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 to start 2018 off with a bang.
1st Gear: Lower Auto Sales Expected In 2018 Thanks To Feds
Everyone’s anticipating a reduction in car sales this year, and that in part’s expected because the Federal Reserve is forecasting three interest rate hikes in 2018, reports Bloomberg. That, according to the news outlet, will crimp the “free-flowing credit that’s helped fuel a record streak of demand growth that’s come to an end.”
Here’s more from Bloomberg:
“Consumers could face slightly higher costs for all their borrowing: credit card balances, student loans, financing a house or a car,” said Charlie Chesbrough, senior economist at Cox Automotive, which owns websites including Kelley Blue Book and Autotrader. “At the same time, higher rates drive up the cost to provide low-rate financing, which eats into profit margins and hurts the carmakers as well.”
The central bank, which hiked rates three times in 2017, raises interest rates to keep the economy from overheating and leading to high inflation. For consumers, those protective measures make it more expensive to take on new car loans or leases.
It’s going to be an interesting year!
2nd Gear: Tesla Misses Goal For Fully-Autonomous Coast-To-Coast Drive
In October 2016, Tesla announced that every car being produced at its Fremont, California, factory will come equipped with hardware capable of handling a fully-autonomous drive. By the end of 2017, he said, Tesla will be able to do a “demonstration guide of fully autonomy” from Los Angeles to New York city, ending with the car parking itself.
But not even a year later, that goal seemed less plausible, according to Musk himself. In an earnings call, he issued a slight caveat: that demo might be delayed until early next year.
“It is certainly possible that I will have egg on my face on that front, but if it’s not at the end of the year it will be very close,” Musk said.
Well, New Year’s Eve came and went, and unless Tesla miraculously pulled off the drive at night without anyone knowing, it missed Musk’s goal.
Now, a slight delay isn’t catastrophic, as the regulatory landscape isn’t in place to oversee self-driving cars. But Musk’s goal was a big talking point in the industry—even if he’s known to issue overly-optimistic timelines. Rather than bask in the limelight of being the first company to pull off such a feat Tesla is watching its head start ceded to others, like Google’s self-driving car unit Waymo, which deployed a fleet of driverless cars in Phoenix a couple months back.
I reached out to Tesla to see if it has any update on when the drive could be expected, and the post will be updated if a comment’s returned. I’m just wondering if anyone egged Elon yet.
3rd Gear: Faraday Future CEO Stays Put In U.S.
The day after Christmas, electric car startup Faraday Future’s boss, Jia Yueting, was ordered by Chinese regulators to return to the country and address a sky-high pile of debt that accrued at his main venture, tech conglomerate LeEco. The order said Jia needed to be back in China by Dec. 31.
Perhaps knowing he’s not likely to be sent back by the U.S., as the country has no extradition agreement with China, Jia rebuffed the order and is staying put in California, reports Reuters. The reason? He says he’s making significant progress on raising money for Faraday.
Here’s more from Reuters:
Jia said in a statement that he had asked his brother, Jia Yuemin, to meet the regulator face-to-face last Friday to provide a report after the notice was issued.
“I am deeply sorry and blame myself for the negative impact of LeEco’s debt crisis,” he said in the statement that was posted on his official WeChat account on Tuesday.
“The fundraising for Faraday Future in the United States is making significant progress and there are many tasks I need to push forward in order to ensure the production and timely delivery of the FF91,” he said, referring to a luxury electric vehicle (EV) that LeEco is developing with Faraday Future.
Reports have circulated that Jia netted as much as $1 billion in a recent round of fundraising. This came just weeks after claims that Faraday raised $900 million from an investment by Tata Motors, which vehemently denied that was the case. One of the reported investors in the latest $1 billion claim has already come out and denied involvement with Faraday; what’s more, we’ve heard the figure could be substantially less, somewhat closer to $300 million, if it even happened.
Whatever the case, Jia’s publicly adamant that it’s going well, but officially, Faraday had no comment on the matter. (Late last month, a spokesperson told me: “We will not comment on company financials or our investors.”)
In any event, Jia’s likely fine to stay in California, at least for now. One Beijing-based lawyer told the South China Morning Post that Chinese regulators have no “legal power to repatriate Jia” from the U.S., as there’s no “extradition agreements between China and the States.”
All of this is happening just one week before Faraday’s supposed to appear at this year’s Consumer Electronics Show in Las Vegas. Can’t wait for that.
4th Gear: The Future Of Cars Is At CES
Speaking of CES, which is competing this month with the Detroit Auto Show, there’s going to be an intense focus on the Future Of Cars. It is a technology conference after all.
Automotive News put together some of the expected highlights of the week:
While auto shows are the primary platform for manufacturers to show off their latest vehicles and detail short-term product plans, CES has become the forum for bombastic announcements on future technology.
In 2017, we saw Fiat Chrysler Automobiles’ Portal minivan concept and Toyota Motor Co.’s artificial intelligent assistant Yui, along with a string of announcements of partnerships between tech and auto companies.
This year, Ford, Nvidia, Intel and Baidu are expected to make announcements at the show, though the companies have been tight-lipped about their plans.
There’s new startups, wild concepts, and big announcements expected from the likes of Nissan and Toyota. It’ll be a long few days, but expect a lot more from us soon on what came out of CES.
5th Gear: Feds Looking At Ford Recall
Back in 2016, Ford recalled more than 150,000 vehicles—including model year 2011 and 2012 F-150 pickups, Ford Expeditions, Lincoln Navigators, and Mustangs—because the automatic transmission could “unexpectedly shift into first gear, causing drivings to lose control,” reports the Associated Press.
But federal regulators are now looking into whether the recall should be expanded to include a million additional vehicles.
Here’s more from the AP:
The National Highway Traffic Safety Administration says it’s now investigating whether Ford should have included up to 1.4 million F-150s, Navigators, and Expeditions from the 2011 and 2012 model years as well as 2013 models.
The federal regulator says it’s continuing to receive complaints from owners, including some who say Ford’s recall repair didn’t work.
Ford said it’s cooperating with the investigation.
Reverse: This Would’ve Been Nice To Find
Neutral: Tesla And Autopilot
The consensus in the auto industry is that Tesla has fallen behind in the self-driving car game. Do you think it can, with everything else on its plate at the moment, catch up?