Volkswagen's New CEO Will Get A Heads-Up If The U.S. Charges Him Over Dieselgate

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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 important stories you need to know.

1st Gear: Volkswagen’s New Head Gets Rare Safe-Passage Deal From U.S.

Volkswagen runs 120 factories across the planet with 12 brands under its wing, so heading up that company entails a lot of travel, both to handle internal affairs as well as to attend promotional events like auto shows.


In an exceedingly rare move, the United States Justice Department guaranteed that new Volkswagen CEO Herbert Diess will continue to be able to do his job without charges or an arrest being dropped on him by surprise. Bloomberg explains:

The Justice Department agreement allows Herbert Diess, promoted last month to lead the German automaker, to travel the world freely without fear of being arrested in connection with the U.S.’s diesel-rigging investigation, according to two people familiar with the matter.

Diess also received a spoken assurance that he would be given advance notice should prosecutors seek to charge him in its emissions cheating probe, said the people, who asked not to be identified because the deal is confidential. Diess, who joined the automaker a couple months before the scandal became public in September 2015, isn’t accused of wrongdoing.


As Bloomberg notes, this deal suggests that either Diess won’t be charged, or he may be providing useful information to the ongoing Dieselgate investigation. Alternately, it suggests that Diess himself had some concerns about coming under additional scrutiny as he was in the infamous July 27, 2015 “Damage Table” meeting where the issue with diesel emissions in the U.S. was explained to senior managers. Bloomberg notes:

That meeting was a key moment in the conspiracy — one where Winterkorn “approved the continued concealment of the cheating software from U.S. regulators,” U.S. prosecutors said in the unsealed indictment against the former CEO. Winterkorn’s defense team is reviewing the charges and will decide after that on the next steps, Felix Doerr, the former CEO’s German defense attorney, said in an email.

Because Diess attended that meeting, he would know what was said by Winterkorn and others when they were together in the room. Diess is already under investigation in Germany — along with Winterkorn — for possible market manipulation for not going public sooner about the scandal.


This deal comes after ex-Volkswagen CEO Martin Winterkorn was charged under seal in March. Germany will not extradite Winterkorn to countries outside the European Union, however, he certainly would have had a hard time continuing to run a multinational company like Volkswagen while stuck in one place had he stayed on as CEO.

2nd Gear: Elon Musk Is Totally Sorry About That Insane Call, Sort Of?

Elon Musk, in his neverending quest to become the Kanye West of automobiles, admitted he was “foolish” on the quarterly earnings call where he refused to answer what he called “boring, bonehead questions.” Now that this call cost Tesla over $2 billion in market capitalization according to Reuters, Musk says he’s like, really, really, really sorry, you guys. Seriously. Sorry.


Musk tweeted that he was “foolish” to ignore analysts on the call, even though they were asking tough questions he didn’t want to answer (via Bloomberg Quint):


Yet he’s still on his haters-gonna-hate kick, as Bloomberg Quint notes:

Musk tweeted that analysts at Sanford C. Bernstein & Co. and RBC Capital Markets were representing “a short seller thesis, not investors” when posing questions he cut off during the Wednesday call. The chief executive officer reiterated that an inquiry about capital expenditures by Bernstein’s Toni Sacconaghi was “boneheaded” and said RBC’s Joseph Spak posed an “absurd” query about Model 3 reservations.

“Oh and uh short burn of the century comin soon. Flamethrowers should arrive just in time,” Musk wrote, referencing devices he sold earlier this year to raise money for his tunnel-digging company Boring Co.


You know, because talking about burning your haters with a flamethrower is completely something that a stable and rational human being would do.

Musk does have a notable fixation on anyone who bets against him, despite the fact that it should be expected when you’re talking about an automaker who hasn’t actually made a profit in its 15 years of existence. Bless his heart.


3rd Gear: Lyft And Aptiv To Unleash 30 Self-Driving Cars In Las Vegas This Summer

Autonomous cars seem to have a bad rap lately, making headlines for crashing while testing on public streets. But Lyft and its automotive technology partner Aptiv seem undeterred to unleash a fleet of 30 self-driving BMWs in Las Vegas this summer. The Detroit News writes:

Lyft and Aptiv will run the self-driving BMWs between the same predetermined sites that the companies used during a successful demonstration at the International Consumer Electronics Show in January, the Las Vegas Sun reported Thursday.

The BMW 5 Series cars will navigate passengers between the Las Vegas Convention Center and various resorts on the Strip.

Las Vegas is working with Aptiv to extend the routes into downtown, said Michael Sherwood, the city’s director of technology and innovation.

The companies are planning astart date for July or August, Sherwood said. The routes are also subject to change.


It’s a win-win for both companies: Aptiv gets to test their self-driving technology under real-world conditions, and should the technology be successful, Lyft won’t have to pay any pesky humans to drive for them.

A human operator will be in these BMW test cars, however, and customers will be able to hail the self-driving BMWs like any other car in Lyft’s system.


Meanwhile, Aptiv is also working with Las Vegas on other transportation solutions for public transit and congestion woes.

4th Gear: Toyota Invests Big In Canada To Push Those Rav4s

Toyota plans to invest $1.1 billion (U.S.) to expand its Canadian operations to build more of hip hop’s favorite vehicle, the Rav4, reports The Detroit News:

The Japanese automaker’s Canadian unit made the announcement Friday afternoon at its plant in Cambridge, Ontario, alongside Prime Minister Justin Trudeau and Ontario Premier Kathleen Wynne. The expansion there and in nearby Woodstock will create 450 jobs, supported by C$110 million each from the federal and provincial governments. The two Toyota plants west of Toronto now employ about 8,000 people and made more than 600,000 vehicles last year.

The investment will allow Canada to built a “hybrid ecosystem,” becoming the largest producer of hybrid Toyotas in North America and supporting Canada’s supply chain of auto-part markets, Trudeau said. “This is a great day for the auto sector,” he said.


It’s all part of meeting consumers’ neverending thirst for SUVs over traditional cars, and Toyota is rearranging accordingly. The Detroit News continues:

Toyota, the world’s second-biggest carmaker, has already announced it will move assembly of the Corolla compact to the U.S. to make room for RAV4 output. During 2017, Toyota sold 407,594 RAV4s in the U.S., topping Camry sedan sales for the first time.


Toyota’s big investment in Canada comes at a time of growing uncertainty over the North American Free Trade Agreement. The United States keeps pushing for more cars and parts to be made in North America, so they’re getting that, I suppose—in Canada. In addition to boosting Rav4 production in Canada, Toyota is boosting its investment in research and development there with the creation of 1,000 new co-op placements.

5th Gear: Eat The Rich

The ultraluxury segment has never been a particularly profitable sector—until recently, that is. Automotive News writes:

Ultraluxury car companies project an image of perfection, but their cash flow used to be as unreliable as the cars they built.

Aston Martin went bankrupt seven times in its first 100 years. Lamborghini went through multiple owners before ending up at Volkswagen. Bentley almost disappeared under a lackluster Rolls-Royce ownership.

That’s no longer the case. The iconic European marques are in a better state now than probably they’ve ever been. The big reason? “Richer people are getting richer and there are more of them,” Andy Palmer, CEO of Aston Martin, told Automotive News. “And the area which is growing quickest and represents their biggest spend is luxury and ultraluxury cars.”


While Aston Martin CEO Andy Palmer is a charming man who we appreciate for actually racing the beautiful cars his company makes, it’s hard not to see the current success of hyper-luxe cars as a bad sign in the larger picture.

Yes, there are more rich people—but also more people on this planet in general, and this news of supercar success comes at a time of record inequality worldwide.


But if you work for one of those lucky luxury marques, you’re probably doing okay at the moment, as Automotive News continues:

The sales growth is staggering. In 2002, the combined global car sales of Aston Martin, Bentley, McLaren, Rolls-Royce, Ferrari and Lamborghini was 6,475, according to JATO Dynamics. Last year, that figure was 29,554. The 2002 figures lack data from China, which had yet to make its mark on ultraluxury sales.

In 2017, McLaren, Ferrari and Lamborghini boasted record sales. Aston Martin, McLaren, Bentley and Ferrari posted profits for the year, with Ferrari claiming industry-leading margins of 30.1 percent. BMW doesn’t break out Rolls-Royce in its financials, but the company boasts it is “highly” profitable. Lamborghini is still an unknown.


When the rich get richer, they don’t trickle down more of that financial gain to the regular working man by default. They just buy nicer Lambos.

Reverse: DaimlerChrysler Was Always Kind Of A Reverse, If We’re Honest

Today’s Fiat Chrysler isn’t the first foreign tie-up the Chrysler brands have been involved with. Twenty years ago, Daimler-Benz and Chrysler merged to form one big mega-behemoth of a company. Automotive News has an interesting retrospective out today, if you don’t remember the era of meh Mercs and strange cross-Atlantic platform sharing.


Neutral: What Dirt Do You Think Diess Has?

My favorite theory of why Diess got a unique heads-up arrangement is definitely the one where he’s dishing out the info. What do you think he overheard in various meetings regarding Dieselgate at Volkswagen?