Here's Why Alfa Romeo Fell Flat On Its Face In America

Illustration for article titled Heres Why Alfa Romeo Fell Flat On Its Face In America
Image: Alfa Romeo
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The decade of Alfa Romeo that barely was, saving money with the government, something about Tesla, and another thing also kind of about Tesla! We’re counting down to the new decade in this, the last Morning Shift of the year, on Monday, Dec. 30, 2019.

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1st Gear: Alfa Rome-no

Let’s talk about Alfa Romeo’s very bad 2019, from The Detroit Free Press:

Through the end of the third quarter this year, U.S. Alfa sales from its three models — Giulia sedan, Stelvio SUV and 4C two-seater — were down 27%, to 13,347. That followed a clearly more promising 2018, which saw sales almost double the previous year to 23,820, thanks largely to a boost from Stelvio sales.

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As a quick refresher, Fiat Chrysler Group, Alfa’s parent company, brought the Italian brand back the U.S. with the 4C roadster in 2013. While that was never expected to be a hit, the Guila sedan introduced in 2015, and the Stelvio crossover in 2017, are not yet torturing the minds and “souls” of the C-suites at Audi, BMW, or Mercedes just yet.

So what’s going wrong? Well, not having a crossover for those early years didn’t help anything. First, nobody knew what the brand was when it got here, then the brand didn’t offer what everybody is currently buying. Not a great plan:

“It’s a brand that has been fundamentally absent from the U.S. for well over 20 years, and there’s still many people that have never heard of Alfa Romeo … and it just takes time, it takes time,” [former head of Alfa Reid Bigland said back in 2017.] “We’re looking to build great vehicles, great experience and be patient and not get into brand-eroding or vehicle-eroding value practices.”

And now some good news, well, if the need to spend billions of dollars for marginal gains over unpredictable and loosely defined spans of time is good news:

“The slow market acceptance of the Giulia and Stelvio have put the damper on the brand’s grand ambitions and FCA knows it will take billions of euros more to break into this market,” Fiorani said.

The brand’s best hope for needed investment could be the merger with PSA Groupe, or not, Fiorani said.

“Alfa Romeo fills a profitable niche that FCA needs. However, the billions it will take to round out its whole lineup would probably be too much for FCA to handle on its own. Possibly with the support of PSA, Alfa Romeo could remain in the market long enough to become a near luxury alternative to the more established brands. If the new company needs to reduce expenses, Alfa Romeo could be among the first things cut,” Fiorani said.

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Earlier this year, Alfa scaled back its plans for more sports cars and will instead introduce refreshed Giulia and Stelvio models alongside two new crossovers in the next couple of years. We asked for this!

2nd Gear: Federal Deals On Electric Motorcycles

Electric motorcycles may not have the city efficiency and rural range of their gas-powered counterparts just yet, and boy are they sure expensive, but the federal government approved an extension to the E-motorcycle Federal Tax Credit, which means you can still get a discount on a new, semi-practical toy.

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Stuff like what Zero Motorcycles sells, or even the new Harley-Davidson Livewire.

Here’s how it works according to the IRS, which hasn’t updated its website since the extension passed on Dec. 20, and lists the wrong years:

You may be eligible for a credit under section 30D(g), if you purchased a 2- or 3-wheeled vehicle that draws energy from a battery with at least 2.5 kilowatt hours and may be recharged from an external source. You must have purchased the vehicle in 2012 or 2013 and begun using it in the year in which you claim the credit. The credit is 10% of the purchase price of the vehicle with a maximum credit of $2,500.

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Lucky for you, the rebate backdates to purchases from 2018 and 2019, just in case you already bought a qualifying electric motorcycle and still want some money back.

You can find the appropriate tax documents to fill out with the rest of your forms come tax time here. 

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3rd Gear: Tesla Builds Cars On Other Continent

Since we’re between holidays and nobody is working, one of the biggest headlines today is Tesla “delivering” its first cars built in the freshly finished Chinese Gigafactory. As with anything having to do with Tesla, though, there is a technicality.

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Here’s what Bloomberg reported:

Tesla Inc. delivered its first China-built cars, a milestone for Elon Musk’s company as it accelerates a push in the world’s largest electric-vehicle market.

The company handed over the first 15 Model 3 sedans assembled at Tesla’s new multibillion-dollar Shanghai plant — its first outside the U.S. — to company employees at the facility on Monday. More workers will receive vehicles over the next couple of days, and deliveries to customers will start in January, company officials said at the ceremony.

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Did you catch that? Tesla handed over 15 cars to “company employees,” and customers won’t get their cars until next month. Why does it matter? Because most car companies would report early production models looked over and cared for by employees as pre-production models.

When you’re delivering to customers on a broad scale, and not just 15 guys you pay to be nice for a few minutes in the parking lot of their day jobs, that’s when you can claim your first continental deliveries. Otherwise, it’s just an employee ownership program and it’s not special.

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But regardless, the Gigafactory model of manufacturing (which is just regular manufacturing but BIGGER, with Elon Musk occasionally quizzing you about your job’s function on the spot) is international now—something many of us didn’t expect to happen a decade ago!

4th Gear: New Decade, NIO Car Company

What’s good for Tesla is bad for its Chinese competition, including NIO, one of the marginally more successful electric vehicle startups in China that’s been struggling to actually sell cars since its deliveries began early this year and is something like $6 billion in the red.

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Here’s more from Bloomberg:

While NIO has cut jobs and started to scale back marketing expenditures, its finances remain critically strained. China’s electric-car market is slowing as the government reduces subsidies, and competition is getting tougher with Tesla Inc. preparing to start deliveries of its China-built Model 3 sedans.

[...]

Shares of NIO have plunged 61% since the company had its initial public offering in New York last year. That’s left it with a market value of $2.5 billion, compared with Tesla’s market capitalization of about $78 billion.

On Saturday, NIO officially unveiled the EC6 SUV, the third major product in its lineup. Pricing for the model, which has a large glass roof, will be announced in July, and deliveries are set to start after that.

To further fuel demand, the company has launched promotional incentives including 0% interest for three years and guaranteed subsidies for cars registered before the end of February 2020. NIO’s sales will probably rise 44% next year to 29,973 vehicles, research firm LMC Automotive predicts.

Yet losses will probably continue to mount: for 2020, the average loss estimate is $1.2 billion on revenue of $1.7 billion, according to analysts’ predictions compiled by Bloomberg. The loss for the third quarter ended last September probably was $381 million, the average estimate shows.

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5th Gear: At Boeing, Profits May Risk Lives

Folks in America love to say you can’t get mad at a business for trying to make a little money, and yet people are going to anyway! Especially when that business is Boeing, and that money it made from trying to make pilot training and testing “profitable” doesn’t look so hot when planes are literally falling out of the sky, possibly due to unskilled pilots.

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Bloomberg has a great outline of the steps Boeing took to save money, avoid unionized labor, and potentially endanger the lives of its passengers in the process:

In 2013, a year after a vote that more than doubled the number of unionized pilots, the company announced that it was moving its Seattle-area flight simulators to Miami. There and in cities such as Singapore and London, amid an historic wave of orders, it relied on hired help known as “purchased service pilots,” or PSPs. Boeing’s longtime trainers had another abbreviation for them: DBCs, or “dirtbag contractors.”

In practice, according to interviews with more than a dozen pilots and engineers who participated in the Max’s development, the turmoil left the aircraft’s cockpit designers with a lack of input from the instructors who regularly saw how the typical airline pilot responded to unusual situations. Even among the pilots, there were communications breakdowns, partly caused by disagreements over unionization. At times conversations were civil but terse.

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The design team behind the 737 Max, the Boeing aircraft that was involved in two fatal crashes and the entire model was grounded back in March of this year, was essentially broken up in a drive to boost profits and save money, according to Boeing’s former chief training pilot Mike Coker:

Boeing’s fight with the pilots came at the same time as layoffs among the engineers and was part of a drive, these people say, to lessen the clout of Seattle-area unions. Company reassignments placed thousands of miles between designers honing flight-deck concepts in Seattle, trainers working with airline pilots in Miami, and a team in California that provides day-to-day support of airplanes in the field. “The driving factor was monetary,” says Mike Coker, Boeing’s former chief training pilot. “Those relationships between the various professional organizations that for decades resulted in a good product, an improved product—they weren’t taken into consideration as much as the bottom line.”

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Bloomberg reports even Boeing execs point to profit-gouging as a point of stress in the Max saga:

Three former senior Boeing executives, however, say privately that they regret the profit-driven imperatives imposed on the training process and see it as critical to understanding how a company renowned for meticulous engineering missed the mark so badly with the Max.

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The two fatal Max crashes are believed to be caused by a glitch in the flight controls of the plane which can flummox untrained and inexperienced pilots.

Pilots outside of Europe and the U.S., like those working in Indonesia or Ethiopia—where both crashed planes were operating—may lack the flight hours or training to regain control amid the glitching flight controls. A glitch that may not have occurred had Boeing not blown up its development and testing teams to fight unions and save coin.

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The Bloomberg report is expansive and dives into the history of Boeing and how the company got involved in one of the biggest and longest-lasting groundings in history. Give it a read.

Reverse: UAW Calls For One Of The First Sit-Down Strikes

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You can read more about the strike here.

Neutral: What’s The Sweet Spot For E-Motos?

Sometimes I go play around the Zero Motorcycles website and I always reach the same conclusion: to get the range specs I’m comfortable with, the options push the price of a 200-mile range bike to over $20,000, even including the federal rebate. What range, or price, would you rather see? When will it hit a nice balance?

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Here’s Why Alfa Romeo Fell Flat On Its Face In America

Let’s be honest here, they’re pieces of shit as well.