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Fiat Wants $6.8 Billion State Loan To Survive

A security agent scans the body temperature of an employee of Italian automobile manufacturer Fiat.
A security agent scans the body temperature of an employee of Italian automobile manufacturer Fiat.
Photo: Getty Images
The Morning ShiftAll your daily car news in one convenient place. Isn't your time more important?

The cost of coronavirus can be measured in how much money people are asking for to survive financially. In the case of Fiat-Chrysler, that number is something between six and seven billion dollars. That and more in The Morning Shift for Friday, May 15, 2020.

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1st Gear: Fiat Wants 6.3 Billion Euro State Loan

That’s not the United States, but falls to Fiat as an entity in Italy and Europe, as Bloomberg reports:

Fiat Chrysler Automobiles NV is in talks to obtain a state-backed credit line of about 6.3 billion euros ($6.8 billion) to buttress the carmaker’s finances against the steep downturn caused by the coronavirus, according to people familiar with the matter.

Fiat’s local unit is discussing the facility with lead lender Intesa Sanpaolo SpA, the people said, asking not to be named because the matter is private. Sace SpA, Italy’s trade-credit insurer, will provide a public guarantee for 80% of the amount, they said.

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Neither Fiat Chrysler nor Italy’s export credit agency SACE commented on the news, as Reuters reports.

I suppose this is all a way of gauging how much COVID-19 is really costing car companies, which have only ever claimed to have been down only one or two billion in any announcement. FCA, for instance, recently stated it had lost $1.84 billion in the first quarter.

2nd Gear: It Sure Seems Like The U.S. Auto Sector Is Pressuring Mexico To Re-Open Early

I think you can read between the lines on any story discussing how re-opening the American auto industry hinges on Mexico re-opening. America’s auto industry relies on parts suppliers in Mexico. How has that been going? Well, it’s been far from a clear path, as Automotive News reports:

On Wednesday, Mexico indicated the sector would start reopening on Monday, May 18, and published advice to that effect in a page in its official gazette.

The government later withdrew the page from the gazette without clarifying whether it would affect the dates of the restart. On Thursday, it published fresh instructions in the gazette indicating the industry would not reopen until June 1.

General Motors on Thursday said it could not currently say when it would restart Mexican operations.

One industry body representing auto suppliers said it would not adhere to the new date of June 1, and considered the previous May 18 restart date as having legal force.

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Why all this back and forth? Could there be, perhaps, some influence happening here? Automotive News continues:

Despite the intensifying challenge posed by the pandemic in Mexico, the United States and auto companies have been pressing its government to reopen factories quickly because automakers will struggle to operate without parts from south of the border.

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Again, I’m sure that American automakers are extremely sensitive to coronavirus’ dangers and would never rush anything because of money.

3rd Gear: Tesla Cuts Prices Again In China

I still have no clue what’s really going on with the EV market in China, which has seen struggling sales under coronavirus. And yet, now we have Tesla cutting prices to meet strict competition, as Automotive News China reports:

Tesla Inc. is cutting prices of cars sold in China for a second time this month as competition starts to heat up again in the world’s largest electric-vehicle market.

The reduction applies to the long-range version of the locally built Model 3, lowering the sticker price by about 20,000 yuan ($2,818), a company representative said Thursday. The cut of about 6 percent would make up for a rebate that is going away later this year, meaning consumers would continue to pay 344,050 yuan for the car, the representative said.

The move may help Tesla stay competitive against Daimler, Volkswagen Group, General Motors Co. and other rivals as car demand in China gradually recovers from a slump worsened by the coronavirus outbreak. The price of the entry-level Model 3 was reduced to below 300,000 yuan this month to qualify for the latest state subsidies.

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The one read of this that makes sense to me is that most EVs compete, at best, with Tesla, while Tesla competes with everybody.

4th Gear: Layoffs At Cruise

GM’s Cruise has had a bit of a hard time, a few years in and still no real big breakout car, design, program, demo, anything. It’s just sort of... there. And now cuts are on, as Bloomberg reports:

Cruise, the self-driving car unit majority owned by General Motors Co., is laying off almost 8% of full-time employees to cut costs in the midst of the coronavirus pandemic.

The company will offer affected staff financial support to help them transition, plus health-care coverage through the end of the year, Cruise CEO Dan Ammann wrote in a staff memo, a portion of which was shared with Bloomberg. The cuts mostly fall outside of Cruise’s engineering and core development teams.

“In this time of great change, we’re fortunate to have a crystal-clear mission and billions of dollars in the bank,” Cruise spokesman Ray Wert said. “The actions we took today reflect us doubling down on engineering work and engineering talent.”

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Ray actually used to work here at Jalopnik, was my old boss, and ran the site for many years. Please enjoy more words of wisdom of his here.

5th Gear: Please Enjoy These Two Articles Also Wondering When (If?) Self-Driving Cars Will Ever Happen

With that being said, please enjoy these two articles catching up with what we wrote about self-driving cars in 2017.

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First let’s take a read from the New York Times, asking “Where Is My Driverless Car?” playing on the old flying car trope:

I remember exactly where I was when I read The Times’s first reveal of Google’s computer-piloted cars 10 year ago. Driverless cars felt like a starry, life-saving advance that encapsulated the best of what tech can do.

The optimism slowly gave way to the reality of the challenge: A self-driving car must “read” and predict what’s happening around it and respond in fractions of a second. Compared to airplanes on autopilot, vehicles on the road must digest far more information from other cars and people acting unpredictably. Any slip could mean someone dies.

That has confined computer-piloted cars mostly to relatively uncomplicated tasks like driving people around gated retirement communities, or rote rides in defined areas — and the cars are grounded if there are dust storms or rain.

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Meanwhile Bloomberg also put out a autonomobile review this week, mixing a few metaphors along the way:

Larry Burns, a former General Motors executive and co-author of Autonomy: The Quest to Build the Driverless Car, likens the race to a marathon, with the industry roughly at mile 15—and the pandemic just put a massive hill in front of the field. “A cliff may be a better analogy,” he said. “The strongest runners are still going to get over it. It will take them longer, but there’s a chance they may be able to accelerate on the other side.”

Even before social distancing, self-driving engineers were quietly recalibrating expectations and pushing promised timelines back. In early 2018, General Motors Co. pledged to have a fleet of self-driving taxis in San Francisco by 2020. While it unveiled a new people-moving machine (sans steering wheel) in January, GM’s launch date for taking on passengers has been open-ended since summer 2019. Meanwhile, Daimler backed away from its pledge to put 10,000 sentient taxis on the streets by 2021. Similarly, Tesla promised to have 1 million autonomous “robotaxis” on the road by the end of last year. The automaker still hopes to fulfill that vision by 2021.

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I will forward that the intervening years have been very fruitful in teaching us that the question of if or when self-driving cars will go mainstream has become kind of secondary. People are starting to realize that even if they show up, they won’t fix anything wrong with society as it is now.

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Reverse: Industrial History Is Automotive History

Via History:

After decades of environmental damage and legal wrangling, General Electric finally begins its government-mandated efforts to clean the Hudson River on May 15, 2009. One of America’s largest and most prestigious corporations, GE had dumped harmful chemicals into the river for years and spent a fortune trying to avoid the cleanup.

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Neutral: Nationalize It?

Government support has been instrumental in the development of every major modern car company, from bailouts at GM, partial state ownership in the case of VW, and military contracts or central planning just about everywhere else.

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If we were to see a new batch of nationalizations of auto manufacturing, even on a limited scale at first, which company would you want to see nationalized? What plans would you hope would be implemented?

Raphael Orlove is features editor for Jalopnik.

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DISCUSSION

Natebirdman
Nate with shorter name

Can we please stop pretending we get any efficiency out of capitalism if we keep using government cash to prop up large corporations that get too moribund.

If they need aid, break them up into chunks that can safely fail.