Auto File: Detroit Strike City!

Forward Industries

08/09/2023 15:40

Joe White
Global Autos Correspondent
    
    
Greetings from the Motor City!
    
     
We live in nervous times. I opened up the Reuters app on my
phone this morning and learned that the United States and China
are working on “killer robots” powered by artificial
intelligence. Do we really need another Terminator movie to
remind everyone what a bad idea this is?
     
Maybe, but we’re not going to get one soon because Hollywood’s
actors and writers are on strike.
     
Strikes are on our minds here in Detroit, too. We are supposed
to be getting excited about the city’s auto show next week.
Instead, the No. 1 story is the threat of a large-scale walkout
by the United Auto Workers in six days that would shut down the
U.S. factories of General Motors, Ford and Stellantis North
America.
     
Before you head out for the weekend – or to buy more Spam and
bourbon for the bunker - we’ll catch you up on the state of play
in Detroit’s labor drama, and more.
     
    Today -
    * The UAW and the Detroit Three play chicken
    *         Tesla rebounds in China
    * Are EV battery prices falling?

     
  
        
  
        
  
    * “Tick tock” in Detroit
  
With less than a week to go before an 11:59 PM EDT Sept. 14
strike deadline, Detroit is staging more drama than Broadway.
     
UAW President Shawn Fain ramped up pressure on the automakers in
a fresh round of video addresses and posts on social media
attacking the Detroit Three. He also threw a punch at the
“corporate media” and analysts fretting that a strike could jack
up car prices.
     
Fain is scheduled to speak again via Facebook Live at 5 PM EDT
Friday. Stellantis’ latest proposal is expected to arrive later
Friday and get tossed in Fain’s trash can.
     
Fain on Thursday called a new contract offer from General Motors
“insulting” and added: “The clock is ticking. Stop wasting our
members’ time. Tick tock.”  Arnold Schwarzenegger couldn’t have
said it better.
     
    Here’s what to watch next week:
     
    * The offers and counter-offers exchanged this week are
close to
irrelevant. The companies are not going to put their final
offers on the table this far ahead of the deadline. The UAW has
no reason to embrace a proposal now – or even a week from now.
Trashing low-ball proposals now helps the UAW president win
ratification for a later, better offer that still does not meet
all the union’s demands.
    
    * The UAW’s decision to rebut the automakers’ proposals
point by
point in public offers insight to the game underway. The
automakers are offering higher pay and a shorter path to top
tier wages – but proposing sharp reductions to profit sharing to
offset that cost. The companies have numbers for what they want
a UAW deal to cost and are presenting that number in different
sized slices. Same as it ever was.
    
    * A strike could be good for both sides – if it doesn’t last
too
long. In the end, both the UAW leadership and the companies need
to show their respective constituencies (union members, Wall
Street) that everything was given on the field.
    
    * The Detroit Three brands – with the notable exception of
Chevrolet - have enough inventory to carry dealers through a two
to four-week strike, according to new calculations by Cox
Automotive. Stellantis dealers have more than 100 days’ worth of
Ram trucks and Jeep SUVs in stock. You could argue that
Stellantis needs a strike to avoid a year-end fire sale.
 
    * Before 1976, UAW walkouts were the norm, not the
exception. (See
this presentation by Chicago Fed advisor Kristin Dziczek.) The
UAW’s 40-day strike against General Motors in 2019 was the
longest walkout against one of the Detroit Three since 1976. In
2007, the UAW struck GM and the former Chrysler for two days and
one day respectively.
 
    * Watch Canada. Unifor, the Canadian auto union, has picked
Ford
to set a contract pattern in bargaining underway in parallel
with the UAW talks. Unifor wants new product investments. Could
the Canadians win at the UAW’s expense?

  
       
    * Essential Reading
  
    * The UAW puts pressure on Biden’s campaign
    *         Apple’s China trouble: A warning to U.S. brands
    * Why automakers won’t get a break from climate pressure

     
  
        
  
    * Tesla doubles down in China
  
    Tesla nearly doubled its share of China’s EV market to 13.2%
in August, and the Model Y was the best-selling vehicle in the
world’s largest market, according to a Reuters analysis of new
China Passenger Car Association data.
     
Overall, China’s vehicle market ticked up, levitated by
price-cutting in the EV segment.
     
  

    * Are battery prices falling?
  
    EV battery prices fell 10% in August and could slide further
as production from new battery factories runs ahead of near-term
demand, according to forecasting firm TrendForce.
     
The race by automakers and battery companies to add new
gigafactories isn’t slowing down. Stellantis said Friday it
plans more battery plants to achieve 400 gWh of in-house
production.
     
A top Rivian executive said the EV truck and SUV company expects
to benefit from falling battery costs.
     

    * Softbank backs AV pioneer Bryan Salesky 
  
    Bryan Salesky and other top executives of failed
self-driving vehicle company Argo AI are back in the game with
funding from Japan’s Softbank. Stack AV, Salesky’s new venture,
will focus on automating trucks. Bloomberg reported Stack raised
$1 billion.
     
    Argo collapsed when Ford and VW withdrew funding.
     
  

    * Fast Laps
  
    - Vinfast Auto’s lofty share price has plummeted 80% during
the past two weeks. The Vietnamese EV startup was briefly worth
more than Ford and GM combined.
     
    - Faraday Future, another struggling EV startup, said it has
detected a “coordinated effort” to undermine its valuation.
FFIE.O shares are down 85% for the year as the company tries to
launch production of its luxury EV and Tesla drives down prices.
     
    - How much China in a supply chain is too much to qualify
for U.S. EV subsidies? Automakers will find out before the end
of the year, the U.S. Treasury said.
     
    - BP expanded its EV charging footprint, opening the UK’s
largest charging hub. BP is one of several oil majors edging
into the EV refueling business. Stay tuned.
     
    - Fisker is slowly ramping production of its Ocean EV,
aiming to hit a 300 vehicle per day pace in Q4.
    
    
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