Renault and Nissan finally have some kind of cost-saving plan, Volkswagen just secured a big buy in China, Amazon may get into self-driving cars. All that and more in The Morning Shift for Wednesday, May 27, 2020.
1st Gear: Divide And Conquer
After all those merger talks, and heated arguments over the controversial ousting of former Chairman Carlos Ghosn, Renault and Nissan finally announced something of a plan to work together going forward, and it involves splitting up the models they each build by size. Nissan does midsize and bigger cars, Renault does the little stuff.
Here’s more on the plan from the Wall Street Journal:
Instead of each company designing every vehicle they sell, Nissan Motor Co. will design the midsize cars and sport-utility vehicles, and Renault SA will do the same for small cars and compact SUVs. The hope is that by 2025, nearly half the vehicles will be built this way. As a result, the companies think they can shave up to 40% off the multibillion-dollar cost of designing the next generations of their vehicles.
It’s lucky that these discussions are happening now, amid a global economic crisis, because that’s exactly what a deal like this was meant to help buffer against. So it’s probably good that they’re still in the planning stages as global-economic shit only just starts hitting the fan.
One example Mr. Senard provided is the next generation of Nissan’s bestselling SUVs, due some time in 2025. Mr. Senard said the alliance’s plan would reduce the amount Nissan would spend on that vehicle by $2 billion, in part because it could build and sell versions of the car to Renault.
[...]
The division of labor extends beyond manufacturing. Nissan would be in charge of autonomous driving research and motors for midsize and large electric vehicles. Renault would design the guts of the electric vehicles and the motors for smaller electric vehicles. They plan to consolidate spending on outsourced services, so more of the back-office functions of the companies are common.
If you wanted branded Renaults in the North American market, I don’t think that’s going to happen. But you can do the GM-Holden thing and buy the badges and bumpers online, probably!
This concept is said to avoid the necessity of a full-on merger, while granting each automaker some sense of independence. But, to me, there lies a potential problem in keeping a relatively loose arrangement:
The details of many of these plans are still being worked out, and there is no guarantee that all of the announced plans will happen, said people at the companies. “It’s all still up for debate—what we manufacture, where we manufacture, what technology we use, what technology we don’t use,” said a person close to Nissan.
If each automaker still picks and chooses what it actually builds, and as we’ve seen over the last year or so these two companies don’t always have full faith in each other, this could very easily lead down a road where neither company ends up taking very many cars from the other one.
Also, both automakers have already previously claimed the point of the arrangement is not to make massive cuts to their workforce, but to look for savings elsewhere. If each company is theoretically only responsible for half as many cars, are teams about to double in size or will the manpower be put to good use elsewhere?
2nd Gear: VW Makes Big Battery Moves
Volkswagen is making big battery moves in China, as reports indicate it’s about to seal the deal with the biggest local battery manufacturer in that market.
From Reuters:
[Volkswagen] is poised to buy 50% of Anhui Jianghuai Automobile Group Holding, the parent of EV partner JAC Motors (600418.SS), for at least 3.5 billion yuan ($491 million), the people said on condition of anonymity as the matter was private.
It is also set to become the biggest shareholder of EV battery maker Guoxuan High-tech Co Ltd (002074.SZ), the people said, adding both deals could be announced as early as Friday.
Volkswagen declined to comment on the deals, details of which are reported here for the first time. JAC and Guoxuan declined to comment.
The outlet claims it’s an effort by Volkswagen to retain its status as the largest foreign automaker in the Chinese market, given new threats by investment from BMW as well as Tesla acquiring the first non-Chinese owned car plant.
3rd Gear: Boeing Cuts 16,000 Workers
Many headlines are reporting today that Boeing will cut “10 percent” of its workforce over recent hardships regarding covid-19 and global economic downturn. I want to tell you up front that that’s 10 percent of a 160,000 workforce, so about 16,000 people.
From Reuters:
A spokesman for the Society of Professional Engineering Employees in Aerospace (SPEEA) union that represents 17,600 Boeing employees told Reuters Tuesday the company informed the union it should expect layoff notices on Friday.
Boeing declined to comment.
In April, Boeing chief executive Dave Calhoun said the company had “begun taking action to lower our number of employees by roughly 10% through a combination of voluntary layoffs, natural turnover and involuntary layoffs as necessary.”
It’s easy to think this is just because of the covid-19 outbreak and the restriction on travel, but don’t forget that this is the company that ignored critical issues with the 737 Max aircraft that crashed twice and has since been grounded just before all this other stuff happened.
4th Gear: Amazoox
Amazon, of the .coms, is reportedly in talks to buy Zoox. It’s one of the flash-in-the-pan autonomous vehicle startups that was getting $3 billion valuations a few years ago. It has since found lesser fortune.
From The Wall Street Journal:
Amazon. com Inc. is in advanced talks to buy Zoox Inc. in a move that would expand the e-commerce giant’s reach in autonomous-vehicle technology.
The companies are discussing a deal that would value Zoox at less than the $3.2 billion it achieved in a funding round in 2018, according to people familiar with the matter.
An agreement may be weeks away, one of the people cautioned, and the discussions could still fall apart.
I can’t wait to see whether the autonomous Amazon delivery van either leaves my packages in the street, or launches them at my apartment.
5th Gear: Cuts At Cruise
Speaking of self-driving cars, according to Bloomberg, GM made it seem like it was “doubling down” on its Cruise engineering teams while facing job cuts, only to then lay off dozens of engineers:
Cruise, the self-driving car unit majority owned by General Motors Co., dismissed dozens of engineers as part of the job cuts the company described earlier as a “doubling down” on its engineering work and talent.
In a notice to mayors and other California government officials dated May 15, Cruise disclosed that 165 employees would be permanently laid off. Of those workers, 40% had the words engineer or engineering in their job title.
“As we said before, the vast majority of cuts came in non-engineering functions,” Ray Wert, a Cruise spokesman, said on Tuesday. The San Francisco-based company has dozens of open engineering positions listed on its website.
Full disclosure: Ray Wert, quoted above, used to be Editor-In-Chief of this website.
Reverse: But It’s Red?
Neutral: How Bad Does Anyone Really Want A Renault?
I’m guilty of openly being grossly optimistic of more European brands making landfall in America, but thinking about the possibility of losing out on the Renault lineup honestly doesn’t have me feeling too jilted. I just hope they take their fun cars and slap Nissan badges on them for us.