Summary of a television interview · Based on the recording of the conversation
In brief
On the programme “В развитие” on Bloomberg TV Bulgaria, Kliment Robev explains why most carmakers are spinning their wheels. In his view, the main reason is that companies are failing to make a smooth transition from internal combustion engines to electric vehicles, and the second-quarter results just published confirm those expectations. He looks at the results of Ford, Stellantis, General Motors and Tesla and at the pressure from Chinese manufacturers.
Key points
- As examples Kliment Robev cites Ford, with earnings of 47 cents per share against expectations of 68 cents, and Stellantis, whose first-half profit fell by 48% and revenue by 14%, while General Motors beat expectations on both revenue and profit and “saved the sector’s face”.
- Tesla, whose market capitalisation of around $700bn is, in his words, enough to buy BMW, Mercedes, Volkswagen, Toyota and General Motors combined, delivered a mixed report – revenue above expectations but profit 40% lower – and its shares fell by 12% in the next trading session.
- He believes investors no longer forgive losses and promises but want predictable profit quarter after quarter, while Elon Musk is trying to reposition Tesla as an AI company betting on robotaxis and humanoid robots, after plans for an affordable car proved unprofitable and the company cut more than 10% of its staff.
- In his view the market depends heavily on the “Magnificent Seven” – Nvidia, Alphabet and Apple alone account for about 15% of the S&P 500 and about 20% of the Nasdaq – which makes it highly sensitive to any slowdown in their growth: after Tesla’s report the Nasdaq fell by 3.5%, and the market seems to be looking for a reason to correct.
- He traces the arrival of Asian carmakers in Europe – the Japanese in the 1990s, the Koreans after 2010 and now the Chinese, who offer electric cars around 30% cheaper than the market average and already hold 5–10% of various European markets and around 20% in Cyprus – which prompted tariffs from the European Commission, a Chinese response and the beginnings of a trade war.
- Traditional carmakers funded their EV projects from the high prices of the post-pandemic years but are now postponing full-electrification targets and holding on to investors mainly through dividend yields, which he sees as unsustainable, so management needs to prepare investors for a difficult and lengthy transition – a point about expectations he illustrates with Tesla, whose shares trade about 40% below the record set three years earlier.
Context
The conversation was prompted by the second-quarter earnings season, in which Ford and Stellantis reported weak results and carmakers’ shares fell; it also touches on the expected Fed rate cut and Donald Trump’s pledge to go after the Biden administration’s electric-vehicle policies if he wins the upcoming presidential election.
Views reflect his position at the date of publication and are not investment advice. Regulatory information
