Good morning! It’s Thursday, February 8, 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: Tesla Is Hurting In Korea
Tesla managed to sell just one of its cars in South Korea in January as it deals with a number of issues, from safety concerns to price and a lack of the charging infrastructure that has made it such a hit in other parts of the world. All of these problems have weighed heavily on demand. From Bloomberg:
The company’s sale of a solitary Model Y SUV was its worst month since July 2022, when the Austin, Texas-based automaker sold no vehicles at all, according to data from Seoul-based researcher Carisyou and the Korean trade ministry. Across all carmakers, the number of new EVs registered in Korea fell 80% in January from December, Carisyou data show.
Carmakers are facing a slowdown in enthusiasm for EVs in South Korea as higher interest rates and inflation prompt consumers to rein in spending, while concerns about battery fires and a dearth of fast chargers are also damping demand. Tesla’s low-selling January marks a major shift for the brand as its China-made Model Y was one of the top sellers ast year.
Many early adopters have already bought EVs and mass-market consumers aren’t looking to purchase yet, according to Lee Hang-Koo, head of the Jeonbuk Institute of Automotive Convergence Technology. Tesla’s popularity is also hurt by its links to China, he said.
“Most Koreans who wanted to buy Tesla’s cars have bought one,” Lee said. “Some people don’t like Tesla recently after finding some of them are made in China,” with consumers concerned about the quality of manufacturing, he said.
Another factor in all of this is strong seasonal swings in demand in Korea. Apparently, many folks avoid buying vehicles in January because they’re waiting to see if the government announces subsidies.
In a statement to Bloomberg News, a spokesperson for Tesla in Korea said consumers delayed EV purchases before the confirmation of subsidies.
Tesla faces headwinds there, too. In July 2023, the company set the selling price of the Chinese-made Model Y at 56,990,000 won ($43,000), bringing it under the threshold of 57 million won that allows cars to qualify for a full government subsidy.
In the plan for 2024, announced Tuesday, the level has been lowered to 55 million won, reducing the subsidy for Tesla’s Model Y by half.
Listen, I know there are clearly reasons why Tesla sold barely any cars in January, but selling just one is wild. That’s only one more car than I sold in South Korea last month.
2nd Gear: The UAW Is Coming For Volkswagen
The United Auto Workers union has signed up a majority of workers at Volkswagen’s Chattanooga, Tennessee plant to join the union and once again make Volkswagen the people’s car.
The good news for labor rights comes less than two months after the UAW said 30 percent of VW workers at the plant had signed union authorization cards. The German automaker’s only U.S. plant employs about 5,500 people who build the ID.4, Atlas and Atlas Cross Sport. From The Detroit News:
Tuesday’s news marks the first time the UAW has announced majority support at a non-union auto plant, according to the union. The UAW launched a campaign to organize non-union automakers after negotiating record contracts with Detroit Three automakers last year.
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Zach Costello, a Volkswagen worker and trainer, said in a statement that “the excitement has been building, and now that we have reached 50%, it is just continuing to grow. New organizers are joining each day spreading our effort to every area of the plant. Just because we are in the South, it does not mean that our work is worth less, that our benefits should be diminished, or that we don’t have rights. All workers should have a voice, and I hope the success that we’re having here is showing workers across the country what is possible.”
“A clear majority” of about 4,100 hourly employees at the Chattanooga plant have signed cards to join the UAW, the union said.
When 50% of workers sign authorization cards at a plant, the UAW has said it will hold a rally there. At 70% support, the UAW would demand recognition from the company, or request a National Labor Relations Board election. The threshold needed to be able to pursue an NLRB election is 30%.
The union has not asked the company to recognize it yet and it has not filed to have an election.
“We respect our workers’ right to decide the question of union representation,” Michael W. Lowder, a VW spokesperson, said in a statement. “And we remain committed to providing accurate information that helps inform them of their rights and choices.”
This isn’t the first time the UAW has tried to organize the VW plant. Back in 2019, a much different world, VW workers at the plant voted 51.8 percent against union representation. The outlet reports there was a narrow defeat back in 2014 as well.
“We realized that the working conditions could be a lot better,” said Victor Vaughn, a logistics team member at Volkswagen, in a statement. “And the employees, we don’t have a say in any of the decisions that are going on within the plant. We’re not being recognized as a major resource for the company. We have a very important job, to put a vehicle on the road that our families are buying, that our kids are riding in. We take pride in what we do, but we don’t have a voice in how we operate. That’s why we’re taking the lead.”
Go get ‘em, folks. Workers’ rights for all!
3rd Gear: Honda Quarterly Profits Rise 35 Percent
Honda’s profit jumped by 35 percent in the latest quarter thanks to a big boom in North America where it saw a mix of higher-margin vehicles like hybrids boost its bottom line. The news prompted Honda to raise its forecast for record operating profit this fiscal year.
Total vehicle deliveries in North America, Honda’s second-largest market, rose 36 percent to 433,000 vehicles. Asian sales increased 17 percent to 518,000 vehicles, and Europe added 7,000 deliveries to reach 25,000 vehicles in the first three months of the fiscal year. From Automotive News:
Operating profit at Japan’s No. 2 automaker increased 35 percent to ¥379.8 billion ($2.69 billion) in the company’s fiscal third quarter ended Dec. 31, compared with $1.99 billion a year earlier, Honda said in its financial report Thursday.
Revenue advanced 21 percent to $38.23 billion in the three-month period, while global sales increased 24 percent to 1.2 million vehicles in the quarter.
Honda is feeding pent-up demand as the global semiconductor shortage fades. The company’s focus on gasoline-electric hybrids is also stoking profits.
Hybrid demand in the critical U.S. market is on the rise, CFO Eiji Fujimura said. That buttresses earnings because hybrids command relatively higher margins and also require fewer incentives.
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Honda raised its fiscal year operating profit outlook, because of beneficial foreign exchange rates and better cost containment.
The Japanese yen’s weakening against the dollar and other currencies boosts the value of overseas revenues repatriated back home.
Honda now expects its operating profit to jump 60 percent to a record $8.87 billion in the current fiscal year that ends on March 31. Additionally, it expects to sell 4.1 million vehicles worldwide in the same fiscal year. That’s an 11 percent increase over the previous year’s 3.7 million sales. Not too shabby, Honda. Not too shabby.
4th Gear: McLaren Is Looking For Money
The sovereign wealth fund that is propping up McLaren is looking for new investors to help fund the British supercar maker’s growth. From Bloomberg:
McLaren’s controlling shareholder, Bahrain’s Mumtalakat Holding Co., has been considering bringing in additional investors who can provide capital and technological expertise, the people said. It’s seeking funds to help develop McLaren’s technology and bring it into new markets, according to the people.
They have approached potential investors including Chinese carmakers, the people said, asking not to be identified because the information is private.
Deliberations are at an early stage, and there’s no certainty they will lead to a deal. Representatives for McLaren and Mumtalakat declined to comment.
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Cash-strapped McLaren has had to tap investors for cash on multiple occasions and sold some of its heritage car collection to Mumtalakat in 2022. Late last year, its shareholders backed a full recapitalization and pledged to introduce a simpler share structure and help the automaker expand into new markets.
McLaren Automotive had about $69 million of cash and undrawn liquidity lines at the end of September 2023. It also has about $651 million of net debt.