The Shortages Are Coming For The Japanese Carmakers

Some Japanese carmakers haven't experienced the worst of the semiconductor shortage yet, Tesla's faith in China still isn't paying off and Rivian owners will have to wait just a little longer for their electric trucks. All this and more in this Friday edition of The Morning Shift for May 28, 2021.

The titans of the Japanese auto industry would probably love to be able to produce more cars right now, but that just hasn't been in the cards so far in 2021. That's alright though, because strong demand in the United States and China is helping them sell what little inventory has made it to dealer lots. From Bloomberg:

Toyota Motor Corp.'s global sales rose 103% to 859,448 units in April, a record, the company said in a statement Friday. The world's largest automaker cited particularly strong demand in America and China for models like its Rav4. Nissan Motor Co.'s global April sales rose 65% to 358,656 units while Honda Motor Co.'s domestic sales were up 106% to 47,817 units.

Production numbers tell a slightly different story. In April, Toyota made 761,459 cars, about double a year earlier when the pandemic was just forcing global automakers to suspend factory lines. But compared with the same month two years ago, prior to Covid, production was down slightly. Nissan and Honda's April production figures were down 29% and 7% respectively versus 2019.

Automakers around the globe are beginning to grapple with the reality of being unable to fully capitalize on swiftly recovering demand for cars due to a lingering shortage of semiconductors. The shortage is estimated to knock millions off of global sales this year.

That's all predictable at this stage of the ongoing semiconductor shortage; what's a bit more worrying is the suggestion that those who are very good at supply chain management, like Toyota, actually haven't felt the pinch yet.

These circumstances are leading to tight inventories for some automakers like Toyota, said Bloomberg Intelligence Analyst Tatsuo Yoshida. Toyota has been relatively unscathed by the chip shortage to date thanks to its sturdy supply-chain-management practices, but its production lines may feel the crunch in June and July, according to Carnorama analyst Takeshi Miyao.

Stay tuned! The worst may be yet to come.

And that something is manufacturing chips right here, right now. On Thursday the Senate voted 68-30 to end debate on a bill that would earmark $52 billion for semiconductor production in the U.S., bringing it closer to a final vote, The Detroit News reported. That $52 billion is part of a larger $250 billion package, named the "U.S. Innovation and Competition Act."

The $250 billion bill is aimed at increasing the United States' economic competitiveness with China, which has been the source of bipartisan concern over intellectual property rights, human rights abuses and, in the auto industry, dominance in the emerging electric vehicle market.

"The focus of the legislation is straightforward: It's about making sure that America continues to be the leader in innovation, the leader in manufacturing, and power our economy in ways that are necessary for us to compete with our global competitors, particularly the Chinese government," said Sen. Gary Peters, D-Bloomfield Township.

The package includes $50 billion for semiconductor chips and an additional $2 billion specifically for "legacy" chips expected to help automakers, which Peters and Sen. Debbie Stabenow, D-Lansing, lobbied their colleagues to include.

It may not surprise you that it almost didn't happen:

A disagreement over a trade provision nearly blocked the package Thursday and was one of the final negotiations after multiple amendments were added to the proposal on the Senate floor. Members of both parties praised it as an example of bipartisan compromise working as it should — though not all Republicans were happy, with Sen. John Kennedy of Louisiana telling POLITICO "we did a piss-poor job of negotiating this."

That right there is the mark of true political compromise.

Beijing's paranoia that Tesla cars may be spying on them may have successfully pressured the automaker to set up local data centers in the region, but the government is still limiting access to those who drive its cars. Officials are also now being asked to please consider switching to another EV instead. From Automotive News:

Authorities in Zhejiang and Guangxi provinces have either asked government bodies to check and report on any employees who have bought the cars, or forbidden staff from key agencies to drive Teslas into certain official areas, the people said, asking not to be identified because the details are private.

As for the "government bodies" included in this panic, it covers just about all of them — all the way down to the country's national weather service:

The China Meteorological Administration, the national weather service headquartered in Beijing, has told staff not to buy the company's EVs and if they already have, has requested they transfer ownership of the car to another person, one person said.

The Propaganda Department of the Chinese Communist Party, meanwhile, is checking whether any employees or their family own Teslas. The moves are motivated by potential security concerns, the people said.

All this despite reports earlier in the month that Tesla was "boosting its engagement with mainland regulators and beefing up its government relations team." Tesla keeps bending to China's will, but evidently none of that has paid off yet. It may never!

It's called Silent Shadow, and it'll be the British luxury marque's first battery electric vehicle ever. Like so many other historic brands' first EVs, of course it has to be a tongue-in-cheek reference to a legacy car. From Automotive News:

The BMW unit last year filed a trademark with the German patent office for the name Silent Shadow, a nod to the Silver Shadow model sold from 1965 to 1980.

But Rolls-Royce CEO, Torsten Mueller-Oetvoes, has not revealed a potential launch date for the vehicle.

"That is still a secret," he said in an interview with Bloomberg Television. "But it will of course obviously be a brand-new Rolls-Royce, rest assured."

Mueller-Oetvoes went onto say that Rolls isn't known for "roaring loud engines and exhaust noises," making EVs a good fit for the brand. That's understandable, but then I'm kind of amazed it took the company this long to build one. When you're a low-volume manufacturer, you can adapt more readily to new technology. Maybe they just needed some time to come up with a clever name.

Deliveries of Rivian's Launch Edition R1T trucks are being pushed back from June to July, the company announced Thursday. Can you guess why? From Automotive News:

The Irvine, Calif., company says it still expects all R1T Launch Edition deliveries to be finished by the spring.

The delay is the result of a few issues such as the global semiconductor chip shortage, delays on shipping containers and difficulties in setting up vehicle servicing. The company said that overall it has not faced some of the more significant chip-related disruptions that have beset the global auto industry.

That's in addition to COVID-19 related setbacks in operating test drives and launching service centers. The Amazon-backed EV maker announced in a statement that R1T and R1S Launch Edition preorder holders can expect to hear from their "Guide" (as in, concierge) "by the end of November with their expected delivery timing."

I'm talking of course about 1995 CART and 1997 Formula 1 champion Jacques Villeneuve, who won the 1995 Indianapolis 500 on this day 26 years ago. Villeneuve also used to make music and might still, but I don't have the time to find out right now. Apparently, his 2007 record Private Paradise sold "233 copies in Quebec and about 30 outside of Quebec and Canada excluding digital sales" in its first month, according to Wikipedia.

I went to the Amelia Island Concours d'Elegance in Florida last weekend. It was fun and a bit weird! I've gotten both my vaccines and I still felt a little uncomfortable, particularly with the lack of mask wearing indoors, but I'm glad I got to see actual humans again. What trips do you have on the horizon?