AD #3058 – Companies Oppose Restricting Voting; Tesla Tried to Hire VW’s CEO; Just-In-Time Production Isn’t Going Away

This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.

MAJOR COMPANIES OPPOSE LAWS RESTRICTING VOTING
Many U.S. corporations are coming out against new laws that restrict voting. Delta Airlines and Coca-Cola made headlines when they opposed new laws in Georgia which they say limit voter access. Now, General Motors, Ford and Stellantis are getting in on the action. Mary Barra, Jim Farly and Mike Manley put out a statement yesterday publicly opposing proposed laws in Michigan that would restrict voter access. And it wasn’t just the automakers. The CEOs of suppliers also signed it, including American Axle, Continental, Magna, Penske, Borg-Warner, Continental Structural Plastics, Lear, and Bosch. A bunch of non-automotive companies also signed it. The Republican leaders in the Michigan Senate who introduced the new laws say they’re going ahead with them anyway. But with so many business leaders publicly opposed to it, you have to wonder if these laws will actually be enacted. After all, those corporations are a major source of political contributions.

TESLA TRIED TO HIRE VW CEO HERBERT DIESS
Well here’s a bombshell. According to Business Insider Germany, Tesla tried to hire current Volkswagen CEO, Herbert Diess, as its chief executive officer back in 2015. Elon Musk even had a contract drawn up for him to sign. Obviously, Diess declined the offer but the report doesn’t explain why. Instead, he joined VW in 2015 after leaving BMW in 2014. But this shouldn’t be too shocking since both CEOs obviously admire each other. Last year they test drove both the ID.3 and Model Y together. Also, Elon Musk has stated that he doesn’t want to be CEO at Tesla forever, so at some point he’ll likely step down from that position.

FORD SETS UP BEV DIVISION IN CHINA
Is Ford setting up a new subsidiary in China without a Chinese partner? Sure sounds that way. Tesla was able to set up in China without having to go along with a Chinese partner because it only sells BEVs, and it looks like Ford wants to do the same thing. Ford China just established what it calls the BEV Division that will do its own R&D, manufacturing, and sales of electric vehicles. It’s going to start off by building and selling Mustang Mach Es in China direct to consumers, not through dealerships. What’s so fascinating about this is we always thought Ford decided to make Mach E’s in Mexico because it has a free trade agreement with China. We thought Ford would export Mach E’s tariff free to China and get a ton of volume in its Mexican plant. But it looks Ford has much bigger plans with the BEV Division, and making EVs in China without a Chinese partner is part of that plan.

FORD LAUNCHING LEVEL 2 BLUECRUISE
Speaking of Ford, it’s going to launch its Level 2 hands-free highway driving system later this year, called BlueCruise. If you thought it was called Co-Pilot360 that’s what Ford calls its entire suite of ADAS hardware and software. But 2021 F-150s and Mustang Mach-Es with the Co-Pilot360 Active 2.0 Prep Package will be able to get the feature via an over-the-air update. The system will allow drivers to go completely hands-free on more than 100,000 miles of highway across North America. It also features a driver monitoring camera in the instrument cluster, which is the same place it uses text and blue lighting cues to help communicate with the driver. Future enhancements, like lane changing, could be added down the line. BlueCruise will cost $600 to unlock, but it’s part of a nearly $1,600 package in the F-150 and $3,200 package in the Mach-E.

MORE HYUNDAI STARIA DETAILS
Unfortunately, it looks like Hyundai’s slick, new Staria van will not be coming to the U.S. but we’ve got more details anyway. It will be offered in two variants; Staria and Staria Premium. As the latter’s name suggests, it will have a more luxurious look and feel to it. This is best highlighted by the tinted brass chrome accents around the exterior and the 2nd row Premium Relaxation Seats. But for those times you need to move stuff instead of people, there’s enough cargo space for three European pallets. Power comes from either a roughly 175 horsepower 2.2L diesel, which will be the only option for Europe, or a 3.5L V6 that makes about 270 horsepower. The diesel can be paired with a 6-speed manual or 8-speed automatic, while the V6 only gets the automatic. No pricing yet, but the Staria goes on sale in select markets in the second half of this year.

RUBBER SUPPLIES RUNNING LOW
The auto industry just can’t seem to catch a break. First it was the chip shortage that’s disrupting production, now rubber supplies are running low. Bloomberg reports there’s several factors leading to the shortage; congestion at ports is disrupting natural rubber from being shipped; stockpiling by China, which snapped up rubber when prices were low last year; plus drought and disease that’s harming rubber trees. Because of that, suppliers are buying what rubber they can but that’s causing prices to spike. Back in February, natural rubber prices hit a four-year high of $2 a kilogram. One CEO at a rubber company expects the price to reach as high as $5 in the next five years. That’s because supplies can’t easily be replenished. Rubber trees need seven years to mature, and producers can’t adjust quickly enough to meet the demand. It’s not affecting the OEMs at the moment but suppliers are feeling the crunch.

INTEL WILL MAKES CHIPS FOR AUTOMAKERS
Automakers are getting some help with the chip shortage though. But not immediately. Intel pledged to start making semiconductors for the auto industry within the next six to nine months. It says it’s in talks with suppliers to get the components it needs to make them. Automakers in the U.S. are estimated to build 1.3 million fewer vehicles this year due to the shortage.

HONDA REVEALS NEW CIVIC
Honda unveiled the new Civic this morning. Or at least it’s officially letting us look at the exterior sheet metal, which Honda calls “a sporty new look.” That’s it as far as details go. And they only released this one picture. And now you know as much as we do about it. The new Civic goes on sale later this summer.

Coming up next, John thinks that all this talk about abandoning just-in-time production is crazy.

Hey, how are sales of the Audi eTron going? Who’s buying the eTron and the eTron Sport? And how’s that build-to-order process going? We’ll get answers to those questions tomorrow Autoline After Hours because our guest will beMatthew Mostafaei, the project manager at Audi for the eTron. Stephanie Brinley from IHS Markit will also be on the show. So join John and Gary for some of the best insights into what’s going on in the automotive industry.

WHY JUST-IN-TIME PRODUCTION ISN’T GOING AWAY
With the chip shortage crippling car production some are saying the auto industry should abandon just in time production. Here’s why that will never happen. Back in the bad old days automakers used to have warehouses stacked to the ceiling with inventory. But all that inventory tied up a lot of cash. It required floor space and storage racks and that drove up cost. If a part was redesigned, you couldn’t use the new parts until all the old inventory was used up. And if you discovered a defective part, chances were you had an entire warehouse full of defective parts. So having piles of inventory is bad for quality. That’s why they went to just-in-time, and it’s why they will not go back. With just in time production automakers typically have one shift worth of inventory on site. Sure they may add a few more buffers of inventory, but they’re not going to go back to having piles of parts. Besides, having lots of inventory only postpones the problem. In other words, instead of running out of chips this month, they would have just run out of chips next month.

And that wraps up today’s report. Thanks for watching.