Preorders don’t matter, the screens are getting bigger, BMW doesn’t lay people off, a big Korean battery fight, and more in The Morning Shift for Wednesday, November 27, 2019.
1st Gear: 250k
The last time Tesla held a launch party for a new car, the Model Y, Musk dismissed the idea that preorders were any kind of valuable metric to measure demand. “We don’t want to comment on the granularity of deposits—again, people just read too much into those,” he said back in April.
In the last six months, apparently Musk’s opinion of preorders has changed somewhat, as he is now tweeting regular updates on the number of preorders for the Cybertruck, which reached 250,000 last night.
Oh wait, in fact, Musk’s opinions on preorders haven’t changed at all?
The classic Muskian maneuver: this thing doesn’t matter, which is why I keep updating my tens of millions of followers on Twitter about it.
One of these Musks is right, and it’s the one on public earnings calls who says preorders don’t matter. This is especially true for the Cybertruck, since Tesla lowered the preorder cost to $100, from $1,000 for the Model Y and Model 3. For a car-like thing that is supposed to cost north of $40,000, a $100 deposit is nothing. A proportional deposit on a $100 purchase would be 25 cents. Asking for a down payment of .25 percent is not serious. Plus, even this trivial deposit is fully refundable. On top of that, the number of preorders is likely bullshit because a lot of people accidentally ordered multiple Cybertrucks.
Even taking the 250,000 number at face value, which you shouldn’t, it means little more than Tesla cobbled together a $25,000,000 interest-free loan, an amount Tesla also could have reached with 25,000 preorders at the traditional $1,000 a pop. But that sounds less impressive, doesn’t it?
2nd Gear: Sales Are Down Because The Screens Are Too Small
After more than a century, automakers have figured out why you buy cars: to stare at the screens inside of them. From the WSJ:
Car companies are introducing bigger screens—and more of them—in their newest models. Executives say the larger displays are needed as the systems that show navigational tools, music options and the like become more sophisticated, and consumers—especially younger ones—want to bring more of their digital lives into the car.
Last week, at the Los Angeles Auto Show, Ford Motor Co. was the latest auto maker to debut a mammoth display: a 15.5-inch touch screen that will be in the company’s new all-electric Mustang Mach-E SUV when it goes on sale late next year. At that size, it will be the industry’s second largest in-car display screen behind the 17-inch panel that Tesla Inc. introduced in 2012 on the Model S sedan.
“The experience that our customers are familiar with on their laptop or cellphone—that rich experience—has really moved into the vehicle,” said Gary Jablonski, chief engineer of connected car technology at Ford.
Hey, you know what I’m not doing when I’m on my laptop or tablet? Operating a multi-ton vehicle at high speeds.
As the WSJ points out, it’s hard to square the bigger, brighter, more distracting screens with the epidemic of distracted driving, which is increasingly getting compared to the drunk driving of the 21st Century.
This is especially irksome when juxtaposed with the “distracted walking” narrative that’s becoming an increasingly bogus excuse to shift blame onto the people getting hit by cars as opposed to those doing the hitting. What “distracted walking” implicitly assumes is that it’s OK for the people driving the car to have a 15-inch touchscreen in front of their face but the people walking across the street cannot look at a 5-inch screen.
In any event, I’m solidly in the Mazda camp that screen sizes on cars should be smaller and non-touch, rather than bigger touch screens. Not merely for safety reasons, but also because they’re more aesthetically appealing and much easier to use.
3rd Gear: BMW Reaches Cost-Cutting Agreement
I don’t have to remind you that every automaker is trying to rebuild the ship as they’re sailing it by selling traditional cars as they restructure their businesses for an electric and possibly automated future. Along those lines, BMW, a company that has so far pretty royally screwed this process up, has reached an agreement with labor to cut costs without, hopefully, resorting to layoffs.
From Reuters:
BMW had been in talks with labor representatives and its top suppliers as it seeks to achieve cost savings of more than 12 billion euros ($13.23 billion) by 2022.
The agreement involves reducing a payout scheme for workers based on company profits, as well changes to Christmas and other bonuses for some workers. The measures are effective from 2020.
Management and labor working together to keep people’s jobs, you love to see it.
4th Gear: Battery Fight
Two of the world’s biggest battery makers, both Korean companies, are in a big legal fight that is kind of about who won the contract to supply Volkswagen’s Tennessee plant but also not really about that at all. But the legal tussle could have huge ramifications for battery supply chains if it’s not resolved.
Here’s Reuters again:
Stung by missing out on the VW deal to the new kid on the block and the departure of 77 employees for its rival across the Han River in Seoul, LGC took SKI to court in the United States in April accusing it of misappropriating trade secrets.
Fast forward seven months and the two firms have hit each other with U.S. lawsuits for battery patent infringements in a bitter row that threatens to disrupt the launches of electric vehicles (EVs) by some of the world’s biggest carmakers.
U.S court filings reviewed by Reuters show the feuding firms are trying to stop each other from importing and selling EV batteries destined for the SUVs VW will build in Tennessee as well as GM’s (GM.N) Bolt, Ford (F.N) pickups, Jaguar’s I-Pace, Audi’s (NSUG.DE) e-tron, and Kia Motor’s (000270.KS) Niro.
If I had to guess, I’d suspect this will get resolved with a settlement of some kind because there’s simply too much on the line for everyone involved. According to one expert Reuters talked to, should one company lose the legal fight, they would suffer a “fatal blow.” Meanwhile, the automakers have absolutely nothing to gain from this and will likely try and mediate an agreement.
5th Gear: Aviator Buyers Beware
Here’s a little report from the Detroit Free Press that some people have had some serious issues with their brand new Lincoln Aviators:
Spencer’s troubles, though, are just one example of problems with the new Aviator and Ford Explorer, built at the retooled Chicago Assembly Plant. The Aviator, a finalist for the 2020 for North American Car Utility and Truck of the Year award, ranges in price from $52,195 to $90,000, including delivery charges.
The high-profile Aviator was the focus of two recalls in August, one related to “unintended vehicle movement” while parked; the other involving seats that “may not adequately restrain an occupant in a crash.” In addition, consumer safely alerts from the company noted, vehicles may have instrument clusters that disable warning alerts and fail to display gear positions — drive, reverse, park, neutral. Federal safety regulations require gear positions to be displayed when a vehicle is not in park.
The article also mentions “a leaky sunroof, nonworking seat belts, computer malfunctions that gave false crash warnings, unexpected parking brake resistance and transmission alarms” as well as a host of other issues that seem to stem from the troubled Chicago Plant that also makes the Ford Explorer.
Everyone in the article with a troubled Aviator got a replacement without much fuss, so if you bought an Aviator with wheels falling off or whatever, go ahead and bring it back, if you haven’t already.
Reverse: Bruce Lee Is A Car
Neutral: What’s Your Car Screen Preference?
Big screen? Small Screen? Touch? How do you like it?