GM and Hertz Going Steady, Lithium Launches, Interest Rates v. Purchasing Power

The Automotive Troublemaker w/ Paul J Daly and Kyle Mountsier

Welcome to Wednesday as we’re covering an announcement by GM and Hertz to move some serious EV volume through rental fleets. We also talk about what the lithium supply is looking like as well as the effects of rising interest rates on Dealers and home owners alike.

• GM and Hertz announced a joint agreement for the automaker to provide 175k EVs to Hertz rental fleet through 2027
  • Order will include Chevrolet, Buick, GMC, Cadillac and BrightDrop EVs through 2027
  • Deliveries are set to begin in Q1 2023 with the Chevy Bolt
  • Hertz is investing to create the largest rental fleet of EVs in North America, with tens of thousands of EVs available for rent at 500 Hertz locations across 38 states. The company’s current goal is for one-quarter of its fleet to be electric by the end of 2024.
  • “It’s exciting that two iconic American companies that have shaped the evolution of transportation for more than a century are coming together to redefine the future of mobility in the 21st century,” said Stephen Scherr, Hertz CEO.
• Many of the EVs are expected to be deployed in LA and SF due to fast approaching restrictions on ICE vehicles
• In 2021 Hertz ordered 100k Teslas which are nearing fulfillment

• EV Demand and supply SNAFUs have pushed prices of the critical component in EV batteries, Lithium, to an all time high
  • Lithium carbonate prices in China, the benchmark in the fast-growing market, hit $71,000 a metric ton, according to price-assessment firm Benchmark Mineral Intelligence. This is about four times as high as a year ago
  • Prices are basically following the Chinese EV market which is exploding
  • Major US automakers have struck deals with lithium producers to secure supply
  • Over 80% of lithium-ion batteries are used for EVs, said Daisy Jennings-Gray, senior analyst at Benchmark Mineral Intelligence. That will increase to 90% in 2030, Benchmark forecasts, up from 40% in 2015.
  • Refining is and will continue to be a major bottleneck in the production of battery grade lithium
  • “I would like once again to urge entrepreneurs to enter the lithium refining business,” Tesla Chief Executive Elon Musk told analysts in July. “There’s lithium pretty much everywhere, but you have to refine the lithium into battery-grade lithium carbonate and lithium hydroxide, which has extremely high purity. So it is basically like minting money right now.”
• Rising interest rates are seriously affecting real estate purchases, home equity, and wealth building. And remember, most Dealers have variable rate loans.
  • Every 1% point rise in interest rates equates to 10% less purchasing power
  • Rates are double what they were this time last year meaning
  • 2.9 a year ago vs 6.1 now. 2.1% delta = 21% less purchasing power
    • $400k home last year is now only $316k with the same mo payment
  • Home prices remain up however the correction is happening

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Hosts: Paul J Daly and Kyle Mountsier
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