The Senate’s proposed EV tax credit extension makes some new demands, Ford owners are suing Ford again, and Bentley’s doing gangbusters. All that and more in The Morning Shift for Friday, July 29, 2022.
1st Gear: EV Tax Credits May Come Back, But At What Cost?
This week, Senate Majority Leader Chuck Schumer and fossil fuel fan Senator Joe Manchin came to a tentative agreement this week on a bill that would remove the sales limit from the $7,500 EV tax credit — getting GM, Toyota, and Tesla their discounts back. But, for automakers, those incentives would come with at least one downside: Vehicle production has to be in North America. From Automotive News:
A Senate proposal released Wednesday would extend the current $7,500 tax credit for consumers buying new electric vehicles but add increasingly stringent critical mineral and battery sourcing requirements for automakers.
By 2024, the proposal calls for 50 percent of the critical minerals used in EV batteries to be extracted or processed in the U.S. or a country where the U.S. has a free trade agreement in effect or from materials that were recycled in North America. In 2024 and 2025, 60 percent of the battery components must be made or assembled in North America.
Sourcing requirements would increase to 80 percent after 2026 for critical minerals, and by 2029 would require 100 percent of the battery components to be made or assembled in North America.
Final assembly of the vehicle must occur within North America — a provision that would apply immediately after the bill is enacted.
While the battery production requirement gets a timeline to kick in, vehicle assembly doesn’t — if your EV isn’t made here, it doesn’t qualify for full benefits. That means vehicles from Toyota, Subaru, Kia, Hyundai, Mazda, BMW, Porsche, Mercedes, and even Tesla cars built in Germany or China would be ineligible. Have fun with your Hummers and ID.4s, I guess.
2nd Gear: Ford Sued Over Yet More Focus And Fiesta Transmissions
Remember back in 2019, before the world fell apart, when Ford was sued for the faulty transmissions in early-’20teens Foci and Fiestæ? It seems that the problems didn’t stop there, as owners of later cars are now bringing the same complaint to court. From the Detroit Free Press:
Four owners of the 2017-19 Ford Fiesta and 2017-18 Ford Focus are suing Ford Motor Co., alleging the vehicles have the same unfixable transmission defects as earlier models that led to hundreds of millions of dollars in class action settlement payments.
However, the vehicles are “plagued by numerous problems and safety concerns ... transmission slips, bucking, kicking, jerking, harsh engagement, premature internal wear, sudden acceleration, delay in downshifts, delayed acceleration, difficulty stopping the vehicle, and eventually catastrophic transmission failure,” said the lawsuit filed in U.S. District Court for the District of Delaware in June. on June.
The lawsuit could potentially cover an estimated 380,000 vehicles nationwide that are equipped with a DPS6 transmission, according to public sales data.
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Ford settled the last suit, paying some owners up to $20,000 to buy their broken cars back. The sedans and hatchbacks were likely disposed of, though I really like the idea that they saw new life in a Spec Broken Gearbox racing series within Ford.
3rd Gear: Bentley Is Unfamiliar With The Concept Of A ‘Recession’
While the rest of the world is frantically cutting jobs and laying off workers to prepare for a global economic downturn, Bentley is having the time of its life selling highly-customized cars to “high-net worth customers.” From Reuters:
Luxury British carmaker Bentley’s first-half operating profit more than doubled, boosted by increased customisation of cars as sales rose significantly in Europe and Britain despite ongoing global economic uncertainty.
“Despite the continued global economic instability, it is promising to see Bentley is showing financial consistency as we reinvent the company,” chief executive Adrian Hallmark said in a statement.
Global sales rose almost 3% to 7,398 cars, up from 7,199 in the first half of 2021, while revenue per car jumped almost 15% to 213,000 euros from 186,000 as high-net worth customers took advantage of a customisation program.
The hot new thing for the C-suite is to fire all of your workers and redirect their salaries into custom Bentleys, apparently. I’m sure this bodes well for the world as a whole.
4th Gear: Aston Martin Swears It Will Stop Bleeding Money Soon
Not every luxury automaker is having such a ball, however. Aston Martin, now without the release of a new Bond movie on the horizon, spent the first half of 2022 shoveling British pounds into an oven. It’ll get better, though, it promises. From Reuters:
Aston Martin (AML.L) expects its finances to improve in the second half of 2022 after burning through tens of millions of pounds in cash earlier this year, it said on Friday, as easing supply chain snarls help boost deliveries of higher margin cars.
Its positive free cash flow forecast comes as the luxury carmaker posted a bigger loss for the first six months, marred by supply chain and logistics snags that were exacerbated by lockdowns in China, the Ukraine war and soaring costs.
Aston Martin earlier this month announced a capital raising that will see Saudi Arabia’s Public Investment Fund overtake Mercedes-Benz AG (MBGn.DE) to become its second-largest shareholder behind Chairman Lawrence Stroll. The cash call will help fix its debt-ridden balance sheet.
The Formula One racing team owner expects to sell more cars in the second half of 2022 as some supply chain snags ease and following a ramp up in production of its more profitable models - luxury SUVs DBX707, and the V12 Vantage sports car.
Walking around New York City, you’ll see Bentleys on the street, but I don’t know that I’ve ever seen a DBX707 in the wild. In fact, the only one I distinctly remember spotting was at Lime Rock Park. I don’t think that counts.
5th Gear: Man Gets Job
Hyundai Motor America has a new CEO, and his name is Randy Parker. He’s moving up from his role as Senior VP of Nationwide Sales, meaning he likely has a pretty good finger on the pulse of the American market. From Automotive News:
Hyundai Motor Co. is making key executive shifts, including the appointment of Randy Parker as CEO of Hyundai Motor America.
He is one of the first African Americans to be named CEO of an automaker in a regional market. He’s also the second Black CEO named in the U.S. auto industry this month. On July 12, Lordstown Motors Corp. named Edward Hightower as its new CEO — the first Black CEO of a U.S. automaker in more than 100 years.
In his current role as senior vice president of national sales for Hyundai Motor America, which he assumed in 2021, Parker has had oversight of all aspects of sales and distribution.
Parker likely understands that Americans don’t buy hatchbacks, but we could all at least ask him to bring back the Veloster. It’s worth a shot, right?
Reverse: The Final Frontier
Neutral: Will The EV Bill Pass As Written?
Toyota, GM, and Tesla have lobbied heavily for the proposed language of the tax credit, but it specifically bans the bZ4X and many Teslas from eligibility — not to mention the league of other automakers whose electric cars aren’t built in the U.S., Canada, or Mexico. Will it face pushback from those other lobbying groups?