Rivian is laying off 6% of its workers, Volkswagen is having a rough time, and Apple got itself a Lamborghini bigshot for its automotive team. All that and more in The Morning Shift for Thursday, July 28, 2022.
Two weeks ago, it was reported that Rivian would cut 5% of its workers in order to reduce expenses. Now, that bell has officially tolled — for six percent of workers, some 840 people who are now out of a job. From CNN Business:
Rivian, the Amazon-backed manufacturer of electric pickups, SUVs and delivery vans, is laying off about 6% of its workforce as the company adjusts as the “world has dramatically changed,” according to an email sent by CEO RJ Scaringe to Rivian’s roughly 14,000 employees.
About 840 of those employees were told Wednesday that they will be leaving the company.
Scaringe pointed to inflation, rising interest rates and increased commodity prices as factors that led the startup automaker to trim its workforce.
“We are financially well positioned and our mission is more important than ever, but to fully realize our potential, our strategy must support our sustainable growth as we ramp towards profitability.” Scaringe wrote in an email to employees announcing the layoffs.
There’s a certain doublespeak to that email that only comes around in the world of business. “We totally have cash reserves on hand, and that’s why we’re cutting hundreds of jobs. The money is fine, it’s just also tight and we can’t afford all of you.” One wonders how many positions could’ve been funded by the $422 million Scaringe raked in last year.
2nd Gear: Volkswagen Knows Things are Bad, Swears They’ll Turn Around Soon, Just Give It One More Shot, C’mon, For Old Times Sake
Volkswagen, refreshingly, is cutting the doublespeak entirely — perhaps because, once your financials reach a certain point, no one believes it any more. The company saw a 28 percent drop in profits last quarter, which is known in the business world as “bad.” It’s an industry term. From Automotive News:
Volkswagen Group, grappling with an upcoming change in CEOs and numerous global business headwinds, reported a 28 percent drop in second-quarter operating profit to 4.7 billion euros ($4.79 billion) despite a 3.3 percent rise in revenue, as negative valuation effects from commodity hedging transactions weighed on results.
The automaker confirmed its outlook for the full year because it expects supply chain bottlenecks of parts from wire harnesses to microchips to ease, but it warned that the war in Ukraine and threats to European energy supply loom over the second half.
VW said deliveries have recovered “noticeably” in recent weeks, pointing to improvements across the group in securing enough semiconductors and other components.
Monthly production volumes across the group improved significantly towards the end of the second quarter, VW said, particularly as coronavirus restrictions lifted in China.
“Look, things are bad now, but we’re working on it and they’ll be good soon” is at least an honest approach, though one we’ve been hearing from everybody now for too long. Sure, it’s the exact same one I took when being served academic probation in college, but guess who got a degree anyway? What I’m saying is, it works.
No one really knows what to expect from the Apple Car (except, of course, our own Andy Kalmowitz), but it seems things may be leaning in a more performance-oriented direction than expected. At least, if the company’s recent hiring of Lamborghini chassis designer Luigi Taraborrelli is anything to go by. From Bloomberg:
Apple Inc. has enlisted one of Lamborghini’s top car-development managers in a sign that it’s stepping up work on a self-driving electric vehicle, according to people with knowledge of the situation.
The company hired Luigi Taraborrelli, a 20-year veteran of the Italian carmaker, to help lead the design of Apple’s future vehicle, said the people, who asked not to be identified because the matter isn’t public. Taraborrelli was most recently Lamborghini’s head of chassis and vehicle dynamics.
The executive worked on Lamborghini models such as the Urus, Huracan and Aventador, in addition to more limited models like the Huracan Sterrato off-road vehicle and Asterion concept car. He oversaw Lamborghini’s chassis development, as well as areas such as handling, suspensions, steering, brakes and rims, according to his LinkedIn profile.
Taraborrelli gave us Lamborghini’s greatest concept: An off-road Huracan. Just slap an Apple badge on that and I will buy one. I’ll even sign up for the Apple Card to get bonus points on the purchase.
Toyota had a rough second quarter, falling nearly ten percent behind its production goals. Despite that, it’s convinced it can make up the difference in the rest of the year, and still manage its self-imposed year-end numbers. From Reuters:
Toyota Motor’s production for the April-June quarter fell around 10% short of its initial plan, but the automaker struck a more optimistic note for its business from August onwards as China’s COVID-19 lockdowns eased and demand outside Japan was resilient.
The world’s largest automaker by sales said on Thursday that output and sales were on the path to recovery, raising hopes it will still be able to reach its record 9.7 million global vehicle production target for the year ending March 2023.
For its April-June first quarter, Toyota produced 2,120,577 vehicles, 9.8% below its initial target of 2,350,000 for the period.
Toyota did overproduce cars in the preceding quarter, so things aren’t quite as dire as they seem. Still, it wasn’t enough to make up for the company’s deficit — the rest of the year will have to see yet more ramped-up production to meet its goals.
5th Gear: Stellantis Doesn’t Understand What People Are Talking About With This Whole “Economic Downturn” Thing, Things Are Looking Great
Sure, the rest of the market may be struggling with production and cutting jobs, but not good ol’ Stellantis. The company saw record profits in the first half of 2022, thanks to high-margin EVs and European sales. From Automotive News:
Stellantis posted record results for the first half despite headwinds including raw material inflation and semiconductor scarcity.
CFO Richard Palmer said the strong performance was supported by sales of high-margin vehicles, including electrified models.
Adjusted earnings before interest and tax rose 44 percent on a pro-forma basis to 12.4 billion euros ($12.7 billion) in the January-June period, the automaker said on Thursday. Stellantis, created from the merger of Fiat Chrysler and PSA Group, does not report quarterly financial results.
“We are ahead of Tesla in Europe in electric vehicle sales, and not far from Volkswagen,” Palmer said on Thursday.
For once, Jeep and Ram don’t seem to be the drivers of the Stellantis Automotive Empire. That means Ram needs to up its game, and there’s only one perfect way to reel in more buyers and more profits: Bring back the V10-powered 1995 Ram 2500, in red.
I keep seeing “recession” trending on Twitter, and every day another company cuts tens or hundreds of workers. What do we think comes next, a minor S&P correction? A 2008-style crash? Construction of the Thunderdome?