Tesla paying for tax credits missed due to delays, Jeep Wranglers filling Jeep dealerships, GM’s challenges in China, and more Ghosn drama. All that and more on The Morning Shift for Thursday, December 27th, 2018.
Production Hell is a term that’s been used to describe Tesla’s attempts to make the Tesla Model 3 a truly mainstream, high-volume car. But alas, the company has had its issues making that a reality, with production problems constantly being fixed, a tent being used to assemble cars, and Elon himself apparently putting in lots of hours.
Production delays happen at Tesla and so do issues with delivery logistics, and that could mean more than just that you don’t get your car on time: You could miss out on a federal EV tax credit. Back in October, Tesla said cars ordered by Oct. 15 were eligible for a full $7,500 government EV tax credit, and that the cars would be delivered by the end of this year.
As Reuters points out in its new story (and as Musk points out in his tweet above), starting on Jan. 1, 2019, the tax credit will drop to $3,750. But some owners still don’t have the cars they ordered, and with just a few days left in the year, they might lose out on their incentive. Luckily for them, Musk says Tesla’s got them covered:
“If Tesla committed delivery & customer made good faith efforts to receive before year end, Tesla will cover the tax credit difference,” Musk wrote in a response to a Twitter user who apparently ordered their car before December. (It’s not clear if the person ordered before the Oct. 15 deadline that Tesla previously stated).
So if you’re still waiting on your Model 3, and your expectation of scoring a full government rebate is dwindling as this year winds down, fear not. Tesla will pay your tab.
Back in may, I wrote a headline that I never thought I’d write: “Holy Crap the Jeep Wrangler Is Nearly Outselling the Toyota Camry.” But ever since the previous-generation JK four-door brought the Wrangler into the family vehicle market, and with the new and improved JL model and America’s deep thirst for SUVs right now, it actually makes sense that Wranglers are flying off of lots.
But apparently, those lots are still fairly full of inventory, with Automotive News saying dealers are “are swimming in them,” going on to write:
Supplies of unsold Wranglers at U.S. dealerships or on their way there have ballooned to well more than 100 days in each of the past three months, including a 156-day supply at the beginning of November and 135 days at the start of this month, while the total number of Wranglers in FCA US’ field stock rose to 85,979 at the start of this month, from 69,579 at the beginning of October.
That’s roughly double or even triple the supply that dealers traditionally carried with the previous JK version of the Wrangler, though levels briefly topped 100 days in the first two months of 2018 as FCA simultaneously produced the old and new generations.
The story cites high production capacity and the JL’s high price as two factors that might contribute to there being so many JLs on dealer lots. It’s true that the JL is roughly $3,000 to $4,000 pricier than its predecessor, and the story quotes one dealer as saying this could make the car out of reach for some consumers, though another dealer the site spoke to didn’t seem so worried:
“We’ve built capacity and just need to continue to adjust to it,” says Eric Nielsen, dealer principal at Nielsen Automotive Group in northern New Jersey, where the group operates two FCA stores. “I don’t think there’s an issue for that car at all.”
The Wrangler’s strong sales (which FCA pointed out to Automotive News) do seem to imply that price isn’t keeping too many people away from the Wrangler, but perhaps it’s not quite meeting expectations. Or maybe it is. FCA told Automotive News that it won’t discuss inventory levels, but production in Toledo continues at a strong pace, and FCA told the news site that Wrangler sales, like those of other cars, are affected by seasonality, and that “dealers are already preparing for a strong spring.”
The world is talking about GM’s restructuring after the company’s CEO, Mary Barra, announced the slashing of small cars from GM’s lineup, the closing of major manufacturing plants, and a roughly 15 percent headcount reduction in the salaried workforce.
Bloomberg’s got a new story out about GM’s next steps from here, and a big part of the plan involves China. The news site says technology is GM’s biggest challenge, and that reducing overall company costs does help when it comes to helping GM reach its “20 battery electric cars by 2023,” goal. A goal whose value to GM will revolve around China:
China is a big part of the strategy, as the largest market for electric cars.
Even as the broader auto market slumps, China’s electric car sales have been surging, backed by its pro-green car policy. But GM’s success with the Bolt hasn’t translated. Of all the cars the U.S. automaker sells there, less than 1 percent are pure electric. GM’s top China executive has said it plans to launch as many as 20 electric models by 2023.
While GM has been ahead of the curve on technology, it doesn’t make the Bolt in big volumes. Meanwhile, its hybrid Chevy Volt, which wasn’t selling, is going to be phased out. The automaker also left a key market for electric cars by exiting Opel in Europe.
Right now, the report cites “UBS estimates” as saying GM is losing $7,000 per Bolt in “earnings before interest and tax.” As GM ramps up its EV lineup, it will probably be China who dictates much of the company’s success.
Nissan’s Chairperson Carlos Ghosn has been arrested on allegations of financial misconduct, and now Reuters is reporting some “fresh misconduct allegations” connected with Ghosn’s third arrest on Friday.
The story cites two anonymous sources as saying the allegations revolve around the “use of company funds to pay a Saudi businessman who is believed to have helped [Ghosn] out of financial difficulties,” with the story reading:
The prosecutors’ statement said they believe that around October 2008, Ghosn was trying to deal with losses on paper of 1.85 billion yen ($16.6 million) incurred on a swap contract he had with a bank which it did not name.
A person helped arrange a letter of credit for Ghosn and a company run by the person later received $14.7 million in Nissan funds in four installments between 2009 and 2012, the statement said, adding that the payments were made in Ghosn’s and the person’s interests.
“By doing so, (Ghosn) behaved in a way that breached trust, and inflicted damage on the property of Nissan,” the statement said. The statement also said Ghosn had earlier sought to have Nissan shoulder the appraisal losses directly.
Reuters’ sources with knowledge on Nissan’s Ghosn probe say it was Khaled Al-Juffali—the vice chairman of a large Saudi conglomerate—who helped out Ghosn. The news site says that conglomerate issued a statement that Khaled Al-Juffali has no comment, though the story does mention that other media has mentioned a denial from Ghosn, writing:
Other media have said Ghosn has through a lawyer denied that he shifted losses to Nissan and has told investigators that the four payments were for legitimate business purposes, including a reward for handling problems at Nissan dealers in Saudi Arabia.
The drama never stops.
China is the center of the electric vehicle world right now, so it’s no surprise that, according to Reuters, Tesla has opened a leasing unit in Shanghai, with the news site writing:
The California-based carmaker, led by billionaire Chief Executive Elon Musk, has opened a wholly-owned financial leasing unit in Shanghai’s free trade zone with registered capital of $30 million, according to China’s National Enterprise Information Publicity System.
This is according to a business registration filing, which says the scope of the leasing unit will involve both leasing and consulting.
Right now, how important are EV tax credits to you as a consumer? How do you see their importance changing with time?