Aston Martin delays first electric car as losses narrow

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© Reuters. FILE PHOTO: An Aston Martin Valkyrie sports car is seen at the Auto Zurich Car Show 2022 in Zurich, Switzerland November 10, 2022. REUTERS/Arnd Wiegmann/File Photo
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By Yadarisa Shabong

(Reuters) -Aston Martin is delaying the launch of its first electric car because of a lack of consumer demand, it said on Wednesday, as record prices for its luxury and special edition models helped the British carmaker shrink annual losses.

Aston Martin is now targeting the launch of its battery electric vehicle (BEV) in 2026, a year later than planned – becoming the latest automaker to push back electrification goals as investment in capacity and technology has outpaced EV demand.

“The consumer demand (for BEVs), certainly at an Aston Martin price point, is not what we thought it was going to be two years ago,” Executive Chairman Lawrence Stroll told journalists.

Stroll said there was “much more driven demand” for plug-in hybrid vehicles, especially for a company like Aston Martin, as people “want some electrification … but (to) still have the sports car smell and feel and noise”.

Aston Martin’s first hybrid supercar, Valhalla, is on course to enter production this year.

The company’s annual pretax losses more than halved in 2023, coming in smaller than market expectations, after selling prices reached record levels as it delivered its Valkyrie models and other special edition cars.

Mercedes-Benz (OTC:MBGAF) earlier this month delayed its electrification goal by five years and assured investors it would keep sprucing up its combustion engine models.

Last June, Aston Martin signed a supply agreement with Saudi Arabia-backed Lucid Group (NASDAQ:LCID) to bolster its electrification strategy.

Stroll, who played down concerns about competition from Chinese EV maker BYD (SZ:002594), added he was happy with the battery technology and platforms available to the company.

PIVOT

Fictional secret agent James Bond’s car brand of choice, Aston Martin has had a tough time since its market debut in 2018.

However, top shareholder Stroll has been trying to bolster its cash and margins by rolling out next-generation sports cars – the latest of which was the new Vantage sports model unveiled this month.

The carmaker’s shares were down 2% at 1047 GMT as investors fretted about its cash flow and volumes.

Aston Martin had hoped to turn free cash flow positive in the fourth quarter, but was hit by the timing of deliveries of its DB12 and Valour models.

It now expects positive cash generation in the second half of this year.

“Aston Martin is pumping reams of cash into marketing in a bid to help position itself at the ultra-luxury end of the spectrum. This pivot was never going to come cheap,” said Hargreaves analyst Sophie Lund-Yates.

Aston Martin reported an adjusted pretax loss of 171.8 million pounds ($217.4 million) for the year ended Dec. 31, compared with a 451 million pounds loss a year earlier.

Analysts, on average, expected a loss of 209 million pounds, according to a company-compiled consensus.

The company kept its near- and medium-term forecasts unchanged.

($1 = 0.7904 pounds)