Good Morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.
1st Gear: The Debates Come To Michigan
No matter which side of the aisle you’re on, you can be forgiven if you’re suffering from a serious case of Debate Fatigue. But the Republican and Democratic candidates will have debates in Detroit and Flint, respectively, in early March, and you can expect some tough questions there about corporate taxes, trade tariffs, jobs moving overseas and other issues that affect the U.S. auto industry.
Does anyone get it right now? Via The Detroit Free Press:
“There is still very poor understanding in both parties of the role of manufacturing and how it functions in our economy,” said David Cole, founder of AutoHarvest, an organization aiming to ease the huge talent gap in manufacturing.
“If they really understood the high economic multiplier associated with manufacturing (meaning that for every job at an auto manufacturer, there are nine other jobs either in suppliers or spin-off jobs created), maybe with these debates, we’ll hear more conversation about it.“
2nd Gear: Crunch Time At Tesla
2016 is going to be a critical year for Tesla Motors. As it seeks to iron out early production issues with the Model X, but has a year to go before the entry-level Model 3 goes on sale, it has to deliver on recent promises to shareholders that a profit will happen. Via Automotive News:
The company expects to deliver 80,000 to 90,000 vehicles for the year, an increase of roughly 60 percent to 80 percent, helping the company avoid a cash crunch even as it invests $1.5 billion in capital projects.
[...] Tesla burned through cash at a rapid rate in 2015 as it built its massive factory for lithium ion batteries in Nevada, ramped up development of the $35,000-and-up Model 3 and expanded the paint shop at its assembly plant in Fremont, Calif.
Losses mounted when manufacturing glitches, some involving simple components such as chrome-plated trim pieces, created delays in the ramp-up for the Model X. Tesla delivered just 208 of the crossovers in the fourth quarter of 2015; by the second quarter of 2016, the company wants to be building 1,000 per week.
“The last several months have been quite excruciating,” said Musk. “Many late nights and weekends. But I think we’re through the woods at this point.”
3rd Gear: Dealers Lukewarm On GM’s Used Car Website
General Motors is starting to dabble in the realm of online-arranged car sales with a new site that lets buyers search for cars that were lease turn-ins, employee vehicle programs and rental car companies. It’s a clever idea, but naturally, the car dealers are quaking in their boots at anything they see as a prospective threat. (It’s the real reason they’ve been up Tesla’s ass so much; they’re scared of where Tesla’s online car sales model could lead.)
From Automotive News:
General Motors’ new Factory Pre-Owned Collection portal, which sells used vehicles directly to consumers, is off to a rocky start. GM dealers nationwide gave it a tepid welcome, with only one in four signing up, and California’s dealer association has challenged the portal’s legality.
The online portal went live Tuesday, Feb. 9. GM says almost 1,100 dealerships have agreed to participate. As of Jan. 1, GM had 4,245 U.S. dealerships.
[...] The letter questions whether the program puts GM in unfair competition with its dealers for used-car sales. It also expresses concerns that GM is engaged in auto brokering — for which GM would need a California license — and that the Kelley Blue Book suggested price that accompanies each vehicle listing is “unrealistic” and “therefore misleading.”
4th Gear: Who Knew What And When About VW’s Diesel Cheating?
A high-ranking employee warned senior Volkswagen (VOWG_p.DE) managers in May 2014 that U.S. regulators might examine car engine software as part of an investigation into pollution levels, two sources familiar with the matter said on Sunday.
The warning came in the form of a letter, which was sent more than a year before the German carmaker’s public admission that its cars had been equipped with software to manipulate emission test results, the sources said, raising questions about how much senior managers knew about the scandal.
The U.S. Justice Department is suing the company for up to $46 billion for alleged violations of environmental law while regulators and prosecutors are looking to establish what role, if any, had been played by senior managers, including former Chief Executive Martin Winterkorn.
What a mess.
5th Gear: The Germans Loosen Up, Kind Of
These tech-y millennials! They all want to wear hoodies and jeans and backwards ball caps to work like their hero Mark Zuckerberg, not suits and ties like on Mad Men. And it’s affecting the auto industry, too, reports Bloomberg:
As digitalization changes the auto industry, dress codes are evolving too, Daimler AG Chief Executive Officer Dieter Zetsche said Thursday. Among the first to abandon the tie, the 62-year-old CEO spoke at a gathering of executives and prospective recruits in slim jeans, a white shirt and jacket — and of course, no neckwear. He put up a slide of Facebook Inc. CEO Mark Zuckerberg in his trademark hoodie with plastic Adidas sandals.
“You do see this more often at our factory in Sindelfingen, too,” Zetsche said, referring to the century-old plant that makes Mercedes-Benz’s flagship S-Class sedan.
Zetsche isn’t alone in loosening up. The sartorial signifier of seriousness is rapidly disappearing from the collars of the leaders of German companies steeped in tradition, from Volkswagen AG to Robert Bosch GmbH and Siemens AG. The subtext is that Germany’s manufacturers are racing to show they can adapt to the digital world reshaping the way they do business.
Reverse: Dale Sr. At The Daytona 500