Democrats getting serious about this whole ‘electric cars’ thing, the sticking points in the tentative UAW-GM deal, and Tesla’s slightly more expensive Model 3. All this and more in The Morning Shift for Friday, October 25, 2019.
1st: The $454 Billion EV Plan
In a bid to stay slightly more relevant in the midst of rapidly changing times, U.S. Senator Chuck Schumer has proposed a $454 billion plan to swap traditional gas-powered cars to electric vehicles, Automotive News reports.
The proposal is intended to take place over a period of ten years so the government isn’t just dumping billions of dollars all at once. The whole goal here is to provide a financial incentive for car buyers to make the cleaner transition.
From the article:
Schumer said in a statement that his plan, which would provide rebates of $3,000 or more to individual buyers, would help transition 25 percent of the U.S. fleet, or 63 million vehicles, away from traditional internal combustion-engine vehicles within 10 years.
The plan would be key to reducing the impact of climate change, Schumer said, noting that the transportation sector accounts for nearly one-third of U.S. carbon output.
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As you can see, not everyone will be given money to go electric. The main foci here are ICE owners whose cars are at least eight years old and still in running condition. Most of the prospective traders would receive $3,000 to $5,000 for the swap, with another $2,000 or more set aside for those of a lower economic bracket who would need more help making the switch. The old ICE cars will then be scrapped.
If this sounds like the whole Cash for Clunkers program to you—you’re not wrong. It has served as the basis on which the EV swap program will function. Except this time, the goal isn’t entirely to stimulate US auto sales; it’s also to clean up our environmental act.
Not all of the $454 billion will go to consumers, though. Schumer’s plan includes billions in incentives for automakers to build or outfit EV factories as well as billions of dollars to improve the EV charging infrastructure.
Schumer’s proposal highlights two of the biggest points of contention in the upcoming 2020 election: auto worker support and environmental concerns. This is basically a way to kill two birds with one stone. Stimulate EV sales and therefore guarantee jobs for US auto workers, and assuage some of the carbon emissions concerns.
You can read the rest of the article here.
2nd: Not Everyone Loves The Tentative UAW-GM Deal
We’ve talked a bit before here on Jalopnik about who’s getting the short end of the stick regarding the tentative UAW-GM deal. But that list didn’t include the lower-paid workers at GM parts plants who are being totally excluded from the full-time wage of $32.32 an hour.
From Automotive News:
GM has separate classes of workers who aren’t paid equally under this proposed deal (and others before it). They include roughly 3,000 employees of General Motors Components Holdings, a subsidiary created in 2009 after the bankruptcy of supplier Delphi Corp.
Those GMCH workers are spread across four plants — two in western New York, one in Kokomo, Ind., and one in Wyoming, Mich. — that make radiators, condensers, coolers and other vehicle parts for GM and other companies. Some workers at those plants say they feel left out of a deal that the union says achieves “major wins” for its members.
Around 81 percent of workers at those GMCH plants in New York have voted against the deal. Hard numbers aren’t yet available from the Michigan and Indiana plants, but it is expected the numbers will be similar.
The biggest problem comes in the form of an almost-ten dollar deficit in hourly pay and the fact that their jobs still aren’t really secure:
Under the terms of the proposed deal, top wages for GMCH employees hired after Nov. 16, 2015, have been raised from $19.86 after four years to $22.50 after eight years, according to the summary distributed by the UAW. Once the workers hit top wages, they’re eligible for a 4 percent bonus payment.
But some are concerned that their pay remains lower than that of workers at GM’s parts distribution centers, known as CCAs, where wages top out at more than $30. They’re also displeased that GM still has the power to consolidate or sell their plants at any time, which they say leads to anxiety over job security.
Essentially, these workers feel that they’re nothing but an afterthought, whose concerns have been ignored for decades.
Many local workers spoke to Automotive News to share their discontent with quotes available here.
3rd: Tesla Model 3s Will Still Be Expensive In China
One of the biggest incentives for Tesla to being Model 3 production in China was the subsequent reduction in cost after removing import costs. But it turns out that the China-produced cars won’t be all that cheaper than their imported American counterparts, Bloomberg reports. The price reduction is only around three percent.
The cheapest imported Model 3 costs $51,500. The China-made vehicles will start at $50,000.
That’s because Tesla has decided to include Autopilot on all of its China-produced cars, with the intention of phasing out all models that do not have Autopilot. From the article:
The pricing suggests Musk is trying to maintain Tesla’s premium image in the world’s largest auto market, leaving local competitors to compete for buyers of cheaper EVs.
“It might affect the choices of some potential customers, but not much,” said Yale Zhang, the founder and CEO of consultancy AutoForesight. “The product’s target group is not that price-sensitive compared with those choosing much cheaper ones.”
It’s an understandable mindset but one that must be disappointing to prospective Asian buyers. Yes, they have been willing to pay about the same for a less technologically advanced model before—but a far cheaper model would have been ideal for those who haven’t been able to afford anything more expensive.
By contrast, local EV manufacturer NIO charges $47,800 for the basic version of its ES6 sport utility vehicle. That isn’t a huge difference in price.
4th: BMW Executive’s Trade War Warning
BMW Chief Executive Oliver Zipse has warned the United States that a global trade war is actually going to be very, very bad for US jobs, despite the narrative that certain political leaders are currently peddling.
It does, admittedly, come from a place quite close to Zipse’s heart. BMW’s largest car factory is located in Spartanburg, South Carolina and currently exports about 70 percent of its produced vehicles to markets all around the globe.
“If they do this, then we are all losers,” Zipse said of his discussions, speaking at an automotive conference in Stuttgart on Friday. “I have the impression they are listening carefully. The export model sustains many jobs in the United States.”
It certainly does make sense. Zipse stated that BMW has no plans to reduce production in South Carolina but will do so if necessary. The implication is that BMW will scale back its production capacity if it were to come up against more export barriers, thus impacting American jobs.
5th: Renault Is Expecting Dividend Cuts
Despite the fact that Renault hasn’t cut its dividend since 2011, the company is hinting that it could be doing so in the near future as a response to shrinking global demand, poor sales, and the ongoing struggles regarding Carlos Ghosn, Bloomberg reports.
From the article:
“We will review exactly where we stand in terms of results and cash generation at the end of the year,” interim Chief Executive Officer Clotilde Delbos told analysts. Then we “will convene with the board in order to decide what is the appropriate dividend policy.”
Renault’s profit warning rattled confidence about the carmaker’s grip on operations among a litany of woes. Fresh from a top management shakeup, Renault said it would need to make some choices on spending and review longer-term strategy as markets contract and costs to meet new emissions rules mount.
Reverse: AC/DC’s First Top 40 Hit Is “You Shook Me All Night Long”
And so those 1980s youths had a brand new soundtrack for their backseat foolin’ around.
Neutral: What Do You Think About The EV Swap Proposal?
My husband maintains that this proposal sounds like a deleted scene from the AOC episode of Our Cartoon President, but I think there’s real potential here. If the government is serious about actually convincing people to swap to electric power, it’s going to need something like this to get people interested.