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: The EV Credit Won’t Die Without A Fight
A lobbyist fight, that is. As the Trump Administration seeks to end the $7,500 tax credit that comes with buying a new electric vehicles, automakers are scrambling to change their mind, and that means some big lobbying efforts on Capitol Hill.
As we’ve previously reported, this comes at an especially unfortunate time for automakers, most of whom are beginning big pushes into electric vehicles—in some cases for the first time ever. And while killing the tax credit probably won’t do much to hurt sales of luxury EVs like the Tesla Model S and Model X, it could well dampen sales of more mainstream-priced cars like the Chevrolet Bolt and Nissan Leaf. From >Automotive News:
The loss of the tax credit could complicate the industry’s efforts to meet regulations in California and nine other states that have set targets for sales of zero-emission vehicles, said Wade Newton, spokesman for the Alliance of Automobile Manufacturers. Automakers also would like to see restoration of the tax credit for fuel cell vehicles that expired in 2016, Newton said.
The Electric Drive Transportation Association, which represents automakers, suppliers, energy companies and technology developers, is going to collaborate with members and other stakeholders to make the case that eliminating the tax credit “is pound foolish” and “work with folks in the Senate to make sure they don’t follow the same path,” President Genevieve Cullen told Automotive News.
“If the whole underpinning of tax reform is to promote jobs, investment and innovation, the credit is doing exactly that,” she said, pointing to the fact that more than 215,000 people are employed in EV development.
The association also will make it clear to policymakers that the U.S. could quickly lose its lead in vehicle electrification at a time when China has announced aggressive sales targets for EVs and Europe is encouraging electrification, Cullen said.
While controversial, automakers are counting on this to happen, so don’t consider it dead quite yet.
2nd Gear: Sergio Questioned In UAW Scandal
The Fiat Chrysler-UAW training center corruption scandal investigation has widened to General Motors and Ford. Now FCA’s own CEO Sergio Marchionne has faced questioning over the matter too. Here’s >The Detroit News:>
The wife of a former United Auto Workers vice president and Fiat Chrysler’s former labor relations…Read more >Read
Marchionne was questioned during a private meeting in July 2016 with the U.S. Attorney’s Office in downtown Detroit, sources familiar with the investigation said. The Italian auto executive was escorted to the meeting by his white-collar, criminal defense lawyer, William Jeffress of the Washington, D.C., law firm Baker Botts.
Marchionne, 65, has not been charged with a crime during an ongoing federal grand jury investigation that has expanded in recent weeks to include a member of General Motors Co.’s board and United Auto Workers training centers funded by all three Detroit automakers.
The scandal emerged publicly in July. That is when former Fiat Chrysler Vice President Alphons Iacobelli was indicted and accused of funneling kickbacks to UAW officials.
“If a subordinate is charged with a crime ... you ought to be concerned,” said Peter Henning, a Wayne State University law professor and former federal prosecutor. “This doesn’t mean (Marchionne’s) done anything wrong. This is a process that is fraught with great risk so you want good counsel to guide you through it and see if you have any criminal exposure.”
Several people have been indicted in the scheme, which alleges money was siphoned from funds meant for UAW worker training centers for gifts, bribes and other acts of graft to union officials.
3rd Gear: New Auto Plant Coming To Detroit-Area For First Time In 25 Years
The story isn’t new. Detroit and its surrounding communities are so inextricably linked to the auto industry that Detroit itself is synonymous with car manufacturers. As automakers expanded globally and—for the most part—took manufacturing elsewhere, Detroit’s struggles exacerbated.
So news of an automaker planning a new factory in the Detroit-area—the first in more than 25 years—is noteworthy. Mahindra Group, based in Mumbai, has plans to open a 150,000-square-foot manufacturing facility in the city of Auburn Hills, reports >The Detroit News.
Here’s more from the News:
It’s not yet clear exactly what the Auburn Hills plant will produce, but the Times of India reported last week that it will build off-road utility vehicles.
The Indian automaker has long wanted to enter the U.S. auto market. Mahindra is already a large distributor of tractors and information technology services in the U.S., but does not have a passenger vehicle in the market. It mainly manufactures SUVs, pickups and commercial vehicles for the Indian market. Mahindra also produces three electric vehicles — a subcompact passenger car, a cargo van and a three-wheel micro car.
The News reports that more details are expected to be shared at a Nov. 20 press conference.
4th Gear: Tesla Cash Flow Considered Amid Model 3 Struggles
Tesla’s production struggles with the all-electric Model 3 sedan have been reported far and wide as of late, but the company tried to quell any concerns about its viability in a call last week with investors.
Tesla has $3.5 billion in cash on hand. But the automaker’s still burning through more than $1 billion in cash per quarter, and at that rate, financial analysts suspect it’s going to need a fresh line of funding sooner rather than later.
With battery bottlenecks holding up output of the cheaper new Model 3 sedan, Tesla may need more funds in 2018. While Musk has brought in more than $3 billion this year from equity, convertible bond and debt offerings, his electric-car maker has burned through about $2.6 billion in cash during just the last two quarters.
“We worry that another capital raise may be necessary,” Toni Sacconaghi, a Sanford C. Bernstein & Co. analyst, wrote in a report to clients. He estimates Tesla will have burned through more than $10 billion in cash by year-end since its founding and that it may be the biggest public company ever to have never generated annual profit or positive cash flow.
The company raised $1.8 billion in a bond sale just a few months ago, but that was before the Model 3 production issues emerged. And though Tesla, with its CEO Elon Musk, haven’t had trouble raising capital when needed, the reported “manufacturing bottlenecks” could raise issues, reports Bloomberg.
But the longer Tesla struggles to get production in gear for the $35,000 Model 3 sedan, the likelier it is the company will be testing investors’ patience. The stock has traded at the lowest intraday level in six months late this week after the company pushed back its 5,000-per-week target for Model 3 output. Musk also shied away from a projection made three months ago that Tesla would be able to build 10,000 units per week at some point in 2018.
In the investor call, Musk came across confident, as long as Tesla manages to start churning out 5,000 Model 3s by the end of the first quarter of 2018. But after missing its first Model 3 production target by more than 80 percent, all eyes are going to be on the automaker until it hits 5,000 per week.
5th Gear: Automakers Looking At Year-End Goal Sales
The auto industry looked to be in a slump throughout the year, but it looks like it has the potential to hit 17 million in sales for the year, once again. And so automakers are barreling toward the end of the year, duking it out for several sales titles and records, according to the >Automotive News.
Among the most prominent are the Japanese automakers battling for the titles of America’s best-selling cars and crossovers, while the overall industry could record a third straight 17 million-unit year for the first time ever.
The races, combined with slightly declining sales, as reflected in October’s 1.1 percent drop, are expected to test the industry’s discipline regarding incentive spending, fleet mix, and balancing profits vs. market share heading into 2018.
One analyst Automotive News spoke to, Stephanie Brinley, said the industry should expect to continuing seeing “some contraction.” So don’t get too over-zealous.
Reverse: A Nod To Detroit>
On November 6, 1998, President Bill Clinton declares that part of Detroit will become anRead more >Read
Neutral: Will The Lobbyists Fix It?
Do you think the EV tax credit can be saved? Or should it be allowed to die?
Source : https://jalopnik.com/automakers-fight-to-keep-the-ev-tax-credit-from-getting-1820166763