Tag: automakers and manufacturing

Autoworkers strike deadline nears as negotiators rush to avoid historic walkout | CNN Business

Detroit
CNN
—

With just hours to go before labor contracts expire at America’s three unionized automakers, thousands of autoworkers could walk off the job.

Those limited, targeted strikes could be enough to grind production to a halt at General Motors, Ford and Stellantis, which builds vehicles under the Jeep, Ram, Dodge and Chrysler brands for North America.

But the uncertainty and confusion underscore the high stakes, with a possible historic strike at all three major automakers, disruptions to the local and national economies, and, perhaps more than anything, a hint at the future of manufacturing jobs in America.

The union and the automakers continued to negotiate down to the wire on Thursday. GM made a new offer on Thursday afternoon, including a 20% raise, matching Ford’s offer.

“We don’t want there to be a strike. We’re ready to work until the deadline,” Ford CEO Jim Farley told CNN. “We’d like to make history by making a historic deal, not having a historic strike,” he said.

And President Joe Biden himself spoke to leaders of the union and the automakers, as a strike could be politically costly for him, as well.

UAW President Shawn Fain on Wednesday evening announced plans for those targeted strikes at any company that fails to reach a labor deal with the union before contracts expire at 11:59 pm Thursday. Fain suggested the strategy, including the possibility of ramping up strikes as negotiating continues, would give the UAW more leverage. “We have the power to keep escalating and keep taking plants out,” he said.

But Farley said on CNN Thursday that striking plants that make critical parts could affect workers at downstream assembly plants.

“We can’t make a vehicle without an engine or transmission or stamping. So those people will, you know, basically be furloughed,” Farley said.

Slowing or stopping the production of a few engine or transmission plants at each company could be as effective at stopping operations as a full strike at all plants, according to industry experts.

One engine or transmission location per company might be enough to shut down nearly three-quarters of the US assembly plants, said Jeff Schuster, global head of automotive for GlobalData, an industry consultant.

“Two plants per company, you can pretty much idle North America,” he said.

Halting the companies’ assembly lines would likely happen in less than a week that way, Schuster said.

One advantage for the union of a targeted strike is the potential to save resources and extend a possible walkout. Striking union members are eligible for $500 a week from the union’s strike fund.

If all 145,000 UAW members among the three automakers were to strike at the same time, it could cost the fund more than $70 million a week, draining the $825 million fund.

If the companies shut down operations and lay off members who are not technically on strike, those workers could be eligible to receive state unemployment benefits rather than strike benefits, which could preserve the union’s resources.

Strikers are not eligible for unemployment benefits, but workers on temporary layoff can receive the benefits, which differ by state but would be less than the union’s $500 strike pay. There also are legal questions in different states about qualifying for unemployment.

An official with Ford told reporters Thursday that under state law, workers in Michigan and Ohio were not eligible to receive unemployment benefits if they were laid off due to lack of parts at their plant caused by a strike. There are some other states, such as Kentucky and Tennessee, where they would be able to receive unemployment benefits, according to the officials.

But they said none of the Ford UAW members would be eligible for so-called “sub-pay,” which they typically receive during temporary layoffs. Sub pay is far more lucrative, covering most of the gap between unemployment benefits, typically less than $300 a week, and normal company pay, which can be close to $1,300 a week.

GM CEO Mary Barra sent a letter to employees Thursday saying the company’s latest offer now includes a 20% raise, with an immediate 10% pay hike. The lower paid temporary employees would get $20 an hour, which represents a 20% raise from the current $16.67 an hour they receive. She called the offer “historic.”

“We are working with urgency and have proposed yet another increasingly strong offer with the goal of reaching an agreement tonight. Remember: we had a strike in 2019 and nobody won,” she said in the letter.

Farley told CNN the offer from Ford of a 20% raise over the life of the contract is the most lucrative offer the company has made to the union in the 80 years it has been there. But he said meeting the union’s demands of close to a 40% raise, along with a four-day work week and other benefit improvements, would have been unaffordable.

Farley blamed the union for the lack of progress in negotiations. But the union has blamed the companies for waiting until the end of August or early September to make their first counteroffers.

The union came up with the 40% raise request based on the increase in the pay of CEOs at the three automakers over the last four years. Ford CEO pay rose 21%, from $17 million for Farley’s predecessor Jim Hackett in 2019, to $21 million for Farley last year. (Farley is the lowest compensated of the three CEOs.)

Asked why the union workers shouldn’t get the same increases, Farley responded, “We’re really open to huge increases.” As to the 40% increases for CEOs, Farley responded, “I wasn’t CEO four years ago, but we have put on the table huge increases, double digit increases.”

Ford has not had a strike since 1978; it has more UAW workers than the other two automakers.

President Joe Biden spoke with Fain and leaders of the major auto companies “to discuss the status of ongoing negotiations,” the White House said Thursday.

The White House declined to say Wednesday that Biden would support UAW workers if they chose to strike.

“I’m gonna leave it at, [Biden] believes the auto workers deserve a contract that sustains middle class jobs and wants the parties to stay at the table, to work round the clock to get a win-win agreement,” Council of Economic Advisors Chair Jared Bernstein told reporters during Wednesday’s White House press briefing.

Biden became directly involved in 11th hour negotiations a year ago to stop engineers and conductors at the nation’s major freight railroad from going on strike and was credited by both sides with a deal being reached at that time. But Biden and Congress had power under a different labor law to keep workers on the job by imposing a contract, a power he used later in the year when rank-and-file rail workers rejected the deal he brokered and again threatened to strike

The autoworkers fall under a different labor law, one that leaves Biden with no power to stop a walkout. And he has limited influence with the UAW, which has been critical of his push to have the industry convert to electric vehicles, a move that could cost members jobs in the long run.

In a statement midday Thursday, GM said it remains in “good faith negotiations” with the UAW but cautioned that a strike would be disruptive to its business.

“Any disruption would negatively impact our employees and customers, and would have an immediate ripple effect across our communities,” a company spokesperson said.

One sticking point in negotiations is that wages are only part of the gap between the two sides. In some ways it might be the least difficult problem to solve, said Patrick Anderson, CEO of Anderson Economic Group, a Michigan research firm.

“The difference between the automakers and the unions on wages is a gap that could be closed,” said Anderson. “The differences involving non-wage demands are a gulf, not a gap.”

The union is attempting to reverse deep concessions that go back as far as 2007. At the time, years of losses had left Ford nearly out of cash, and GM and Chrysler were on their way to bankruptcy and federal bailouts.

The number one concession the union wants to end is a lower tier of wages and benefits for workers hired since 2007. While top pay for those newer hires, who today make up a majority of membership, is the same as the $32.32 paid to more senior members, it takes many more years to reach that level.

The union also wants to restore traditional pension plans for those hired since 2007, as the more senior workers now receive, as well as the same retiree health care coverage. And to protect members from rising prices, it wants a return of the cost-of-living adjustments to pay that all employees lost in 2007.

Even Fain calls those demands “ambitious,” but he said they’re driven by record or near record profits at the automakers.

Pandemic supply chain disruptions and shortages of some parts, particularly computer chips, have led to record car prices. The average purchase price of a new car in August was nearly $48,000, according to Edmunds. That’s up 30% from August of 2019.

Automakers have used their limited supply of parts to build vehicles loaded with options to maximize profits. That’s produced a strong bottom line. General Motors reported record profits in 2022, and Ford posted near-record profits as well. Stellantis, a European-based automaker formed in 2021 by the merger of Fiat Chrysler and PSA Group, had 2022 profits up 26% compared to its first year of combined operations.

A strike that halts production nationwide could also be costly for the automakers at a time of strong demand by car buyers and strong competition from nonunion automakers such as Tesla and foreign brands. GM said it lost $2.9 billion during its 2019 strike.

While the automakers have done their best to build up inventory at dealerships, car buyers could have trouble finding some of the models they want and could have to wait longer for their choice of colors and options. And limited supplies could put upward pressure on some vehicle prices.

– CNN’s DJ Judd contributed to this report

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September 14, 2023
Autoworkers strike: What to watch for as the clock ticks down | CNN Business

New York
CNN
—

Time is running out to avert a strike that could shut down America’s unionized auto assembly plants and other manufacturing facilities.

The United Auto Workers contracts with General Motors, Ford and Stellantis expire at 11:59 pm Thursday. The contracts cover 145,000 UAW members at the three companies.

If there’s no new deal by the contract expiration, the union has said it will start targeted strikes against a undisclosed number of facilities at each company.

Here’s what to watch as the clock ticks down:

It might not take much to virtually shut down the output from all the companies.

The companies operate a complex network of plants that depend on getting parts from different facilities.

Slowing or stopping the production of a few engine or transmission plants at each company could be as effective at stopping operations as a full strike at all plants, according to industry experts.

One engine or transmission location per company might be enough to shut down nearly three-quarters of the US assembly plants, said Jeff Schuster, global head of automotive for GlobalData, an industry consultant.

“Two plants per company, you can pretty much idle North America,” he said.

Halting the companies’ assembly lines would likely happen in less than a week that way, Schuster said.

One advantage of a targeted strike for the union is the potential to save resources and extend a possible walkout. Striking union members are eligible for $500 a week from the union’s strike fund.

If all 145,000 UAW members among the three automakers were to strike at the same time, it could cost the fund more than $70 million a week, draining the $825 million fund.

With targeted strikes, it’s possible that the companies will shut down operations and lay off members who are not technically on strike. That could make them eligible to receive state unemployment benefits rather than strike benefits, which could preserve the union’s resources. But there are legal questions about qualifying for unemployment.

UAW President Shawn Fain told his members in a Facebook Live appearance Wednesday evening that if they are not in one of the plants that the union picks to go on strike, they should stay on the job. He said in that case they would be working under an expired contract, rather than on an extended contract.

Fain said he would announce at 10 pm Thursday which plants have been selected to go on strike. Among the likely targets, Schuster said, are a Stellantis transmission plant in Kokomo, Indiana, a GM transmission plant in Toledo, Ohio, and a Ford transmission plant in Livonia, Michigan. Those three plants have just over 6,000 UAW members on staff, according to figures available from the companies’ websites.

But there is still a chance no plants will go on strike and no operations will be disrupted. While Fain warned members that a strike appeared likely – “We’re likely going to have to take action,” he said during his remarks Wednesday – he also said there had been movement at the bargaining tables.

Fain said that all the automakers had boosted the amount they were offering to raise wages, with Ford now offering a 20% raise during the life of the contract, GM is offering 18% and Stellantis is offering 17.5%, although Fain cautioned that still did not meet the union members’ needs, which had started with a demand for an immediate 20%, and four additional raises of 5% each over the course of a four-year deal.

And all the automakers issued statements saying they want to reach tentative labor deals before the deadline that would avoid a strike. Despite the difference, there is a chance for an 11th hour settlement or settlements.

There are separate union contracts at each of the traditional Big Three. That means there could be a tentative labor deal reached at Ford and GM that keeps those workers on the job, while the employees at Stellantis could go out on strike.

Ford has not had a national strike since 1976 and has not had a strike of any kind at its US plants since 1978.

In contrast, experts say Stellantis, which builds vehicles under the Jeep, Ram, Dodge and Chrysler brands, could see workers walk off.

“I think there’s a 99% chance of a strike at Stellantis,” said Art Wheaton, director of labor studies at Cornell University’s Industrial and Labor Relations school in Buffalo.

If the two sides are close to a deal at the deadline, they could agree to a temporary contract extension for hours or even days. That extension could even go on for months, as with the West Coast ports during negotiations with the International Longshore and Warehouse Union last year and earlier this year.

Fain has repeatedly said that the 11:59 pm contract expiration is a “deadline, not a reference point.” In past negotiations, the union has sometimes chosen only one automaker to strike, while staying on the job at the other two. Once a deal was reached, the union moved to get the other automakers to accept that “pattern” as the basis for their own contract.

But Fain insists the union will not follow that playbook this time.

Sometimes one or both sides will walk away before the final minute before a contract expiration. Although the strike might not start until after the deadline, a breakdown of talks could kill the chance for an 11th-hour deal.

That’s what happened in bargaining in May between the Writers Guild of America, which represents 11,000 writers, and the Alliance of Motion Picture and Television Producers, which represents major studios and streaming services in the contract negotiations. While the contract was due to end at midnight PDT, the talks ended about three hours earlier.

Sometimes after talks break down, the parties can return to the table and reach a deal without a strike. That happened in July at UPS, as talks between the company and the Teamsters union ended after a marathon negotiating session in the early hours of July 5. Official talks did not resume for nearly three weeks. But when the two sides met again on July 25, they quickly reached a deal that averted an August 1 strike.

But a break in talks at any of the automakers at this late date would not be a good sign.

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September 14, 2023
Biden urges UAW and Big Three automakers to reach deal to avoid strike | CNN Business

Washington DC
CNN
—

President Joe Biden sought to ramp up pressure on the United Auto Workers union and the nation’s three unionized automakers – Ford, General Motors, and Stellantis, known as the “Big Three” – one month ahead of a critical deadline for labor talks.

“As the Big Three auto companies and the United Auto Workers come together — one month before the expiration of their contract — to negotiate a new agreement, I want to be clear about where I stand. I’m asking all sides to work together to forge a fair agreement,” Biden said in a new statement Monday.

The White House has been closely monitoring the talks as the two sides appear far apart. The union is demanding significant pay raises of 40% or more for members to match increases in CEO pay at the companies over the last four years and a reversal of past concessions by the union.

Negotiations could put the White House at odds with the union. While the AFL-CIO, which is made up of multiple independent unions, has already endorsed Biden’s reelection bid, calling him the “most pro-union president in our lifetimes,” the UAW itself has yet to join in that endorsement. A strike could have massive economic – and political – consequences. Biden and UAW President Shawn Fain met briefly in the West Wing last month while UAW leadership was at the White House briefing senior staff on their positions.

The three contracts between the UAW and General Motors, Ford and Stellantis, which sells cars and trucks under the Dodge, Ram and Chrysler brands, are due to expire September 14. Fain last week denounced the most recent offer from Stellantis, throwing a copy of the offer in the trash during a video for members. Plans for strike authorization votes at all three companies is expected to be announced soon, the union said Monday.

Traditionally the UAW will select one of the three companies to go first and have the other two put on hold while it concentrates on reaching a deal, then the union will push for similar from the other two automakers as part of a “pattern.”

The UAW is pushing for an aggressive set of demands at the negotiating table, and has been critical of the Biden administration’s financial support for the transition to electric vehicles, arguing that the Biden administration has been overly supportive of automakers’ plans for EV battery plants that are expected to pay far less than union wages. Fain has publicly warned that UAW is prepared to strike, saying nearly 150,000 members will strike if the three automakers do not meet their demands.

CNN has previously reported that while Biden enjoys hefty support from leadership of many unions, he has also faced lingering mistrust and concern among some of the rank-and-file of the UAW, according to people familiar with the dynamics, a perception fueled in part by the president’s intervention to avert a freight rail strike in December.

In a nod to the UAW’s demands, Biden used the union’s “fair transition” to clean energy language.

“I support a fair transition to a clean energy future. That means ensuring that Big Three auto jobs are good jobs that can support a family; that auto companies should honor the right to organize; take every possible step to avoid painful plant closings; and ensure that when transitions are needed, the transitions are fair and look to retool, reboot, and rehire in the same factories and communities at comparable wages, while giving existing workers the first shot to fill those jobs,” Biden said in the statement.

The UAW said it saw the White House statement as an endorsement of it bargaining position.

“We appreciate President Biden’s support for strong contracts that ensure good paying union jobs now and pave the way for a just transition to an EV future,” Fain said in a statement. “We agree with the president that the Big Three’s joint venture battery plants should have the same strong pay and safety standards that generations of UAW members have fought for.”

The three automakers said they, too, want to reach deals that would avoid a strike.

Ford pointed out that it employs more UAW members and builds more cars and trucks at US plants than any other automaker.

“We look forward to working with the UAW on creative solutions during this time when our dramatically changing industry needs a skilled and competitive workforce more than ever,” it said.

“Stellantis remains committed to working constructively and collaboratively with the UAW to negotiate a new agreement that balances the concerns of our 43,000 employees with our vision for the future,” said that company.

“We will continue to bargain in good faith with the UAW to maintain our momentum and to provide opportunities for all in our EV future,” GM said in a statement.

The union is concerned about the plans by all three automakers to convert from traditional gasoline powered vehicles to EVs in the coming decades. it takes an estimated one third less hours of work to assemble an EV than a car with an internal combustion engine, since that engine and the transmission that goes with it has so many moving parts missing from an EV.

The Biden administration has been active in supporting the switch to EVs, providing tax credits for EV buyers and loans to build plants necessary for EVs, such as those that make batteries.

There are about a dozen EV battery plants now under construction nationwide. For the most part, those plants are joint ventures between automakers and battery makers, and thus will not be covered under the UAW contracts with the Big Three. Workers at the one battery plant for one of the Big Three to open so far, a Warren, Ohio, plant for the joint venture between GM and LG, voted 98% in favor of joining the UAW. But the union has yet to reach a deal with plant management on a contract, and workers there are paid about half of what UAW members are paid at the Big Three.

– CNN’s Vanessa Yurkevich contributed to this story

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August 14, 2023
Stellantis to put second battery plant in town where EVs threaten current jobs | CNN Business

New York
CNN
—

Stellantis and Samsung plan to build a second EV battery plant in Kokomo, Indiana, a town where many current Stellantis workers see such plants as a threat to their current jobs.

EV battery plants are a critical part of the plans of traditional automakers to transition from gasoline-powered cars to electric vehicles in coming decades. But they could be a threat to existing jobs building engines and transmissions, which are not needed in an EV. Stellantis has four plants in Kokomo alone building engines and transmissions, employing more than 5,000 hourly workers between them.

Stellantis, which builds cars under the Jeep, Ram, Dodge and Chrysler brands, along with unionized rivals General Motors and Ford, are now in the fourth week of a strike by the United Auto Workers union, and the future of jobs building EVs are a central issue in the strike.

While the four Kokomo plants are not on strike, the union is on strike at Stellantis’ assembly complex in Toledo, Ohio, as well as at 20 parts and distribution centers spread across 14 states.

All the automakers are in the process of building EV battery plants, and all of them are using joint ventures with battery manufacturers such as Samsung to build and run the plants. They have all insisted that will make the employees of the plants employees of the joint ventures, not the automakers themselves. And the pay at US EV battery plants that have opened so far is a fraction of what UAW members get when working for the automakers.

UAW President Shawn Fain announced Friday that GM had agreed to a key union demand that employees at its EV battery plants will be part of the company’s national master labor agreement with the UAW. GM has not confirmed that agreement, and details of how much those workers would be paid and if they’ll be considered GM employees or covered in the agreement as employees of separate companies is not yet known.

But Fain hailed that agreement as a major win for the union and said it would now press Ford and Stellantis to agree to similar terms if they want to end the strike.

Samsung and Stellantis announced plans for its latest battery plant in the wake of that announcement.

The two companies announced Wednesday that they are investing more than $3.2 billion to build the new plant, which will open in early 2027 and have an annual capacity of 34 gigawatt hours. Its opening will bring about 1,400 new jobs to Kokomo, located an hour north of Indianapolis.

StarPlus Energy, the joint venture formed by Samsung and Stellantis, previously chose Kokomo for its first gigafactory that’s currently under construction and scheduled to open in 2025.

In total, the two factories will produce 67 gigawatt hours annually. “Indiana’s economy is on a roll,” said Indiana Governor Eric Holcomb in a press release, adding that the second plant means the companies are doubling their capital investment and the amount of new jobs being created.

The factories will help Stellantis meet its goal for battery electric passenger cars to make up 100% of its sales in Europe, and 50% of its sales in the US, by 2030. Stellantis announced in 2021 an “aggressive” investment of $35 billion for electric vehicle production and needs 400 gigawatt hours annually to meet its 2030 goal.

Stellantis was created in 2021 through the merger of Fiat Chrysler and PSA Group, maker of Peugeot, Citroën, Opel and Vauxhall cars in Europe. Shares rose nearly 2% in premarket trading.

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August 2, 2023
Tesla shares jump after Morgan Stanley predicts Dojo supercomputer could add $500 billion in market value | CNN Business

New York
CNN
—

Tesla’s Dojo supercomputer could fuel a $500 billion jump in the electric vehicle maker’s market value, analysts at Morgan Stanley said in a note Monday.

Shares of Tesla jumped more than 6% during early trading Monday morning, on the heels of the rosy prediction from Morgan Stanley’s team about the automaker’s supercomputing efforts. The Morgan Stanley team, lead by longtime Tesla analyst Adam Jonas, predicted that the massive drive in value could come from Dojo potentially unlocking new revenue streams through the wider adoption of robotaxis and software services.

The analysts compared the potential of Dojo at Tesla to the “same forces that have driven” Amazon Web Services to propel Amazon’s profitability to new heights.

“Investors have long debated whether Tesla is an auto company or a tech company. We believe it’s both, but see the biggest value driver from here being software and services revenue,” the note stated.

Dojo, an in-house supercomputer that has been in the works at Tesla for some five years, is designed to train AI systems to complete complex tasks like assisting Tesla’s driver-assistance system Autopilot as well as help propel its “Full Self-Driving” efforts.

The Morgan Stanley analysts see Dojo as being able to open up “new addressable markets that extend well beyond selling vehicles at a fixed price.”

The analysts added that the latest version of Tesla’s full self-driving system (expected to be unveiled at the end of the year) and Tesla’s next AI day (expected in early 2024, but yet to be announced) will be “worth watching.”

Shares of Tesla have doubled since the beginning of the year, but are still far off from the all-time intraday high of $414.50 hit in November 2021. The world’s most valuable carmaker had a market cap of some $788.74 billion as of the market close on Friday.

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August 2, 2023
Tesla owners in China protest against surprise price cuts they missed | CNN Business

Shanghai
Reuters
—

Hundreds of Tesla owners gathered at the automaker’s showrooms and distribution centers in China over the weekend, demanding rebates and credit after sudden price cuts, which they said meant they had overpaid for electric cars they bought earlier.

On Saturday, about 200 recent buyers of the Tesla Model Y and Model 3 gathered at a Tesla delivery center in Shanghai to protest against the US carmaker’s decision to slash prices for the second time in three months on Friday.

Many said they had believed that prices Tesla charged for its cars late last year would not be cut as abruptly or as deeply as the automaker just announced in a move to spur sales and support production at its Shanghai plant. The scheduled expiration of a government subsidy at the end of 2022 also drove many to finalize their purchases.

Videos posted on social media showed crowds at Tesla stores and delivery centers in other Chinese cities from Chengdu to Shenzhen, suggesting wider consumer backlash.

After Friday’s surprise discounts, Tesla’s EV prices in China are now between 13% and 24% below their September levels.

Analysts have said Tesla’s move was likely to boost its sales, which tumbled in December, and force other EV makers to cut prices too at a time of faltering demand in the world’s largest market for battery-powered cars.

While established automakers often discount to manage inventory and keep factories running when demand weakens, Tesla operates without dealerships and transparent pricing has been part of its brand image.

“It may be a normal business practice but this is not how a responsible enterprise should behave,” said one Tesla owner protesting at the company’s delivery center in Shanghai’s Minhang suburb on Saturday who gave his surname as Zhang.

He and the other Tesla owners, who said they had taken delivery in the final months of 2022, said they were frustrated with the abruptness of Friday’s price cut and Tesla’s lack of an explanation to recent buyers.

Zhang said police facilitated a meeting between Tesla staff and the assembled owners at which the owners handed over a list of demands, including an apology and compensation or other credits. He added the Tesla staff had agreed to respond by Tuesday.

About a dozen police officers could be seen at the Shanghai protest and most of the videos of the other demonstrations also showed a large police presence at the Tesla sites.

Protests are not a rare occurrence in China, which has over the years seen people come out in large numbers over issues such as financial or property scams, but authorities have been on higher alert after widespread protests in Chinese cities and top universities at the end of November against Covid-19 restrictions.

Other videos appearing to be of Tesla owners protesting were also posted to Chinese social media platforms on Saturday.

One video, which Reuters verified was filmed at a Tesla store in the southwestern city of Chengdu, showed a crowd chanting, “Return the money, refund our cars.”

Another, which appeared to be filmed in Beijing, showed police cars arriving to disperse crowds outside a Tesla store.

Reuters was unable to verify the content of either video.

Tesla does not plan to compensate buyers who took delivery before the most recent price cut, a spokesman for Tesla China told Reuters on Saturday.

He did not respond when asked to comment on the protests.

China accounted for about a third of Tesla’s global sales in 2021 and its Shanghai factory, which employs about 20,000 workers, is its single most productive and profitable plant.

Analysts have been positive about the potential for Tesla’s price cuts to drive sales growth at a time when it is a year from announcing its next new vehicle, the Cybertruck.

“Nowhere else in the world is Tesla faced with the kind of competitors that they have here [in China],” said Bill Russo, head of consultancy Automobility Ltd in Shanghai.

“They are in a much bigger EV market with companies that can price more aggressively than they can, until now.”

In 2021, Tesla faced a public relations storm after an unhappy customer climbed on a car at the Shanghai auto show to protest against the company’s handling of her complaints about her car’s brakes.

Tesla responded by apologizing to Chinese consumers for not addressing the complaints in a timely way.

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January 8, 2023
Are in-wheel motors the future of electric cars? | CNN Business

London
CNN Business
—

In 1900, Ferdinand Porsche and Ludwig Lohner unveiled an electric car with battery-powered motors attached to its front wheels. It was seen as a sensation, but the technology never took off as petrol cars accelerated to world domination.

More than a century later, in-wheel motors are making a comeback. Mounted in the rim of an electric vehicle’s wheels, the motors increase efficiency by delivering power directly to where it’s needed most.

“In-wheel motors are a game changer,” says Luka Ambrozic, chief commercial officer of Slovenian company Elaphe Propulsion Technologies, one of the leading developers of the technology. They offer the “ultimate freedom of design,” he says, giving vehicle manufacturers the opportunity “to build better and smarter cars.”

By packing everything into the wheels, there’s no need for other components like a gearbox or a drive shaft which usually transfers power from the onboard motor to the wheels.

This makes the car lighter, Ambrozic tells CNN Business, and it saves energy by reducing the distance the power has to travel. It also frees up space in the vehicle and allows the manufacturer to make the car more aerodynamic. A more aerodynamic vehicle in turn needs less power, which can mean smaller batteries and lighter vehicles, he adds.

Elaphe, which was founded in 2006 by Gorazd Lampič and quantum physicist Andrej Detela, has designed in-wheel motors for a range of electric vehicles. The Lightyear 0, notable for curved solar panels built into its roof, is equipped with motors co-developed by Elaphe’s in each of its wheels. Lightyear says the car will go into production this year and will have the most efficient production powertrain in the world.

Aptera Motors, another company that develops solar electric vehicles, has enlisted Elaphe to supply in-wheel motors for its lightweight three-wheeler design, although production is yet to begin. And Lordstown Motors is using Elaphe’s hub motors for its new Endurance line of electric pickup trucks, which it says give the truck genuine four-wheel drive. Commercial production of the pickup truck began in September.

These examples show that in-wheel motors can be used for both lightweight and heavy-duty applications, says Ambrozic, although the designs must be tweaked for each purpose. “It’s not about having a one-size-fits-all motor,” he says.

But some industry experts believe in-wheel motors may have limited uptake in mainstream markets. James Edmondson, a senior technology analyst specializing in electric vehicles for market research firm IDTechEx, notes that most big car manufacturers have based their EV platforms on onboard motors. Introducing in-wheel technology would require a complete redesign of the system. “If you have to start from scratch and build up your vehicle from the ground up, it’s a huge investment,” he says.

Manufacturers are also concerned about durability and suspension, says Edmondson. In-wheel motors are far more exposed to the elements as well as impacts and vibrations from the road. The motors also make wheels heavier, which can reduce ride comfort, although Edmondson notes this could be compensated for by the weight saved elsewhere on the vehicle.

According to a 2021 report from research firm Markets and Markets, the demand for in-wheel motors is expected to rise in line with the growth of electric vehicle sales, reaching a value of more than $4 billion by 2026, up from $800 million in 2021.

The report notes that as electric vehicles become more popular, automakers are looking towards in-wheel motors for their space-saving abilities and improved power efficiency.

Another major player is Protean Electric, which was acquired by British electric vehicle maker Bedeo in 2021. This year, the company announced a new partnership with Dongfeng Motor Corporation Tehnical Center, a Chinese state-owned automobile manufacturer.

Elaphe is also eyeing up China for expansion. It plans to scale up its output to more than 100,000 in-wheel motors a year in Slovenia by next year, before launching production in both the United States and China.

“Now is the time for commercial expansion and production expansion,” says Ambrozic. “We want to be a step ahead of the market to make sure we are ready when the opportunities are right.”

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October 26, 2022
Korean auto giant Hyundai investigating child labor in its U.S. supply chain | CNN Business

CNN Business
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Hyundai Motor Co, Korea’s top automaker, is investigating child labor violations in its U.S. supply chain and plans to “sever ties” with Hyundai suppliers in Alabama found to have relied on underage workers, the company’s global chief operating officer Jose Munoz told Reuters on Wednesday.

A Reuters investigative report in July documented children, including a 12-year-old, working at a Hyundai-controlled metal stamping plant in rural Luverne, Alabama, called SMART Alabama, LLC.

Following the Reuters report, Alabama’s state Department of Labor, in coordination with federal agencies, began investigating SMART Alabama. Authorities subsequently launched a child labor probe at another of Hyundai’s regional supplier plants, Korean-operated SL Alabama, finding children as young as age 13.

In an interview before a Reuters event in Detroit on Wednesday, Munoz said Hyundai intends to “sever relations” with the two Alabama supplier plants under scrutiny for deploying underage labor “as soon as possible.”

In addition, Munoz told Reuters he had ordered a broader investigation into Hyundai’s entire network of U.S. auto parts suppliers for potential labor law violations and “to ensure compliance.”

Munoz’s comments represent the Korean automotive giant’s most substantive public acknowledgment to date that child labor violations may have occurred in its U.S. supply chain, a network of dozens of mostly Korean-owned auto-parts plants that supply Hyundai’s massive vehicle assembly plant in Montgomery, Alabama.

Hyundai’s $1.8 billion flagship U.S. assembly plant in Montgomery produced nearly half of the 738,000 vehicles the automaker sold in the United States last year, according to company figures.

The executive also pledged that Hyundai would push to stop relying on third party labor suppliers at its southern U.S. operations.

As Reuters reported, migrant children from Guatemala found working at SMART Alabama, LLC and SL Alabama had been hired by recruiting or staffing firms in the region. In a statement to Reuters this week, Hyundai said it had already stopped relying on at least one labor recruiting firm that had been hiring for SMART.

Munoz told Reuters: “Hyundai is pushing to stop using third party labor suppliers, and oversee hiring directly.”

Munoz did not offer further detail into how long Hyundai’s probe of its U.S. supply chain would take, when Hyundai or any partner plants could end their dependence on third party staffing firms for labor, or when Hyundai could end commercial relationships with two existing Alabama suppliers investigated for child labor violations by U.S. authorities.

In a statement on Wednesday, SL Alabama said it had taken “aggressive steps to remedy the situation” as soon it learned a subcontractor had provided underage workers. It terminated its relationship with the staffing firm, took more direct control of the hiring process and hired a law firm to conduct an audit of its employment practices, it said.

SMART Alabama did not immediately respond to a request for comment.

Munoz’s comments come on the same day that an investor group working with union pension funds sent a letter to Hyundai, pushing it to respond to reports of child labor at U.S. parts suppliers, and warning of potential reputational damage to the Korean automaker.

The letter said that the use of child labor violated international standards Hyundai committed to in its Human Rights Charter and its own code of conduct for suppliers.

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October 21, 2022
Why BMW really decided to make batteries in the US | CNN Business

CNN
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BMW recently announced a $1.7 billion investment to help prepare its huge Spartanburg, South Carolina, factory to produce electric cars and SUVs. That sum included $700 million for the construction of a battery manufacturing plant nearby.

Spartanburg is BMW’s largest factory anywhere in the world. It employs 11,000 people and produces 40,000 SUVs a year, only 40% of which are sold in North America. The rest are exported to 120 other countries.

It’s one of a number of such announcements in recent months and years as automakers gear up to start producing more electric vehicles. Mercedes, Hyundai, Honda, and others have also announced battery plant construction projects in recent months. BMW’s announcement came after the passage of the Biden administration’s Inflation Reduction Act, which limits tax incentives for electric vehicles to those with largely US-based battery manufacturing and raw materials supplies.

The rules allow consumer tax credits only for electric vehicles that meet increasingly strict goals for US-based manufacturing of the vehicles themselves, as well as their batteries. They also require US sourcing for battery raw materials and they place caps on the cost of the vehicles and the income of the buyers. Buyers can get full tax credits only if they, and the vehicles, meet the requirements.

But that sort of regulation had no impact on BMW’s decision to locate battery production in South Carolina, BMW chairman Oliver Zipse said in an interview with CNN Business. Simple logistics were a far more important factor.

“You will not fly hundred of kilograms of batteries around the world or put them on a ship,” he said. “You’re not going to do it. You’ll localize anyway.”

Not only were the IRA’s rules pushing American manufacturing unneeded, said Zipse, they also risk negative repercussions for the very American jobs they’re designed to protect, he said.

The IRA provides no benefit for vehicles, regardless of how “American made” they are, if they aren’t sold inside the US. More importantly, though, protectionist regulations attempting to wall off American-made vehicles for American buyers can spark retaliation, endangering valuable export business, said Zipse.

“You can never make a regulation without looking at the consequences from other regulators,” he said. “And I only warn that we get a tit-for-tat regulation.”

And, simply, as a practical matter, it’s difficult to wall off automaker’s supply chains in the way the IRA would seem to demand, Zipse said.

“The assumption that you can incentivize an industry which is completely from A to Z inside one region in the world, in such a complex industry, like the car industry is a wrong assumption,” he said.

Zipse also warned of the possible unintended consequences of regulations, like those in some US states and in Europe, that ban sales of non-zero-emission vehicles after a certain date. For one thing, it could mean overall industry sales will decline.

“We do not believe that this one drivetrain will make up the complete market of today’s size,” he said.

Not all consumers will be able to have electric vehicle chargers at home, Zipse said, so many could decide, instead, to keep their gasoline cars longer or buy used gas-powered cars.

Some automakers, like BMW competitors General Motors and Mercedes-Benz, are apparently not worried about that possibility of shrinking sales and have announced plans to go all-electric by a set future date. BMW has never said publicly that it intends to make only electric vehicles after any certain time.

Unlike some automakers, such as GM and Volkswagen, that make electric vehicles on distinct engineering platforms entirely different from their gasoline cars, BMW engineers its vehicles so they can be produced as electric, plug-in hybrid, or purely gasoline-powered. BMW executives tout this sort of flexibility to respond to market demands for different types of vehicles.

Instead, he said, regulators should impose gradually more stringent emissions restrictions while leaving it up to automakers how best to reach those targets, as regulators have done in the past. To date, that approach has not halted increasing global warming.

Zipse insisted that BMW can manage whatever regulators decide, however.

“We can easily ramp them up,” Zipse said of increasing regulatory demand for electric vehicles. “All our factories are qualified for building EVs. We have a flexible approach.”

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October 20, 2022
Tesla’s AI Day is tonight. It may wow you — or end with a gaffe | CNN Business

Washington, DC
CNN Business
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Tesla

(TSLA) will hold its second annual AI Day in Palo Alto, California, Friday evening. The six-hour event will include updates on Tesla

(TSLA)’s work in artificial intelligence, “Full Self-Driving,” its supercomputer “Dojo” and maybe a humanoid robot, according to invitations posted online by Tesla

(TSLA) supporters. The event is expected to be live-streamed.

Dojo is a supercomputer being designed to train AI systems to complete complex tasks like Tesla’s driver-assistance systems Autopilot and “Full Self-Driving,” which sometimes perform some driving tasks like steering and keeping up with traffic. Tesla’s previous AI Day included detailed technical explanations of the company’s work in a bid to attract leading engineers.

Tesla CEO Elon Musk has claimed before that in the long run people will think of Tesla as an AI company, rather than a car company or energy company. He has said that Tesla AI may play a role in computers matching general human abilities, a huge milestone many experts say is decades away and perhaps unattainable. Musk, who has a long history of predictions, has said it may be reached in 2029.

But more limited and easier to develop forms of artificial intelligence — like identifying emergency vehicles stopped on a highway — have proven to be a significant hurdle for the company as it pursues its dreams of self-driving cars. AI powers “Full Self-Driving,” but the system has faced criticism and backlash as it still requires driver intervention to prevent collisions and Musk’s deadlines for its capabilities slip year after year.

And this summer Tesla’s director of artificial intelligence, Andrej Karpathy, exited the company, several months after it was announced he was taking a sabbatical.

It’s not easy to predict what may or may not show up at any event helmed by Musk. Products heralded and talked about sometimes don’t perform as designed — like when Musk showed off the Tesla Cybertruck’s supposedly “unbreakable” windows, that promptly broke — and can’t even be bought years later. (Three years after the event Tesla sells a T-shirt that memorializes the broken window, but it has yet to sell a Cybertruck.)

Musk has unquestionably disrupted entire industries with his work at Tesla and SpaceX. But he’s also earned a reputation for missing deadlines and overpromising.

Last year’s AI Day “surprise,” for instance, was a Tesla “robot,” which was just a human dancing in a suit.

Musk then claimed that the automaker is building a 5-foot-8, 125-pound humanoid robot, called Optimus or Tesla Bot and a prototype would likely be unveiled this year. It’s unclear if a prototype will be revealed Friday, but Musk tweeted Thursday that the event would include “cool hardware demos.”

Tesla is also working on wheeled robots for manufacturing and autonomous logistics, according to a Tesla job posting for a senior humanoid mechatronics robotics architect.

Musk claimed last year that the humanoid robot would have a profound impact on the economy. It would begin by working on boring, repetitive and dangerous tasks, he said.

Tesla and Musk are not, of course, the first to bet on robots. Robots already handle many factory jobs, and companies like Boston Dynamics have worked for years to develop humanoid, animal-like, and other robots for industrial applications.

Humanoid robots have long fascinated the public and earned a place in pop culture as powerful but sometimes dangerous. Tesla tapped into this when it posted on Instagram in a promotion for the event that, “if you can run faster than 5 mph, you’ll be fine.” The Tesla humanoid robot is planned to have a top speed of 5 mph, the automaker has said.

But creating a humanoid robot that rivals a human’s abilities has proved incredibly difficult for robotics experts. Artificial intelligence has seen major advances yet trails the general abilities of a human toddler. Most robots in use today are restricted to simple tasks in basic environments like vacuuming a home or moving parts in a factory.

Tesla would not be the first automaker to build a humanoid robot, either. Honda worked on a series of robots, known as Asimo, for nearly 20 years. The Japanese company shut down development of Asimo in 2018. Korean automaker Hyundai bought Boston Dynamics in 2020.

Musk said Thursday that AI Day would be “highly technical” as it is meant for recruiting engineers to work on artificial intelligence, robotics and computer chips.

“Engineers who understand what problems need to be solved will like what they see,” Musk tweeted Friday.

Tesla did not respond to a request for comment.

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October 1, 2022