Auto File: Musk Engages Crisis Mode
23/05/2022 16:40
May 23 - Joe White
Global Autos Correspondent
joe.white@thomsonreuters.com
Greetings from the Motor City!
I took a couple of days off. What could possibly go wrong?
Sure enough...
Today, let’s look at the latest turns in Elon Musk’s
three-ring drama, size up Rivian’s delivery woes and break down
Detroit’s latest strategy for powering up combustion SUV
profits.
Here we go -
* Elon Musk’s Chaotic Twitterverse
The Techno-king of Tesla and the sometime-world’s richest
person never takes a break.
On May 19, Musk tweeted that "Tesla is on my mind 24/7 https://www.reuters.com/markets/europe/tesla-investor-calls-share-buyback-after-musks-twitter-deal-hurts-stocks-2022-05-19
” and accompanied that message with an image of a young man
ogling a woman in a red dress while his girlfriend looks
disgusted.
That same day, he denounced as "utterly untrue" https://www.reuters.com/world/us/musk-denies-he-sexually-harassed-flight-attendant-private-jet-2022-05-20
claims in a news report that he sexually harassed a flight
attendant on a private jet in 2016. Again on Twitter, he made a
ribald joke about the uproar https://twitter.com/elonmusk/status/1527525498460508160,
declared he intended to vote Republican and then flew off to
Sao Paolo to meet with Brazil’s President Jair Bolsonaro https://www.reuters.com/world/americas/elon-musk-meet-with-brazils-bolsonaro-says-report-2022-05-20.
Since Friday, Musk’s jet has traveled https://twitter.com/ElonJet
to Brazil, Houston, Austin, Hawthorne, California and, as of
this morning, was back in Austin, according to the Twitter
account @elonjet https://twitter.com/ElonJet/status/1528487009144254464
which tracks the public records of the aircraft’s journeys.
During all this, Musk and his advisers continued their war
with Twitter https://www.reuters.com/markets/europe/do-claims-against-musk-raise-legal-issue-his-companies-twitter-deal-2022-05-23
over how much of the company’s traffic is generated by
automated spam accounts.
Musk has made clear his goal is to get a lower price for the
social media company than the $44 billion he agreed to on April
25, when Tesla’s share price was about 33% higher than it was at
today’s open. Twitter is just as adamant that the deal will go
through at the agreed price.
Yes, what about Tesla? The world’s leading electric car
company has lost 46% of its value from its 52-week high -
shedding roughly $580 billion in market value.
S&P Global last week dropped Tesla from its ESG Index https://www.reuters.com/business/sustainable-business/tesla-removed-sp-500-esg-index-autopilot-discrimination-concerns-2022-05-18
- used by investment funds that want to put money into
companies with superior scores on environment, social issues and
corporate governance. S&P officials said Tesla’s scores had
slipped on concerns https://www.reuters.com/business/sustainable-business/musks-esg-attack-spotlights-35-trillion-industry-confusion-2022-05-20
about its handling of claims of workplace racial discrimination
and vehicle safety probes. Musk raged that ESG investing is a
scam.
Also, out of the blue, Musk tweeted that Tesla is “building
a hardcore litigation department” https://twitter.com/elonmusk/status/1527748229470646272
that will report to him, and “initiate & execute lawsuits.”
There was good news from China for Tesla shareholders today:
The company is planning to restore production at its largest
assembly plant to pre-pandemic levels by Tuesday, Reuters
reported. https://www.reuters.com/business/autos-transportation/tesla-plans-ramp-up-pre-lockdown-output-shanghai-by-tues-memo-2022-05-23
The headlines about Tesla come with risks, especially for a
company that has built its brand image https://www.reuters.com/technology/tesla-brand-threatened-by-musk-harassment-claim-criticism-democrats-2022-05-20
on environmentally progressive innovation. Ask Detroit’s
automakers how difficult it can be to repair damage to a
corporate reputation https://www.reuters.com/business/autos-transportation/ford-recalls-39000-us-suvs-after-engine-fire-reports-2022-05-19.
* Can Rivian deliver?
Rivian is rebuilding its ordering and customer delivery
system https://www.reuters.com/business/autos-transportation/ev-maker-rivian-delivery-headache-hits-market-shuts-down-coffers-2022-05-23
to deal with its supply chain problems. That effort comes at
some cost to customer satisfaction as people who ordered Rivian
electric trucks and SUVs months ago see others behind them in
line get vehicles while they wait.
Rivian’s struggle to match customer orders to what can be
built with the parts available illustrates the pressure all of
the post-Tesla crop of EV startups face. Investors have largely
shut off the funding faucets, except at high prices. The costs
of ramping to sustainable mass production are soaring. Investors
and analysts agree that Rivian is one of the best of the EV
companies to go public during the past two years. And yet its
shares are down 72% since January.
* Detroit’s SUV Adventures
Someday, Ford aims to be a leading seller of electric
vehicles https://s23.q4cdn.com/799033206/files/doc_presentations/2021/05/Delivering-Ford-Presentation.pdf.
But right now, Ford is expanding its lineup of
combustion-powered SUVs to cash in on consumer demand for
vehicles outfitted for wilderness adventures somewhere west of
Laramie https://www.thehenryford.org/collections-and-research/digital-collections/artifact/240458.
Ford is promoting new “Timberline” versions of its
Expedition and Explorer SUVs https://media.ford.com/content/fordmedia/fna/us/en/products/crossovers---suvs/expedition/2022-expedition.html.
The Timberline Expeditions come with off-road ready hardware
such as a “Trail Turn Assist” for negotiating tight corners
between rocks, four-wheel drive systems with seven different
drive modes and underbody armor borrowed from the Ford F-150
Raptor offroad pickup.
Ford managers say the target customers for the new
Timberline models are Gen X’ers and Millennials. Wait! Weren’t
Millennials going to be the generation that did not own cars? https://www.smartcitiesdive.com/ex/sustainablecitiescollective/new-study-millennials-prefer-car-access-over-ownership/32723
Never mind. Millennials now represent 28% of the customers
buying large SUVs, said Ford Expedition brand manager Devin
McParlane.
Not to be left out, Stellantis has two new large Jeep SUVs
ramping up this year: The Wagoneer and the Grand Wagoneer.
General Motors has been less overt than its cross-town
rivals about jumping on the off-road adventure bandwagon
alongside Ford’s Bronco brand and the Jeep lineup. But the GMC
Hummer EV with its crab-walking mode and insane Watts to Freedom
(WTF) acceleration is a big step in that direction.
What’s behind all this Westward-ho marketing? Here’s a
clue: An Expedition Timberline has a sticker price of just over
$77,370, excluding freight. A regular Expedition starts at
$52,620.
* America becomes Havana
The average sedan or compact car on the road in the United
States is now 13.1 years old https://www.reuters.com/business/autos-transportation/average-age-us-cars-hits-record-high-due-tight-supplies-report-2022-05-23,
a new record, according to S&P Global. Light trucks on the road
are younger, but still hoary at an average age of 11.6 years.
Overall, the U.S. car and light truck fleet is a record 12.2
years old, up from 10.9 years in 2011.
S&P Global said the supply chain crunch and resulting price
spikes for used and new vehicles have led consumers to hang on
to vehicles longer. The pandemic also pushed many people to
ditch public transportation and rely on old vehicles instead.
S&P predicted a “notable increase in repair revenue” as
drivers try to keep their clunkers on the road.
* Automakers become energy companies
BMW said it is exploring investments in solar, geothermal
and hydrogen https://www.reuters.com/business/sustainable-business/bmw-exploring-energy-investments-reduce-dependence-natural-gas-2022-05-23
to replace natural gas as a source of energy for its
operations. The company’s production chief said BMW has to
diversify to blunt the risk that Russia will cut off natural gas
supplies to Western Europe.
Tesla early on took the view that it was an energy company
as well as an automaker. The Ukraine war and investor pressure
to cut climate emissions are leading rivals to dig deeper into
their own energy supply chains.
* Daimler Truck expands its battery drive
Daimler Truck said it will buy 9% of battery production
equipment maker Manz. https://uk.sports.yahoo.com/news/daimler-truck-9-stake-germanys-105454256.html
As part of the deal, Manz will build a pilot production system
for batteries Daimler will use in electric trucks.
Why does it matter? Because in these times of scarcity,
securing access to the sophisticated equipment needed to build
EV batteries is just as critical as locking down supplies of
lithium and other raw materials.
* Hyundai, Biden and unions
During a visit by U.S. President Joe Biden to Seoul, South
Korean automaker Hyundai promised to invest more than $10
billion in the United States by 2025 https://www.reuters.com/business/autos-transportation/hyundai-motor-group-invest-5-billion-us-through-2025-2022-05-22
to build a new EV factory and invest in other transportation
projects such as flying cars.
Hyundai clearly hopes to benefit as the U.S. tries to build
ties with Asian economies https://www.reuters.com/breakingviews/us-china-divide-creates-fast-lane-hyundai-2022-05-23
outside of China.
One off note: The new EV plant will go to Georgia, a state
where unions are weak. Biden pitched Hyundai Chairman Euisun
Chung on the benefits of collective bargaining. Chung did not
reply.
* Tiny EVs for Japan
Alliance partners Nissan and Mitsubishi said they will
develop electric versions https://www.reuters.com/business/autos-transportation/nissan-mitsubishi-motors-unveil-light-evs-japan-2022-05-20
of the micro-compact kei cars that account for about 40% of the
Japanese market. Tiny, inexpensive “city cars” have not caught
on in the United States, but automakers are betting that
electric micro-cars could be viable in Asia’s congested cities