Welcome to the Daily 5 report for Thursday, Feb. 20.
There's no question artificial intelligence is moving into multiple facets of auto manufacturing, retailing and driving, but there's still a long way to go.
This story by Nick Gibbs of Automotive News Europe notes current challenges in automotive AI, such as inaccuracy, high energy consumption and the absence of so-called killer applications for transforming the driving experience.
Still, this societal-changing technology has the potential to help automakers develop better infotainment, automated-driving and voice assistant systems, to name a few use cases, our story says. One of Wall Street's more influential automotive analysts put it this way in a conference call earlier this month:
"Many argue that if you are an industrial company or an auto company, you either have an AI strategy or you don't have a future," Morgan Stanley's Adam Jonas said.
Chipmakers, such as Qualcomm, are at the forefront of execution as they create processors with the ability to handle the computing power required to run AI models. Qualcomm expects AI to enter cars faster than in mobile phones, Gibbs wrote.
"I feel very comfortable saying that AI in the car will probably happen faster than in the phone in terms of use cases because it is such a rich environment," Nakul Duggal, Qualcomm's general manager of automotive, told a panel at this year's CES tech show in Las Vegas.
In another story today from Automotive News Europe, Mercedes-Benz attempted to put financial projections on possible Trump administration tariffs. The Germany automaker put the potential bottom-line cost for the tariffs at about $1 billion a year, or an entire percentage point of margin. And that figure was based on a 10 percent tariff, not the 25 percent tariff Trump has threatened.
CEO Ola Källenius, who is also president of the European auto lobby group ACEA, acknowledged that Trump has proposed stiffer tariffs than 10 percent, our Peter Sigal wrote. Källenius said the 10 percent figure was offered as a basis for comparison and suggested that negotiations could result in a lower number.
One of the biggest beneficiaries of Trump's tariffs in the U.S. could be used-car retailers such as Carvana, which reported robust fourth-quarter and full-year results on Wednesday.
Despite swinging to a record $159 million Q4 net profit compared with a $200 million net loss in 2023, Wall Street beat the shares down today because of pressure on vehicle sales margins. Apparently, Carvana's 46 percent boost in revenue and 50 percent surge in deliveries didn't matter. Go figure.
Wall Street was far kinder today to longtime drivetrain supplier Dana Inc., which reported that its net loss nearly doubled to $80 million during the fourth quarter. Yet shares in Ohio-based Dana rose in early trading, before turning south by late morning. Dana CEO Bruce McDonald said the company is "well on our way to our 2026 target of $300 million" in annual cost-cutting.
Finally, we have this analysis today from our China correspondent Yang Jian, who explains how Ford Motor Co. and Kia turned around their deteriorating fortunes in China. The short answer for China progress? Exporting the vehicles out of China.
That's it for today. Have a great rest of your day.
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— Philip Nussel, online editor
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