Elon Musk has overpromised and underdelivered, again, Ford is gearing up for the new Explorer, and Nissan is still dealing with executive turnover. All that and more await you in The Morning Shift for Monday, August 26, 2019.
1st Gear: Elon Is Up To Elon Things, As Is New York Governor Andrew Cuomo
Vanity Fair had a big piece out last night all about Musk’s plans for a second Gigafactory in Buffalo, New York, that was supposed to be ground zero for our solar-powered future. SolarCity was the future, way back in 2016. Solar panels on cars! Solar panels everywhere! But that hasn’t happened.
SolarCity, as you may recall, was started by two of Musk’s cousins, and promised to do the entire home solar experience from construction to sales to installation. It ran into a ton of problems, including the financial kind, and then Musk convinced the Tesla board to acquire it. Things have not gone stellar since then.
A few highlights from the VF story:
Last week, Walmart sued Tesla for breach of contract due to “years of gross negligence,” claiming that solar panels installed at seven of its stores went up in flames, causing millions of dollars in damage. The lawsuit, citing Tesla’s “utter incompetence,” seeks to have the company remove rooftop panels it installed at more than 240 Walmart stores.
On the consumer side, SolarCity was plagued by complaints about misleading sales tactics and shoddy installations. As the problems mounted, some workers began to feel manipulated by the company’s talk about being a force for good in the world. “I turned a blind eye to a lot of the silliness because of the idealism,” says one former senior employee. “I don’t know when the Rubicon was crossed, but there were micro-crossings every day.”
By 2014, several insiders say, the board was also growing concerned. The company imported most of its solar panels from China, and it looked like demand would soon outpace supply. Because Musk had a reputation as a manufacturing genius, the board decided that SolarCity needed to start making its own panels—a huge shift in its business model. “Installing and selling solar has almost nothing to do with manufacturing,” says a former solar-industry executive. “It’s like a car dealer saying it’s going to make cars.”
Do you want a passage about New York Gov. Andrew Cuomo being a starstruck dumbass? Many passages you will get.
The state promised to spend $350 million to build a factory and another $400 million on equipment specified by SolarCity. The company would get a 10-year lease on the facility—for just $1 a year. In return, it promised to employ at least 1,460 people in “high-tech” jobs at the factory, hire another 2,000 to support the sale and installation of solar panels in New York, and help attract an additional 1,440 “support jobs” in the state. Once it achieved full production, the company pledged, it would spend some $5 billion in New York over the following decade.
“It was sold as a perfect marriage,” says the former senior employee. “The area around the factory is terrible, and I remember thinking: Wow, we are going to save the town where steel was made.” Cuomo too was hooked. “He was enchanted with the idea of Elon Musk in Buffalo,” says a longtime lobbyist in Albany. “I think he actually thought Musk was the next Dalai Lama.”
But the official who took credit for the deal with Tesla—the man who championed the company as a Rust Belt savior—stands by his decision to place his trust in Elon Musk. Governor Cuomo, who paid his own visit to Buffalo last spring, declared that he’s perfectly pleased with the progress at SolarCity. “They’re ahead of schedule,” he said.
At least one person was sold a bill of goods only to get a refund through tweeting.
Customers who tried to purchase a Solar Roof took to Twitter to share their horror stories: Kevin Pereau, a California homeowner, said he paid a deposit of $2,000 to have a Solar Roof installed more than two years ago—then never heard from the company again. He got his money back only after he started tweeting at Musk every single day.
Corporations are always doing shit like this, and I don’t blame Tesla or Musk for acting in the same manner that thousands of other corporations before them have acted, i.e. snookering some local government into giving them a ton of taxpayers’ money.
But it’s still illuminating that in the year of our lord 2019 stories are still being written with great surprise that Elon Musk may in fact not live up to his big promises.
2nd Gear: The New Ford Explorer Required Some Complicated Retooling At Its Chicago Assembly Plant
The sixth generation of the Ford Explorer is coming for 2020. It’ll probably be fine. Good, even. The changes, in any case, required some major retooling at the plant where it is assembled, according to Automotive News. The changes were more drastic than when Ford started making aluminum-bodied F-150s at its Dearborn plant in 2014.
Per Auto News:
Every 90 seconds, a synchronized lineup of trucks dropped off loads of scrap metal next to the river. Barges took the metal, weighing more than the Eiffel Tower, to a recycling center a mile away.
Inside the plant, supervisors used stopwatches to clock thousands of GPS-tracked tractor-trailers that hauled in new tooling in a specific order. Officials rented nearby lots to hold the trailers so the tooling would be close by when the time came to install it, rather than storing it farther away and risking getting off schedule because of Chicago’s notoriously heavy traffic.
They did it all at a blindingly fast pace. In one area of the body shop, crews tore out old equipment, installed new machines and began building parts within seven days.
“It’s the most difficult thing I’ve been involved in,” Gary Johnson, a 30-year-plus Ford veteran appointed head of manufacturing and labor affairs last fall, told Automotive News. “Just the scope, age of the complex and the location of it. This was the ultimate team sport.”
An irony in all this is that the retooling was challenging in large part because of Chicago traffic.
One of the biggest differences between the F-150 and Explorer changeovers was location.
Although the Dearborn and Chicago sites are near major interstate highways, daily gridlock in the Chicago area made it more difficult to move trucks on a tight deadline.
So Ford decided to take advantage of the location along the river, renting a barge that ultimately carried more than 10,000 tons of scrap metal. Multiple construction cranes worked long hours during the first week to move the metal aboard.
3rd Gear: Upheaval At Nissan Continues
Carlos Ghosn is gone. The wake of that whacking continues to have reverberations. Now, Infiniti, the brand’s luxury nameplate, is getting a new design chief amid its attempts to turn around a sales plunge.
That new chief is Taisuke Nakamura, currently responsible for Nissan’s concept cars and its “global design strategy.”
Per Automotive News:
[Karim Habib], a Lebanese-born Canadian who joined Infiniti in July 2017 from BMW, is leaving the company “to pursue other opportunities,” Infiniti said.
Nissan is overhauling Infiniti’s business strategy to focus on the U.S. and China markets. Sales in the U.S., the brand’s top market, were down 13 percent to 71,718 vehicles through July.
Habib’s departure is the latest personnel upheaval at Infiniti, whose restructuring includes its withdrawal from the European market and the return of its brand headquarters to Japan from Hong Kong. It also comes at the brand readies the launch of a new design language centered around an upcoming wave of electrified vehicles.
In separate news, Nissan had a computer failure that crippled the company last week.
A critical Nissan Group data center in Denver crashed Aug. 17 apparently because of a power outage. The results were widespread and frustrating for the automaker and its retailers last week, sending customers away empty-handed and interrupting factory production — as Nissan Group is doggedly trying to shore up falling U.S. retail sales.
But the crisis also demonstrates a larger vulnerability for today’s auto industry, which depends on complex digital vehicle distribution systems that link data and commerce among consumers, retailers, distribution networks, manufacturing plants and finance companies.
All of that shut down for Nissan Group last week, affecting the operations of Nissan and Infiniti’s approximately 1,300 U.S. dealers as well as an undetermined number of retailers in Canada and Mexico. It was unclear at week’s end how many new-vehicle sales Nissan Group lost from the glitch or what the ultimate cost will be to dealers, sales personnel and service shops.
The system, referred to internally as NNANet, is the retailer’s tool for ordering cars and parts, obtaining product rebate information to know how to structure a sale, checking on vehicle recalls, filing warranty claims to enable service work to be performed and priced, and seeking factory financing information.
“Everything we do with Nissan goes through NNANet,” said Tim Hill, owner of Hill Nissan in Winter Haven, Fla. “That is our lifeblood.”
In still other news, getting rid of Ghosn may end up costing Nissan a lot more money than they initially thought, thanks to civil lawsuits.
Per The New York Times:
As Nissan built its public case against Mr. Ghosn, the automaker has exposed itself to substantial legal liability, according to Darren Robbins, one of the lawyers leading Jackson County’s suit, which seeks class-action status to include all Nissan investors in the United States.
“They’ve admitted many of the elements of securities fraud,” Mr. Robbins said. “While it might have been helpful for the company vis-à-vis Ghosn, with respect to the securities laws, that’s a nettlesome fact for them.”
The costs are likely to mount. Nissan may already spend tens or even hundreds of millions of dollars defending itself against the suit. It could be hit with additional civil suits in Japan, though securities suits there are rarer and less punitive, and face regulatory penalties in both countries.
Nissan declined to comment on litigation, but said it took the charges against it “extremely seriously and expresses its deepest regret for any concern caused to its stakeholders,” adding that it would continue “to strengthen its governance and compliance, including making accurate disclosures of corporate information.”
4th Gear: Tesla Is Increasing Prices in China
This is according to Reuters’ sources, which pin the increase as a direct result of President Donald Trump’s trade war.
Reuters reported this month that Tesla was considering to lift prices in China from September after the yuan weakened significantly against the U.S. dollar. One person told Reuters on Monday that the automaker was bringing forward these plans to Aug. 30.
Both people said the automaker is now also mulling another price hike in December after China’s commerce ministry last week announced it would reinstitute tariffs of 25% on vehicles and 5% on auto parts which it suspended in December, in the latest tit-for-tat escalation of the trade war.
“Tesla will also try to ship more cars to China before December, before the tariff hikes,” said one of the people.
Should you care about this? Maybe not, but I’m bookmarking for the next conversation about Tesla’s long-term viability as a business.
5th Gear: Honda Has A New Airbag!
Here’s a brief video about it:
And here’s some details from Automotive News:
As opposed to a conventional airbag, which has one inflatable component, Honda’s new version consists of:
A center chamber.
Two outward-projecting side chambers that create a wide base across the dashboard.
A “sail panel” that stretches between the two side chambers at their outermost edge. Honda describes it as a catcher’s mitt that decelerates the occupant’s head while also engaging the side chambers, pulling them inward to cradle and protect the head.
“Looking at the real-world data, we can tell that over 56 percent of these real-world crashes have some level of angled impact. I mean, it’s not straight into a wall or to a tree or something,” said Heitkamp. “So we recognized that we need a restraint system that can improve at the angle-type collisions.”
The airbag will be in cars starting next year, but Honda did say which cars it would be in. It is from supplier Autoliv, not Takata. I wonder why.
Reverse: Grease Is The Word
Reverse: Will Solar Panels Ever Become A Widespread Thing On Homes?
A house in my neighborhood in the early ‘90s had solar panels. It was a big deal. People “talked” about it. I feel like they’re still at that level of novelty.