Volvo has reasons to be happy now but the future is unsure, Rivian is planning to build another factory as it’s yet to ship its first truck and the upward trajectory of Tesla prices cannot be stopped. All that and more in this TGIF edition of The Morning Shift for July 23, 2021.
Volvo is absolutely raking it in at the moment, reporting the best half-year sales and operating profits in its 94 years as a company. The cause? Momentum behind crossovers and electric cars, which carry with them bigger margins and thus make the company more money than your aunt’s old 240 did.
Unfortunately, Volvo also knows that no matter how rosy earnings are looking now, the back half of 2021 will not be so impressive. From Automotive News:
“The base scenario that we have is that the chip shortage will not improve, which means our sales and revenue growth in the second half will be flat compared with the second half of 2020,” Volvo CFO Bjorn Annwall told Automotive News Europe.
This predicament highlights another consequence of increasing your sales during a shortage: You’ve got nothing left to sell once all that inventory is gone.
“The global shortage led to positive effects on revenue and profitability,” the automaker said in its half-year financial report.
But Volvo CEO Hakan Samuelsson said the automaker will struggle to continue with that strategy because it will not have as much reserve stock to sell.
“In the first half we sold more than we produced because we could lower our inventory, but you can only do that once,” Samuelsson told ANE.
It’s been interesting to watch how the semiconductor shortage has hit different automakers at different times — sometimes multiple times — and how they’ve all managed the problem differently. Unless you’re Alfa Romeo or Fiat, in which case, your lots are regrettably full.
This time, rather than states debasing themselves to win the company’s next headquarters location, they’ll be debasing themselves over Rivian’s next plant. The Amazon-owned electric truck and commercial vehicle manufacturer has not yet delivered a single customer vehicle, but it is already mulling over the location of its second factory, an spokeswoman from the company confirmed to Reuters on Thursday:
“While it’s early in an evolving process, Rivian is exploring locations for a second U.S. manufacturing facility,” Rivian spokeswoman Amy Mast said on Thursday. She declined to provide further details.
Multiple U.S. states have bid for the plant - dubbed “Project Tera” in documents - which will be announced in a couple of months and break ground early next year, said the sources, who asked not to be identified. The timing could still change given the coronavirus pandemic, which has already delayed the planned announcement from the summer, the sources said.
This facility will also house battery manufacturing, Reuters reports:
A second U.S. plant will expand the company’s capacity and include a 50 gigawatt-hour (GWh) battery cell production operation built in phases, as well as a product and technology center, according to documents seen by Reuters that were submitted to state economic development officials. While the documents did not mention Rivian, sources told Reuters that Tera and Rivian were one and the same.
The proposal listed spring 2021 as the period in which states would be notified of the company’s decision, with “mobilization” likely in the summer, and then the start of construction in the fall. However, the pandemic has delayed that timeline, the sources said.
If there’s one silver lining to this, it’s that state and city officials won’t all make that same stupid joke of asking Alexa where Amazon should build its next warehouse.
The President’s task force on mitigating the semiconductor shortage is still awaiting approval from Congress on the $52 billion it’s asking for. In the meantime, the team has given a lot of thought to where that money should go and how much, according to Commerce Secretary Gina Raimondo by way of Bloomberg:
“We’re putting plans in place right now already on the team to invest the $52 billion,” she said Thursday during a White House press briefing. “We need to incentivize the manufacturing of chips in America and so we are very focused on putting the pieces in place so that can happen.”
I’m no financial advisor, but if you expect you may come into $52 billion that you’re expected to spend in order to solve a big problem, it’s generally a good idea to figure out what you intend to do with it before you get it. Raimondo didn’t clarify exactly how those funds will be invested, but she did relate something else of note:
Raimondo told Bloomberg News in an interview that she’s hearing signs of improvements from automakers who told her the supply crunch is getting “a little bit better” amid a global semiconductor shortage. Despite the uptick in chips allocation to the autos sector, many continue to see manufacturing delays.
The day you see a Morning Shift published without a headline about production delays, chip shortages or other manufacturing-related snags is the day the crunch has really lifted. Until then, I don’t buy it.
There have been seven months in 2021, and Tesla has just raised the prices of its vehicles a seventh time. On this occasion it’s the Model 3 and Model Y, whose long-range, dual-motor variants have gone up $1,000 each, according to Electrek. In the case of the Model 3 specifically, that means prospective buyers today will be paying a fair bit more than they would have even just a few months ago.
The popular version of the Model 3 now starts at $49,990, or $3,500 more than it was earlier this year.
The delivery delay for new orders is also listed as 10 to 16 weeks.
Earlier this year, CEO Elon Musk blamed some of the previous price increases on supply chain issues, including the global chip shortage.
It’s not clear if it’s still the case with this new price increase, which is bigger than the previous $500 incremental increases.
I don’t doubt Elon Musk’s claim that supply has a lot to do with this, though I find it ironic that one of the supposed benefits of direct sales — no markups — has gone out the window. Turns out a centralized sales operation can screw customers over just like the dealers can.
It’s all a part of the Dieselgate-related settlement between Volkswagen and its four former bosses, which the company’s shareholders approved on Thursday according to Reuters:
The initial deal, which was announced last month and which will see Volkswagen receive 288 million euros ($339 million) in compensation, required shareholder approval and 99.9% of investors agreed to the proposal at the group’s annual general meeting.
Here’s how that’s broken down by the four dudes who have to pay up, with ex-CEO Martin Winterkorn bearing the brunt:
As part of the deal, Winterkorn and Stadler will pay 11.2 million and 4.1 million euros, respectively.
Former Audi board member Stefan Knirsch agreed to settle for 1 million euros, and ex-Porsche AG board member Wolfgang Hatz for 1.5 million, Volkswagen said.
“But wait,” you may be asking right now. “That only adds up to 17.8 million euros! What about the other 270.2 million?” Well, it turns out that’s coming back courtesy of the company’s insurance policy. Yeah, I was sort of disappointed to learn that, too.
Before Lotus got its hands dirty on what would later be called the Talbot Sunbeam, Chrysler launched it in on this day in 1977, 44 years ago. Chrysler Europe marketed and sold the small hatchback for just a year and a half before it gave up, and Peugeot swooped in to buy up the company’s assets in the region. Although the Sunbeam’s Chrysler badge was replaced when it was initially resold as a Talbot, its Pentastar grille emblem remained on new models for a time afterward.
On Thursday, Mercedes F1's Twitter account uploaded this short video, which I have watched probably about 15 times by this point:
Everything about this is perfect. The fonts chosen; the weird pastiche of background visuals in the title screen; the way the videos behind each item in Arcade Mode sort of freeze when they’re first highlighted, as that vertical pillar slides over; and of course the music and sound effects. Rarely am I so taken by a brand account’s memery, but this is truly something else. Lewis Hamilton is of course a Gran Turismo brand ambassador, so this all makes total sense. But the accuracy with which this GT3-inspired tribute was made absolutely floors me. As a result, I’ve been listening to Slipstream on repeat all morning.