year. Rivian Autonesses,
Openlane, an online platform
through which automakers and finance
companies wholesale off-lease
vehicles, performed worse than in previous
years because off-lease supply is
down about 60 percent. CarsArrive
and AutoVIN - KAR's other businesses
that handle off-lease vehicles - also
took a hit.
" The reality that [customers are] experiencing
today in terms of their offlease
portfolio is markedly different to
what it was two and a half years ago, "
Kelly said.
Still, Openlane is a crucial asset because
it is key to some of KAR's largest
customer relationships,
said Kelly,
who co-founded Openlane and sold it
to KAR in 2011.
Per-vehicle auction fees rose 29 percent
to $65 in the quarter because of
higher vehicle values and fewer lowfee
commercial
vehicles
moving
through
KAR's digital businesses.
target of 290,000 vehicles - which is
10 times last year's deliveries.
Gianarikas said Polestar can " leverage
the scale of traditional automakers
while simultaneously starting with a
clean sheet of paper, which has its own
advantages. "
Polestar is likely to have an easier
time navigating the global supply
chain crisis than Rivian and Lucid,
which are building production and
supply chain networks from scratch.
" When suppliers have limited components,
they're likely to prioritize
their longtime customers rather than
the newcomers, " Abuelsamid said.
As Polestar gets set to go public, it
might not have timing on its side. But
Gianarikas is bullish on the long-term
investment prospects of early-stage EV
makers.
" There's always a market for innovative
companies, " he said. " People want
to fund high-quality innovation. " m
motive attempted to raise prices on its reservation
holders, a move that resulted in massive
blowback.
In response, Rivian CEO RJ Scaringe apologized
to buyers of the R1T pickup and R1S SUV
for betraying their trust and backtracked on the
price increases for vehicles booked before
March 1.
Rivian's price hikes of about 20 percent were
higher than Lucid's, but Rivian also created more
inexpensive models at the older price points. Rivian's
base R1T starts at $68,575, including shipping.
Both Lucid and Rivian have received widespread
industry praise for their high-end EVs,
along with order backlogs that will stretch into
next year and beyond.
Rivian said it has continued to log new orders
even at the higher prices. m
Reuters contributed to this report.
KAR's performance in the first quarter
didn't meet expectations set by J.P.
Morgan analysts, but they said last
week that the company's long-term
outlook may be more positive than
some investors might think.
Selling off the physical ADESA U.S.
business should allow more focus on
Openlane and the company's other
online businesses, J.P. Morgan analyst
Ryan Brinkman wrote in a research
note. KAR could see growth as it rolls
out its plan to nab a larger part of the
market through those online offerings,
he added.
The sale of ADESA U.S. and the resulting
shift toward becoming a fully digital
business will help KAR cut costs, company
executives said. KAR is expecting
cost reductions by year end to be at an
annualized rate of at least $30 million.
Kelly acknowledged KAR's client
base has needed " time to digest " the
agreement to sell ADESA U.S. to Carvana,
the No. 2 used-vehicle retailer in
the nation by sales volume. After the
deal was announced, some customers
were confused over its terms, he said.
In fact, some automakers and dealers
have indicated they will move away
from using ADESA U.S. now that it's set
to be held by Carvana, a formidable
competitor.
Kelly didn't elaborate on whether
KAR saw users shift away specifically
because of the transaction, expected
to be finalized this week.
But he said KAR customers are fully
aware the company has its sights on a
larger-scale digital transformation. No
additional education or effort will be
needed to make them understand
what KAR will be like without ADESA
U.S., he said.
Customers " understand the rationale,
and I think they're enthusiastic
about working with the new KAR, " Kelly
said. a
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