Auto File -Elon Musk’s Blues, China’s Graphite Squeeze

Nu Ride

20/10/2023 16:13

Oct 20 - 
  
    
Joe White
Global Autos Correspondent
 
Greetings from the Motor City!  
 
Citizens of the World of Cars who planned to work-from-home and
knock off early for the weekend, I’ve got news for you. It’s
going to be a busy day.  
    
 
It looks like Halloween is coming early for the auto industry.
Boo!! There’s a new supply chain threat from China! 
    
 
Yikes! Elon Musk torched more than $70 billion in market value
with his riffs on electric vehicle affordability! 
    
 
General Motors, Ford and Stellantis will be sweating through the
next hours waiting for UAW President Shawn Fain to reveal his
next moves in contract bargaining with the Detroit Three at 4 PM
Eastern Time (2000 GMT) on Friday. Could he spring another nasty
surprise? 
    
 
Before you run for the exit, here’s what’s happening. 
 
    *         China flexes its EV supply chain muscles 

    * Elon Musk hits the brakes 
    * What’s behind the UAW-Detroit Three battery battle 

 
China sends a graphic graphite warning  
    China hit back at U.S. and European Union trade pressures
with a threat to restrict access to Chinese graphite that is
essential for electric vehicle batteries and other high-tech
products. 
 
    China refines 90% of the world’s graphite. Western efforts
to reduce China’s hold on this link in the EV/green technology
supply chain by producing synthetic graphite have so far not
yielded a commercially viable product.   
 
Analysts noted China’s exquisite timing. Even Elon Musk now says
high prices for electric vehicles are slowing demand. A squeeze
on supplies of an essential EV battery ingredient won’t help. 
 
In Europe, the surge in sales of low-cost Chinese built EVs
pushed EU officials to launch an investigation that could lead
to new tariffs – which could make EVs less affordable and hurt
German vehicle exports to China.  
 
In the United States, automakers are cutting EV prices and
production and warning the Biden administration its goals for
accelerating the U.S. market shift to EVs are out of touch with
market reality. 
 
Republican critics of Biden’s EV policies are sounding alarms
about dependence on China for EV technology. A graphite
clampdown by Beijing could be wind beneath their election season
wings. 
    
 
Essential Reading 
    * How Germany companies are tackling China risk 
    *         Tesla shifts out of “ludicrous” mode 
    * UAW strikes haven’t dried up dealer inventory - yet. 

 
Musk hits the brakes and vaporizes $70 billion 
Elon Musk covered a lot of territory in his third quarter call
Wednesday evening. The highlights: 
 
    Tesla is slowing down plans to build a new factory in Mexico
because of uncertainty about the North American EV market’s pace
of growth.  
    
 
    The long-awaited Cybertruck will officially come to market
Nov. 30, Musk said. But ramping up production will take 12 to 18
months, and involve “enormous challenges,” Musk said. Tesla has
1 million orders for the wedge-shaped, stainless steel EV. It
could be four or five years before the holder of order number
1,000,000 gets delivery. 
 
The world’s richest man said he is very worried about the impact
of rising interest rates on consumers living
paycheck-to-paycheck. At times during his investor call, Musk
sounded like he had borrowed a speech from UAW President Shawn
Fain: 
  
    “It's sometimes difficult for people who have high income,
and when I say high, it'd be like someone who's earning over
$200,000 a year, to understand what life is like for someone who
is earning $50,000 or $60,000 or $70,000 a year, which is most
people.” 
 
    Tesla has cut prices for its high-volume Model 3 and Y but
is raising the price of its high-performance Model S Plaid by
5.6% to $94,990.  
 
Wall Street did not like any of this. Tesla shares fell by
nearly 10% on Thursday, losing $70 billion in market value. 
 
Musk’s dour take on the economy created another challenge, on
top of the cost of the UAW strikes, for Ford and General Motors
when those companies report Q3 results and update their
full-year forecasts next week.  
    
    
 
Behind Detroit’s Battery Battle 
UAW President Shawn Fain has scheduled a Facebook Live talk on
Friday “to give bargaining updates from all 3 tables.” The union
has not said if Fain could order another strike.  
 
Economists and suppliers are warning the UAW’s strikes – limited
as they are - threaten the economy and profits across several
global business sectors. 
 
    One of the most difficult issues on the tables at Ford,
General Motors and Stellantis centers on the wages and union
status of workers at EV battery factories owned by legally
separate joint ventures between the automakers and Asian battery
makers.  
 
Under U.S. labor law, the automakers do not have to negotiate
for these separate companies, most of which haven't hired
workers and are not organized by the UAW. In reality, they have
little choice. 
 
At the center of the battery plant bargaining is how much of the
U.S. government subsidies the battery JVs receive will go to
workers, and how much will go to automakers to offset billions
invested in EV capacity and supply chains.  
 
Non-union U.S. battery plant production workers earn up to 50%
less than the current top rate for UAW-Detroit Three assembly
workers. Automakers say they cannot unilaterally pay above
market wages – even with subsidies - and stay competitive with
Tesla and Chinese automakers.  
 
Fain calls that logic a “race to the bottom.” 
 
The UAW is also worried that UAW powertrain jobs will be
switched out over time for non-union battery plant jobs,
diminishing the union’s sway. 
 
UAW and Detroit Three negotiators still have differences over
pay and retirement benefits to resolve.  
 
Ford and GM report third quarter results next week. One betting
line in Detroit is that the UAW will wait until after those
numbers drop to close a deal.  
 
The automakers could also use those calls to amplify their views
that a longer strike puts union jobs at risk, not their EV
plans.  
    
 
Detroit brands can put you in a new car today 
With a few notable exceptions, the UAW strikes have so far had
little impact on availability of Detroit brand vehicles,
according to new data from Cox Automotive. 
 
GM had the leanest inventories among the Detroit Three when the
UAW shut down the factory that builds Chevy Colorado and GMC
Canyon pickups. Inventories of those models are now at a lean 20
to 31 days’ supply, Cox estimates. Ford’s Bronco inventories
have shrunk to 49 days. 
 
But Ford still has 99 to 124 days’ worth of the Ford Explorer
and Lincoln Aviator SUVs built at its Chicago assembly plant,
which went on strike Sept. 29. Stellantis still has 122 days’
worth of Jeep Gladiator pickups in stock more than a month after
workers walked off the job at the Toledo Jeep factory. 
    
    
 
Cruise tackles Tokyo 
General Motors, Honda and GM’s Cruise robo-taxi unit have formed
a venture to bring Cruise’s driverless ride service to Tokyo by
early 2026.  
 
This is a piece of positive news for Cruise as it wrestles with
multiple safety investigations in the United States.  
 
The companies plan to use GM’s Origin multi-passenger robo-taxi
vehicles which have no human controls designed in. All of this
is subject to regulatory approval. Honda invested $2 billion in
Cruise in 2018 and has EV and fuel cell partnerships with GM.   
    
    
 
Europe’s auto recovery plugs in, powers on 
Electric and hybrid vehicle sales just keep on rocking in
Europe. Growth in sales of electrified vehicles outpaced the
overall market and accounted for half of total sales. Overall EU
light vehicle sales rose 9.2% in September. 
    
    
 
Fast Laps 
Stellantis will challenge Ford’s dominance in the U.S. and
European light commercial vehicle markets by packaging its
commercial vehicle operations into a new unit called Pro One. 
If that name seems familiar, it may be because Ford calls its
commercial vehicle unit “Ford Pro.” Some trademark pros are very
likely assessing what to make of that. 
 
Vinfast could raise up to $1 billion under a deal to sell shares
to U.S. hedge fund Yorkville Advisors. The Vietnamese EV
startup’s shares have lost 84% of their value since a meme-stock
style debut in August. Yorkville has come to the aid of other
challenged EV startups including Lordstown Motors (now bankrupt)
and Faraday Future. 
 
Ford is recalling 35,000 Mustang Mach-E electric SUVs to replace
high-voltage connectors that could overheat and cause the
vehicle to lose power. 
 
EV startup e.GO said it plans to go public via a SPAC and use
the funds to build micro factories in the United States and
Europe for its low-cost EVs. Among e.Go’s challenges: Persuading
investors to buy an EV SPAC in 2023 and fending off Chinese EVs
in Europe. 
 
Toyota has joined the list of automakers signing up for Tesla’s
EV charging plug standard, enabling customers to use the Tesla
Supercharger network. 
 
Volta Trucks is searching for a buyer to rescue the electric
commercial truck startup from bankruptcy. 
 
Renault shares tumbled after the company reported a sharp drop
in third quarter sales. 
    
  
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