Joe Biden says that Tesla is an automaker, Toyota’s sales forecast is down, and the car repair business is booming. All that and more in The Morning Shift for February 9, 2022.
1st Gear: Biden Mentions A Car Company
Joe Biden doesn’t like Tesla all that much, mostly because its workforce is non-union, but also because Tesla CEO Elon Musk repeatedly resists government regulation. Biden has ignored Tesla as a result, prompting desperate pleas from Musk for attention. The issue also prompted a very sad petition.
Well, Elon’s wish was granted on Tuesday, when Biden made a passing reference to Tesla in a speech arguing that American manufacturing is back.
“From iconic companies like GM and Ford building out new electric vehicle production to Tesla, our nation’s largest electric vehicle manufacturer, to innovative younger companies,” Biden said, adding other start-ups and saying manufacturing is coming “back to America after decades.”
Asked in August whether the White House did not invite Musk because workers at Tesla are not unionized, White House press secretary Jen Psaki said: “I’ll let you draw your own conclusion.”
When asked about Biden’s Tesla namedropping on Tuesday, Psaki said “We all know that Tesla is a major producer of electric vehicles,” and added the White House sees “huge opportunity” for the United States from the industry overall.
Elon tweeted his glee.
This is the most groveling I think I’ve ever seen out of Elon, all just to get Biden to say Tesla’s name. Congratulations, I guess.
2nd Gear: Meanwhile, Another Tesla Recall
This time it is for 26,681 cars over an issue with the heat pump, which may cause issues defrosting the windshield. This one will be an over-the-air update, like another recent recall.
Tesla told U.S. regulators the error may cause a valve in the heat pump to open unintentionally and trap the refrigerant inside the evaporator. Tesla will perform an over-the-air software update to address the issue.
The recall covers some 2021-2022 Model 3, Model S, Model X, and 2020-2022 Model Y vehicles that may not comply with a federal motor vehicle safety standard. It is the latest in a string of recent recalls for the Texas-based EV manufacturer.
Tesla said it was not aware of any injuries or crashes related to its latest recall but NHTSA said it could reduced windshield visibility in certain conditions, which may increase the risk of a collision.
There has been some recent debate over whether to call over-the-air updates “recalls,” given that the term “recall” implies that you have to take the car to a dealer for service. Well, the National Highway Traffic Safety Administration still calls over-the-air updates for potential safety issues recalls, so take it up with them.
3rd Gear: Toyota’s Forecast
The biggest automaker in the world said Wednesday that the chip shortage continued to bite, and it was reducing its sales forecast for its fiscal year, which ends at the end of March. It now expects to sell 8.25 million cars for its fiscal year, down from 8.55 million.
From Automotive News:
Toyota said it expects to lose between 100,000 and 200,000 units of output in March due to the semiconductor bottlenecks after losing 140,000 units in January from COVID-19 interruptions.
All told, Toyota said it could lose up to 480,000 vehicles of output from January through March.
“We don’t think this imbalance between microchip demand and supply will improve anytime soon, and coupled with coronavirus outbreaks, the outlook still remains unclear,” a Toyota executive said after the automaker announced financial results on Wednesday.
“This uncertain situation will likely continue into the next fiscal year,” he said.
Toyota’s dialed down outlook encompasses a downward revision of its fiscal-year production plan to 8.5 million vehicles, from a target of 8.87 million envisioned as recently as mid-January.
“The plan for 8.5 million units is based on our taking into account all the supply shortages for parts that are currently expected and conservatively reducing the forecast,” Toyota said.
Toyota still reported net income in October, November, and December of $6.88 billion, so, really, it’s doing just fine.
4th Gear: Honda Also Reported Its Quarterly Results
And Automotive News’ takeaway is that it wants to maintain a low number of incentives, by which they mean discounts on the cars Honda sells, in the form of cash back, financing deals, you know the bit.
U.S. inventory levels have shrunk to a mere 11 days, Senior Managing Executive Director Kohei Takeuchi said, while detailing results for the company’s fiscal third quarter ended Dec. 31. That has allowed Honda to chop some 85 billion yen ($738.5 million) from incentive spending.
But Honda said production and inventory levels are expected to increase in the coming fiscal year, from April 1. And that will mean trying to maintain the disciplined approach.
“We want to keep down incentives as much as possible, but we have to consult with dealers as to how much inventory they will hold,” Takeuchi said.
“There might be some margins to increase incentives due to this.”
One way Honda hopes to keep a cap on outlays is through introducing new product that commands better pricing power, Takeuchi said. The executive did not specify what vehicles are on tap, but the CR-V, HR-V, Passport and Pilot crossovers are all due for updates.
Honda also said that its net income for October, November, and December was $1.68 billion, so, really, it’s doing just fine.
5th Gear: Tales From A Land Of Broken Cars
The car market is bad, both new and used, which means that people are paying for fixes that they otherwise wouldn’t bother with. As Bloomberg reports, mechanics have also turned into therapists of a sort. I love each one of these anecdotes from on the ground:
In Athens-Clarke County, where the University of Georgia’s affluent student body belies the 25% poverty rate, garage owner Kevin Thain says his crew is working customers through end-of-service-life decisions on a weekly basis. It isn’t unusual lately to see fixes running over $10,000. “We’ll look at the vehicle, and if it’s got smoke coming from under the hood, or making a whappity-whappity-whap sound, they’ll ask me, ‘Is this car worth fixing or not?’ ” he says. “You hate to be like the doctor calling the family into the consultation room, but sometimes we are that.”
Dixon Collins, 58, operates a small garage in Athens set among buy-here-pay-here car lots and a waste-hauler’s yard. Goats bleat in a pen behind his metal shop. He points to a black Chevy Tahoe in his lot that had $5,000 of work done on it, despite having clocked 300,000 miles. His customers are using credit cards and loans from families to pay for repair bills, he says. “What people would not even think about spending on a car before, they’re spending on it now.”
People used to balk at a repair if the price hit $1,500 and instead would buy a replacement vehicle, says Ross Colket of Colket Automotive Technical Services in suburban Philadelphia. Customers’ tipping point now is closer to $2,500, he says.
Colket approaches customers cautiously when breaking the news that a repair will run into the thousands: He describes each needed fix methodically. “You ease into it,” he says. “You give them the description of what’s going on with the car, and I save the price of it for the tail end of it.” He’s been putting people on repair schedules, too, so they can spread the work over time.
Having recently spent, ahem, a couple grand to get some things fixed on my Fit, I also have been thinking quite a bit about the tipping point of when to bail. It gets harder and harder after each new spend.
When the Navy did take control of the ship, shortly after Pearl Harbor, it began the conversion of the liner—but to a troop ship, renamed the USS Lafayette in honor of the French general who aided the American colonies in their original quest for independence.
The Lafayette never served its new purpose, as it caught fire and capsized. Sabotage was originally suspected, but the likely cause was sparks from a welder’s torch. Although the ship was finally righted, the massive salvage operation cost $3,750,000 and the fire damage made any hope of employing the vessel impossible. It was scrapped—literally chopped up for scrap metal—in 1946.
Neutral: How Are You?
A friend has informed me that he went ahead and bought a Land Rover Discovery, and he further says that after two hours of driving, no warning lights have come on (so far), and that he will let me know “if it lives up to its reputation as a legendary piece of shit.”