The Chinese government isn’t happy with reported issues with Tesla’s early deliveries, the UAW continues to implode in scandal, Big Oil’s price war escalates as Cadillac cancels its EV unveiling, and much more in The Morning Shift for Tuesday, March 10, 2020.
While Tesla is used to facing government scrutiny for its Autopilot hardware and software here in the U.S., its early batches of cars produced in the new Shanghai Gigafactory are already coming under scrutiny for shipping with the wrong computer chips, and the Chinese government is speaking up about it.
From Automotive News:
Tesla started delivering China-made Model 3 electric sedans from its $2 billion Shanghai factory in December, but some buyers said on Chinese social media that the control units in their cars run on HW2.5 chips, which are less advanced than the HW3.0 chips listed on their specification sheets.
The Ministry of Industry and Information Technology urged Tesla on Tuesday to ensure product consistency, quality and safety, according to a statement on the ministry’s website.
HW3.0 chips are necessary for the full self-driving mode in Tesla’s driver assistance system, a feature that is optional when customers order Tesla cars.
In a post on its Weibo account last week, Tesla said the swap was due to a lack of supply of the HW3.0 chips and the company would replace the chip for customers who received cars with the HW2.5 systems.
A reminder that Tesla is the first outside company China granted permission to build a factory and produce cars without requiring a domestic automaker partnership, as other companies like Jaguar Land Rover, BMW, etc. have had to do. It’s mostly to boost the sales of electric vehicles, with the government acknowledging Tesla as a leader in the segment.
Quality issues aside, the Shanghai Gigafactory was of course a good idea, as Bloomberg reports:
Tesla Inc. delivered almost one-third of all electric vehicles in China last month, an industry group said, signaling the Model 3 maker has been relatively unscathed by the coronavirus outbreak that’s paralyzed much of the country.
The company delivered 3,958 units in February — or about 30% of all new-energy vehicles in the country — said Cui Dongshu, secretary general of the China Passenger Car Association, in an online briefing on Monday about the country’s overall industry figures. That’s a “pretty good performance,” he said.
Keep in mind this has been a month of quarantine for much of China due to coronavirus and nationwide car sales tumbled by almost 80 percent.
Hot off of a bargaining corruption case between the UAW and Fiat Chrysler, and amidst a current investigation into whether or not the new UAW President, who replaced the corrupt guy, is also guilty of corruption, the UAW now faces a new scandal as current women staffers working for the union allege sexual misconduct from regional manager Richard Rankin.
From The Wall Street Journal:
Two current female UAW staffers have alleged that Richard Rankin, a regional director who holds a powerful position on the union’s governing board, repeatedly made sexually charged remarks that in one instance escalated to a physical threat, the people close to the inquiry say.
UAW leaders have tapped an attorney from the Washington, D.C.-based law firm Bredhoff & Kaiser, PLLC to conduct an independent investigation into the women’s claims, the people said. The investigation began in January after a group of UAW-represented nurses filed a separate formal grievance to the union’s board involving Mr. Rankin last fall that also contains allegations of sexual harassment, some of these people say.
Even before news broke of the sexual misconduct allegations, the union already has had to face potential federal oversight due to the corruption scandals.
General Motors wants a piece of whatever comes out of the investigation into the corruption scandal between Fiat Chrysler and the UAW, claiming it’s owed in new Racketeer Influenced and Corrupt Organizations Act (RICO) lawsuit.
From Automotive News:
General Motors on Monday opposed Fiat Chrysler Automobiles’ motion to dismiss its racketeering lawsuit, disputing FCA’s claims that GM failed to allege that it was a direct victim and that it filed the suit outside of the statute of limitations.
In a wide-ranging November lawsuit, GM claimed that FCA received an unfair advantage in labor costs by bribing UAW officials during years of contract negotiations that cover workers’ wages and benefits. The suit also alleges that Sergio Marchionne, the late FCA CEO, wanted to weaken GM in an effort to force a merger between the two automakers.
Monday’s filing is the latest in what promises to be a long, drawn-out case in federal court between the rival Detroit automakers. FCA has promised a vigorous defense.
The entire Marchionne courting saga with GM was never going to end quietly.
Russia and Saudi Arabia are continuing to gear up for a price gouging war between each other, in some cases extending beyond the maximum amount of production that’s actually sustainable and breaking records.
Saudi Arabia escalated its oil price war with Russia on Tuesday, as its state-owned company pledged to supply a record 12.3 million barrels a day next month, a massive increase to flood the market.
The supply hike — more than 25% higher than last month’s production — puts Aramco above its maximum sustainable capacity, indicating that the kingdom is even tapping its strategic inventories to dump as much crude, on the market as quickly as possible.
Moscow responded within minutes, with Energy Minister Alexander Novak saying Russia had the ability to boost production by 500,000 barrels a day. That would put the country’s output potentially at 11.8 million barrels a day — also a record.
“There is a significant amount of market posturing going on between Saudi Arabia and Russia,” said Jaafar Altaie, managing director of Abu Dhabi-based consultant Manaar Group. “They’re both getting ready to fight a pretty aggressive price war.”
In the meantime, the stock market failed to rebound, as it usually does on the Tuesday after a Monday with a big drop, and the coronavirus continues to push cancellations, closures, and quarantines as it wreaks further havoc on the global economy.
It only Tuesday.
Speaking of, General Motors made a big deal about its upcoming electric vehicles last week, which was supposed to be crowned off in early April with the reveal of Cadillac’s newest EV, the Lyriq crossover. But the event has been canceled.
From Automotive News:
The automaker on Monday called off the early-April unveiling of the Cadillac Lyriq crossover, the first of several battery-powered models Barra has said will debut in the next few years. Worse yet, the boost GM shares got when she made the case the company can compete with Tesla Inc. was short-lived. The stock was hit hard by Monday’s virus-related market rout, falling the most since the carmaker’s November 2010 initial public offering.
Cadillac is reevaluating plans for rolling out the Lyriq now that it won’t be introduced at the canceled April 2 event in Los Angeles, according to a spokesman. The vehicle is the first GM will build using the new battery and electric-drive system the automaker showed off to investors and media last week.
The only thing going viral that night was likely the coronavirus itself, anyway.
It’s already been a year since 157 people aboard Flight 302 died when the plane crashed, the second of two Boeing 737 Max crashes in the span of five months that eventually led to plane model being grounded and an investigation of allegedly faulty software programs and procedures.
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