Japanese automakers are finally giving in to electric cars, not everyone in the union loves the proposed contract with General Motors, Renault and Nissan only have a year to sort things out, and much more for this average Morning Shift for Tuesday, Oct. 22, 2019.
1st Gear: Japan Comes Around On Electric Cars
Now that Volkswagen, Geely and Volvo, Ford, General Motors, BMW, Mercedes, Audi, Jaguar Land Rover, and pretty much all of China have solidified electric vehicles as the future of the market, the Japanese automakers have decided to finally catch up.
Granted, Nissan’s been at this for a while—the Leaf was an early modern EV pioneer that’s been on the market for a decade. And many of these automakers have been great on hybrids. But in general, it feels like the Japanese OEMs have been behind on pure electric cars. It’s crazy that Toyota, for example, doesn’t make an EV in 2019.
That’s going to change soon. And their big party to celebrate commitment to electric vehicles will be this year’s Tokyo Motor Show, as Climate Nexus points out in an email newsletter to Jalopnik:
Expected automaker announcements at the Tokyo Auto Show include Mazda revealing its first all-electric vehicle; new plug-in hybrids from Suzuki, Mitsubishi and Honda, and a revamped fuel cell vehicle from Toyota expected to go on sale next year. Overall, Japanese automakers are planning to invest over $26 billion in electric vehicle technology as companies like Honda and Mazda aim to fully electrify their fleets by 2030, and Toyota plans to get half of its annual sales — about 5.5 million units — from electrified vehicles by 2025.
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Over the last few years, Korean and Japanese automakers have tried to find ways of making hydrogen propulsion work on a large scale. But in that time, companies like Tesla, General Motors, and even Nissan have proven that electric vehicles offer a cleaner emission solution with less tradeoff right now, so that’s where the market is moving.
Now companies like Toyota, Honda, and Suzuki need to play catch up on electrifying their lineups. Toyota never took the next step to full battery-electric after the Prius was a hit a decade ago. Honda couldn’t even get a strong competitor to the Prius going, and its most attractive EV offering is a small retro city car introduced this year that won’t even be sold in the U.S. As for Mazda, it’s a lot smaller than the rest, so the lack of investment there is understandable. (We will see the Mazda EV in Tokyo, finally.)
Some Japanese automakers, like Mitsubishi and Nissan, have already made good headway into the EV market, though, but those accomplishments haven’t penetrated the rest of their vehicle lineups. They simply haven’t capitalized on their own successes with attractive mass-market options for customers.
With Volkswagen already getting its ID electric cars into production in Europe with more to come in the U.S. next year, Tesla’s Model 3 selling as many as the small company can produce, and General Motors already pushing the Bolt platform further with an upcoming crossover, now is probably the breaking point for Japanese companies to avoid falling too behind on producing EVs that customers actually want to buy.
We’ll have more on each automaker’s strategies going forward as new announcements are made at this week’s Tokyo Motor Show, so stay tuned.
2nd Gear: UAW General Motors Contract Ratification Not A Shoe-In
The United Auto Workers and GM finally came to an agreement on a new proposed contract last week after a month of worker strikes. But UAW member ratification isn’t guaranteed, as the new contract offers a lot of new benefits for workers but failed to reopen any of the U.S. plans GM announced closures for—a sensitive issue for many workers.
Here’s more from Automotive News:
UAW officials are touting the fact that the deal addresses many top priorities: wage increases, a path to permanent employment for temporary workers, no increase in health care costs and a shorter wait for new hires to earn top wages. Full-time hourly workers would receive bonuses of $11,000 and 4 percent of their annual pay shortly after ratifying the contract.
But the UAW’s failure to save Lordstown Assembly in Ohio and two transmission plants in Michigan and Maryland has put many members on edge and could complicate ratification. If the deal passes, the UAW would then use it as a framework for contracts with Ford Motor Co. and Fiat Chrysler Automobiles.
The agreement is already facing some blowback, with a small majority of both production workers and tradesmen rejecting the agreement at GM’s Spring Hill, Tennessee assembly plant, one of the largest UAW groups to already vote. Smaller groups have approved of the new contract by a wide margin, though, according to Bloomberg.
No matter what, the strike is planned to continue through this Friday, Oct. 25, which is the deadline for member voting on ratification of the agreement. Most members are also expected to vote on Friday, so it likely won’t be clear how close approval gets until the end of the week.
If it’s ratified, the new agreement will become the framework for union negotiations with Ford and Fiat Chrysler going forward.
3rd Gear: Renault Chairman Has A Year To Sort Out Alliance With Nissan
Following the ousting of former Renault CEO and Nissan Chairman Carlos Ghosn, mastermind of the Renault-Nissan alliance, over alleged financial misconduct has left the already strained arrangement in complete disarray.
Now, Renault Chairman Jean-Dominique Senard has given himself a year to mend the relationship between the two automakers, or he will consider it a “failure, on a personal level, and by our teams.” That’s not a great outlook.
Here’s more from Automotive News:
“My obsession is for the alliance to take off in 2020,” Senard told France Inter radio.
“If, by 2020, we don’t manage to start extracting ... all the potential of this alliance, I’ll consider it to be a failure, on a personal level and by our teams.”
Senard was parachuted in from tire maker Michelin in early 2019 to help steady Renault, which is 15 percent owned by the French state.
“I discovered an alliance in worse shape than I’d imagined ... this takes time to mend,” Senard said.
Senard also said anything else, including the failed discussion with a new-formed partnership or merger with Fiat Chrysler, was off the table until Renault and Nissan could sort out their differences over which company has more control over the direction of operations.
4th Gear: Maybe, Finally, Possibly A China Trade Deal Soon But Probably Not
China’s Vice Foreign Minister Le Yucheng signaled that trade talks with the U.S. were improving, giving oil markets a slight boost at the prospect of ending a silly tariff trade-off, Reuters reports:
Brent crude oil LCOc1 was up 30 cents at $59.26 a barrel by 1215 GMT, while U.S. West Texas Intermediate crude CLc1 was 26 cents higher at $53.57 per barrel.
China and the United States have achieved some progress in their trade talks, Vice Foreign Minister Le Yucheng said on Tuesday, and any problems could be resolved as long as both sides respected each other.
The International Monetary Fund last week forecast that fallout from the U.S.-China trade war and trade disputes across the world would slow global growth in 2019 to 3.0%, the weakest in a decade.
Lower economic growth typically means reduced demand for commodities such as oil.
Please just sort it out. I’m still not clear on how this got to be such a mess in the first place, beyond leadership trying to look tough.
5th Gear: New Big Plane In Race For Biggest Plane
Banning private jets would go a long way in curbing one of the biggest polluters in the world today: air travel.
Anyway, Gulfstream is trying to win the race to build the largest private jet on sale. It has a new one, from Bloomberg:
Gulfstream is angling to reclaim bragging rights as builder of the world’s biggest private jet.
The planemaker unveiled plans to make a roomier version of its flagship G650, which was unseated last year as the largest luxury jet by Bombardier Inc.’s Global 7500. Gulfstream’s new G700, with an expected debut in 2022, will be capable of flying 7,500 nautical miles and cruise at just under the speed of sound.
What the hell does someone do with a big ass plane to themselves? Anyway, good for all the rich people who are gonna buy this. We wish them luck when the shit finally hits the fan someday.
Reverse: Make The Ugly Highways Less Ugly
Neutral: EVs Are Here, But Will They Stay?
It feels like it’s only been a couple of years for the automotive market to do a complete turnaround on developing and selling electric vehicles on a massive global scale. Since every major market is now invested in the game, is this a short term solution to a bigger problem of replacing combustion engine cars with cleaner technology? Is demand adequate enough in America?
Or is it just a bandaid until we get something like hydrogen technology sorted out, making Hyundai, Honda and Toyota’s efforts worth it in the long run?