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: Munich Prosecutors Arrest Audi’s Top Exec
In the ceaseless narrative that is Volkswagen’s decision to cheat on diesel emissions tests, which eventually exploded into the Dieselgate scandal, several executives from Volkswagen and Audi have been arrested for their roles in organizing the massive cheating issue. Now, prosecutors in Munich said Monday that Audi CEO Rupert Stadler has been detained because of “concerns over potential evidence tampering,” reports CNN Money.
Munich prosecutors said in a statement Monday that Rupert Stadler, who has worked for Audi parent company Volkswagen since 1990, had been detained because of concerns over potential evidence tampering.
Stadler, 55, is the highest ranking Volkswagen executive to be arrested in connection to a costly diesel emissions scandal that burst into public view in 2015.
A VW spokesperson confirmed to CNN Money that Stadler had been arrested, and said the automaker’s board would discuss it later Monday.
“The principle of the presumption of innocence continues to apply to Mr. Stadler,” the spokesperson said in a statement.
The arrest follows a $1.2 billion fine levied last week against VW by the German government. Martin Winterkorn, the former VW CEO, was indicted last month by US prosecutors for alleged wire fraud, conspiracy to defraud American customers and violations of the Clean Air Act.
This is the song that never ends.
2nd Gear: Earthquake In Japan Is Messing With Auto Production
Japan’s second-biggest metropolis, Osaka, is dealing with the after-effects of a major 6.1 earthquake Monday that has killed at least three people. According to Automotive News, the earthquake is wreaking havoc on auto production in the area as well, with factory lines halted as a resul.
From Automotive News:
Honda Motor Co., Mitsubishi Motors Corp. and Toyota Motor Corp. unit Daihatsu all stopped production at plants in the region.
Daihatsu said it would resume operations at the Osaka plant on Monday evening.
Honda and Mitsubishi plan to resume operations as well after conducting safety checks, the News reported.
3rd Gear: Burgeoning Trade War Between China-US Annoys Automakers
President Donald Trump’s administration has complicated life for numerous automakers across the world, and that picked up last week, after he made good on his word to impose a 25 percent tariff on $50 billion worth of Chinese imports.
That batch of stuff, according to Automotive News, includes “auto parts critical to the U.S. supply chain.” In a surprise to no one, China responded immediately with a tariff on U.S. goods, including cars. Woo, trade war.
From Automotive News:
The volley of fire dashes hopes for a more amicable resolution of the U.S.-China trade dispute, hopes that were raised just a month ago when China agreed to substantially lower tariffs on imported vehicles following pressure from U.S. President Donald Trump.
If the China action moves ahead as planned July 6, it would hit Tesla and German luxury automakers hardest. Mercedes-Benz and BMW are big exporters of crossovers and SUVs to China from their U.S. plants. Tesla exported 14,779 U.S.-built vehicles to China last year.
In particular, the timing of a prospective trade war isn’t good for Tesla, which just fired 9 percent of its workforce in a quest to achieve profitability. And Automotive News says Trump administration could follow this up by imposing tariffs on an additional $100 billion of goods. Buckle up.
4th Gear: Ford’s AV Hub Planned In Detroit
Ford is gearing up to deploy a massive public relations campaign for redeveloping a significant relic of Detroit, the Michigan Central Depot train station near downtown. That kicked off Sunday, with Executive Chairman Bill Ford Jr. giving interviews to every news outlet in Detroit to explain his grand vision for the building.
From The Detroit News:
Plans for the Corktown campus, to be announced Tuesday, would deliver 1.2 million square feet of mixed-use development spread over multiple parcels and at least three recently acquired buildings. Ford expects to move 2,500 of its employees — roughly 5 percent of its southeast Michigan workforce — to the campus, with space for an additional 2,500 entrepreneurs, technology companies and partners related to Ford’s expansion into Autos 2.0.
“It’s not just a building,” Ford Executive Chairman Bill Ford Jr. told The Detroit News in an interview at Ford World Headquarters. “It’s an amazing building, but it’s about all the connections to Detroit, to the suburbs, and the vision around developing the next generation of transportation.”
Detroit has a rich history in recent years of ceding major tax breaks to corporations looking to invest in the city’s downtown, and Ford didn’t hide the fact that it’s looking to cover one-third of the renovation costs through tax incentives.
The company, pointing to previous projects in the city, expects roughly a third of the up-front renovation costs would be covered by tax breaks for restoring the historic depot. Ford, the city and the former owners of the building have declined comment on how much Ford paid for the station, or how much Ford will spend on the renovation.
Seeing the train station rehabbed is going to be a remarkable sight. But you have love the big businesses that expect renovation costs to be covered by the public. So nice.
5th Gear: GM Thinks Its Fuel Cell Business Is About To Take Off
Automakers are intensely focused on making electric vehicles the powertrain of our future, but there’s other options in the works. Some players think fuel cell technology can work, and General Motors counts itself among that crowd.
The way it’s pursuing the endeavor is by partnering with nonautomotive companies, reports Automotive News.
The latest example: an exclusive deal with Liebherr-Aerospace of France to develop a hydrogen fuel cell-powered auxiliary power unit for aircraft applications. An auxiliary power unit typically powers an aircraft’s lighting, air conditioning, backup systems and other auxiliary functions.
The deal marks what’s expected to be the automaker’s first major foray into aerospace since it sold its Hughes Aircraft operation two decades ago. It calls for the companies to mutually explore opportunities to leverage Liebherr’s strong position as a supplier of on-board aircraft systems with GM’s fuel cell technology.
The work, Automotive News, represents an “answer to the quandary facing all automakers,” which is how to handle the costly research and development work of fuel cell tech and not pass those costs down to customers.
Such tie-ups and revenue opportunities allow GM to cut costs and scale up volume more rapidly than relying on consumers to embrace, and pay for, the new technology.
“I think it’s a great idea,” said Morningstar analyst David Whiston. “There’s no reason they can’t do something like that. The military can be a nice revenue path … which is very small today.”
Fuel cell is a promise long in the works. We’ll see how it pans out in the coming years.
Reverse: What A Long Time Ago
Neutral: Audi CEO Arrested
Another major CEO arrested over Dieselgate. Is there anyone else in VW or Audi’s ranks who could face arrest?