The Ford Ranger is “the most American made,” the auto industry is mad it has to reduce CO2 emissions, and Tesla. All that and more in The Morning Shift for September 18, 2020.
1st Gear: Tesla
Reuters has a big feature on Tesla ahead of “Battery Day,” which is September 22, when Tesla is expected to unveil some new battery technologies. These are supposed to make the batteries last longer and be cheaper. This is all part of a push by Tesla to do more and more battery stuff on its own.
From Reuters:
New battery cell designs, chemistries and manufacturing processes are just some of the developments that would allow Tesla to reduce its reliance on its long-time battery partner, Japan’s Panasonic, people familiar with the situation said.
“Elon doesn’t want any part of his business to be dependent on someone else,” said one former senior executive at Tesla who declined to be named. “And for better or worse — sometimes better, sometimes worse — he thinks he can do it better, faster and cheaper.”
Tesla has battery production partnerships with Panasonic, South Korea’s LG Chem and China’s Contemporary Amperex Technology Co. that are expected to continue.
But at the same time, Tesla is moving to control production of cells — the basic component of EV battery packs — at highly automated factories, including one being built near Berlin, Germany, and another in Fremont, Calif., where Tesla is hiring dozens of experts in battery cell engineering and manufacturing.
“There has been no change in our relationship with Tesla,” Panasonic said in a statement provided by a company spokeswoman.
“Our relationship, both past and present has been sound. Panasonic is not a supplier to Tesla; we are partners. There’s no doubt our partnership will continue to innovate and contribute to the betterment of society.”
Tesla did not respond immediately to a request for comment.
2nd Gear: China Is Behind On Electric Vehicle Parts
China is the world’s biggest car market but a think tank there is worried that it’s falling behind on EV parts like semiconductors, according to Bloomberg:
China is pushing for greater self-reliance amid tensions with trade partners including the U.S. As the auto industry moves toward electrified and self-driving vehicles in a once-in-a-century shift, suppliers of software and semiconductors are gaining in importance.
“The supply-chain problem has to be solved,” [Zhang Yongwei, vice president of China EV 100, a high-profile electric-vehicle industry think tank] said at the industry gathering. An automobile powerhouse must have a strong supply chain of its own, he said.
China has been the world’s biggest vehicle market and producer for a decade, claiming about a third of the global total. But in semiconductors, China has only one company in the top 20, Zhang said. Less than 5% of automotive chips are made in the country and for some key components, carmakers rely 90% on imports, he said.
Meanwhile, semiconductor-based components are set to account for more than 50% of a car’s manufacturing cost by 2030, up from about 35% now, according to a report by China EV 100 and Roland Berger.
3rd Gear: Automakers Aren’t At All Excited About Even Tougher Emissions Standards Proposed In Europe
Pour one out for the automakers.
From Automotive News:
[European Commission President Ursula von der Leyen] proposed revising 2030 targets to mandate a reduction of CO2 emissions for the overall EU economy of at least 55 percent over 1990 levels, up from the 40 percent previously envisioned.
The implications for the auto industry are as yet unclear because von der Leyen did not mention passenger car fleet emissions targets. The Süddeutsche Zeitung reported last week that the , European Commission would propose increasing to 50 percent a planned 37.5 percent cut over 2021 levels, citing a leaked EU internal document.
Automakers fear the tougher target will require massive additional investments from the industry at a time when it has been badly hit by the coronavirus crisis.
“Policy makers need to put in place not only targets but also the required supportive policies for all vehicle types, without which these targets will simply not be achievable,” said Eric-Mark Huitema, director general of industry association ACEA.
[...]
“The higher the climate targets become, the higher and more critical the ambition level of these enabling factors must also be,” Huitema said.
The suppliers’ association CLEPA called for an “honest debate about the effects of policy decisions.”
4th Gear: GM’s Nikola Partnership Is Pretty Low-Risk For GM
That’s according to analysts that the Detroit Free Press talked to. The partnership, announced a week-and-a-half ago, didn’t include GM handing over any money. Per the Freep:
“The biggest risk right now is the risk of a huge PR black eye for (GM CEO) Mary Barra and the firm,” said Morningstar’s David Whiston. “Even though there isn’t much financial risk right now because the deal is initially cashless for GM, it still looks really bad optics-wise should Nikola be charged with criminal fraud or go bankrupt. But as a GM analyst, I’d rather have that risk than GM actually wastes billions of dollars buying Nikola stock.”
Analyst Sam Abuelsamid of Guidehouse Insights in Detroit agreed, saying GM has more to win than to lose.
“It’s all potential upside. The worst case for GM is that they take a minor reputational hit if things go sideways with Nikola. They’re not putting any cash in this deal,” Abuelsamid said. “They have a customer who will potentially buy their fuel cells and batteries. In return, they get a stake in a company that potentially has an upside valuation, compared to what it’s actually done.”
Will Nikola even be around this time next year? We’ll see.
5th Gear: The Ford Ranger Is The Most ‘Made In America’
It has 85 percent “total domestic content,” according to an index produced by American University, which includes parts but also research and development and company headquarters location. The economy has globalized to an extent that these sorts of indexes are kind of irrelevant—BMW, Mercedes, Volvo, Nissan, Honda, Toyota, Subaru, Kia, and Volkswagen all make cars on US soil—but the list is still interesting.
Via The Detroit News:
After the Ranger, the automatic transmission model of the Chevrolet Camaro was the second-most made in America vehicle in 2020 with 83% domestic content sourcing. The Corvette as well as the mid-size Chevrolet Colorado and GMC Canyon pickups tied for third with 82% domestic content. The Jeep Cherokee Latitude and Trailhawk SUVs were fourth with 78.5% domestic content.
The rest of the top 10 finishes as follows:
- Tied for fifth with 77.5% domestic content: Three-liter Ford Explorer, Cadillac CT4 and CT5, and Tesla Model S and Y
- Sixth with 77% domestic content: Cadillac XT4
- Tied for seventh with 76% domestic content: Chevrolet Camaro with manual transmission, Caddilac XT5 and XT6, and GMC Acadia
- Tied for eighth with 75.5% domestic content: Ford Expedition and Mustang with a 2.3-liter Ecoboost engine and 5.0-liter engine with automatic transmission
- Tied for ninth with 75% domestic content: Five-liter Ford F-150, Lincoln Aviator, long-range Tesla Model 3, and Tesla Model X
- Tenth with 74.5% domestic content: Jeep Cherokee
A better guide than “buy American” for consumers who give a shit is “buy union,” though sadly that confines you to the Big Three. No perfect choices out there.
Reverse: Mallrats
Neutral: How Are You?
I’m probably going to go to California for a few months this winter, so I spent roughly all day yesterday plotting various coast-to-coast routes from New York City. I honestly can’t wait for a long, depressing, monotonous drive through Kansas.