Auto File-Carlos’ speedy exit

Nippon Life India Asset Management

03/12/2024 16:00

Dec 3 - 
By Nick Carey, European Autos Correspondent 
Greetings from London! 
A winter of discontent for the car industry is beginning to look
ever more likely, especially in Europe, thanks to weak EV demand
and rising Chinese competition.  
Just in the last week, Stellantis said it will close its
Vauxhall van plant in Britain, German supplier Schaeffler said
it will close plants in Austria and Britain, and sources told
Reuters that French auto supplier Valeo will cut around 1,000
jobs in Europe. Coming on top of recent job cut announcements
from Ford and Nissan, the outlook right now isn’t pretty.   
Auto industry executives are now nervously watching to see if
America is next once Donald Trump takes office in January.
Mexico’s government has warned that the 25% tariff Trump
promises on Mexican goods could kill 400,000 U.S. jobs.  
That and his threat to axe a $7,500 U.S. EV subsidy could mean
pain in particular for No. 1 U.S. automaker General Motors as it
is reliant on Mexico and Canada for parts and has bet heavily on
EVs. 
Which brings us to today’s Auto File… 
    * Carlos hits the road  

    * Volkswagen’s industrial strife  

    * Britain taps the EV brakes  

 
Carlos makes a fast exit  
This year has not turned out the way Carlos Tavares expected.
After a major profit warning at the end of September, the once
untouchable CEO of Stellantis had declared he would retire at
the end of his contract in early 2026 after fixing the company’s
inventory disaster in the United States. 
That proved too long for the world’s No. 4 automaker, which
abruptly announced Tavares’ resignation on Sunday. Tavares has
waxed lyrical often about the Darwinian age the auto industry is
in, though perhaps he did not think at the time that it would
cost him his own job. 
The news of his ouster sparked a fresh sell-off of the company’s
shares, as it heralds a period of prolonged uncertainty while
the company is led by an executive committee until a new CEO is
chosen in the first half of 2025.  
In an unusually frank message to employees, Stellantis chairman
John Elkann said Tavares and the company’s board had fallen out
over what was in the automaker’s best long-term interest. 
The new CEO will have to reset Stellantis’ U.S. business, which
was its profit driver but where dealers complain that Tavares
priced the company’s cars out of the market. 
Tavares had insisted that Stellantis’ problems were a purely
regional matter, but as my Reuters colleagues Giulio Piovaccari,
Alessandro Parodi and Inti Landauro have reported, Stellantis
has also lost market share in Europe by raising its prices
beyond what customers are willing to pay. You can read about
that here. 
 
Recommended reading: 
    * Trump still opposes Nippon-U.S. Steel deal 

    * India to sweeten EV offers to automakers 

    *         Trump tariffs costly for carmakers, S&P says 

 
Volkswagen and German union face off 
As soon as Volkswagen announced back in September that it may
have to close plants in Germany to cut costs, the powerful IG
Metall union promised that meant a fight.  
The union followed through on that promise on Monday, with
workers at nine VW car and component plants across Germany
holding two-hour strikes, bringing assembly lines to a halt. 
Almost 100,000 workers joined those strikes, the union said. 
The union has threatened that the strikes could escalate into
24-hour or unlimited stoppages unless a deal is struck in the
next round of wage negotiations. This would reduce Volkswagen's
output, adding to the impact of declining
deliveries and plunging profit.  
Volkswagen said it respected the workers' right to strike and
had taken steps to ensure a basic level of supplies to minimize
the strike's impact. 
The union last week proposed measures it said would save 1.5
billion euros ($1.6 billion), including forgoing bonuses for
2025 and 2026, but management has dismissed those as
unrealistic. 
With both sides digging in, this fight could last quite a while
yet. 
 
Britain inches away from EV mandate 
For much of this year, much of Britain’s car industry has been
jumping up and down about the zero emission vehicle (ZEV)
mandate put in place by the previous Conservative government,
arguing that its targets were impossible to meet and would cost
automakers billions. 
After a drumbeat of bad news including the closure of
Stellantis’ Vauxhall plant and Ford cutting Ford jobs, the
current Labour government relented and said it would reconsider
the rules.  
Unlike the European Union’s CO2 emissions targets, which
automakers can hit by selling a mixture of hybrids and EVs,
Britain mandated that automakers sell a minimum percentage of
fully electric cars or face fines of 15,000 pounds per
non-compliant vehicle sold. 
EVs have to make up 22% of an automaker's new car sales in 2024,
rising to 80% in 2030. 
But the industry forecasts EVs will make up only 18.7% of
overall sales this year. 
Automakers had warned they would have to pay out nearly 6
billion pounds in discounts and compliance costs to meet the
2024 mandate and kept up a steady stream of complaints that
eventually the government could not longer ignore. 
 
Musk’s payday postponed 
Elon Musk’s $56 billion compensation package drama was rekindled
this week as Delaware judge Chancellor Kathaleen McCormick of
the Court of Chancery ruled that Tesla CEO’s is not entitled to
receive the payout despite shareholders voting in June to
reinstate it. 
The ruling follows the judge’s January decision that called the
pay package excessive and rescinded it, surprising investors,
and casting uncertainty over Musk's future at Tesla. 
Tesla now has to weigh its options for how to proceed, as Musk
has threatened he could develop products outside the company if
he doesn’t get his money. Some of those options are tricky and
expensive. 
The company could appeal, which could take a year. It could
craft a new pay plan, but that would be expensive. And
reinstating the old plan would force Tesla to take a $25 billion
charge. 
But given the size of the payout, Musk’s payday drama is clearly
far from over. 
 
Fast Laps 
Nissan said its global production fell for a fifth straight
month in October, led by downshifts at most of its manufacturing
hubs except for Mexico. 
Toyota’s global output dropped for a ninth consecutive month in
October, dragged lower by big falls in U.S. and Chinese
production. 
Chinese automaker BYD is asking its suppliers to lower their
prices, in a sign that a brutal ongoing price war in the world's
largest auto market is set to escalate. 
General Motors will sell its stake in its joint venture battery
plant in Lansing, Michigan, to partner LG Energy Solution as the
Detroit automaker cuts back on its EV plans. 
China's Baidu has received a license to test autonomous vehicles
with its Apollo Go robotaxi service in Hong Kong as it expands
its footprint outside the Chinese mainland. 

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 (Editing by Mark Potter)