The auto industry is still trying to play both sides, and I get the feeling that it’s going to get away with it. All that and more in The Morning Shift for October 21, 2020.
1st Gear: At Least The UAW Endorsed Somebody
All the way back in April, the UAW backed Biden for supporting collective bargaining, workplace protections, and supporting healthcare. Seems like an easy choice! The automakers themselves, however, have been significantly more cagey, as Bloomberg details in a new report:
“The industry is more divided than I’ve seen it in my lifetime,” U.S. Rep. Debbie Dingell, D-Mich., said in an interview. “There’s competitive issues that drive that, but if they’re not together on those issues, they’re going to be in trouble.”
Bloomberg notes that while another Trump term likely means more trouble with automotive standards, in particular emissions fights with California, a Biden presidency would likely mean a return to Obama-style handling of things, with EV tax credits and support for autonomous vehicles. This is apparently not enough for car companies to stand behind:
“As always as we go through an election period, we’ve got to sure we’re paying attention to what might change and what might stay the same and be a resource,” said John Bozzella, CEO of the Alliance for Automotive Innovation. “Our role is to be a resource and educate and we want to be a resource to every candidate.”
Part of the problem is that the auto industry is scared to get too public with what it wants from the government, Bloomberg suggests, quoting Dingell about the 2008 bailout. I think there’s more to it. In particular, I think the auto industry is undone in part by exceedingly confusing names for its political associations. Per Bloomberg:
Trump’s trade wars and tariff threats on imported autos and parts — which the Biden campaign has criticized — led to a lobbying shakeup for the auto industry in Washington earlier this year.
That’s when the former Alliance for Automobile Manufacturers, which represented both foreign and domestic-owned carmakers, merged with the Association of Global Automakers, which represented foreign-owned automakers. The reformed group is the Alliance for Automotive Innovation and it now focuses primarily on the push by carmakers to develop self-driving cars and steers clear of trade issues that have dominated the Trump era.
Foreign-owned carmakers which were apart of the Association of Global Automakers banded together to create a new lobbying group known as Autos Drive America. Only the American Automotive Policy Council, which lobbies for domestic carmakers, remains unchanged as Trump goes before voters for a second time.
2nd Gear: European Car Industry Still Writing Polite Letters About Brexit Wrecking Their Shit
Meanwhile in Europe, the auto industry is also using a very soft touch. It’s still trying to warn politicians about Brexit with letters, as the Financial Times reports:
The letter from the European Automobile Manufacturers’ Association (ACEA) — a group that represents companies including BMW, Toyota and Fiat — urges Brussels to “reconsider its position” on rules for determining whether goods will qualify for tariff-free trade.
The group’s specific demands include that the EU should lower the percentage of components in a car that must be either European or British for the vehicle to qualify for the benefits of any EU-UK trade deal.
ACEA is also seeking a “phase-in period” of these new rules to help industry adapt to the changed business environment.
The letter, sent on October 15 and seen by the Financial Times, is a sign of how key EU industries are concerned about the potential economic fallout of Brussels’ approach to the negotiations.
Good luck with that!
3rd Gear: Texas Instruments Is A Good Barometer Of The Auto Industry, And It’s Back At It
Somehow Texas Instruments isn’t completely financially supported by helping high schoolers cheat on tests, and it also supplies computer chips to all kinds of sectors, including the auto industry. There, TI says, business is back to normal.
Bloomberg lays it all out in an article, “Texas Instruments Gives Strong Forecast on Automotive Demand:”
Sales of chips used in vehicles have risen back to year-ago levels, helped by the reopening of auto plants in North America and Europe, Texas Instruments executives said. Increased consumer spending on home electronics such as smart speakers and televisions has helped boost demand for semiconductors that power those devices. Industrial demand remains mixed, the company said.
Texas Instruments has more than 100,000 customers, which make everything from consumer electronics to space hardware. That breadth makes its earnings and forecasts a proxy for demand across the economy.
“We remain cautious — this economy is not in good shape,” Chief Financial Officer Rafael Lizardi said in an interview. “The long-term secular trends are awesome, but could we hit an air pocket at some point in the next quarter or two or three? Absolutely.”
I would like to add that Rafael Lizardi is also the name I use when I peel back my human mask to reveal my true lizardperson form.
4th Gear: Volvo’s First EV Priced At $264 Per Mile Of Range
Our first all-electric Volvo, an XC40 with a bunch of batteries in it, will start at $54,985. Automotive News calls this “priced to move,” which is a little silly in the context of the Chevy Bolt and other non-luxury EVs:
Volvo Car USA’s first all-electric vehicle is priced to move, even if it might not get very far on a full charge.
The 2021 XC40 Recharge P8 compact crossover will start at $54,985, including a $995 shipping charge, when it goes on sale early next year.
The battery-propelled version of Volvo’s XC40 compact crossover delivers 402 hp and an EPA-estimated 208 miles.
That calculates out to about $264 per mile of range. The Chevy Bolt’s $38k/259mi is about $146 by contrast.
5th Gear: Here’s Some Good Analysis Of Tesla’s Lithium Claims
In the context of making EVs more affordable, Tesla and lithium loom large. Tesla has been trying to get its costs down and production up, to levels that are not possible with the current lithium industry.
The Financial Times has some good analysis of it all, focusing on how Tesla is getting into lithium production itself, mostly as a means of pushing the industry as a whole:
When Tesla held its socially distanced “battery day” last month at an outdoor parking lot in California, it invited executives from the two big US lithium companies, Livent and Albemarle.
As they sat in their allotted Model 3s watching Elon Musk on their in-car screens, he dropped a bombshell: the electric car maker was becoming a competitor.
Tesla, Mr Musk said, had acquired the rights to a 10,000-acre plot in Nevada where it planned to extract the metal using simple table salt, and would build a lithium refinery to supply a new factory in Texas. The next day Albemarle and Livent lost a combined $1.7bn in market value as their share prices plunged.
But industry insiders and observers remain sceptical that the car group can pose a serious competitive threat to established lithium producers. They say Tesla’s plan is unlikely to bear fruit for years and is instead designed to put pressure on the industry, which is dominated by five companies, to ramp up production.
The FT notes that “the lithium industry would need to grow more than eightfold just to supply Tesla,” so this is going to be no small undertaking.
Reverse: Boats Are Cars
Neutral: Why Can’t Biden Seal The Deal?
You’d think getting the heavily-unionized American auto industry in line would be pretty one and done. What is the Democratic ticket missing in its policies and messaging?
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