Auto File-Detroit’s Labor Fight Meets Campaign 2024

AutoNation

27/09/2023 15:30

Sept 27 - 
Joe White
Global Autos Correspondent
     
Greetings from the Motor City!  
 
We’ve had a busy couple of days here in Detroit, the new
official epicenter of the 2024 U.S. election campaign.  
 
The president of the United States flew in Tuesday to show
support for striking auto workers. The leading Republican
candidate to take Joe Biden’s job will be in Michigan tonight.
Everyone’s singing “Can’t forget the Motor City!”  
 
We’ve got more, including a look under the hood of the
dysfunctional U.S. electric vehicle (EV) market, and a big move
by Toyota to seize ground in India. 
 
One more thing: Reuters has a new newsletter I think you'd like.
The Reuters One Essential Read will offer a daily recommendation
on the best of our journalism, with news, photos, videos and
graphics that you cannot find anywhere else. It's coming in
October and I've signed up. I hope you do too. 
 
And now, on with the show. 
 
Today – 
 
    * The UAW gets a Presidential endorsement 
    *         Tesla’s U.S. rivals are fighting for scraps  
    * Toyota triples down in India 

 
The UAW’s Big Political Win 
United Auto Workers (UAW) President Shawn Fain’s campaign for
record contracts with the Detroit Three hit a high point Tuesday
when U.S. President Joe Biden joined a union picket line near
Detroit. Biden – who wants but does not have the UAW’s official
endorsement - declared through a bullhorn that auto workers
deserve “a helluva lot more than what you're getting paid now”
and expressed support for the union’s push for a 40% raise. 
    
    Ford, the de facto lead company in the ongoing bargaining,
replied that “Ford and the UAW are going to be the ones to solve
this,” in a statement headlined: “Response to Politician
Involvement in Negotiations.” 
 
Needless to say, the Detroit automakers do not welcome
“politician involvement” in the bargaining with the UAW. But
they’re going to get it, with more to come from Donald Trump
this evening.  
 
Politicians claim a seat at the bargaining table on the grounds
that they are authorizing billions in tax-funded subsidies for
the EV transition. Plus, auto workers’ votes could decide the
outcome of the 2024 presidential contest as well as races for
Congress and other offices. Polls show more public support for
the UAW than for the auto companies.  
 
Meanwhile, Tesla CEO Elon Musk piped up to say that the UAW’s
demands are a “sure way” to drive the Detroit Three “bankrupt in
the fast lane.”  
 
Musk has fought UAW efforts to organize Tesla factories, and now
enjoys a roughly $15 per hour labor cost advantage over Ford, GM
and Stellantis. And that’s before factoring in Tesla’s lead in
labor-saving manufacturing automation.  
 
Essential Reading 
    * Why Americans are angry about the economy 

    * High interest rates aren’t killing car sales, yet 
    * The UK veers from ICE ban to new oil plans 

 
The Unsustainable U.S. EV market  
Demand for EVs grew to nearly 9% of total U.S. vehicle sales
during the first half of this year, but the U.S. EV market is
still a shakeout waiting to happen, according to a Reuters
analysis of new industry data. 
 
New sales data show that the U.S. EV segment is a lopsided,
unstable structure. Tesla is outselling the No. 2 EV brand,
Chevrolet, by more than ten to one. Chevy’s one EV is the aging
Bolt, soon to go out of production. 
 
The Alliance for Automotive Innovation, an industry trade group,
counts 103 electric and plug-in models available in the U.S.
market.  
 
Of those, only the Tesla Model 3 and Model Y are on track to
sell more than 100,000 each this year – enough to support a
full-size assembly plant, according to S&P Global data. Most of
the rest are scrapping for tiny slices of the market that offer
insufficient economies of scale. 
 
The Alliance raises another challenge: The ratio of EVs on the
road to public EV charging stations is going in the wrong
direction. The group’s latest EV market report says 49 new EVs
were put on the road for every new charging port activated
during the second quarter. The Alliance sees seven EVs per
charger as an ideal ratio. The U.S. is currently at 26 to 1 –
worse in many heartland states.  
 
Barring a surge in demand, and a significant loss of share by
Tesla, scores of EV models will not sell enough to be
profitable. That’s one reason among many why Ford is hitting the
brakes on a plan to build a $3.5 billion battery plant in
Michigan.  
 
Toyota goes bigger in India 
Toyota plans to build a third assembly plant in India, boosting
its capacity in the world’s most populous country by 30%,
Reuters reports. 
 
Toyota’s sales in India have grown thanks to a partnership with
Japanese automaker Suzuki, long a strong presence in India.
Toyota’s success in India is timely: The world’s largest
automaker by sales is struggling in China, along with other
foreign automakers.  
 
The EU-China EV fight will go beyond EVs 
China’s commerce minister warned his EU counterparts to back off
their threats to levy tariffs on Chinese-made EVs shipped to
Europe, or risk broader damage to EU-China ties. 
 
The comments made more explicit the risk of Chinese retaliation
that concerns German automakers and some German government
officials. Germany AG has plenty of concerns about China –
including worries about intellectual property. But German
automakers fear a European “decoupling” from China’s lucrative
market. 
 
Tesla is at risk of getting caught in the crossfire. A senior EU
official told the Financial Times that Chinese-made Teslas and
Chinese-made vehicles of other Western brands imported to Europe
would also be investigated for unfair pricing. 
 
Fast Laps 
Renault has ended its common purchasing partnerships with Nissan
and Mitsubishi, another step in unwinding the Alliance among the
three automakers. 
 
Pendragon, a British auto retail group, is now the prize in a
bidding war. AutoNation, one of the largest U.S. auto dealer
groups, is offering $544 million, trying to outbid U.S. rival
Penske Automotive Group and its partner Hedin Mobility Group. 
 
French EV subsidies are propelling a venture by British EV
supplier Bedeo to convert thousands of diesel vans to
hybrid-electric powertrains. 
 
Hyundai and Kia recalled 3.37 million vehicles in the United
States to fix defects linked to 31 fires.  
 
U.S. consumers bought more vehicles in September than a year
ago, according to Cox Automotive, another sign that the economy
is chugging along despite the Fed’s run of interest rate
increases. Cox plussed up its forecast for the year, predicting
U.S. auto sales will finish at 15.3 million to 15.4 million cars
and light trucks, not 15 million as forecast earlier.  
 
Fisker is accelerating deliveries of its Ocean electric SUVs to
300 vehicles a day later this year. The company said it has
built 5,000 Oceans, but so far delivered just 900. Fisker shares
popped in response to the release.  
 
Volkswagen cut production of two of its lower-priced EVs in
Europe blaming slow sales. The ID.3 and Seat Cupra models are
among the European-assembled models under pressure from Tesla
and Chinese EV imports. 
 
Faraday Future shares plunged after the struggling EV startup
said it will raise another $90 million through a stock offering.
That’s nearly double the company’s current market cap. 
 
An EV solar charging subsidy offered by a state-owned German
bank was over-subscribed and shut down to new customers after
just one day. The program offered 10,200 euros to customers who
agreed to install solar charging systems for their EVs. 
     
Auto File is published on Mondays, Wednesdays and Fridays. Think
your friend or colleague should know about us? Forward this
newsletter to them. They can also subscribe here.

 (Editing by Mark Potter)