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.
1st Gear: So Much For That
Google’s koala-like autonomous pod and self-driving Lexus SUVs have made a lot of headlines, but as we pointed out earlier this year, it hasn’t yet materialized into any actual commercial product yet despite being around longer than anyone.
Now, according to a report in subscription tech site The Information, big changes are coming to the program. Google is apparently scaling back the program. It likely won’t be its own standalone vehicle with no pedals and steering wheel, as Google originally set out to do, but rather a tech partnership with established automakers. Sound familiar?
Still, Google supposedly wants to launch an autonomous taxi service by the end of next year. Here’s how The Verge sums it up:
Fiat Chrysler is producing a new prototype vehicle for Google based on the Pacifica minivan; if the testing is successful, they’ll reportedly be used in the eventual commercial service. The two companies announced a partnership to develop self-driving minivans in May.
Alphabet CEO Larry Page and CFO Ruth Porat are said to be behind the decision to pivot, believing the existing plan of self-producing a radically new car without a steering wheel to be impractical. It’s reportedly a controversial move inside Google X’s autonomous driving division, known as Chauffeur, with Google co-founder Sergey Brin also in favor of the idea of developing a car from end to end.
Google is expected to release more information today. We’ll keep you updated. But this isn’t that surprising a move; once again, a tech company learns that making cars is hard, and it may be better for them to focus on tech and partner with people who actually know how to make cars.
2nd Gear: Takata’s Recall Repair Rate Sucks
If you live in the south, you may be at risk of death or injury from an exploding Takata airbag. This is because only 18 percent of affected airbag inflators have been replaced, the AP reports.
Officials from the National Highway and Transportation Safety Administration released a schedule for further recalls on Friday and said the agency would require all 19 companies involved to submit plans to reach more owners. NHTSA is also requiring manufacturers to prioritize fixing affected vehicles in Florida, Texas and other states, since high humidity can increase the risk of the airbag exploding with too much force and spew shrapnel fragments into people in the car.
Some cars will have both the driver side and passenger side air bags replaced.
Eleven people have been killed by Takata inflators in the U.S. and as many as 16 worldwide. The government says about 180 people have been hurt in the U.S. alone.
As of last week, however, only 12.5 million, or about 18 percent, of the inflators had been replaced, and NHTSA said some automakers weren’t doing enough to contact owners. The agency ordered the companies to turn in a “recall engagement plan” within 90 days to increase the completion rate.
Automakers need to move faster but the recalls are still set through 2020. Part of the problem is these damn inflators were in everything. This is why Takata isn’t out of business yet; talk about too big to fail.
3rd Gear: Magna Steyr May Expand
Magna Steyr is a contract factory that makes cars the automakers don’t have capacity to build themselves, often low-volume models or special edition cars, but some mainstream stuff as well. Evidently business is booming because it’s considering a new plant in Europe to meet demand, reports Reuters (via Automotive News):
Magna, which makes parts for most of the world’s automakers and also assembles vehicles under contract, currently builds the Mercedes G class for Daimler at its Graz plant in eastern Austria and will replace the production of BMW Group’s Mini Countryman with the BMW 5 series in March next year, according to the Automotive News Europe plant assembly map.
In September, the Canadian company said it was mulling a new plant following the 5-series order from BMW.
Jaguar’s full-electric I-Pace SUV will also be constructed at Magna’s Graz plant from next year.
“Should the Graz plant become overloaded, a new factory nearby might be an option,” Apfalter told weekly Automobil Produktion in an interview published today.
The I-Pace should be fun.
4th Gear: The Demise Of Beepi
In other news out of Silicon Valley, Beepi, the startup that helped people buy used cars, folded most of its operations last week and will merge with another startup that results in 180 Beepi employees losing their jobs. Part of the problem, Automotive News notes, was a business model that was innovative but tough business model:
Beepi, of Los Altos, Calif., is part of an emerging group of startups that includes Vroom, Shift Technologies Inc. and Carvana, looking to sell used vehicles directly to consumers through the Internet. Each of the retailers has a slightly different business model.
Under Beepi’s model, the company inspects and photographs owners’ cars and posts the vehicle profiles online. Owners keep the vehicles until they are sold, and buyers do not drive the vehicles until making the purchase. Beepi inspects the vehicles again just before delivery, handles the delivery and offers a 10-day money-back guarantee. If vehicles are not sold in 30 days, Beepi offers to buy them.
Although the used-vehicle market has ample space for new entrants among peer-to-peer operations, dealerships and independent stores, it’s difficult to succeed, said Alan Haig, president of buy-sell advisory firm Haig Partners in Fort Lauderdale, Fla.
“Everyone who has been successful has realized that used cars are unique, depreciating assets, and the margins are shrinking because the Internet allows consumers to choose more freely between vehicles,” Haig said. “You have to be a good retailer, not just a software developer.”
5th Gear: Automakers Need Us To Be Cool With China
How important is it America and China get along? These days, very important, which is why President-elect Donald Trump’s tough talk on trade with China has companies—including automakers—worried about the future. Via Reuters:
More than four decades after President Richard Nixon upset the status quo of his time with a surprise visit to Beijing, what’s good for U.S.-China relations is good for General Motors and Starbucks and Apple and Wal-Mart Stores Inc.
China has hit U.S. goods with retaliatory tariffs in the past when disputes flared. China in 2011 slapped duties on U.S.-made large cars and sport utilities as part of a trade dispute.
The stakes are higher now. More than one-third of the 9.96 million vehicles General Motors Co sold globally in 2015 were delivered to Chinese customers. Profits from Chinese operations, including joint ventures, accounted for about 20 percent of GM’s global net income of $9.7 billion in 2015. Ford Motor Co’s China JVs represented about 16 percent of its global pre-tax profit of $9.4 billion in 2015.
[...] “The United States and China are in a symbiotic relationship, we are wed to each other and do best when we grow together,” said Susan Aaronson, a professor at George Washington University who teaches corruption and good governance.
The total value of U.S. trade with China was $599 billion in 2015, according to the U.S. Census Bureau, of which $116 billion was exports to China from U.S. producers, while U.S. companies imported $483 billion in goods from China.
Reverse: Hat n’ Boots
Neutral: Is Google Making The Right Move?
I say almost certainly, yes. But what do you think?