Good morning! It’s Tuesday, January 23, 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: Toyota Chair Isn’t Sold On BEVs
Toyota Chairman Akio Toyoda thinks battery electric vehicles will only ever reach 30 percent market share, and the rest will be taken up by hybrids, hydrogen fuel cell vehicles and internal combustion-powered cars.
This theory is part of the “multipathway approach” Toyoda has argued for years. It’s the idea that customers should be able to pick whatever powertrain fits their needs, and the transition to EVs won’t happen as quickly as many folks think. From Bloomberg:
With a billion people in the world living without electricity, limiting their choices and ability to travel by making expensive cars isn’t the answer, the grandson of the company’s founder said during a business event this month, according to remarks published on the company’s media platform Tuesday. “Customers — not regulations or politics — should make that decision,” he said.
The world’s No. 1 carmaker has pushed back against criticism of falling behind in the transition to electric vehicles, saying that its pioneering hybrid drivetrains, hydrogen technology and holistic approach will ultimately prove to be the right approach for the business, customers and the environment. Earlier this month, Toyoda announced an initiative to develop new combustion engines.
“Engines will surely remain,” Toyoda was quoted as saying in the company publication. It wasn’t clear whether Toyoda’s remarks referred to new car sales or those already on the road.
On the other hand, Bloomberg forecasts that electric vehicles will account for about 75 percent of new car sales and 44 percent of passenger vehicles on the road by 2040.
In 2023, Chief Executive Officer Koji Sato said the Japanese automaker would sell 1.5 million battery EVs per year by 2026, and that number would rise to 3.5 million by 2030.
2nd Gear: RIP In Peace Vroom
Online used vehicle seller Vroom is killing off its e-commerce operations, saying it needs to preserve liquidity. Unsurprisingly, it caused the company’s stock to drop 51 percent to $0.25 in after-hours trading on January 22. From Automotive News:
The company will suspend used-vehicle transactions through vroom.com, according to a news release. Vroom also intends to sell its current used-vehicle inventory through wholesale channels, halt purchases of additional vehicles and reduce its work force by 800 employees – or 90 percent – as part of a “value maximization” plan its board of directors approved Jan. 19, according to a regulatory filing.
[…]
Vroom’s captive finance unit, United Auto Credit Corp., will “continue to serve” third-party customers, the company said. So will CarStory, an AI-powered analytics and auto retail digital services platform Vroom acquired in January 2021. Vroom said none of the 800 affected employees are affiliated with UACC or CarStory.
Vroom, of Houston, sought to raise additional capital to fund its operations and extend its vehicle floorplan facility, which expires March 31.
“Despite significant efforts to do so, we ultimately were unable to raise the necessary capital in the current market,” Vroom CEO Tom Shortt said in a statement. “Obviously, we are very disappointed with this outcome.”
Here’s the deals with sales and purchases on the site:
In a “Frequently Asked Questions” information page now live on its website, Vroom said customers who signed a contract to purchase or sell a vehicle through the platform should reach out to the company’s support team at (855) 524-1300 to discuss their options.
Customers who have not already signed a contract will not be able to buy or sell a vehicle, according to the page.
Vroom went public back in 2020 at the height of the Covid pandemic when online vehicle shopping and delivery seemed like a really good idea. I can’t blame Vroom for the move. You gotta ride that lightning.
3rd Gear: Boeing Is Boned On 2024 Production Goals
Even before a Boeing 737 Max’s door plug blew out mid-flight, Boeing was having trouble building enough of its new plane. Now, matters have gotten even worse because of added inspections and regulatory scrutiny that is expected to hurt output in 2024. This is probably for the best. From the Wall Street Journal:
Key airline customers are inspecting existing 737 MAX 9 planes, while federal air-safety officials are delving into the jet maker’s broader manufacturing processes. They are also examining supplier Spirit AeroSystems, which produced the plane’s door plug and fuselage.
Several aerospace analysts have lowered their financial forecasts for Boeing following the Jan. 5 accident, which also led to the grounding of 170 MAX 9 jets. How significant the financial impact is will depend, they say, on how long it takes to identify the cause and secure long-awaited certification of other MAX models.
“The pace is clearly going to be affected,” said Michel Merluzeau of AIR, a research company in Seattle. “In the longer term, this puts a lot of pressure on Boeing.”
Boeing and Spirit have launched internal reviews and have said they support the government investigations. Boeing is slated to update investors on its latest financial results Jan. 31. Chief Executive Dave Calhoun plans to announce the results from the Seattle area, where Boeing builds the 737.
Right now the 737 accounts for the bulk of Boeing’s total production and backlog of orders. In some good news, the Max 9, which only accounted for about 20 percent of Max deliveries in 2023, isn’t nearly as popular as the smaller Max 8. It has a far smaller share of the backlog of over 4,330 undelivered 737s.
It takes about 11 days in final assembly to produce a single 737 aircraft. Boeing has been promising to get back to producing about 50 a month from its factories. It delivered 45 in December and 396 for all of 2023.
Boeing this month has delivered just five 737s from its Renton, Wash., factory through Thursday, according to data from aviation analytics company Cirium. In the past few years, the plane maker has shipped out 10 to 15 in the same period. Deliveries often ebb and flow, and a slow start to the month isn’t necessarily indicative of longer-term delays.
Boeing had just begun to speed deliveries of the 737 following a series of production issues last year, including a snafu involving misdrilled holes on Spirit fuselages that all but halted production in the summer of 2023 and sapped its profits.
Boeing booked a net loss of $2.2 billion in the first nine months of 2023 on about $55.8 billion in revenue. In that period, the manufacturer generated about $1.5 billion in free cash flow, a closely watched measure, toward its full-year target of $3 billion to $5 billion.
Now, the FAA has launched a probe of Boeing’s manufacturing and will not say when grounded Max 9s would be allowed to fly again. This scrutiny may end up delaying the certification of two new jets, the shorter Max 7 and the slightly longer Max 10. Boeing was expecting certification of the planes, both of which are already delayed, early in 2024.
Because of all this, Boeing most likely will not hit its goal of building 57 Max jets per month, a goal set by the company for next year, until the end of 2026 or early 2027.
4th Gear: Ford E-Transits Head To The USPS
Ford E-Transit vans are going postal. You’re about to see a hell of a lot of Ford E-Trainsit vans making mail stops as part of a multimillion-dollar contract with the United States Postal Service. From the Detroit Free Press:
Officials from the federal agency held a ceremony in Atlanta to mark the beginning of a shift to electrification of vehicles used for mail service, spotlighting a newly furnished South Atlanta Sorting and Delivery Center with EV charging stations and an E-Transit battery electric parcel delivery van.
Postmaster General Louis DeJoy and other White House officials discussed progress on EV infrastructure and outlined plans for a more sustainable future through the electrification of the post office’s nationwide fleet, including the purchase of 9,250 Ford E-Transit vans through 2024, the Postal Service said in a news release.
Neither the agency nor Ford revealed the cost. A 2023 E-Transit van, which is built at the Kansas City Assembly Plant in Claycomo, Missouri, has a retail starting price of $45,995 plus taxes and fees. High-volume vehicle purchases typically negotiate prices down from retail cost. These are left-hand drive vehicles, commonly used by mail carriers.
Ford CEO Jim Farley issued this statement, “Our dedicated Ford Pro and E-Transit team are proud to play a role in helping to electrify the largest federal fleet in the country.”
In 2023, the Postal Service said it planned to spend up to $9.6 billion on electric vehicles, and $3 billion of that would come from the Inflation Reduction Act. By 2028, the financial commitment to both EVs and charging infrastructure will result in a total of over 66,200 electric delivery vehicles and the overall acquisition of 106,000 delivery vehicles. Additionally, there is an initial order for 14,000 charging stations around the country.