Raphael Stevens

Legacy automakers continue to promise big increases in production and sales of electric vehicles, but their efforts so far have done little to change the highly watched market.
Hyundai Motor, including Kia, overtook GM in U.S. sales of EVs but remains a far second compared with industry leader Tesla.
Tesla, led by CEO Elon Musk, has grown its lead over the legacy automakers to roughly 300,000 all-electric vehicles, according to data from Motor Intelligence.

A Tesla Model Y is seen on a Tesla car lot on May 31, 2023 in Austin, Texas. Tesla’s Model Y has become the world’s best selling car in the first quarter of 2023. 
Brandon Bell | Getty Images

DETROIT – Legacy automakers continue to promise big increases in production and sales of battery-electric vehicles, but their efforts so far have done little to change the highly watched, emerging market.
Despite notable upticks in sales compared with a year ago, industry leader Tesla remains the top EV seller and has grown its lead over legacy automakers. It is roughly 300,000 units ahead of its closest competitors Hyundai Motor and General Motors through the first half of this year, according to Motor Intelligence. That compares with a roughly 225,000 gap in the first half of 2022.

The auto data firm reports that Tesla, which does not release sales by region, is estimated to have sold 336,892 vehicles to retail and fleet buyers in the U.S. during the first half of the year, a 30% increase from a year earlier.
Meanwhile, Hyundai — including the Kia brand that’s owned by the same parent company — increased its EV sales by roughly 11% during that time to 38,457 units. GM, which was second in EV sales through the second quarter, more than quadrupled electric car and truck sales to 36,322 units through June compared with a year earlier. And Volkswagen more than doubled EV sales to 26,538 units sold through June.

Ford Motor, which was second in EV sales last year behind Tesla, rounded out the top five spots with sales of 25,709 vehicles through June, according to Motor Intelligence. Ford’s EV sales were only up 12% compared with a year earlier, as the automaker took downtime to retool some plants such as a Mexican facility that produces its electric Mustang Mach-E crossover.
“Our EV sales continue to grow. Improved Mustang Mach-E inventory flow began to hit at the end of Q2 following the retooling of our plant earlier this year, which helped Mustang Mach-E sales climb 110% in June,” Andrew Frick, Ford vice president of sales, distribution and trucks, said Thursday in a sales release.

Tesla sales

Tesla’s 30% year-over-year sales growth during the first half of the year was fueled by production at a new plant in Texas coming online and ramping up. However, that hasn’t been enough to keep up with the EV market’s overall growth.

Tesla’s market share of U.S. EV sales dropped nearly 10 percentage points from a year ago to represent 60% of electric vehicles domestically sold, according to the data from Motor Intelligence.
Tesla’s decline in market share comes as more competitors enter the field, resulting in overall market growth. EV sales in the U.S. increased roughly 50% through June compared with the first half of 2022.
Legacy automakers, as well as newer companies such as Rivian Automotive, have been attempting to ramp up production of all-electric vehicles but many of their outputs remain small. Aside from the top slots, only five others have between 1% and 4% U.S. market share, according to Motor Intelligence. A host of others are under 1%.
Tesla’s global deliveries were more than 889,000 EVs during the first half of the year, including 466,140 vehicles during the second quarter. Its production is expected to continue to grow, as Tesla is aiming to produce at least 1.8 million electric vehicles in 2023.
CEO Elon Musk has told shareholders that the Texas factory should be the highest-volume production auto plant in the U.S. once it is fully ramped up. Last year, Musk said the Texas plant was aiming to produce half a million vehicles annually by the end of 2023.

Hyundai rises, GM disappoints

Hyundai’s second-place position is especially notable considering that its vehicles don’t qualify for federal EV tax incentives of up to $7,500 unless they’re leased. Those incentives, which are complex, are meant to benefit EVs that are produced in North America. EVs from Hyundai are currently imported from overseas.
The South Korea-based automaker has been leaning into that leasing loophole under the Biden administration’s Inflation Reduction Act. The Hyundai brand has increased leasing of its EVs from roughly 2% to begin this year and has now hit more than 30%, according to Hyundai Motor America CEO Randy Parker.
“It’s not an even playing field, and we’re certainly not happy about it. But those are the deck of cards that have been dealt and we’re trying to play that deck as best as we can,” Parker said Wednesday during a call with reporters.

Hyundai Ioniq 5 on display at the New York Auto Show, April 13, 2022.
Scott Mlyn | CNBC

GM’s EV sales thus far have been disappointing, especially when it comes to new models with the automaker’s “Ultium” battery technologies. The automaker has been criticized for not ramping up production of its newest EVs such as the GMC Hummer and Cadillac Lyriq quickly enough.
The vast majority of GM’s EV sales during the first six months of the year were of its outgoing Chevrolet Bolt models, which will be discontinued later this year.
GM CEO Mary Barra reiterated last week at the Aspen Ideas Festival that the company’s output of newer EVs has been constrained due to domestic production of its batteries that’s taking longer than expected.
Barra has said GM plans to catch Tesla in sales by mid-decade, as the automaker rolls out more mainstream EV launches later this year such as the Chevrolet Silverado, Blazer and Equinox. It’s also launching a new electric delivery van and a $300,000-plus bespoke Cadillac EV called the Celestiq in 2023.
The Detroit automaker has said it plans to produce 150,000 EVs this year for the U.S. market.
— CNBC’s Phil LeBeau and Lora Kolodny contributed to this report.
Disclosure: NBCUniversal News Group, of which CNBC is a part, is the media partner of the Aspen Ideas Festival.

Mary Barra, GM Chair and CEO, speaks during the unveiling of the Cadillac Celestiq electric-sedan in Los Angeles, California on October 17, 2022. 
Frederic J. Brown | AFP | Getty Images More

The FDA has approved Eisai and Biogen’s Alzheimer’s treatment Leqembi.
Medicare announced it will broadly cover Leqembi for patients enrolled in the program for older Americans, though several conditions apply.
Medicare coverage is a crucial step to help seniors with early Alzheimer’s disease pay for the treatment, which has a list price of $26,500 per year.
Leqembi slowed cognitive decline in a clinical trial, but the treatment is expensive and carries serious risks of brain swelling and bleeding.

The Food and Drug Administration on Thursday fully approved the Alzheimer’s treatment Leqembi, a pivotal decision that will expand access to the expensive drug for older Americans.
Medicare announced shortly after the FDA approval that it is now covering the antibody treatment for patients enrolled in the insurance program for seniors, though several conditions apply.

Leqembi is the first Alzheimer’s antibody treatment to receive full FDA approval. It is also the first such drug that to receive broad coverage through Medicare.
Leqembi is not a cure. The treatment slowed cognitive decline from early Alzheimer’s disease by 27% over 18 months during Eisai’s clinical trial. The antibody, administered twice monthly through intravenous infusion, targets a protein called amyloid that is associated with Alzheimer’s disease.
Medicare coverage is a crucial step to help older Americans with early Alzheimer’s disease pay for the treatment. With a median income of about $30,000, most people on Medicare cannot afford the $26,500 annual price of Leqembi set by Eisai without insurance coverage.
Medicare had previously only agreed to cover Leqembi for patients participating in clinical trials after the treatment received expedited approval in January. This policy had severely restricted access to the drug.
To be eligible for coverage, patients must be enrolled in Medicare, diagnosed with mild cognitive impairment or mild Alzheimer’s disease, and have a doctor who is participating in a data-collection system the federal government has established to monitor the treatment’s benefits and risks.

Eisai | via Reuters

Joanna Pike, president of the Alzheimer’s Association, the lobby group that advocates on behalf of people living with the disease, said although Leqembi is not a cure, it will help patients in the early stages of the disease maintain their independence, conduct their daily lives, and spend more time with their families.
“This gives people more months of recognizing their spouse, children and grandchildren,” Pike said in a statement Thursday. “This also means more time for a person to drive safely, accurately and promptly take care of family finances, and participate fully in hobbies and interests.”
But the treatment carries serious risks of brain swelling and bleeding. Three patients who participated in Eisai’s study died. FDA scientists have said it is unclear if Leqembi played a role in these deaths.
Alzheimer’s disease is the most common cause of dementia among older adults and the sixth leading cause of death in the U.S., according to the FDA.
Dr. David Knopman, a neurologist who specializes in Alzheimer’s disease at the Mayo Clinic in Minnesota, said Leqembi clearly demonstrated a benefit to patients in Eisai’s trial, though he cautioned the efficacy of the treatment was modest.
Knopman said appropriately diagnosed and informed patients should be able to decide for themselves whether they want to take Leqembi after weighing the benefits and risks of the treatment as well as the potential logistical challenges of finding a place to receive the twice-monthly infusions.

Medicare coverage

To receive coverage, Medicare is requiring patients to find a health-care provider participating in a registry system that collects real-world data on the drug’s benefits and risks. The system is controversial. The Alzheimer’s Association and some members of Congress are worried this requirement will create barriers to treatment.
There are concerns that the number of health-care providers participating in such registries will be limited, and that people in rural towns and other underserved communities will have to travel long hours to find such a provider.
The Centers for Medicare and Medicaid Services has set up a nationwide portal to make it easy for health-care providers to submit the required data on patients receiving Leqembi. The free-to-use portal went live moments after the FDA decision on Thursday.

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Rep. Anna Eshoo of California, the ranking Democrat on the House Subcommittee on Health, and Rep. Nanette Barragan, D-Calif., raised concerns in a letter to CMS last month that patients could struggle to find a doctor participating in the system.
Alzheimer’s is typically diagnosed with the help of a PET scan to detect the amyloid protein associated with the disease or in some cases with a spinal tap. Medicare currently only covers one PET scan per lifetime for dementia. It is unclear if the program plans to change that policy.
There’s also concern that there could be too few specialist physicians and locations to administer the infusions if Leqembi is broadly embraced as a treatment and patient demand for the antibody is high.
Some studies have estimated that wait times for antibody treatments like Leqembi could range from months to even years over the next decade depending on demand.
Tomas Philipson, who advised the FDA commissioner and CMS administrator during the second Bush administration, said the registry is an unnecessary hurdle and Medicare should drop it, but he doesn’t believe the requirement will create an insurmountable barrier to patients accessing Leqembi.
If demand for Leqembi is high, doctors will have an incentive to participate in the registry and the drug companies will want to help, said Philipson, an expert on health-care economics at the University of Chicago.
How high demand will be for Leqembi is uncertain, he said. Families worried about the serious side effects may opt not to take the treatment, while others will decide the benefits outweigh those risks, he said.

High cost

Leqembi’s price tag and the treatment’s benefit-risk profile are controversial.
Medicare patients treated with Leqembi will pay 20% of the medical bill after they meet their Part B deductible, according to CMS. Costs may vary depending on whether the patient has supplemental Medicare coverage or other secondary insurance, according to the agency.
Patients could face up to $6,600 in annual out-of-pocket costs for Leqembi even with Medicare coverage, according to a study published in the journal JAMA Internal Medicine. The treatment could cost Medicare up to $5 billion a year depending on how many people receive the infusions, the study estimated.
Sen. Bernie Sanders, I-Vt., chair of the Senate Health Committee, has called Leqembi’s price “unconscionable” and in a letter last month asked Health and Human Services Secretary Xavier Becerra to take action to reduce the cost.
Sanders said patient out-of-pocket costs for Leqembi would amount to a sixth of many seniors’ total annual income and noted the high cost of the treatment could increase premiums for everyone on Medicare.
Eisai says its $26,500 annual list price for Leqembi is lower than the company’s estimate of $37,600 for the total value of the treatment for each patient. The Institute for Clinical and Economic Review, a nonprofit that analyzes health-care costs, estimated in April it should be priced at $8,900 to $21,500 per year.
Though Leqembi could prove costly to Medicare, Philipson said delaying coverage of the treatment would result in significant increased health-care spending as people with mild Alzheimer’s disease, which can be managed at home, progress to more serious disease that requires expensive nursing home care.
Philipson and his colleagues at the University of Chicago estimated that delaying Medicare coverage of Alzheimer’s antibody treatments by one year would result in $6.8 billion in increased spending. By 2040, health-care spending would rise by $248 billion.

Clinical benefit

Thursday’s full FDA approval comes after a panel of six outside advisors voted unanimously in June in support of the drug’s clinical benefit to patients. The panel was unusually small because some members recused themselves due to conflicts of interest.
The American Academy of Neurology stated in a February letter to CMS that there is a consensus among its experts that Eisai’s clinical trial of Leqembi was well designed and the results were “clinically and statistically significant.”
Some nonprofit groups such as Public Citizen, a consumer advocacy organization, strongly opposed FDA approval of Leqembi. A representative from Public Citizen told the advisory panel that the evidence for the drug’s benefit does not outweigh significant risks of brain swelling and bleeding.
And representatives from the National Center for Health Research and Doctors for America, also nonprofits, told the panel that Eisai’s clinical trial did not include enough Black patients, who are at higher risk for Alzheimer’s disease.
Leqembi has technically been approved for the U.S. market since January, when the FDA cleared the treatment under an accelerated pathway. The FDA uses expedited approvals to save time and get drugs to patients suffering from serious diseases more quickly.
But Medicare refused to cover the Leqembi at that time, asking for more evidence that the expensive treatment had a real clinical benefit for patients that outweighed the risks.
The program’s cautious coverage policy stems from the FDA’s controversial 2021 approval of another Alzheimer’s antibody treatment called Aduhelm, also made by Eisai and Biogen.
The FDA’s advisory committee declined to endorse Aduhelm because the data did not support a clinical benefit to patients. Three advisors resigned after the agency’s decision to approve the treatment anyway.
Knopman is one of the advisors who resigned over the FDA’s decision on Aduhelm. He said the data for Leqembi is different. Eisai conducted a clean trial that showed the antibody had a modest clinical benefit for patients, Knopman said.
An investigation by Congress subsequently found that the FDA’s approval of Aduhelm was “rife with irregularities.”
Sanders, in his letter to Becerra, said the FDA “has a special responsibility to restore the public trust after its inappropriate relationship with Biogen during the agency’s review of a prior Alzheimer’s drug, Aduhelm.” More

Levi Strauss narrowly beat Wall Street’s estimates after reporting a steep drop in U.S. wholesale revenue.
The blue jean retailer slashed its profit outlook for the year and expects wholesale revenues in the U.S. to continue to fall as it shifts its business towards a direct-to-consumer model.
The apparel company now expects adjusted earnings per share of $1.10 to $1.20, compared to a previous range of $1.30 to $1.40.

A pair of Levi’s selvedge denim jeans arranged in Louisville, Kentucky.
Luke Sharrett | Bloomberg | Getty Images

Levi Strauss on Thursday drastically cut its profit outlook for the year after the apparel retailer reported a steep drop off in wholesale revenues and soft sales in the U.S., its largest market. 
The blue jean seller saw bright spots, however, in its direct-to-consumer sales and China market.

Shares dropped more than 6% in extended trading.
Here’s how the company did in its fiscal second quarter compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:

Earnings per share: 4 cents, adjusted, vs. 3 cents expected
Revenue: $1.34 billion vs. $1.34 billion expected

The company’s reported net loss for the three-month period that ended May 28 was $1.6 million, or 0 cents per share, compared with a net income $49.7 million, or 12 cents a share, a year earlier. During the quarter, Levi reported adjusted earnings of 4 cents per share.
Sales dropped to $1.34 billion, down 9% from $1.47 billion a year earlier. 
Halfway through its fiscal year, Levi slashed its full-year profit outlook. It now expects adjusted earnings per share of $1.10 to $1.20, compared to a previous range of $1.30 to $1.40. Analysts had expected adjusted earnings of $1.29 per share, according to Refinitiv.

Levi also tightened its revenue outlook for the year. The retailer now expects sales to grow between 1.5% to 2.5% compared to a prior range of 1.5% to 3%. Analysts had expected growth of 2.6%, according to Refinitiv.
The dismal outlook was attributed to a number of factors but was driven by an expected slowdown in U.S. wholesale revenues, which plunged 22% in the quarter, Levi’s chief financial and growth officer Harmit Singh told CNBC.
Wholesale revenue has fallen because of a consumer slowdown impacting the retail industry at large and internal issues at Levi that resulted in items being out of stock, said CEO Chip Bergh.
Bergh noted the company has grappled with high inventory levels, which created congestion at its distribution centers and made it harder to fill orders for wholesale partners.
“Now our inventory levels are improving significantly, that is improving our customer fill rates, which is improving our in stock position,” he said.
“We’re now partway into Q3 already, we are seeing our US wholesale sell out trends improve and a lot of that is simply due to the fact that we have better in-stock position today,” Bergh added.
The company is also planning on taking price reductions on about a half dozen of its more price sensitive items, such as its 502 and 512 jeans, moves that will cut into its margins in the quarters ahead. The jeans will drop in price from $79.50 to $69.50 but are still higher than their pre-pandemic price of $59.50, Bergh said.
He said the company raised prices relative to competitors past the point where it could continue to grow market share, “so we’re just narrowing that price gap versus competition back to the historical levels with this $10 rollback.”
Bergh noted the price reduction will only show at stores where Levi has wholesale partnerships, such as Macy’s, and won’t be seen at its owned stores or internationally.
Levi is also planning for a higher tax rate in the second half of the year, a trend it said contributed to the lower outlook. Levi’s effective tax rate during the quarter was 78.4%, compared to 36.1% in the year-ago period.
“Our outlook on U.S. wholesale, even with the pricing moves that we’re taking and everything else, we’re being cautious about it,” said Bergh. “Just in light of the recent performance, and the current macro headwinds, and just the consumer dynamics in this market.”
While the steep drop in wholesale revenue is hurting Levi in the short term, shifting sales away from wholesalers is part of the company’s larger strategy, said Bergh. The push is similar to Nike’s playbook.
“Our focus is to drive our direct-to-consumer business, including e-commerce, so our own stores, our franchise partner stores, which actually rolls up through wholesale globally, and our e-commerce business. That is our strategic priority,” said Bergh.
“It has better structural financials, higher gross margin, we’re in control of the consumer experience,” he said.
During the quarter, DTC revenues increased 13% and were driven by growth in both company-operated stores and online sales. E-commerce revenue increased 20% in the quarter.
When Bergh first joined Levi about 12 years ago, wholesale customers such as Macy’s and Kohls, accounted for more than 40% of Levi’s total business, but these days, it’s less than 30%, he said.
The slowdown in wholesale revenue contributed to a 22% sales drop in the Americas, where Levi saw $609 million in revenue, below estimates of $639.5 million, according to StreetAccount. Sales fell 2% in Europe, where the company reported $361 million in revenue, but they were higher than the $344 million analysts had expected, according to StreetAccount.
Sales were rosier in Asia, where revenue was up 18% in the quarter at $262 million, driven by strength in the company’s DTC channel. It beat Wall Street’s estimate of $230.2 million, according to StreetAccount.
Read the company’s full earnings release here. More

Nikola asked its shareholders for approval to increase the total number of shares it can issue.
While a majority voted in favor, the total number of shares voted fell short of a legally-required threshold.
But Delaware may change that law shortly, and Nikola will try again in August.

Nikola TRE FCEV2
Courtesy: Nikola

Electric truck maker Nikola is still short of winning shareholder approval to issue new stock and has once again adjourned its annual meeting to try to win more support, the company said on Thursday.
Nikola had adjourned its June 6 annual meeting until Thursday to try to drum up more support for the proposal. Current law in Delaware, where Nikola is incorporated, requires approval from owners of at least 50% of the company’s outstanding shares to pass a share increase proposal.

However, that law may change on Aug. 1. Under amendments approved by Delaware’s state legislature and now awaiting signature by the state’s governor, a company incorporated in the state will need only a simple majority of shares voted to approve an increase in authorized shares.
Nikola’s meeting is now adjourned again until 4 p.m. ET on Aug. 3, when the new rule may be in effect. Nikola said that proposal would have passed on Thursday had the new rule been in place.
Nikola is asking its shareholders for approval to double its total shares authorized, to 1.6 billion from 800 million, to give it flexibility to raise cash by issuing new shares as needed.
The company is expected to launch the long-awaited hydrogen fuel cell version of its Tre electric semitruck later this month. As of May 9, it had 140 orders in hand for the new truck. Nikola is hoping to raise additional cash to help fund the new truck’s production ramp and to build out its hydrogen refueling network in the U.S. and Canada.
Nikola will report its second-quarter results before the U.S. markets open on Aug. 4. More