Good morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the stories you need to know.
1st Gear: Someone Has To Be The Grown-Up In The Room
It turns out that when you’re the CEO of a massively valued company struggling to meet its self-stated production goals, getting on Twitter and calling someone a pedophile for no good reason will rattle your investors and industry analysts. Who knew?
If you’re not up to speed on Tesla CEO Elon Musk’s now-infamous “pedo” tweet about a cave rescuer from the Thai soccer team incident, you can fix that by reading this. (The rescuer is also considering a lawsuit against Musk for the tweets.)
The point is it’s not a great look for Musk, who, as he’s camped out at the Fremont, California plant over the past few months working to ramp up Model 3 production, has jousted with just about everyone. Tesla’s stock was down Monday, though it rebounded today.
Here’s the Washington Post on the effect it’s had on the company:
Rattled investors sent Tesla shares tumbling 3 percent on Monday, extending a losing streak for a company that was only weeks ago America’s most valuable automaker, worth more than General Motors. Musk’s critics have long said his bitter slugfests — with rivals, partners, analysts, journalists and employees, to name a few — have hamstrung Tesla on its vaunted mission to reshape the auto industry and change the world.
Tesla stock has plunged more than 16 percent since last month, shaving billions of dollars off the company’s market value at a time when it still depends on investor cash and confidence. The company lost $2 billion last year and has never earned an annual profit.
Even Musk’s shareholders and supporters are beginning to question how his temper could affect the company he built, and their bottom line.
“This thing is unraveling,” said Gordon Johnson, the managing director of Vertical Group, a New York-based investment research group. “You had a very big shareholder last week say they want him to focus on executing and stop with the tweets — and then, this weekend, you get more tweets. What’s his angle? What is he doing? … He keeps promising all of these things, and he keeps missing, and he’s not being held to task.”
Again with the tweets!
It’s vital to note some of the analyst sources quoted in this story are Tesla shorts, and that no matter what happens, Musk will probably have tons of defenders—some with a looser grip on reality than others. But it’s clear these remarks come at a precarious time for the company, and after so many high-profile battles with journalists, critics, investors, ex-employees, analysts and more, one has to wonder if the Tesla board is beginning to see the unpredictable Musk as more of a liability than an asset.
Anyway, the big lesson from this is that you should never tweet, ever. Which I myself have been saying for years.
2nd Gear: Another Conviction In The FCA-UAW Scandal
The United Auto Workers union could use some wins right now, but it’s still reeling from the ongoing court case involving officials who misused $4.5 million in money meant to train Fiat Chrysler Automobiles employees. The latest conviction came down yesterday, the Detroit Free Press reports:
Monica Morgan, 55, was sentenced in U.S. District in Detroit to 18 months in prison, one year supervised release and a $25,000 fine. In addition to her fine, Morgan is liable for an additional $88,000 in restitution, after paying about $102,000 to date.
Morgan pleaded guilty in February to a tax charge for hiding $201,000 on her 2011 taxes. Other charges, including one alleging conspiracy, were dismissed in exchange for her plea. Judge Paul Borman said sentencing guidelines would have allowed for a sentence of between 24 and 30 months in prison.
In plea documents, Morgan acknowledged that the money came from criminal activity, and Borman said, “It is a serious offense and it’s not just a straight tax offense.”
Morgan is the widow of the late General Holiefield. Authorities said he worked with former FCA Vice President Alphons Iacobelli in a scheme involving the misuse of $4.5 million.
They lived pretty high on the hog, it seems:
Prosecutors have said that, among other things, the misappropriated money was used to pay off the $262,219 mortgage on Holiefield and Morgan’s Harrison Township home, as well as luxury items for those caught up in the scheme.
Gardey said Morgan had engaged in a “high-flying lifestyle” despite declaring an annual income of a bit more than $5,400.
He described first-class travel, said she spent tens of thousands of dollars, had helped funnel $325,000 to a fake hospice and still has access to $680,000. In addition, Gardey said about $80,000 in bogus photography courses had been set up to send money to her business.
The way I see it, you can believe in the principle of unions and the power America’s auto workers have through organization and still believe the UAW is corrupt as hell and should be nuked from space. Frankly, American workers deserve better than these clowns.
3rd Gear: How’s Uber Doing These Days
Hey, speaking of scandal-ridden organizations, let’s check in on Uber:
Uber is facing a U.S. government investigation into allegations that the ride-hailing service set up a pay structure that discriminated against its female workers.
The U.S. the Equal Employment Opportunity Commission opened the probe in August 2017, according to a person familiar with the investigation. The person asked not to be identified because the inquiry is considered confidential.
The Wall Street Journal first reported the ongoing investigation.
The EEOC declined to comment Monday. Uber said it has already revamped its compensation practices and introduced other measures designed to ensure its male and female employees are treated fairly.
This has been your update on Uber!
4th Gear: Ford Out $299.1 Million In Takata Settlement
More than just the Japanese automakers were implicated in the Takata airbag disaster: the potentially lethal explosive bags were in just about every car, everywhere. And Ford is the latest company to pay for it, agreeing “to a so-called economic loss settlement of $299.1 million covering at least 6 million U.S. vehicles with potentially faulty Takata air bag inflators”, Reuters reports:
The settlement covers several forms of economic damages linked to the inflators, including claims that vehicles were inaccurately represented to be safe, buyers had overpaid for cars with defective or substandard air bags and faced out of pocket costs to deal with recalls.
Six automakers have previously agreed to similar settlements worth over $1.2 billion combined, including: Honda Motor Co; Toyota Motor Corp; Nissan Motor Co; Mazda Motor Corp; Subaru Corp and BMW AG.
I bet Takata’s not real popular at the parties anymore.
5th Gear: Dead: Chevrolet City Express
Ford is still crushing it in the small van space with the Transit Connect, and its latest victim is the Chevrolet City Express, which I honestly forgot about. I mean, I knew Chevy had a small van too, but if you held a gun to my head and asked me to name it I probably couldn’t. Anyway, that model is now dead, reports Automotive News:
General Motors has discontinued the Chevrolet City Express, a small work van which the automaker has marketed under a partnership with Nissan Motor Co. since 2014.
Dealers, according to a GM spokesman, were told of plans to drop the small van last summer. Final orders were taken in September 2017 and production of the last 2018 Chevy City Express vans — a derivative of the Nissan NV200 — ended at Nissan’s assembly plant in Cuernavaca, Mexico, in February.
But Chevrolet gained little traction in the emerging segment. Less than 30,000 City Express units have been sold in the U.S. since it went on sale in November 2014. That’s less than one year of Ford Transit Connect sales, which have averaged more than 42,500 annually since 2013.
It will be missed. I mean, probably not, but I’m trying to be polite.
Reverse: Great Work Nils
Neutral: Does Elon Musk Skate This Time?
Will the board and investors call for his head, or is he untouchable? And is he still what Tesla needs, or is it time to turn the reins over to a more traditional CEO?