Automakers are experiencing a perfect storm of trends that have the potential to upend the industry as we know it. Tesla recently made headlines by closing its Dojo supercomputer program, effectively abandoning its pursuit of developing in-house chips for driverless technology. In contrast, the company’s board of directors just approved a $29 billion golden parachute for CEO Elon Musk. Take Rivian and Lucid Motors, for example, both of which are addressing worries over the One Big Beautiful Bill Act (OBBBA) in their most recent filings. Meanwhile, Lyft, long considered a competitor to Uber, has entered into a strategic partnership with Baidu to accelerate the deployment of autonomous vehicles across Europe.
In an unprecedented turn of events, Tesla announced today that it will be shutting down its Dojo program. This program was aimed at bolstering its AI and chip development for autonomous driving. This strategic shift away from in-house chip production has implications for Tesla’s long-term plans for driverless technology. The move is especially ground-breaking given the rising competition in the EV market, as rival automakers are stepping up their game, innovating and challenging limits.
What’s more, Tesla’s board of directors recently approved a massive compensation package for Musk. This package amounts to about $29 billion in equity. Unfortunately, this decision proves that the company has no intention of getting rid of its CEO. At the same time, it highlights the troubling level of executive pay in these deeply uncertain economic times.
Rivian and Lucid have been vocal about the implications of the OBBBA, emphasizing its significance in their risk factors disclosures. Rivian, despite admitting some future challenges, continues to be bullish by focusing on the positive such as the 45X tax credit tied to domestic battery production. This credit would be a major lifeline for Rivian’s ongoing operations. It will solidify the company’s position in the increasingly competitive EV space.
Lucid had pretty serious concerns about the act as well. The company is already in the process of determining what it may mean for operations. As noted in their 10Q filing, “If any of the Company’s suppliers, sub-suppliers or partners experience financial distress, insolvency or disruptions in operations, they may be unable to fulfill their obligations or meet the Company’s production and quality requirements.” This wariness is indicative of the larger unknowns plaguing the automotive supply chain.
Rivian has sued to allow it to sell its electric cars to consumers directly in Ohio. The lawsuit further underscores Rivian’s commitment to establishing and maintaining a national direct-to-consumer sales model. It’s an approach that’s quickly becoming the favorite among direct-entering disruptors to the automotive space.
Great moves forward Lyft, great moves forward! They’ve collaborated with Baidu to utilize Apollo Go’s self-driving cars as shared, robotic taxis in multiple European markets. This collaboration aligns with Lyft’s vision of enhancing mobility solutions through advanced technology, marking a significant step towards integrating autonomous vehicles into mainstream transportation networks.
Across the aviation spectrum, we have some thrilling news from Joby Aviation! They intend to purchase Blade Air Mobility’s urban air mobility ride-share business for as much as $125 million. The acquisition is expected to enhance Joby’s engineering infrastructure. The company is preparing for commercial operations as soon as its electric aircraft earns Type Certification from the Federal Aviation Administration (FAA).
Destinus—which has made headlines as a drone startup sending uncrewed, NATO-supplied bombers to Ukraine—plans to acquire Daedalean for $223 million. Daedalean’s mission is developing state-of-the-art autopilot systems for aviation. This underscores the growing importance of cutting-edge technology to both military and nonmilitary applications.
Jeh Aerospace, an Indian component-manufacturing company with headquarters in Atlanta. So too, “Volocopter,” which has raised at least $11 million in a Series A funding round and is based in the aerospace sector. This capital will fuel Jeh Aerospace’s growth strategy and further develop its capabilities as an innovative and cost-effective manufacturer of aerospace components.
Uzum, the express food delivery and fintech startup from Uzbekistan, has raised a huge $65.5 million in a funding round. Tencent and VR Capital both co-led this exciting investment. In many ways this investment is a testament to the burgeoning interest in innovative last-mile delivery services and fintech solutions across emerging markets.
Our automotive industry has never before faced such extraordinary challenges. The imposition of a 100% import tariff on semiconductor chips would be fatal to its operations. Such tariffs would be a serious blow to automakers in the midst of rampant supply chain disruptions and soaring production costs. The administration’s historical tendency to change policy raises concerns about how these tariffs will be implemented and whether exemptions can be secured.
Foxconn is already on its third year of ownership over the WI plant, but has faced challenges with ramping production of electric vehicles up to scale. This step backwards brings to light the challenges still grappling traditional manufacturers making the leap into the EV space.
As automakers navigate this complex landscape filled with opportunities and challenges, their strategies will significantly influence their ability to thrive in an increasingly competitive environment.
