Good morning! It’s Tuesday, November 28, 2023, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

1st Gear: New Vehicles Are Too Expensive

About two weeks ago, the United Auto Workers union signed contracts with the Big Three automakers to end the strike and get vehicle production back up and running. Now new car sales across the country have rebounded ever so slightly.

However, many do not think those sales will gain any significant momentum going into the new year for one simple fact: new vehicles are way too expensive. From The Detroit Free Press:

According to S&P Global Mobility, November U.S. light vehicle sales are expected to recover from the strike-dampened sales levels of October, but they will lack any momentum for significant uptick. S&P Global Mobility projects 1.23 million vehicles will be sold in the United States this month, which would translate to a seasonally adjusted sales rate (SAAR) of 15.5 million units for the month, which is flat compared with the October SAAR level.

“While the end of the UAW strikes provides some potential relief to those automakers impacted, the ever-present affordability concerns remain prevalent for the foreseeable future,” said Chris Hopson, principal analyst at S&P Global Mobility, in a statement.

Hopson said over the next few months it is unlikely that auto sales will pick up from the current pace, “with the upshot being a bounce in early 2024 production creating a progression for inventory and incentive levels to develop come spring of 2024.”

A lack of affordability in the new car market is nothing new. It was an issue well before the UAW’s 46-day long strike that started on September 15.

“With high interest rates … nothing is going to unwind quickly,” Hopson said. “We can get some inventory in here, but interest rates are still high and inventory is still low based on what we saw at pre-COVID levels.”

At the end of October, there were about 2.1 million new vehicles in inventory across all automakers, up from 2 million at the end of September, Hopson said.

Cox Automotive data showed that in October, with new-vehicle inventories on the rise despite the UAW strike, the average price paid for a new vehicle was $47,936, about $670 lower than the year-ago period, but well above pre-COVID-19 when it was about $36,000.

Despite the minor price dip from a year ago, rising interest rates make affordability impossible for many consumers. According to an October report by MarketWatch, the average auto loan interest rates across all credit profiles range from 5.07% to 14.18% for new cars and 7.09% to 21.38% for used cars.

It’s widely expected that the affordability issue of new cars is going to continue throughout 2024 and beyond. High prices and interest rates have reportedly caused about 10 percent of buyers who would typically buy a new vehicle to fall out of the market. They’re now either going for used vehicles or have dropped out completely.

2nd Gear: Tesla Beats Anti-Union Claims

The National Labor Relations Board dismissed claims that Tesla illegally fired employees working on Autopilot software at its Buffalo, New York gigafactory to end a union organization push. The complaint was originally filed in February by Workers United, a union looking to organize at the factory. From Reuters:

Workers United claimed that within days of announcing a union campaign earlier this year, Tesla fired dozens of workers from its Autopilot department. Tesla has said the firings were based on performance reviews and not tied to union activity.

The labor board official, however, found merit to two separate claims that Tesla maintained an unlawful rule on the acceptable use of technology in the workplace and solicited grievances from workers in an attempt to thwart support for the union, NLRB spokeswoman Kayla Blado said on Monday.

If Tesla does not settle those claims, the NLRB will issue a complaint against the company that will be heard by an administrative judge, Blado said.

The campaign in Buffalo is apparently part of a nationwide push to unionize Tesla shops. The effort has spurred a number of complaints filed with the labor board alleging illegal union busting.

The United Auto Workers (UAW) union, which recently won new contracts with the Detroit Three automakers, has said that it plans to aggressively organize U.S. auto plants operated by Tesla and other non-unionized companies. President Joe Biden said this month that he supported the union’s efforts to organize workers at Tesla and Toyota.

In April, an NLRB judge ruled that supervisors at a Tesla service center in Florida illegally barred workers from discussing pay and other working conditions and told them not to complain to higher-level managers.

Earlier this month, a U.S. appeals court reversed an NLRB decision that said Tesla violated federal labor law by barring workers at its Fremont, California, assembly plant from wearing UAW T-shirts.

And the same court is separately considering Tesla’s appeal of an NLRB ruling that said CEO Elon Musk violated federal labor law by tweeting in 2018 that employees would lose stock options if they joined a union.

It won’t come as much of a surprise to learn that Tesla denied any wrongdoing in all of those cases.

3rd Gear: Cruise Spending Cuts

General Motors is cutting back spending in its self-driving vehicle unit Cruise following a pedestrian crash in October. From Reuters:

In October, one of Cruise’s driverless cabs was not able to stop in time from hitting a pedestrian who had been struck by a hit-and-run driver, raising safety concerns around the use of robotaxis.

Cruise in November paused all supervised and manual car trips in the United States while also expanding a safety review of its robotaxis, causing tumult within the company and compelling CEO Kyle Vogt and Chief Product Officer Daniel Kan to step down.

Last week, Cruise said it was planning to relaunch in one city before expanding to others. It also said it would focus on its Bolt-based autonomous vehicles in the near future.

4th Gear: Toyota Cutting Stake in Denso

Toyota and two other affiliates are planning to sell about a 10 percent state in automotive supplier Denso by the end of 2023. It’s a stake that’s likely to be worth about $4.7 billion. From Reuters:

The sale of shares in Denso would mark the latest step by the world’s top selling automaker to cash in on stakes in affiliates as it ramps up production of fully electric vehicles, a capital-intensive endeavour that spans research and development to an overhaul of the factory floor.

Toyota, Toyota Industries and Aisin will sell Denso shares worth a total of about 700 billion yen ($4.7 billion) at current market prices, the two sources said.

Toyota Motor’s portion of the sale will represent short of half of the roughly 10%, with Toyota Industries and Aisin making up the remainder, the sources added. Denso, a key Toyota supplier, is the world’s second-largest maker of automotive components.

Denso is planning to buy back some of its own shares in the open market to keep its share price from dipping too much.

In a statement, Denso said it was considering a share sale, a buyback and other capital measures, but that nothing had yet been decided. A Toyota spokesperson said the company was not in a position to comment on Denso, while a Toyota Industries spokesperson said nothing had been decided. Aisin said reports of the share sale were not something it had announced itself.

At $4.7 billion, it would be the second-biggest such share offering in Japan this year, after the more than $9 billion sale of shares in Japan Post Bank in March, according to LSEG data.

It would also be the biggest share offering in the auto industry in more than a decade, highlighting the stakes involved in the pivot to battery electrics.

Toyota, which held about 24.2 percent of Denso stock at the end of September, is still expected to be a top shareholder in the company.

Reverse: More Interesting Than F1

Good morning! It’s Tuesday, November 21, 2023, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

1st Gear: Fisker’s Accounting Chief Makes It Two Weeks

Fisker’s chief accounting officer, Florus Beuting, a man who started the job just two weeks ago, is already out at the nascent automaker. Hey, at least he lasted longer than Anthony Scaramucci. From The Wall Street Journal:

Florus Beuting, who was named chief accounting officer in early November, has left the automaker, the company said in a regulatory filing Monday. His exit follows the departure of his predecessor, who left in late October after roughly three years at the startup to take a job with another company, leading Fisker to unexpectedly delay its earnings release.

Beuting resigned from the company Tuesday, a day after Fisker reported third-quarter results, according to the filing.

[…]

Fisker is one of a number of automotive startups that are trying to rapidly expand their business amid cooling demand for EVs. The company’s first vehicle, the Ocean SUV, went on sale earlier this year, but sales have been slow to take off as Fisker struggled with parts delays and difficulties shipping its vehicles to the U.S. from Austria, where they are built.

Beuting was previously the chief accountant at PLBY Group, the parent company of the Playboy brand. He was hired by Fisker on November 6, just a little bit before the company unexpectedly pushed back its quarterly earnings report because of the change in executives.

John Finnucan, who had been Fisker’s chief accounting officer since around the time the company went public in late 2020, left on Oct. 27 to join a private company focused on refueling solutions. At the time of Finnucan’s departure, Fisker said his exit wasn’t related to company operations or accounting practices.

Fisker delayed the release of earnings by about a week, saying the gap between Finnucan’s departure and Beuting’s first day at work meant the company was unable to finish preparing all of its financial documents and regulatory disclosures for the period.

The company disappointed Wall Street when it reported third-quarter results, recording worse than expected net loss and revenue. Fisker’s shares tumbled more than 10% in after-hours trading after it released the quarterly results.

Fisker has also recently cut its production target for the year to between 13,000 and 17,000 vehicles. That’s down fairly substantially from its previous target of about 20,000 vehicles.

2nd Gear: Nissan’s Wage Hike For Plant Workers

Nissan is raising top wages for workers at its U.S. manufacturing plants by 10 percent in January following the United Auto Workers union’s contract with the Big Three automakers.

Apparently, about 9,000 U.S. workers in total, including technicians, maintenance and tool and die technicians, will get pay hikes on January 8. Additionally, workers not yet at the top scale will see their wages increase. From Reuters:

Nissan said it is also eliminating wage tiers for U.S. production workers. In recent weeks, Hyundai Motor, Toyota Motor and Honda Motor have all announced they would hike U.S. factory wages after the UAW contract and as the union says it will work to organize nonunion plants operated by foreign automakers and Tesla.

Nissan said the pay hikes reflect its commitment to its employees in the United States “and enhancing our competitiveness.”

The UAW labor deals with General Motors, Ford Motor and Stellantis include a 25% increase in base wages through 2028, including an immediate 11% hike, and will cumulatively raise the top wage by 33%, compounded with estimated cost-of-living adjustments to over $42 an hour.

It also cut the number of years needed to get to top pay from eight years to three years, will boost the pay of temporary workers by 150% and make them permanent employees. The deal also includes significant retirement improvements.

[…]

Nissan said over the last three years it has increased wages at its three manufacturing sites by 12-18.5% in total; previously cut time needed to reach top pay from eight to four years; added two paid holidays and increased paid parental leave for production workers.

For decades, the UAW has been unable to organize at auto plants operated by foreign automakers, but UAW President Shawn Fain is looking to change that in the near-ish future.

3rd Gear: Hyundai’s New Plant In Singapore

Hyundai opened its heavily automaker facility in Singapore that is expected to play an important role in the Korean automaker’s electrification strategy in the coming decades. It deploys robotics and new production methods. From Bloomberg:

The Hyundai Motor Group Innovation Center Singapore covers seven floors and can make as many as 30,000 electric vehicles annually, according to Hyundai. It has been in operation since early this year, producing Ioniq 5 cars and fully autonomous robotaxis. The Ioniq 6 will join the manufacturing lineup in 2024.

“HMGICS will establish itself as one of two Hyundai Motor Group innovation pillars that will lead the company’s future in the electrification era over the next 50 years,” Hyundai said in a statement Tuesday. “The facility will serve as a testbed for developing future mobility solutions.”

[…]

A feature of the 86,900-square meter (935,380-square feet) facility is a so-called cell-based production system, where humans and robots work side by side, replacing the traditional conveyor-belt manufacturing approach. Some 200 robots engage in operations such as assembly and inspection, freeing humans to focus on more creative and productive duties, Hyundai said.

Singapore’s Prime Minister, Lee Hsien Loong, was in attendance at the groundbreaking ceremony three years ago. At the time he reportedly described it as a “major step forward” for Hyundai and that it was the “first of its kind” in the world.

The building also features a 618-meter rooftop track for test driving and a smart farm where robots work on producing vegetables, some of which will be used in a restaurant scheduled to open next year. Only 1% of land in Singapore is assigned to agriculture, and the city-state imports 90% of food consumed. It aims to produce 30% of food locally by 2030.

Hyundai Motor Group is planning to build over 3.6 million EVs every year by the end of this decade. It is also building a much larger factory than this one in Ulsan, South Korea that’ll be capable of producing 200,000 EVs per year. It’ll also be building another factory in Georgia with a capacity of 300,000 vehicles per year.

4th Gear: Tesla’s Deal With India

India is getting close to a deal with Tesla that would allow the Austin, Texas-based automaker to ship its electric vehicles to the country starting next year and set up a factory within two years. From Bloomberg:

An announcement could come at the Vibrant Gujarat Global Summit in January, one of the people said, declining to be identified because the discussions are private. The states of Gujarat, which is Prime Minister Narendra Modi’s home base, Maharashtra and Tamil Nadu are under consideration because they already have well-established ecosystems for electric vehicles and exports, another person said.

Tesla would commit an initial minimum investment in any plant of around $2 billion, one person said, and would look to increase purchases of auto parts from the nation to as much as $15 billion. The US automaker would also seek to make some batteries in India to bring down costs, the person said.

Right now, no final decision has been made and plans can reportedly change, according to folks with knowledge of the project. CEO Elon Musk said earlier this year that Tesla plans to make a “significant investment” in India, and he plans to visit next year.

Representatives from India’s Ministry of Heavy Industries, which oversees the automobile sector, and the ministries of finance, and commerce and industry, didn’t respond to requests for comment. Tesla also didn’t respond to a request for comment.

Breaking into the world’s most-populous nation, where demand for electric vehicles is growing among aspirational middle-class consumers, would be a potential boon for Tesla, which currently has factories in the US, China and Germany. Modi’s government has been pushing to increase domestic manufacturing of EVs and encourage a more rapid adoption of cleaner transport.

Despite those efforts, India’s EV market has a long way to go, with battery-powered cars accounting for just 1.3% of the total passenger vehicles sold last year, according to BloombergNEF. Buyers are hesitant to make the switch due to electric cars’ high upfront cost and a dearth of charging stations.

Tesla currently doesn’t import import its vehicles directly into India because of the high tariffs that are being levied. When the first locally made cars eventually go on sale, they could (in theory) sell for as little as $20,000.

Reverse: Yo, Adrian!

United Auto Workers union members at Stellantis and Ford have now joined General Motors workers in ratifying the labor agreement between the union and the Big Three automakers this week. The vote marks the end of the labor dispute between the two parties that resulted in a six-week-long strike earlier this year.

If we’re being pedantic about it, not every single Stellantis and Ford plant worker has voted yet. However, the split of yes versus no votes so far – 68 to 32 at both companies – is enough to guarantee it’ll succeed since a simple majority is needed for ratification.

At some plants, the contact margin of victory was even higher. Ford Dearborn Truck Plant and the Rouge Electric Vehicle Center – both in Michigan – are seeing 78 percent of workers vote in favor of the deal. Those results put the contract up by over 12,000 votes, according to Automotive News.

At the same time, Stellantis’ deal was ahead by over 9,600 votes on Friday as results showed over 70 percent of workers at the automaker’s two Detroit assembly plants are supporting it. Only a couple of shops have rejected the contract: the two Mopar parts depots at the Toledo Assembly Complex in Ohio that are slated to close. It’s an understandable move, I suppose.

If you are aware of what numbers are, then you probably realized that Stellantis and Ford’s deals have gotten much broader support from UAW workers than General Motors, which passed 55 percent to 45 percent. We reported yesterday that the GM agreement was opposed by the majority of workers at seven of its 11 U.S. assembly plants.

The three deals are rather similar, AutoNews says:

All three deals include 25 percent pay raises through April 2028. Most workers get an 11 percent raise and $5,000 bonus upon ratification. The contracts also restore cost-of-living adjustments that, combined with the raises, are expected to ultimately boost worker pay more than 30 percent.

The deals also cut the time it takes to make top wages to three years from eight, eliminate lower tiers of pay for some workers, increase vacation time and boost retirement contributions.

UAW leaders have said there is more value in each year of the agreement than in the entirety of the last four-year contract signed in 2019. As part of the deals, the union also negotiated some back pay for striking members.

Ford was the first of the three automakers to reach a tentative agreement with the UAW on October 25. It was followed by Stellantis on October 28 and GM on October 30.