AD #3676 – Stellantis “Outraged” at UAW; Plant Utilization Could Fall; China Forces Germany to Be More Open Minded

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

STELLANTIS “OUTRAGED” AT THE UAW
It’s Day 40 of the UAW strike and it’s crazy how fast this thing is moving. Information that is accurate one minute, is not the next. And shortly after recording yesterday’s show the union ordered 6,800 workers at Stellantis’ Sterling Heights plant in Michigan to go on strike. The plant, which builds the Ram 1500 pickup, is one of the company’s most profitable. And not surprisingly Stellantis is not happy, saying it’s “outraged.” The UAW says it is striking the truck plant because Stellantis “has the worst proposal on the table.” One Wells Fargo analyst estimates that Stellantis will lose $110 million in operating earnings per week while the truck plant is shut down. And with it added to the mix, there are now more than 40,000 UAW workers on strike.

GM WITHDRAWS 2023 GUIDANCE
GM is also feeling the pain and announced it’s dropping its profits and EV production targets for this year because of costs related to the strike. GM released its third quarter earnings and while revenue came in at over $44 billion, which was up 5.4%, its net income was down over 7%. The company says the UAW strike cost it $200 million in Q3, but with additional shut downs it’s now running at $200 million a week. And the UAW could easily escalate that more by shutting down profitable plants like Arlington or Flint Truck. Would that be enough to squeeze an even better deal out of GM? There’s no way to know for sure, but CEO Mary Barra says that the company has been offering record contracts “for weeks now” that won’t put jobs or GM at risk and accepting “unsustainably high costs… is something (she) will not do.” No doubt UAW President Shawn Fain will use these words against GM since it also declared a quarterly dividend of 9-cents per common share. This is something Fain views as throwing money at Wall Street, money that should be going to members who helped generate those profits.

PLANT UTILIZATION COULD FALL FURTHER
One of the big things the UAW is trying to protect against with record contracts is the shift to electrification. There’s a lot more EV models coming, EVs need less people to assemble them and the automaker’s upcoming battery plants haven’t been organized by the Union yet. However, there’s a number of indications that not enough people in the U.S. want to buy an EV right now. And if that turns out to be true, there’s going to be a lot fewer worker shifts at production plants. Right now car plants in the U.S. are on average only making 66% of the cars they’re capable of building. 80-85% is considered the point when most plants start turning a profit. If EV demand doesn’t pick up more and the UAW strike draws out even further plant utilization could fall even more. And one analyst says it could take as much as 5 years to turn around.

MITSUBISHI DROPS CHINA, INVESTS IN RENAULT’S EV DIVISION
Mitsubishi is going to stop making cars in China and is transferring its stake in its JV to its partner GAC. While it will incur a one-time loss for restructuring in China, Mitsubishi will save money by dropping its operations in the country. And it announced it’s investing up to 200 million euros in Renault’s EV division, Ampere, which it’s expected to go public with sometime next year. Mitsubishi says the move will help it to improve its EV development technology and Renault will get more EV manufacturing scale.

U.S. DOJ EXPANDS TESLA INVESTIGATION
Tesla revealed that the U.S. Department of Justice has expanded its investigation into the company. The DOJ had been looking into its Autopilot and Full Self Driving features but in its recent quarterly report with the Securities and Exchange Commission, Tesla disclosed that the investigation has expanded to include “personal benefits, related parties, vehicle range and personnel decisions.” It was also revealed that the DOJ has issued subpoenas for information instead of just requesting it. While the filing didn’t provide details, legal experts speculate that the DOJ may be investigating CEO Elon Musk and whether the company has been truthful about vehicle features.

GREAT WALL 1ST TO ANSWER EU ANTI-SUBSIDY QUESTIONS
Great Wall Motor is the first Chinese EV maker to respond to the EU’s anti-subsidy investigation into Chinese made EVs. The automaker says it formally submitted answers to the EU investigators, while calling for fair and open trade. Great Wall says Europe is a strategic market for the company and it also plans to build a plant in the region. But the EU is concerned about the flood of low cost EVs from China. So last month it launched an investigation into Chinese made EVs, looking to exclude vehicles with a very carbon-intensive energy mix. The EU claims the Chinese automakers are receiving huge state subsidies that keep prices artificially low. And that could result in tariffs being imposed on the EVs, if the EU concludes that they’re hurting the European auto industry.

JAPAN WANTS MORE EV COOPERATION
The Inflation Reduction Act has resulted in a lot of EV investment in the U.S. because companies want to meet requirements to qualify for EV tax credits. But other regions like Europe, South Korea and Japan were unhappy EVs made in their countries wouldn’t qualify for subsidies and have lobbied to change the rule. So now the Nikkei news reports that Japan is seeking more cooperation with the U.S. and Europe over subsidies for electric vehicles, semiconductor chips and other critical materials. Japan wants the sides to avoid adopting protectionist rules that would harm free trade. So it’s proposing a set of standards for subsidies between the three regions and says it wants to start discussions as early as this year.

STELLANTIS REVEALS NEW COMMERCIAL VAN LINEUP
Last week Stellantis announced it’s combining all of its brands that sell commercial vehicles into one division called Stellantis Pro One. And now it’s showing off 12 new van models, including electric and fuel cell, from Citroen, Fiat, Opel, Peugeot and Vauxhall for the European market. The electric vans feature the company’s new 2nd-gen BEV platform. The compact vans have a range of 330 kilometers or 205 miles. The mid-size vans offer 50 or 70-kWh battery packs which provide a range up to 350 kilometers or 224 miles. And the large vans feature a 110-kWh battery that provides 420 kilometers or 261 miles of range. As for the fuel cell vans. The mid-size ones have a range of 400 kilometers or 249 miles and they launch in the middle of next year, while large fuel cell vans have a range of 500 kilometers or 311 miles and also launch next year. Other features include updated interiors with a new 10-inch infotainment screen, new safety technology and wireless connectivity. Stellantis also revealed that in North America it will introduce a new Ram ProMaster EV by the end of the year, the Ram 1500 REV in late 2024 and a fuel cell vehicle in the future.

CHINA FORCING GERMANY TO BE MORE OPEN MINDED
German automakers have typically made some of the most desirable cars in the world. But the chief designer at Porsche and Volkswagen says because Chinese companies and startups like Tesla can do things completely different, it’s forced German automakers to be more open minded. He says this is ultimately a good thing because it forces the decision makers to be more open minded as well. But to truly catch the Chinese and Tesla, legacy automakers are going to have to start moving a lot faster.

But that brings us to the end of today’s show. Thanks for tuning in.