Auto File: GM and Ford Tap the Brakes

GS Yuasa

23/01/2023 16:00

Jan 23 - 
    Joe White 
    Global Autos Correspondent 
    Greetings from the Motor City!  
It finally looks like winter here in Detroit. We have snow on
the ground for the first time in weeks - and it’s cold.  
It’s the appropriate climate to usher in the season for
forecasting 2023 results. Because as we’ll see today, the chill
is reaching into automakers’ executive suites and board rooms.
The auto industry is going through a once-in-a-century
revolution, but some things don’t change. When economic winds
blow heavy, automakers cut spending.  
Today, we’ll look at GM’s decision to call off a big battery
investment, Ford’s staff cuts in Germany and Geely’s latest move
to expand its EV footprint in Europe.  
        * GM invests in V8s, shelves a battery plant 
    General Motors has shelved, for now, plans to build a fourth
U.S. EV battery plant with partner LG Energy Solutions. 
News of the decision to slow investment in EV battery production
broke the same day that GM announced plans to invest $854
million to retool plants in Flint, Mich., New York state and
Ohio to build the sixth generation of the automaker’s small
block V-8 - the latest iteration of a combustion engine family
that goes back to the 1950s. 
What gives? GM isn’t saying. But the decisions point to these
factors:  
    * GM makes most of its global profits from sales of V-8
powered
pickup trucks and SUVs in the United States. Keeping that
franchise going as fuel economy and emissions standards tighten
over the next decade is critical.  
    * The outlook for electric vehicle sales in the United
States over
the next decade is uncertain. Many forecasters and analysts
predict U.S. EV demand will fall short of capacity over the next
several years. The price war Tesla began this month could be a
preview of coming attractions as scores of new EV models fight
for market and mind share.  
    * GM and LG already have three U.S. battery factories to
launch –
and those launches so far are going more slowly than GM
anticipated. As GM reviews spending heading into a possible
recession, putting off another $2 billion + battery investment
until the first three plants are shaken down looks prudent. 
    * Battery technology is shifting fast. GM’s first three
Ultium
battery plants are designed to produce nickel-cobalt batteries.
But Ford and other manufacturers are turning to less costly
lithium-iron chemistries. Solid state batteries are supposed to
be just around the corner, and GM is investing in startups
exploring other alternative chemistries. 

        * Ford cuts jobs in Germany 
Ford is slashing several thousand product development jobs in
Germany, and Germany’s IG Metall union is promising a fight. 
Ford CEO Jim Farley has been warning that the shift to EVs would
result in job cuts and restructuring across the company. Ford
last August outlined plans to cut 3,000 jobs from its North
American and Indian staffs.  
Now, Ford is planning to cut as much as 65% of its German
product engineering staff, shifting work to the United States,
union leaders said.   
The cuts throw more shade on the future of Ford’s EV
collaboration with Volkswagen. Ford executives have signaled
they believe they have a competitive software and electronics
architecture locked in for future EVs – whereas VW is rebooting
its software strategy.  
Ford reports 2022 financial results on Feb. 2. 
        * Geely wants more from its London cab company 
The London Electric Vehicle Company up until now has been a
niche manufacturer of purpose-built black hybrid taxis for the
London metropolitan area. 
Owner Geely now has bigger plans in store for LEVC, Reuters
reports. Geely wants LEVC to build a broader portfolio of EVs,
taking advantage of technology developed for the Chinese
automaker’s other brands – Volvo, Polestar and Zeekr. 
Geely is also investing heavily to expand the breadth of the
British Lotus brand. 
        * Suppliers race for the EV gold 
“Vertical integration” are magic words for automakers trying to
cut the costs of EV technology. Big automakers say they want to
build batteries and develop electrical and software
architectures in-house – like Tesla! – to control costs and
valuable data. 
But suppliers are betting there’s room for them to profit in a
world where $1.2 trillion is being invested in EV development.
Will big automakers always have the best EV wiring systems or
want to hire engineers to focus on nanotechnology coatings?  
        * Musk in the hot seat 
Elon Musk heads back to the witness stand in a federal court
today to explain why he tweeted that he had funding secured for
a Tesla LBO in 2018 when he did not. 
On Wednesday, Musk will be in the hot seat again, assuming he
appears on Tesla’s Q4 results call. Musk will be asked to
explain how he sees the EV price war he started playing out –
and for an update on the long-delayed Cybertruck launch.  
    Early indications are the price cuts are juicing demand. 
Other questions could include how much longer he expects to be
CEO of both Tesla and Twitter, and whether he intends to sell
any more Tesla stock to fund that adventure. The Wall Street
Journal raised questions about the timing of Musk’s Tesla share
sales ahead of disappointing Q4 production figures. 
Musk and Tesla’s board are getting heat from big shareholders on
both the Twitter and the share selling issues. Ross Gerber, head
of the Gerber Kawasaki investment fund and a prominent Tesla
bull, used his annual meeting with his investors to chastise
Musk for an “absolute conflict of interest” in holding the two
CEO jobs. 
Will Musk address the scope of the role given to Tom Zhu? Zhu
now oversees Tesla’s production in the U.S., while continuing
his role as head of China operations. 
        * Beware the car buying 'nomads' 
U.S. consumers who buy a certain brand of vehicle for the first
time are more likely to switch brands the next time they buy
than at any time in the past decade, according to new data from
S&P Global Mobility. 
Among brands with a high ratio of “one-and-done” buyers: Ram,
Dodge, Volkswagen and Audi, S&P Global found. The brand
capturing the highest share of brand nomads...? One guess.
Starts with T. 
        * Honda battery deal 
Honda and Japanese battery maker GS Yuasa said they will
collaborate on high-output lithium ion batteries. 
        * No more ICE trucks for Europe? 
The Netherlands, Belgium, Denmark and Luxembourg want the
European Union to set a deadline for phasing out combustion
commercial trucks. Note the absence of Germany from the list. 
        * Black ink at Jaguar 
The rising tide of demand for luxury vehicles is finally lifting
Jaguar Land Rover. The British brands owned by India’s Tata said
they expect more than 400 million GBP in free cash flow for the
latest fiscal quarter. 
        * Essential Reading 
    More people are frustrated with car shopping. 
    Why Ford’s CEO wants to be a racing pro 
    EVs take a bite out of road funding (via Trucks FoT)  
 (Editing by Andrew Heavens)