Good morning! It’s Tuesday, February 20, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
1st Gear: European Carmakers Could Form Alliance To Fend Off Chinese EVs
Volkswagen, Renault and Stellantis are apparently exploring the idea of linking up to build cheaper electric vehicles as Chinese-made EVs and Tesla bear down on their home turf. This outside threat exposes competitive weaknesses at Europe’s biggest mass-market automakers. Because of that, it is becoming more and more clear that the status quo has to change. From Bloomberg:
There’s a “perfect recognition that in the future, the companies which are not fit to face the Chinese competition will put themselves in trouble,” Carlos Tavares, chief executive officer of Stellantis NV — the company created from the 2021 merger of Italy’s Fiat and France’s PSA Group — said in an interview last week. He has previously said that Europe’s auto industry faces a “bloodbath” if it doesn’t adapt.
Pushed by a slowdown in the pace of EV adoption, auto executives are discussing ideas ranging from pooling development resources to bundling businesses across European borders to better compete in the once-in-a-generation shift. The coming months are crucial.
Rather than muscling aside gas guzzlers, sales of fully electric cars this year are set to grow at the slowest rate since 2019, according to BloombergNEF, with the unexpected stall in momentum intensifying competition. Even for Tesla, the slowdown — which has led to widespread discounting — has made an impact. A 20% share slump this year has erased about $150 billion from its market capitalization — more than double VW’s value.
Headwinds for the sector include governments dropping incentives, rental firms balking at ballooning repair costs and consumers increasingly frustrated with climate policies impacting their pocketbooks. Elections in the US and Europe could further fuel anti-EV sentiment, just as an inflection point approaches.
In 2025, tighter emissions rules come into effect in the European Union, meaning manufacturers need to sell more battery-powered cars or face hefty fines. In an unlikely worst-case scenario, Volkswagen AG could face penalties of more than €2 billion ($2.2 billion) if it fails to sufficiently reduce fleet emissions, according to Bloomberg calculations based on company and regulatory data.
Meanwhile, as pressure continues to build on European carmakers to, well, make more EVs, China’s state-supported manufacturers are entering Europe with models that are really good and really cheap.
BYD Co.’s Dolphin, for instance, is listed at about €7,000 less than a similarly equipped VW ID.3, which the German carmaker originally pitched as the Beetle of the EV era. The Chinese manufacturer will underscore its European ambitions by showing off several electric models at the Geneva car show next week, including a luxury SUV rivaling the Mercedes-Benz G-Class.
Failure for Europe’s carmakers to come up with a working Plan B risks upheaval in an industry that employs some 13 million people and accounts for 7% of the EU economy.
“We have spent billions as an industry to make electric mobility possible,” said Holger Klein, the CEO of ZF Friedrichshafen AG, a German parts maker that employs around 165,000 people worldwide. “Now the question is: Do we have the right parameters?”
Here’s where the whole “Airbus of autos” mantra comes in:
Renault SA CEO Luca de Meo has been advocating an alliance akin to the tie-up that created a European planemaker to vie with Boeing Co. by pooling assets in Germany, France, Spain and the UK. The executive has argued that an “Airbus of autos” would help share the massive cost of building cheap EVs, while allowing them to benefit from greater scale.
Interest in broader cost sharing rose late last year, when Renault presented a concept for an electric city car that would cost less than €20,000 — half the price of VW’s ID.3. De Meo’s initiative is inspired by Japan’s kei cars. The popular mini vehicles are built by several manufacturers and get preferential treatment from regulators.
Different approaches are emerging. Stellantis’s Tavares has openly discussed an interest in mergers and acquisitions, whereas others are more focused on less-thorny collaborations.
Renault’s de Meo downplayed speculation on a major combination last week, telling Bloomberg Television that agility is more important than size. He confirmed that talks on a joint EV platform are taking place “left and right.”
“We’re very open to share that kind of investment because it’s very difficult to make money with small cars,” said de Meo, who has previously worked for Volkswagen as well as Fiat. “We’re trying to find a way.”
Building cars is expensive and, well, difficult. That’s especially true when the competition breathing down your neck is backed by one of the largest economies in the world and the product it is making is actually quite good.
2nd Gear: GM Orders Stop-Sale Of Midsize Pickup Twins
General Motors is having more software issues with some of its products, and now it is issuing a second stop-sale order on its vehicles in the past three months.
On February 19, GM put a stop-sale order on all 2024 Chevy Colorado and GMC Canyon Midsize pickup trucks. From The Detroit Free Press:
This follows a December stop-sale order of 2024 Chevrolet Blazer EVs so that GM could find a fix to owner-reported software problems that include intermittent issues with in-vehicle screens and problems using DC fast charging. GM, which had started shipping Blazer EVs to dealers in July 2023, is still working on that fix.
Last week, the Detroit Free Press was first to report that GM has a large number of its 2024 midsize pickups parked near the Wentzville Assembly Plant in Missouri, where it builds them. The pickups were there because the vehicles have software glitches and cannot be sold, said two people familiar with the situation. The people are not being named because they are not authorized to speak publicly.
GM said Monday it has already shipped some of the midsize pickups to dealers, but it is pausing the sale of all the vehicles.
“We are disappointed when we choose to pause sales, but we are committed to quality and the customer experience, therefore software updates will continue to be part of the process as our vehicles become more and more technologically advanced,” GM spokesman Kevin Kelly said in a statement emailed to the Free Press late Monday.
Kelly said GM has its software leadership team “urgently working to overcome any issues in the short term.”
GM’s long-term plan includes, “revamping the software development process and more importantly the validation process,” Kelly said.
Hopefully, this Stop Sale doesn’t last as long as the Blazer EV’s. The Colorado and Canyon are very obviously important parts of GM’s portfolio. On top of that, they’re also just really good “little” trucks.
3rd Gear: Toyota Industries Faces Scrutiny For Cheating Motors
Japan’s transportation ministry is getting ready to take action against a Toyota affiliate for cheating emissions tests, and it may end up withdrawing certification for some engine types. From Reuters:
The ministry will order Toyota Industries, the world’s largest manufacturer of forklift trucks, to take steps to prevent a “recurrence of the misconduct”, the newspaper reported, citing people familiar with the matter.
[…]
Toyota Industries, which also makes cars, textiles and electronics, may lose certification for an excavator engine, the report said.
The ministry appears to be preparing similar action over two forklift engine models, it added.
“The regulator will weigh the severity of the misconduct before deciding whether to do the same for engines used in Land Cruiser vehicles and HiAce vans,” the report said.
The company reported to the ministry in January that it had engaged in misconduct that included tampering with performance test data for multiple forklift and automobile engine models, Nikkei added.
I guess these forklifts are about to be *puts on sunglasses* un-certified. YEAHHHHHHH!!!!!
4th Gear: Subaru Halts Output At Japanese Factory Following Worker Death
Subaru is temporarily suspending production at three Japanese plants, including the factories that build the Forester and Crosstrek for export and well as the BRZ. The move comes after a 35-year veteran worker was crushed to death earlier this month. From Automotive News:
The accident happened on the evening of Feb. 13, after a 25-ton mold fell on a worker at the Yajima assembly plant in Gunma prefecture north of Tokyo, the Nikkei and Nikkan Jidosha Shimbun reported. As of Feb. 16, it still was not clear when production would resume.
A police spokesman in Ota, the city where the Yajima factory is located, confirmed details of the death. Police identified the worker as a 60-year-old man who was a 35-year veteran of Subaru.
[…]
The man was operating a crane by himself using a remote control to lift and move 25-ton molds, the local Jomo Shimbun reported. One of the molds collapsed, pinning the worker between another mold. An autopsy determined the cause of death as asphyxiation.
The shutdown affected three plants in the Gunma region, Subaru’s main production hub.
The Yajima assembly plant, where the accident occurred, makes the Impreza compact, and the Outback, Crosstrek and Forester crossovers. The nearby Main plant makes the BRZ, Impreza and Crosstrek as well as the WRX sports car and the Levorg, a Japan-market wagon.
Also affected was the local Oizumi engine and transmission plant.
Jesus Christ, what an awful story, all around. This poor guy.