Stellantis’ Canadian battery plant is up within the air, Stellantis additionally wants to scrub up its services in Europe and Hyundai nonetheless isn’t constructing the one automobile all of us hoped it might. All that and extra on this version of The Morning Shift for Monday, May 15, 2023.
1st Gear: They’ll Have What Volkswagen’s Having
Last yr, Stellantis and LG Energy Solution introduced a plan to construct a battery plant in Ottawa. The facility was to obtain “undisclosed contributions from federal and provincial governments,” per Reuters, and on the time it was publicized because the largest-ever funding in Canada’s auto business. As a part of the deal, LG was investing nearly $1.5 billion of its personal cash. Yet all of that seems to be in jeopardy now, as a result of Stellantis has reportedly determined it deserves extra from the federal government. From a Reuters report:
“As of today, the Canadian Government has not delivered on what was agreed to, therefore Stellantis and LG Energy Solution will immediately begin implementing their contingency plans,” Stellantis mentioned in a short emailed assertion, with out elaborating.
The actual situation right here could also be Volkswagen. See, VW was awarded a really beneficiant funding from Canada this yr for a plant of its personal, to the tune of CAD 13.2 million ($9.77 billion). That was apparently a lot sweeter than what the federal government promised Stellantis in 2022, which has made the home of misfit manufacturers (and Jeep) jealous. The Reuters report continues:
Stellantis is threatening to tug the plug on the battery plant until it’s cope with the federal government is sweetened to the extent Volkswagen acquired this yr, the Toronto Star newspaper reported earlier on Friday, citing unnamed sources.
The Star mentioned Stellantis started searching for an enriched deal in Canada shortly after the U.S. Inflation Reduction Act, which gives $369 billion of subsidies for electrical autos and different clear applied sciences, handed into legislation final yr.
Canada’s cope with Volkswagen for a battery gigafactory, introduced this yr, is the most important single funding ever within the nation’s electric-vehicle provide chain.
The federal authorities has dedicated to offer as much as C$13.2 billion in manufacturing tax credit by way of 2032, whereas Europe’s largest carmaker is investing as much as C$7 billion to construct the plant St. Thomas, Ontario.
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It’s unclear what Stellantis’ “contingency plans” are, but it sounds like they involve the company packing up its toys and taking its future plant elsewhere, probably south of the border. The Canadian government shouldn’t be too fussed about that; demand for new auto manufacturing facilities in North America isn’t exactly hard to find these days.
2nd Gear: Stellantis’ Grimy Plants
We now turn to Stellantis’ Pomigliano d’Arco plant outside Naples, where the new Alfa Romeo Tonale and Fiat Panda are made. Some factory workers held a work stoppage there for two hours on Friday, marking three days of protest, over unsanitary conditions. From Bloomberg:
“The plant is dirty and the toilets stink,” [Italian Federation of Metalworkers automotive coordinator Simone] Marinelli said. “Work overalls are missing — some workers have to wait months to have the old and worn out ones replaced.”
Stellantis said it rejected accusations of a lack of attention to working conditions, according to an Italy-based spokesman. The company always acts within the framework of labor contracts and with respect for its employees, while also considering the competitive environment of the automotive industry, he said.
Unfortunately, this “respect for employees” appears to be a trend across Stellantis’ European facilities:
Stellantis Chief Executive Officer Carlos Tavares is known to leave no stone unturned to find cost savings with the strategy underpinning earnings rising to record levels. The concern over facility maintenance due to cutbacks at Pomigliano — where less than half of workers making the Panda took part in Friday’s protests — isn’t isolated with staff at other factories also pressuring management to improve conditions.
Manufacturing sites in France aren’t receiving appropriate investments into their upkeep, said Christine Virassamy, who heads France’s CFDT labor union at the carmaker, one of the country’s biggest.
“Often there are clogged toilets, or soap is missing, or grass that doesn’t get cut,” she said in a phone interview. “Ventilators are missing in summer and it can get stifling in factories.”
Stellantis finished 2022 with profit totaling $17.9 billion, a 26-percent year-over-year increase that outpaced GM’s growth over those same 12 months. It definitely beat Ford, which lost $2 billion. Buy the damn soap.
3rd Gear: Not Hyundai’s Vision
We all love the N Vision 74, Hyundai’s cyberpunk hydrogen-powered concept supercar. “Love” may actually be too modest a description of what many enthusiasts feel for the car, which is why I’m disappointed to relay the latest from Carscoops, which got it on record after some rumors otherwise that the Vision 74 still isn’t destined for series production:
“We are aware of media speculations on the potential commercial production of the N Vision 74 rolling lab development model,” Hyundai spokesperson Derek Joyce told Carscoops after talking to the company’s Korean brass. “However, we currently have no plan to put the model into commercial production.”
Hyundai was forced to deny the rumor following a report from Korean outlet, Money Today. Earlier this week, the outlet claimed that the brand was preparing to host something called “Pony Day” at its design studio in Seoul on May 27. […]
The outlet was incorrect, Joyce has confirmed. His comments follow a similar denial reported by Korea’s Wikitree, which quoted the automaker as saying that, “there is no plan to mass-produce the Pony Coupe, and there is no Pony Day event planned.”
It seems this mysterious “Pony Coupe” may actually just be a new concept inspired by the Giorgetto Giugiaro-designed Hyundai Pony, the brand’s first mass-produced car. What’s weird about that is Hyundai already made such a one-off in 2021, called the Heritage Series Pony. The Heritage version was an EV restomod, however, so maybe this new project will be a little more original. Whatever it turns out to be, it’s not a production N Vision 74, so I’m going back to sleep. Wake me up when that changes.
4th Gear: Ford Cuts Jobs in China
The Blue Oval reportedly shed as many as 1,300 positions in China, per a report Bloomberg picked up from regional business publication Economic Daily News on Monday:
Ford’s wholesales in China fell below half a million units for the first time in a decade in 2022, continuing a slide since 2016, when the US automaker shipped 1.27 million vehicles and had a market share of 4.6%. That share dropped to 2.1% last year, as Chinese consumers increasingly embrace electric vehicles made by the likes of Tesla Inc. and local players such as BYD Co.
“Our costs are not competitive, and we are working internally and with our partners to reduce costs in all areas,” a Ford spokeswoman wrote in an email response to Bloomberg News. “We can only win through a lean and agile organization. These actions are necessary for us to build a healthier and more sustainable business in China.”
She didn’t specify how many jobs would be cut or provide a time frame.
The only EV Ford sells in China is the Mustang Mach-E, which isn’t exactly taking off over there. However, that’s hardly a phenomenon Ford is experiencing alone, as we’ll discuss in our final gear for the day…
5th Gear: China Price War Update
…which is that the race to the bottom for new car prices in China hasn’t helped anyone sell more cars. Profits are sliding industry-wide — unless you’re BYD, anyway — and local manufactures involved in joint ventures with foreign makes are being hit the hardest. Economists are getting very nervous. From Bloomberg again, this time care of Automotive News:
The price war and ballooning investment in the transition to EVs ate into growth. Of the 10 companies that turned a profit in the quarter, only three posted an increase. That’s down from four in 2022, and all of them in 2021. Again, BYD was an outlier, posting a 410 percent surge in earnings, while Changan Automobile’s profit rose 54 percent.
The dilemma facing all legacy carmakers, not just Chinese ones, is that gasoline cars currently generate more profit and better margins. By selling a increasing number of electric cars, they’re actually making less money, according to [Minghsun Lee, head of greater China auto research at Bank of America Corp].
“But if they want to survive, they have to embrace EVs otherwise they’ll disappear,” he said. “So they have to choose. Worldwide, traditional car companies want to have more EV sales, but profitability will be worse.”
If we go back to the example of Mach-E, remember that Ford takes a bath every time it sells one. Even so, the electric ‘Stang was one of the 695 passenger car models that saw reductions in sticker since the start of 2023. Consumers seem content to wait for the next price drop, because the market has taught them that there’s always another coming down the pike. Mingshun Lee, the Bank of America analyst quoted in the article, summed all this up with concerning brevity to Bloomberg:
Lee expects passenger car wholesales to stay flat for 2023, with a slight decline in domestic demand offset by growing exports, where Chinese carmakers will be looking for growth. The market is too crowded with dozens of traditional and EV makers, and no major player has exited yet, he said.
“There are too many companies and everyone wants to survive,” he said.
Reverse: Ration Season
On this day in 1942 — 81 years ago — 17 states began imposing mandatory gasoline rationing to assist the wartime effort. By the end of the year, it was the policy across 48 states. There was even a temporary 35 mph speed limit set in place to reduce unnecessary fuel burning. Meager sacrifices of personal liberties to serve a common good, brought to you by the same country that couldn’t wear a damn mask. From History.com:
Neutral: The Crown Fits
It’s certainly the bias of our residence web page speaking however I’ve this intense urge to drive a Toyota Crown this morning. I by no means have earlier than, the Crown’s very existence puzzles me and it doesn’t look half dangerous for a lifted sedan. What bizarre, moderately attainable new automobile do you wish to take for a check drive?
Source: jalopnik.com