Stellantis thinks it can make a lot of money in India, midsize SUVs did mostly fine in a new side crash test, and Elon Musk. All that and more in The Morning Shift for May 18, 2022.
1st Gear: Hyundai
It wasn’t two days ago when we were talking about Hyundai being a real force in EVs, and, what do you know, on Wednesday Hyundai and Kia announced a new plan to spend $16.5 billion on EV development in what is an EV arms race among automakers.
Hyundai Motor Co. and its affiliate Kia plan to invest 21 trillion won ($16.5 billion) to boost the production of electric vehicles in South Korea, including the establishment of new factory that would ultimately have the capacity to make around 150,000 cleaner cars a year.
Under the plan, the two automakers aim to increase annual EV production in [South Korea] to 1.44 million units by 2030 from an expected 350,000 units this year, Hyundai said in a statement Wednesday. That forecast 1.44 million output would account for about 45% of Hyundai and Kia’s planned global EV production volume by then.
The new factory for purpose-built vehicles will be located within Kia’s existing Hwaseong manufacturing site, Kia said in a separate statement. Construction is expected to begin in the first half of 2023, with commercial production starting in the second half of 2025.
We are going to be awash in EVs before we know it, and, hopefully, one day, one of them will be affordable.
2nd Gear: Elon Musk and Twitter
I have refrained from commenting too much on Tesla CEO Elon Musk’s thirsty attempt to buy Twitter, mainly because it is incredibly boring. I suggest you read Bloomberg’s Matt Levine on the matter if you are interested, because he actually knows what he’s talking about, but the broad outlines of the story are that Elon signed a binding agreement to buy Twitter at a certain price and then, this week, said that the deal maybe can’t happen because of spam bots or something, though, because he signed said agreement, probably still has to buy it, unless Twitter’s board is made up of a bunch of colossal weenies.
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According to Bloomberg, Twitter’s board signaled on Tuesday that they may not be a bunch of colossal weenies.
“We intend to close the transaction and enforce the merger agreement,” the board said Tuesday in a statement to Bloomberg News. Directors voted earlier to unanimously recommended that shareholders approve Musk’s $54.20-a-share offer.
The proposed takeover includes a $1 billion breakup fee for each party, which Musk will have to pay if the deal falls apart due to financing issues. But Musk can’t just walk away by paying the charge.
The merger agreement includes a specific performance provision that allows Twitter to force Musk to consummate the deal, according to the filing. That could mean that, should the deal end up in court, Twitter might secure an order obligating Musk to complete the merger rather than winning monetary compensation for any violations of it.
Many have said, probably correctly, that this is all Elon angling to buy Twitter at a lower price, because Twitter’s stock has tanked since the deal was announced, closing at $38.32 on Tuesday, which is much less than the $54.20-per-share price that Elon locked in to buy. I hope Twitter’s board holds its nerve, if only to prove a point.
3rd Gear: Speaking of Tesla
Here is a slightly bizarre story from Automotive News, about an unfortunate incident last week at a Manheim Auctions site in Florida:
According to the Palm Beach County Sheriff’s Office, a man driving a Tesla lost control of the vehicle in the Manheim parking lot and struck the passenger side of a 2010 Hyundai and a concrete wall, pinning one pedestrian between the two cars and another pedestrian between a car and a wall. The accident took place Thursday, May 12.
The sheriff’s department said one of the pedestrians had critical injuries and was airlifted to Delray Medical Center in Delray Beach, Fla. The press release said the other pedestrian had minor injuries and was transported to HCA Florida JFK Hospital in Atlantis.
In a statement to Automotive News, Manheim spokeswoman Lois Rossi confirmed three people were sent to the hospital and wrote that Manheim was cooperating with law enforcement and had no further comment on the cause of the accident.
A local TV station, CBS12 News, clarifies that the driver was a Manheim employee who was “moving around cars” during an auction. Thoughts and prayers.
4th Gear: The Insurance Institute for Highway Safety Says ‘Most’ Midsize SUVs Did All Right in a New Side Crash Test
That is better than almost all of the compact SUVs that IIHS tested, all but one of which failed to get a good rating. The midsize SUVs did better, but also didn’t hit it out of the park.
Ten out of 18 midsize SUVs earn good ratings: the Ford Explorer, Infiniti QX60, Lincoln Aviator, Mazda CX-9, Nissan Pathfinder, Subaru Ascent, Toyota Highlander, Volkswagen Atlas, Volkswagen Atlas Cross Sport and Volkswagen ID.4, the only electric vehicle in the group.
Two more, the Buick Enclave and Chevrolet Traverse, earn acceptable ratings. Six others are rated marginal: the Honda Passport, Honda Pilot, Hyundai Palisade, Jeep Wrangler 4-door, Kia Telluride and Nissan Murano.
When IIHS announced the first ratings in the new test in October, only one out of 20 small SUVs managed a good rating, while half were rated marginal or poor.
“It’s encouraging to see so many midsize SUVs from different automakers earn good ratings in this more challenging evaluation,” says IIHS Senior Research Engineer Becky Mueller, whose research formed the foundation for the new test protocol. “These results will help confirm the adjustments they need to make to other vehicles going forward.”
IIHS introduced the new, tougher side test to address higher-speed crashes that continue to cause fatalities. Like the original side test, the new test represents the type of crash that occurs when two crossing vehicles collide in an intersection.
I don’t know anybody who consults IIHS ratings before buying a car, but I guess I’m glad it still exists. Well, glad for anyone to be out here telling automakers they aren’t good enough.
5th Gear: Stellantis Sees Opportunity In India
The Indian car market is mostly Suzuki, Hyundai, Tata, Mahindra, and Kia, and, to a lesser extent, Toyota and Renault, because Indian consumers value small and inexpensive cars, because they know what’s good. Stellantis, which makes a lot of big and expensive cars, sees an opportunity in India, for some reason, according to Reuters.
Stellantis chief Carlos Tavares expects India to be a profitable market and a bigger growth opportunity than the carmaker previously expected as it faces challenges in countries such as China and Russia.
India, where Stellantis sells its Jeep and Citroen brands, makes up a fraction of the carmaker’s global sales but Tavares said he expects revenues in the South Asian nation to more than double by 2030 and operating profit margins to be in double-digits within the next couple of years.
“Being profitable in India is possible if you do things the India way,” Tavares said at a virtual media roundtable late on Tuesday.
This, according to him, includes sourcing parts locally and vertically integrating the supply chain to keep costs low, and engineering cars locally with features Indian consumers want and are willing to pay for.
Good luck, Carlos.
Reverse: Happy Birthday Heinz-Harald Frentzen
He finished second in the Formula 1 driver’s championship in 1997 and third in 1999. He is still underrated in my book. Here’s an old clip from The New York Times, which is also a reminder of how good Williams used to be and how lame Michael Schumacher was:
On Sunday, he drives at the Canadian Grand Prix in Montreal where, in last year’s chaotic, accident-filled race, Frentzen was involved in one of the season’s most controversial incidents on lap 20.
After the safety car neutralized the race for a fourth time, Michael Schumacher made a pit stop while he was in the lead. When he re-entered the track, he cut in front of Frentzen, who was going full speed in third place.
Perhaps remembering the family business, Frentzen chose to spin out rather than collide. Schumacher served a 10-second penalty but won the race. He claimed he hadn’t seen Frentzen, but on television it looked as if he cut him off to gain a position.
The incident symbolized the different directions taken by the careers of the two German drivers. Frentzen was in the second of two failed seasons at the once-dominant Williams team. He won only one race, while Schumacher was the sport’s dominant driver, twice world champion.
While Ferrari and McLaren drivers still control the races this year, Frentzen is leading the rest of the pack. He is fourth in the drivers’ title race, behind two Ferrari drivers and a McLaren driver, and he has placed his Jordan team third in the constructor’s race, ahead of Williams.
Frentzen, 33, seems to be in charge of his destiny for the first time since he came to Formula One in 1994. As a teenager he outshone Schumacher in karting; he finished second in the Formula Three series in Germany in 1989 when Schumacher finished third, and he was considered the more talented of the two at Peter Sauber’s sports car team in 1990.
But where Schumacher made a lightning start to his career in Formula One, Frentzen went adrift in Formula 3000. (He also lost his girlfriend to Schumacher, and she is now Mrs. Schumacher.) When he finally broke into Formula One, it was with the new Sauber team. He squeezed good results from a bad car, and when Ayrton Senna was killed at Imola, Italy, Frank Williams invited Frentzen to take Senna’s place.
Neutral: How Are You?
The residents in my building are up in arms over a proposal to turn a nearby street into a pedestrian plaza, thus eliminating probably 70 or so street parking spots. Anyone who owns a car in New York, myself included, is completely mad.