Hey everybody Rob Merritt here, welcome back to Tesla Daily, it's been a quiet couple of days for Tesla, but today we do have some very interesting industry news and a couple of Tesla updates as well. Not much action in the stock market Tesla today up a third of a percent closing at $267.43, the NASDAQ up too tens of a percent, and the last few days have been pretty low volume in general for Tesla stock.
Quickly looking at the calendar for this week, a pretty normal week for economic reports, but of course earnings continue, we've got Toyota, Amazon, Apple, and Airbnb could be interesting as well the rest of this week.
Alright, I want to start off today with an article from Automotive News about dealerships profits, a lot of dealers have just reported this, and I think it's an interesting topic right now because we have seen reports from automakers that have been pretty strong financially, at least relative to expectations, Ford and GM, they both raised their guidance for the year last week. So in general it seems like the automotive industry is actually kind of doing okay, which is a little bit surprising because there's obviously the headwind for legacy ice manufacturers of EVs, both the cost to develop them and then also the market share that they are starting to take. And then of course like anything else, although particularly relevant to automotive, this is a high interest rate environment which should be a headwind for automakers as well.
One of the elements that makes analyzing these legacy automakers a little bit trickier though is because they sell vehicles to dealers, dealers are their customers, so slower sales in the industry could take a long time to funnel all the way back into the legacy automakers numbers. And of course during COVID inventory ran really short so dealers have been building their inventory back up, creating additional sales for these periods for legacy automakers. But that should be a temporary thing because you can only build back inventory so far. So that inventory piece largely seems to be coming back into balance now, definitely still some pockets, but that should mean that dealer orders from this point forward are going to be more reflective of their current incoming order rate rather than orders plus some figure to build back inventory. So we may soon start to see some of that effect reflected in the sales for the OEMs.
And then on the dealer side it's going to be very interesting to see what happens because as a result of low inventory, dealers have been adding markups and significantly increasing their profitability off of that constrained supply. So if supply comes back in line, does profitability then fall? That would seem pretty logical. And automotive news reporting that five of the six major publicly traded franchise dealership groups reported double digit percentage declines year over year on new vehicle gross profits during the second quarter. Hmm.
All right. So maybe we are now starting to see the pendulum shift back in the other direction. They put together a nice table that on the left shows their average vehicle profit in Q2 and then compared to Q1 on the right and then Q2 last year. And we can see pretty sharp declines in all these numbers from Q2 this year from those comparables. However, some much needed context is also provided here and that is Q2 2019. So pre pandemic and you can see gross profits that used to be two to $3,000 per vehicle are now four to $6,000 per vehicle. So even with a sharp decline this quarter, these numbers are still well above historical levels.
So okay, no problem then what these declines, they'll just continue to decline back to normal levels and everything will be all good. But the problem is that dealers may have become accustomed to these type of profits. They may not be quite as amenable to those profits getting cut in half from a couple of comments from CEOs of these franchise dealerships that kind of seems to be the case. One said quote, but we continue to believe that the new normal level of new vehicle GPU gross profit per unit will remain structurally higher than it was pre pandemic end quote. Another CEO said we're not going back to the 19 levels of gross profit and we certainly don't see that anytime in our near future.
All right. Very clearly they want to maintain these higher levels of profitability, but the question is why? What have they done in these three years to justify having a higher profitability than they have had historically? How have all of these car dealers made so much progress in their business in the last three years that they've all been able to double their profitability? It certainly doesn't seem like it's innovation that would be driving this, especially if it's happening to all of these dealers obviously seems much more likely to be a result of some sort of macro economic situation, which it sure would seem like when that situation resolves itself, things would return to a more normal level. But they're both here saying, no, we don't think that's going to happen. We don't want that to happen.
Well, just as much as you were responsible for these increases in profitability, you'll have control over the declines in profitability that you're likely going to be subject to seeing that is to say probably not a whole lot. And if they do want to maintain this profitability, obviously that's directly coming out of the pockets of customers or the OEM. We've talked about the pressures that are mounting for both the OEM from electric vehicle development and for customers from high interest rates, so why do the dealers who are sitting directly in the middle of those two parties and probably providing the least value out of any of them think that they're just going to be fine and maintain these record profits? At some point, something has got to give, so I think this metric is going to be one that will continue to be interesting to watch.
Next and somewhat related, Chevy has announced that they have started production on the Chevy Blazer EV. This is built on the Altium battery platform, so one of the next generation EVs, 4GM, and as a part of start of production, they have announced the official MSRP for at least the current versions that they are manufacturing, and they have come in quite a bit higher than their initially announced targets for MSRP, which for some reason are still showing up on their website, so it seems like they still have aspirations of getting to lower prices in the future, but for now, at least the vehicles that they are producing, I don't know if these are just top of the line trims or something like that, but the current versions are roughly in the $57,000 to $60,000 price range, compared to the initially announced MSRPs of $45,000 up to the low 50s. Those original prices were probably still going to be a little bit tough as they compared directly with the Model Y, and I think in most regards, the Model Y would probably compare favorably at the same price, so for these prices to come in $7,500, $10,000 more expensive than those initial announced prices, make it really tough to see why someone might want to buy this vehicle. Plus, when we look at prices or compare prices, that's only half the picture, probably not even half the picture, because it doesn't account for gross profitability, gross margin, which we know from Ford's reporting is a long, long way from becoming profitable, and I'm sure GM is not in any better of a situation. So these scenarios where these vehicles are priced around or above the Model Y and still not able to even be close to being profitable really should be a lot more eye-opening than it seems to be for most people. People seem to just say, well it's early, they'll get to scale and it'll be a lot better, which completely takes for granted that actually getting to scale is probably the hardest part of any of this. There's no guarantee of that happening, especially if the vehicles just aren't competitive, even when they are priced with negative gross margins.
So I don't know, with the dealership stuff, with this, it just seems like we continue to inch closer and closer to something breaking, it just doesn't seem like this can continue forever, it just takes so long with the nature of the auto industry. I guess we'll keep waiting to find out. Quick last one on this topic, Mazda has announced that they are discontinuing the all-electric MX-30 in the United States, not surprising, it only had 100 mile range they sold less than 1,000 vehicles life to date.
Alright, next up we've got a bit of news on the Lithium front, Bloomberg today reporting that Exxon is in talks with Tesla, Ford, Volkswagen, and other automakers to potentially become a Lithium supplier for these companies. Bloomberg says Exxon is looking to secure buyers to bolster its push in a Lithium extraction as the EV boom boosts demand and threatens its core oil production and refining business. So I think it's easy to root against the oil companies, but if they are redirecting resources into areas like this, they obviously have a vast amount of those that should then be a positive as long as they aren't using those resources to then slow things down. So we'll keep an eye out for more news on that, but it certainly would be an interesting partnership if it does come to be.
Alright, next up we've got a couple of transportation services updates, the first is from Uber Japan, which has announced a partnership with Tesla to deploy a fleet of 100 Teslas under an Uber premium brand in Tokyo, starting in 2024. So it's obviously not the biggest order ever, but still kind of cool to see, particularly because this will feature a dedicated menu where users can specifically request a Tesla Model Y. Usually with Uber you don't have that level of specificity, so interesting to see and of course could expand in the future to other areas. Separately, Tampa Florida has announced a new program called Dash or Downtown Area Shared Hubs, which will feature low cost rides from hub to hub, there will be 20 different hubs in Tampa, provided by Tesla Model Y vehicles. They say that this will begin in October and the trips will cost just a few dollars per trip. They didn't specify how many Model Ys they'll have in this fleet. So to me this pretty much sounds like the concept for the boring company, just obviously above ground. But when we see Tesla's used for things like this or for the Uber Japan service, I think it just highlights the value proposition that Tesla is able to bring, especially in the case of high mileage uses. Always nice to hear about those.
好的,接下来我们有几个交通服务的更新。首先是Uber日本,他们宣布与特斯拉合作,在东京部署一支由100辆特斯拉组成的Uber豪华品牌车队,计划于2024年开始投入使用。这可能不是有史以来最大的订单,但看起来还是挺酷的,特别是因为这里将提供一个专门的菜单,用户可以特别要求一辆特斯拉Model Y。通常情况下,使用Uber时没有这样的具体要求,所以这很有趣,当然未来也可能在其他地区扩展。另外,佛罗里达州坦帕市宣布了一个名为Dash或Downtown Area Shared Hubs的新计划,该计划将提供特斯拉Model Y车辆在不同枢纽之间的低成本乘坐服务,在坦帕市将有20个不同的枢纽。他们表示这将于十月份开始,并且每次行程只需要几美元。他们没有具体说明这个车队将拥有多少辆Model Y。对我来说,这听起来很像无聊公司的理念,只是显然是在地面上。但当我们看到特斯拉被用于这类事情,或者用于Uber日本服务时,我认为这只是突出了特斯拉能够提供的价值主张,特别是在高里程的使用场景下。听到这些消息总是令人开心。
Alright, last couple of things, some new Cybertruck videos as we tend to see frequently, these days the first shows some new wheels, looks like more of an aero style here, so not sure if that's something that Tesla has in mind for production, or just for testing. And then the other video, just a walk around, but a walk around of what seems to be a release candidate vehicle, and maybe most interestingly it does have the rear windows completely rolled down so we can see that those won't stop halfway. Which we may have seen previously, I can't recall, but either way nice to see it in a later stage.
And then last item for today, some nice recognition for Tesla and for SpaceX from Mikaylo Fedorov. He's engaged with Elon before on some of SpaceX's actions in Ukraine, and he today sent a post thanking Elon Musk for his contributions. He has now sent 500 plus powerwalls to Ukraine, and he also mentions that SpaceX has sent 40,000 plus Starlings. So nice to see that for Ukraine, and that'll wrap it up for today. As always, thank you for listening, make sure you're subscribed and signed up for notifications. You can also find me on Twitter slash X at Tesla podcast, and we'll see you tomorrow for the Tuesday, August 1st episode of Tesla Daily. Thank you.