Author: reuters

By Akash Sriram

(Reuters) -Tesla delivered a record number of electric vehicles in the fourth quarter, beating market estimates and meeting its 2023 target, but lost its spot as the top EV maker by sales to China’s BYD.

Tesla delivered 484,507 EVs in the October-to-December period, falling short of the 526,409 vehicles that Warren Buffett-backed BYD handed over – mostly in China – suggesting that car buyers were looking for cheaper models in a high-interest-rate economy.

While the U.S. automaker’s year-end sales push mostly paid off, helping it deliver 1.8 million vehicles this year, it fell short of CEO Elon Musk’s ambitious 2 million annual internal target.

However, it is still ahead of BYD for the whole year. The Chinese firm delivered a total of 3.02 million vehicles, including about 1.4 million plug-in hybrid EVs.

Tesla stock, which doubled last year, was nearly flat on Tuesday in a broadly weaker market.

BYD’s deliveries show price cuts are working for the Chinese company, said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

“The fight will hurt margins for both companies, but BYD clearly believes it’s a price worth paying to increase market share and recognition,” she added.

Tesla increased discounts and offered incentives like six months of free fast charging if customers took deliveries by December-end, in a bid to boost sales before some variants of its compact Model 3 sedan lose U.S. federal tax credits in 2024.

That helped it post a growth of 11% over the immediately previous quarter and higher than estimates of 473,253, according to 14 analysts polled by LSEG.

It made a record 494,989 vehicles in the quarter after a production halt in the third quarter to upgrade assembly lines, taking total production in 2023 to 1.85 million units.

On Wednesday, China Passenger Car Association (CPCA) data showed Tesla sold 94,139 China-made electric vehicles (EVs) in December, up 68.7% from a year earlier.

Tesla’s delivery numbers are “much, much, much better than domestic U.S. car companies,” said Gary Bradshaw, portfolio manager at Tesla shareholder Hodges Capital.

Smaller rival Rivian also reported deliveries on Tuesday, with the company missing market estimates amid a broader pullback in EV demand.

The weakness has led U.S. automakers including Ford and General Motors to become more cautious about their EV production capacity plans.

Tesla is also facing scrutiny from regulators over its self-driving technology with the company recalling more than 2 million vehicles last month to install new safeguards in its Autopilot advanced driver-assistance system, after a federal safety regulator cited safety concerns.

Consumer Reports — an influential U.S. non-profit group that conducts extensive reviews of cars, kitchen appliances and other goods — said its preliminary evaluation suggests the software update to fix issues were not sufficient and did not go far enough to prevent misuse and driver inattention.

TAX CREDITS

Some analysts said Tesla could have to continue the price cuts it started in January last year to maintain demand, after the end of the tax incentives under the Inflation Reduction Act (IRA) brought forward sales into the fourth quarter.

“Tesla may have to cut prices further, especially for a vehicle like the versions of the Model 3 that lost their tax credit,” said Seth Goldstein, equity strategist at Morningstar.

The rear-wheel drive and long-range variants of Tesla’s Model 3 no longer have federal tax credits of $7,500 this year as updated requirements on battery material sourcing kick in, under the IRA.

Goldstein, however, said that most of the price cuts were in response to higher interest rates by the U.S. Federal Reserve so Tesla may maintain prices if borrowing costs start coming down.

Model 3 cars and Model Y sports utility vehicles accounted for 461,538 deliveries in the quarter, while Tesla handed over about 23,000 units of its other models.

Tesla did not disclose if the deliveries included the newly launched Cybertruck.

(Reporting by Akash Sriram in Bengaluru; editing by Shounak Dasgupta, Krishna Chandra Eluri and Pooja Desai)

By David Shepardson

WASHINGTON (Reuters) -Many electric vehicles lost eligibility for tax credits of up to $7,500 after new battery sourcing rules took effect on Monday, including the Nissan Leaf, Tesla Cybertruck All-Wheel Drive, some Tesla Model 3s and Chevrolet Blazer EV, the U.S. Treasury said.

The Treasury issued guidelines in December detailing new battery sourcing requirements aimed at weaning the U.S. electric vehicle supply chain away from China. They took effect on Monday.

The number of EV models qualifying for U.S. EV tax credits fell from 43 to 19. Those figures include different versions of the same vehicle type. Treasury said some manufacturers have yet to submit information on eligible vehicles, which could lead to changes in the list.

Tesla did not immediately comment Monday but said on its website “Cybertruck is likely to qualify for the federal tax credit later in 2024.”

The new rules allow buyers to claim the tax credit of up to $7,500 at a participating dealership at the point of sale. The tax credit sets limits on vehicle price and buyer income to qualify.

The Volkswagen ID.4, Tesla Model 3 Rear Wheel Drive, BMW X5 xDrive50e, Audi Q5 PHEV 55, Cadillac Lyriq and Ford E-Transit are among the vehicles that fell off the list of vehicles eligible for tax credits.

Volkswagen said on Monday it “is in the process of confirming eligibility for a federal EV tax credit for vehicles” after Jan. 1.

“We are optimistic that MY2023 ID.4s and all MY2024 ID.4s will be eligible under the new rules,” VW added.

BMW did not immediately comment.

Nissan said is working with suppliers in an effort to meet changing requirements “and regain tax credit eligibility for the Nissan Leaf in the future.”

The Treasury said “automakers are adjusting their supply chains to ensure buyers continue to be eligible for the new clean vehicle credit, partnering with allies and bringing jobs and investment back to the United States.”

Ford Motor said last month its E-Transit would lose the $3,750 tax credit, as would the Mach-E and Lincoln Aviator Grand Touring plug-in hybrid, but its F-150 EV Lighting and the Lincoln Corsair Grand Touring retained credits.

General Motors noted all of its EVs would temporarily lose eligibility except the Chevrolet Bolt, adding the Lyriq and Blazer EV are losing the credit because of two minor components.

GM expects after a sourcing change the Lyriq and Blazer EV will regain eligibility in early 2024 and said its Chevrolet Equinox EV, Chevrolet Silverado EV, GMC Sierra EV and Cadillac OPTIQ produced “after the sourcing change will be eligible for the full incentive.”

The 2022 Inflation Reduction Act law reformed the EV tax credit, requiring vehicles to be assembled in North America to qualify for any tax credits, eliminating nearly 70% of eligible models at the time.

Tesla disclosed in December its Model 3 Rear-Wheel Drive and Long Range vehicles would lose federal tax credits starting Jan. 1. The Model 3 Performance retains the $7,500 credit.

(Reporting by David ShepardsonEditing by Marguerita Choy and Lisa Shumaker)

By Blake Brittain and Jaspreet Singh

(Reuters) -Apple can for now resume sales of its flagship smartwatches, after a U.S. appeals court on Wednesday paused a government commission’s import ban on the devices imposed in a patent dispute over its medical monitoring technology.

The tech giant had filed an emergency request asking the U.S. Court of Appeals for the Federal Circuit to halt an order from the U.S. International Trade Commission (ITC), which had ruled that Apple had infringed the patents of Irvine, California-based Masimo.

A final decision could cost either company millions of dollars and potentially force a settlement or some kind of technological workaround by Apple, analysts said. Ultimately, though, any financial hit for Apple is likely to be dwarfed by the bad publicity the lawsuit is generating, they said.

Masimo shares closed 4.6% lower at $115.11 following the decision on Wednesday, and Apple shares closed flat at $193.15.

“We are thrilled to return the full Apple Watch lineup to customers in time for the new year,” Apple said in a statement. “Apple Watch Series 9 and Apple Watch Ultra 2, including the blood oxygen feature, will become available for purchase again in the United States at Apple Stores starting today and from apple.com tomorrow by 12 pm PT.”

Masimo declined to comment on the court decision.

The ITC barred imports and sales of Apple Watches with technology for reading blood-oxygen levels. Starting with its Series 6 model in 2020, Apple included a pulse oximeter feature in its smartwatches.

Masimo has accused Apple of hiring away its employees, stealing its pulse oximetry technology and incorporating it into Apple Watches. Apple has countersued, calling Masimo’s legal actions a “maneuver to clear a path” for its own competing smartwatch.

“Apple can easily develop their own blood monitoring software, it is just a matter of time … The software development costs are not something that will be too concerning for a company as wealthy as Apple,” said Stuart Cole, chief macro economist at Equiti Capital.

“The bigger issue is that this is not very good PR for Apple, suggesting as it does that Apple is stealing technology from competitors rather than developing its own. Apple is fighting this lawsuit more with an eye on what it means for their future health-wearable products rather than this specific blood oxygen monitoring piece of software,” he said.

In a four-paragraph ruling on Wednesday, the appeals court said it would halt the ban while it considers Apple’s motion for a longer-term pause during the appeals process. The court gave the ITC until Jan. 10 to respond to Apple’s request.

U.S. President Joe Biden’s administration declined to veto the ban on Tuesday, allowing it to take effect. Apple asked for a pause of the ban later that day.

Apple has said it is working on a range of legal and technical options.

On Tuesday, the company told the court that U.S. Customs and Border Protection is considering whether redesigned versions of its watches infringe Masimo’s patents and can be imported. The customs agency has set a target date of Jan. 12 for its decision, Apple said.

Apple had paused sales of the affected devices from its website and retail locations last week in the United States due to the ITC decision. They remained available at retailers including Amazon, Best Buy, Costco and Walmart.

The ban did not affect the Apple Watch SE, a less-expensive model without a pulse oximeter. Previously sold watches also were not be affected by the ban.

A jury trial on Masimo’s allegations against Apple in California federal court had ended with a mistrial in May.

Apple’s wearables, home and accessory business, which includes the Apple Watch, AirPods earbuds and other products, brought in $8.28 billion in revenue during the third quarter of 2023, according to a company report.

(Reporting by Blake Brittain in Washington and Jaspreet Singh in Bengaluru, additional reporting by Max Cherney in San Francisco, and Akash Sriram and Aditya Soni in Bengaluru; Editing by Ben Klayman, Chizu Nomiyama, Howard Goller and Matthew Lewis)

(Reuters) -Apple customer service teams were informed in a company memo this week that it will no longer replace out-of-warranty models going back to Apple Watch Series 6, Bloomberg News reported on Thursday.

The iPhone maker had said on Monday it would pause sales of its Series 9 and Ultra 2 smartwatches in the U.S. from this week, in relation to the patent dispute over the technology that enables the blood oxygen feature on the devices. These two models are currently unavailable on Apple’s U.S. website.

If a customer has a broken screen, for instance, they would not be able to get the issue fixed by Apple, the Bloomberg News report said, adding the company will still offer help that can be done via software, such as reinstalling the operating system.

Company representatives were told to inform affected customers they will be contacted when hardware replacements are allowed again, according to the report.

Apple did not immediately respond to a Reuters request for comment.

(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Krishna Chandra Eluri)