Fight for scale

One of the enduring themes of this decade has been the failure of EV startups to scale up. Companies like Arrival and Lordstown raised billions from investors who wanted the next Tesla – even though most had no revenue or even working prototypes. Most of those same companies went bust as investors balked at letting startups burn sacks of cash with little prospect of getting to scale. Jim DeLuca, CEO of Saudi EV startup Ceer, has a deep-pocketed backer in the country’s sovereign wealth fund, but he told me ahead of the launch of the company’s first two electric models that he has learned from mistakes of other firms. First, DeLuca stressed that the two futuristic models – the sedan in particular reminds me of the cars in sci-fi thriller “Tron” – are real pre-production cars that will start deliveries in the first quarter, not just ideas in a PowerPoint. After his experience as CEO of Vietnamese EV maker VinFast – which burned through billions in an aggressive expansion plan and is now restructuring – DeLuca stresses that Ceer will instead scale up methodically in Saudi Arabia then neighboring countries. Chinese automakers are piling into the Middle East, so it remains to be seen if Ceer can make it. The company has a determined backer as Saudi Arabia has long wanted a viable auto industry of its own. But with a huge global fight for market share underway, it’s not an easy market to launch a new brand into. Sadly, lack of customers has been Seat’s problem. Founded in 1950 under Franco, Seat has struggled for years. Automakers loathe ditching old brands, not least of all because it doesn’t look good. But Volkswagen has telegraphed pretty clearly that Seat’s days are numbered. The brand has had no all-new models since 2020 and has not been allocated an EV model because it’s not profitable – the kiss of death on a continent gradually going electric. The last round of brands to die was around 15 years ago and included Pontiac, Saturn and Mercury. With the global fight for market share, you won’t have to wait that long for the next round. Life has also not been easy for McLaren, which has been lossmaking for years. But after a painful restructuring under a new owner – Abu Dhabi sovereign wealth fund L’IMAD – the UK sportscar maker is expanding and investing in a new factory. That will include biting the bullet and launching its first-ever SUV – a move that has been a singular moneymaker for luxury rivals Ferrari, Lamborghini and Bentley. Part of McLaren’s problem has always been that a few thousand cars a year has not provided enough scale while the company has produced more cars than customers want – which brings discounts and weak resale values. Chief Operating Officer Michael Straughan told me that McLaren needs growth to spread its costs and get better terms from suppliers. The only way to do that is to launch more models like the SUV to bring in more customers. Almost four years ago to the day, Porsche had a blockbuster stock market listing where the luxury carmaker looked untouchable as the jewel in Volkswagen’s crown. Today, not so much. Porsche’s dismal performance in China and some expensive missteps into EVs have placed it front and centre of Volkswagen’s broader problems as the sprawling German car group tries to turn its fortunes around. Much of the $11.5 billion in one-off costs Volkswagen spelled out in a profit warning on Friday come down to Porsche’s dire state. Volkswagen has promised to ramp up its restructuring efforts. But the profit warning came just weeks after the company’s supervisory board approved a turnaround plan, leaving some investors wondering whether more bad news is coming. The last few years have been hard for traditional automakers when it comes to making product decisions. For decades all they had to do was show up with an “all-new” car that boasted incremental improvements and other than some notable failures – the Edsel comes to mind – they generally hit their mark. But with high expectations early this decade of an electrifying world, some automakers bet too heavily on electric and were left hanging by a lack of demand – and in the US case by the Trump administration’s active dismantling of state support for the new technology. As Reuters reporter Kalea Hall reports, General Motors is one of those automakers that bet big on EVs and is now paying the price. You can read all about it here. GM is sitting out a hybrid boom. Investors have cheered GM’s focus on gas-engine trucks and SUVs, which has fueled strong profits. But its US sales have declined this year, and some dealers say they are losing customers to rivals selling hybrids.

Fight for scale

Scaling new heights

Last breath at Seat?

A first-ever SUV for McLaren

Fresh VW pain and GM lacks hybrids

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