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: Tesla Gets That Money
Of course Tesla needs cash. Who doesn’t! But Tesla has huge ambitious plans just up ahead, like the Gigafactory, the Model 3 and a production target of 500,000 cars annually by the end of 2018. And it blasted through more than $600 million of cash in the first half of this year.
So Tesla just took out a $300 million credit line from Deutsche Bank for its for its vehicle leasing program, reports Reuters. This is hardly a rare move by any automaker or company, but it does raise the point of Tesla’s cash crunch at the moment:
Moreover, Tesla’s planned $2.6 billion acquisition of SolarCity (SCTY.O), which itself has pressing cash needs, will add to its liquidity issues. Combined, the two companies’ debt totaled $5.43 billion with a combined cash burn of $830 million last year.
In August, the company said it had $3.25 billion in principal sources of liquidity as of June 30, 2016, but in July it repaid $678 million on a revolving credit line and planned to redeem $411 million of 2018 convertible notes, warning it could spend more on the securities.
The company also warned that the value of its secured assets had limited its ability to borrow under its asset-based revolving credit agreement with a syndicate of banks.
2nd Gear: Recalls!
Here are some recalls for you. Honda recalls, in Japan, over those damned contemptible Takata airbags. Via Reuters:
Honda Motor Co (7267.T) on Thursday said it was recalling about 668,000 vehicles in Japan to replace air bag inflators supplied by Takata Corp (7312.T), as part of an expanded nationwide recall announced earlier this year.
Japan’s second-largest automaker said it had recalled models including its Fit subcompact hatchback model, and the Civic and Accord sedan models over passenger-side air bags. Vehicles produced between 2009 and 2011 were affected, it added.
The latest announcement takes Honda’s global tally of recalled air bags to about 51 million, around half of the roughly 100 million slated for recall worldwide over inflators which are at risk of exploding with excessive force.
That is so many airbags.
3rd Gear: More Recalls!
Here are some more recalls for you. This time it is Mazda recalls here in America, because their rear hatches can fall on people. Via the AP:
The recall covers certain 2010 through 2013 Mazda 3 compact cars, as well as 2012 through 2015 Mazda 5 vans. Also included are certain 2013 to 2016 CX-5 and 2016 CX-3 SUVs. More than 759,000 vehicles in the U.S. and Canada are affected.
Mazda says the corrosion protection coating applied to the hatch lift supports at the factory wasn’t sufficient. Over time, water containing road salt can get into the supports, causing them to corrode and break. Mazda says it has no reports of accidents or injuries caused by the problem.
4th Gear: Michigan’s Driverless Car Bill ‘Speeds’ Through Senate
Michigan is making a big legislative push to allow autonomous cars to test on public roads. If passed, these laws will also let consumers buy these cars as soon as they’re available, and allow services like Uber or Lyft to operate them.
One state senator likened the progress being made on this front to the space race. From The Detroit News:
In a series of 36-0 votes, the Republican-controlled chamber approved bills that would allow the burgeoning autonomous car industry to put electronically controlled vehicles on any Michigan road.
“We’re moving into the next century, ladies and gentlemen,” Senate Majority Floor Leader Mike Kowall, R-White Lake, told fellow senators as he urged support for the legislation, which he introduced earlier this year.
The package of four bills aims to keep Michigan ahead of competing states like California and Florida that are trying to lure companies and investments with autonomous car-friendly laws.
5th Gear: China’s Car Sales Jump Ahead Of End To Tax Cut
In China, auto sales increased 24.5 percent to 1.8 million units in August, Bloomberg reports. That’s thanks in part to a tax cut on smaller-engined vehicles set to expire soon. The cut was instituted to encourage development of more fuel-efficient cars.
Consumers are anticipating the expiration of a tax cut on purchases of vehicles with smaller engines, according to Cui Dongshu, secretary general of the association. Automakers also are discounting to draw buyers, narrowing the average profit dealers are making for selling a premium car in China to 66 yuan ($10) from 487 yuan in June, according to data compiled by WAYS Consulting Co.
“In our recent dealer interviews, it was clear that pre-buying had already begun to influence industry volumes,” Robin Zhu, an analyst at Sanford C Bernstein, wrote in a report dated Sept. 5. “We expect the pull-forward of demand to persist through the end of the year, and support year over year growth.”
Reverse: Euro Nissan