Toyota Is Spending Billions More on Electrification

The company is investing in American and Japanese battery production.

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Toyota is spending billions on battery production, Berkshire Hathaway has sold some BYD shares, and internal strife at Faraday Future threatens to oust an executive. All that and more in The Morning Shift for Wednesday, August 31, 2022.

1st Gear: Toyota Is Getting Serious About This Whole ‘EV’ Thing

I’m not sure if you’ve heard, but electric cars are the future. Even Dodge is getting in on them, with its bad-sounding Charger Daytona SRT Banshee EV Did I Miss Any Other Words concept. But Toyota, progenitor of the Prius, has fallen a bit behind the competition — something the company seems to recognize, and apparently wants to rectify. From Reuters:

Toyota Motor Corp said on Wednesday it would invest up to 730 billion yen ($5.27 billion) in Japan and the United States to make batteries for fully electric vehicles, a category of automobile that critics say it has been slow to embrace.

When the additional facilities come on line between 2024 and 2026, Toyota’s battery production capacity in the two countries will have increased by 40 gigawatt-hours, the company said, giving no current figure for comparison.

“This investment is aimed at enabling Toyota to flexibly meet the needs of its various customers in all countries and regions by offering multiple powertrains and providing as many options as possible,” it said in a statement.

Some green investors and environmental groups have said the company should move faster to introduce fully electric (or “battery electric”) vehicles, rather than clinging to the internal combustion engine in such powertrain configurations as the hybrid.

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We’ve gotten a sneak peek as to where that Toyota money is going in the U.S., also courtesy of Reuters:

Toyota Motor Corp will boost its planned investment in a new U.S. battery plant from $1.29 billion to $3.8 billion, partly in response to rising consumer demand for electric vehicles, the company said on Wednesday.

Battery maker Panasonic will be a partner in the Liberty, North Carolina, plant through its Prime Planet Energy & Solutions (PPES) joint venture with Toyota, according to Norm Bafunno, senior vice president of powertrain manufacturing and engineering at Toyota Motor North America.

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When Toyota announced the initial $1.29 billion investment last fall, North Carolina said the state would boost reimbursement to Toyota by $315 million if the company’s investment topped $3 billion.

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A battery plant in the U.S. is a very handy way to meet those upcoming battery construction restrictions in the new EV tax credit. Looks like Toyota is planning ahead.

2nd Gear: Warren Buffett And Berkshire Backpedal On Bankrolling BYD

Rumor had it that Warren Buffet, investor and technically sort of my mom’s boss, might be disinvesting from Chinese automaker BYD. Turns out, he sold a whopping half a percent of the company’s shares — but investors panicked anyway. From Automotive News:

Warren Buffett’s Berkshire Hathaway Inc. has trimmed its stake in BYD Co., seven weeks after prompting speculation it might sell its entire multi-billion dollar stake in the largest Chinese electric vehicle company.

In a Hong Kong Stock Exchange filing, Berkshire said it sold 1.33 million Hong Kong-listed shares of BYD for about HK$370 million (US$47 million), reducing its stake in BYD’s total issued H shares to 19.92 percent from 20.49 percent.

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BYD’s share price fell nearly 12 percent the next day.

A friend of mine once coined the concept of Seagull Market Theory, wherein the actions of investors can be accurately modeled using seagulls pecking at a discarded container of french fries in a parking lot. Sometimes a car drives by, which is not a real threat to the seagulls and does not affect the fries, but the birds scatter anyway. Eventually, they always come back, at least until the fries are gone.

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3rd Gear: Faraday Future Workers Want Their Boss Gone

Nobody wants a bad boss. Yet Faraday Future workers claim they’ve been stuck with one, in the form of recently appointed Executive Chairperson Susan Swenson. From Reuters:

Several employees of Faraday Future Intelligent Electric Inc have called on the electric-vehicle startup’s board and shareholders to remove Executive Chairperson Susan Swenson, according to a letter seen by Reuters.

Representatives for a group of about 140 employees alleged in the letter dated Aug. 23 that Swenson had organized attempts to “push the company into bankruptcy and restructuring”.

Swenson did not respond to requests for comment, while Faraday Future declined to comment.

The group also asked the board to make public the findings from an ongoing investigation of multiple whistleblower letters concerning four directors - Sue Swenson, Jordan Vogel, Scott Vogel and Brian Krolicki. The directors did not immediately respond to requests for comment.

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It’s unclear what an “organized attempt” to bankrupt a company looks like, or how that might benefit Swenson herself. But who knows? Faraday Future has been in a weird place for a very long time.

4th Gear: No One Wants To Go To Detroit

Detroit is known for the cold, the bad roads, and for apparently very good fried chicken sandwiches. But for major automakers, that last point doesn’t seem to balance out the first two — or the costs of attending an auto show in a world that continually cares less and less about them. From The Detroit News:

Overwhelming vehicle demand, insufficient interest, costs and a preference for more exclusive driving opportunities are among the many reasons major brands are skipping next month’s North American International Auto Show.

The Detroit Automobile Dealers Association moved the show, the first since January 2019, to a more climate-friendly time of year, Sept. 14-25. The hope was to attract more action to the show from consumers, media and automakers with outdoor activations and ride and drives. It doesn’t appear foreign automakers that previously dropped out have been convinced to return or that electric-vehicle startups are inclined to make an appearance either.

The Detroit Three are the only major automakers listed as holding news conferences at the event. Others are planning to have some type of presence, though they won’t necessarily be on the floor of Huntington Place or use the event to make headlines. And some that attended the last show like Nissan Motor Co. Ltd. and Hyundai Motor Co. are passing in 2022. Meanwhile, startups including Rivian Automotive Inc. haven’t jumped on board either

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So many of the legacy automakers don’t want to play, but the startups also have no interest in showing up. Surely this bodes well for the future of the Detroit show, particularly as shows like Geneva continue to see cancellations year after year. Remember, not having the Detroit show in the cold of January was supposed to help fix a lot of this.

5th Gear: Subaru Bets On AI For The Future Of EyeSight

Modern Subarus come equipped with EyeSight, the company’s camera-based safety sensing suite. It’s been on the market for a number of years, and Subaru claims exemplary results for collision avoidance. But for the next stage, the company has decided the software needs to get smarter. From Automotive News:

Subaru is developing new versions of its trademark EyeSight driver assist system that will leverage artificial intelligence to deliver autonomous driving and auto parking.

The all-wheel-drive niche player plans to introduce the new setups from 2025. The technology will build upon Subaru’s stereo camera system and use artificial intelligence to improve computer recognition in hard-to-see situations, such as when road lane markers are covered in snow.

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Subaru’s moves are part of the company’s long-term ambition to achieve zero road fatalities by 2030 among people involved in collisions with the brand’s vehicles.

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Do you remember those old Subaru ads, the They Lived campaign? I can also attest to Subaru’s safety ambitions having personally known people who in fact Lived after horrible accidents in Subarus.

Reverse: What Makes A Man Turn Neutral?

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Neutral: What’s The Future Of The Auto Show?

Is there one? I always liked them as a kid because you could go on the Jeep Mountain, or go sit in supercars that had already had their shift knobs stolen. Will auto shows evolve into a more consumer-based experience, rather than just media events?