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.
For the past week or so, we’ve been hearing rumors of Chinese automakers talking with Fiat Chrysler about a potential merger. The initial report from Automotive News quoted “a source,” who said Fiat Chrysler execs had flown to China to meet with the country’s Great Wall Motor Company. But—with sources also mentioning a number of other companies like Dongfeng, Zhejiang Geely and Guangzhou—it was still “unclear which Chinese automaker or automakers are pursuing FCA.”
Reuters talked with a Great Wall Motors media relations official, who told the news site “With respect to this case, we currently have an intention to acquire. We are interested in (FCA).” That’s about as straightforward as it’s going to get, though Automotive News also spoke with the Baoding-based company, and learned that the company’s real goal is to buy up the Jeep brand.
The site communicated via email with Great Wall’s president Wang Fengying, who said his team wants to acquire Jeep, and that the company is “connecting with FCA” to start talks. A spokesperson for the company sent a follow-up email, saying:
We are deeply interested in the Jeep brand and have paid close attention to it for a long time...Our strategic goal is to become the world’s largest SUV maker. Acquiring Jeep, a global SUV brand, would enable us to achieve our goal sooner and better.
For its part, Fiat Chrysler told both news outlets that it had not been approached by the Chinese truck and SUV company.
Sergio Marchionne, CEO of Fiat Chrysler, has previously made statements indicating that he’d consider spinning off the SUV brand. Whether he’ll sell it to Great Wall—a company with a market value $4 billion lower than FCA’s, according to Reuters—we’ll have to wait and see.
The Jeep brand has been passed around throughout the years, finding itself under the leadership of a number of different companies including Willys-Overland, Kaiser, AMC (which was controlled by French-owned Renault), Chrysler, DaimlerChrysler, Cerberus and FiatChrysler. So in the grand scheme of things, selling off Jeep isn’t a novel concept.
But for the brand to go to Great Wall seems a bit farfetched; if the Jeep brand is for sale, surely there are bigger and richer companies willing to buy up the cash-cow off-road marque.
2nd Gear: U.S. States Are On A Quest For Toyota/Mazda’s New Plant
We learned recently that Toyota and Mazda are planning to partner up on a new $1.6 billion assembly plant with a production capacity of 300,000 vehicles. Such an enormous facility promises 4,000 jobs when it’s finally completed in 2021, so naturally, a number of states are interested in housing the operation.
As for which state will actually win the business, we still don’t know yet. The Detroit Free Press uses the term “national bidding war” in reference to the two automakers’ requests fo proposals from a number of different regions of the U.S., saying:
The two Japanese automakers recently issued a blind request for proposals to states in the Midwest, mid-Atlantic and South, according to two people familiar with the plans who were not authorized to speak publicly because the process was confidential.
The news site went on, saying that, when submitting their early proposals, states were left in the dark about the exact details of the project:
Told only that an unidentified employer was weighing its options for a massive project under the code name Project Mitt, state economic development officials delivered preliminary proposals, including potential tax incentives, job training programs and infrastructure investments.
Michigan is among the states pursuing Toyota and Mazda’s new project, with a spokesperson from the state’s economic development arm telling the Detroit Free Press:
The State of Michigan bid on that project some time ago...We did not know the specific details of the project we were bidding on, including the fact that we were not given the name of the company(companies) that had submitted the (request for proposal).”
And the state’s governor, Rick Snyder, made it clear why his state is the right place for Toyota and Mazda, saying:
Michigan is absolutely the best location in the U.S. for this joint plant to be established, due to our leadership in automotive research & development, especially on mobility issues...We also have a strong pipeline of engineers and professional trades talent.”
The Detroit Free Press’s story mentions a number of different states as suiters. Among them: Alabama, Arkansas, Georgia, Indiana, Kentucky, Michigan, Mississippi, North Carolina, Ohio, South Carolina, and Tennessee.
You can expect these states to bid fiercely for what would almost certainly be a huge economic boon.
3rd Gear: Cars Are Getting Too Efficient, So Self-Driving Taxes Could Be On The Way
As cars get more efficient, people buy less fuel, which means states make less money from gas taxes. This is a problem for some states, so they’re finding other ways to make up for the lost income; taxing self-driving cars.
The Detroit News says Massachusetts has proposed legislation that would require a 2.5 cents-per-mile tax on autonomous cars. Tennessee has a similar tax in mind, having already approved a one cent-per-mile tax on self-driving cars and a 2.6 cents-per-mile tax for self-driving trucks with more than two axles.
On a national level, the Eco Center for Transportation, a think tank in Washington, has also suggested a one cent-per-mile tax on automakers for autonomous cars, with the organization’s vice president saying the tax could bring in $300 million annually to build better roads. He told The Detroit News:
Self-driving cars tend to be very fuel-efficient, and a lot of automakers have talked about how they are going to be all-electricThat means they are imposing the same type of wear and tear on roadways without paying into the system.
So even if we all save money at the pump, we’re going to pay the government somehow, because that’s how America works. Still, it will take some time for self-driving cars to catch on, so these taxes aren’t likely to have a huge effect in the near term.
4th Gear: A Fourth Person Has Been Charged In The Fiat Chrysler-UAW Scandal
Last month, the feds indicted former Fiat Chrysler executives for allegedly diverting millions of dollars from the National Training Center—the facility Fiat Chrysler uses to educate and train blue-collar workers—to the pockets of UAW officials.
Some of that money, as we learned in July from the indictment, had reportedly been diverted by Al Iacobelli (Fiat Chrysler’s former vice president of employee relations) to finance a Ferrari 458 Spider, fancy Mont Blanc pens, home improvement projects, credit card expenses, and private jet leases.
More recently, The Detroit News points out, a former UAW labor executive named Virdell King was the fourth person to be charged, with the federal court claiming she kept thousands of dollars of illicit funds.
Virdell, “the first black woman to head a local UAW-Chrysler union” according to the news site, allegedly used the training center’s credit card between 2012 and 2015 to buy a shotgun, golf equipment, luggage, concert tickets and theme-park tickets with training center money—expenses totaling over $40,000.
Virdell is expected to plea guilty in the next few days.
5th Gear: Volkswagen Won’t Be Selling The Farm
If you expect VW to sell off brands because of the Dieselgate scandal, don’t hold your breath. Thomas Sedran, VW’s head of group strategy, told Reuters that the car company wasn’t in a rush to sell off any assets—a move that would go against the wishes of labor unions, especially in light of VW’s decent financial position right now. He told the site in an interview that the company’s focus was on shifting towards electric vehicles and transport services, saying:
It’s much more important to discuss which new business fields the company will enter. Divestments are less relevant...Big decisions like how to expand or optimize the business portfolio of a global company need time and have to be developed by consensus. For Volkswagen, the topic of the business portfolio is very important but not time critical.
Though VW has looked into selling off its transmission maker Renk and its motorcycle brand Ducati, it looks like getting rid of those might not be as critical as the huge Dieselgate bill might make it seem.
Reverse: Ransom E. Olds Starts What Later Becomes Oldsmobile
We like to think of Jeep as a uniquely American brand, but it’s been owned by many different companies from many different countries over the decades. Do you think the brand will have the same attraction to buyers if it’s owned by a Chinese company? (I think so).