Now that another weekend of Fancy Person Things® at Monterey Car Week is in the books, it’s time to return to reality: an auto industry disrupted by batteries, software and labor disputes over things like batteries and software. Good Monday morning, Autopians! Time to rise and grind.
We kick off this late summer week with news about how General Motors is fixing its slow electric vehicle rollout; how Hyundai and Kia are hatching similar plans in America; the way Tesla plans to “lock” its true battery capacity with software; and the fight over wages in all of these new battery plants.
I’d almost apologize for going so “tech” heavy today, but as you know, I don’t make the news. I just tell you about it. Gimme a beat and let’s get nasty.
GM On Slow EV Rollout: We’re Working On It
Have you seen the Barbie movie yet? I thought it was delightful. (And maybe the best thing Ryan Gosling’s ever done.) But in addition to launching a Mattel Cinematic Universe that nobody asked for, it’s also so rife with GM EV product placement that a few scenes feel like a TV commercial; the Chevy Blazer EV SS crossover, in particular, figures pretty heavily into the film.
There’s just one problem: you can’t even buy it yet. That particular model is said to go on sale in the spring 2024, and it’s already been delayed. Same with the new Silverado EV. The Cadillac Lyriq doesn’t seem to exist outside of Detroit-area press fleets, and the GMC Hummer—an inherently limited-volume car due to its price and size—has been rife with problems. Earlier this year GM was touting the fact that “all” of its EVs would qualify for the new tax credit, but the vast majority of those cars aren’t even in production yet.
GM’s made a lot of big electric promises but so far it’s been slow to deliver. But it makes sense why: besides setting up a whole new supply chain, it’s building an entirely new architecture called Ultium that uses new batteries and new software. This is very new territory, even for The General.
So now, CEO Mary Barra’s message is taking shape: help is on the way. Here’s Automotive News:
GM will get some help reaching that goal when its second Ultium Cells battery plant with joint- venture partner LG Energy Solution opens in Tennessee this year, joining the one already operating in Ohio. With more battery capacity and more EV nameplates on the way, GM is working to resolve issues that have constrained its ability to scale production.
More than 2,000 Lyriqs and Hummer EVs reserved by customers were in transit to dealers at the end of June, Barra said on GM’s second-quarter earnings call. And more than 1,000 Lyriqs were delivered to customers in July, CFO Paul Jacobson said during a J.P. Morgan conference this month. It took GM nearly a year to deliver the first 1,000 Lyriqs.
“There’s been some criticism that we should have been faster with our EVs. We’re going as fast as we can, but we wanted to make sure we were leveraging a platform that’s going to give us efficiency with Ultium and that consumers weren’t going to have to compromise,” Barra said. “I’m very confident with the product portfolio we have coming, the pricing and the demand.”
Honestly, though: I find it tough to knock GM on this one. You can knock the massive multi-brand marketing hype, for sure, because at some point you have to deliver on your huge promises (or you find some that you can kick down the road forever because your company’s market cap is tied to them.) But if GM sees the move to the Ultium EVs as the long-term, long-game future of the company—which is nicely profitable at the moment—then it makes sense to take time to get things right. It’s one thing to have glitches with an expensive toy like the Hummer EV; that won’t fly with the more mainstream cars.
Anyway, GM is working on the electric thing.
Battery Plants Are A Point Of Contention In The UAW Fight
Spurred in part by big federal investments thanks to the Inflation Reduction Act, pretty much all of the automakers that build cars in the U.S. are spinning up new battery plants like that GM-LG plant in Tennessee. You can’t have EVs without batteries, right? But that’s exactly part of the labor fight going on in Detroit right now. As Bloomberg explains, those workers are making crucial GM parts but they aren’t a unionized shop:
One of the more divisive topics putting General Motors Co., Ford Motor Co. and Stellantis NV at risk for potential strikes in the coming months concerns the thousands of battery workers they’ll need the next few years.
The United Auto Workers wants to represent these hires, and for them to get the same pay and benefits as union members at other facilities.
The companies want to cordon off this conversation from negotiations of new four-year labor contracts they’re negotiating with the UAW. For one, most of their battery factories are still under construction. Plus, these facilities aren’t the carmakers’ outright — each of them have set up joint ventures with Asian battery manufacturers.
And as usual, new UAW President Shawn Fain isn’t mincing words about how he feels here:
Fain understands carmakers needed to form joint ventures to access battery technology, but they could have hired the workers at better pay. He has a solution in mind: have the car companies do the hiring at auto-worker pay rates, then lease these staff to the battery ventures.
“We’d love to see it, or some type of arrangement, but the companies have to be willing to do it,” Fain said in an interview. “Their intent was to create a different class of workers.”
The challenge for the UAW is that generally speaking, EVs need fewer parts and less labor than conventional cars do. So those battery plant workers could someday form a big chunk of “auto industry” jobs in America.
The UAW fears that if they aren’t unionized or getting good wages now, that may never happen. But the automakers are desperate to cut costs in the race to electrify, so they don’t want to pay those higher union wages, and I’m willing to bet companies like LG or SK On don’t want to mess with the UAW—now or ever.
More on that from Fain:
The car companies say their joint ventures weren’t set up to be end runs around union wages. They need the expertise of battery partners to build the packs powering their EVs, and for these facilities to be cost-competitive.
“To me, that’s code for a race to the bottom,” Fain said. “Mary Barra made $200 million over the last nine years. I don’t know how someone looks themselves in the mirror knowing what they are doing at Ultium.”
I think this will be an especially interesting part of the UAW negotiations to watch because it really encapsulates what’s at stake here: does the future of the American car industry include union labor or not?
Hyundai, Genesis And Kia Also Ramp Up U.S. EV Plans
I struggle with a persistent problem in my life: I would really love to own one of Hyundai and Kia’s rad new EVs, like an Ioniq 6 or an EV6. But they are still very expensive and, because they’re built in Soth Korea, left out of the EV tax credits (unless you lease them, and then it’s debatable whether you’re saving money or not because that “deal” could just get baked into a lower residual at the end of your term.) A shame! These cars are great, but pricey.
Help is on the way here too. Automotive News has an update on Hyundai Motor Group’s huge battery and EV factory plans across the South. You know how Tesla has the Gigafactory? Hyundai calls theirs the “Metaplant.” They got the golden arches, mine is the golden arcs, etc.
Kidding aside, the Korean giant has big plans for EVs in the U.S., including the big vehicles we Americans love most: three-row crossovers and pickup trucks. They get us. From the story:
Six models are planned for the plant, which has a capacity to build 300,000 EVs a year and the ability to produce up to 500,000, depending on demand. Three of those models are likely to be Genesis vehicles. Production of the Ioniq 7, Hyundai’s three-row electric kid hauler, could also move to Georgia. In late 2026, both Kia and Hyundai are expected to launch midsize electric pickups geared toward the U.S. market; both could be candidates for Metaplant assembly.
Hyundai also spent $300 million upgrading its plant in Montgomery, Ala., to build the Genesis Electrified GV70, an electric version of the top-selling luxury crossover, as well as the hybrid version of the Hyundai Santa Fe.
In a similar move, the group is spending $200 million to ready the Kia Georgia factory in West Point to assemble the EV9, a boxy, three-row crossover and Kia’s second dedicated electric vehicle. Kia EVs also will benefit from a joint venture between HMG and battery supplier SK On that will likely be its primary source of power packs.
The first wave of Kia EV9s, to go on sale this year, will be imported from South Korea. Kia Mexico also is likely to undergo electrification upgrades. The company already produces the compact Forte and subcompact Rio, which is being discontinued after the 2023 model year, at its factory in Monterrey, Mexico. Forecasters believe two smaller electric crossovers will come from the plant after a full-scale retooling.
Besides the tax credits, being able to build these cars locally and at a greater scale will no doubt lower their prices long-term. I don’t see Hyundai doing crazy Tesla-style fire sale moves, but as it ramps up these cars in America, I fully expect them to become more competitive in price. But that could take several years to happen, unfortunately.
Tesla Will ‘Lock’ Its New Battery Capacity With Software
I will scream this from the rooftops until I am dead: the way automakers plan to make a bunch of money in The Future is by having you pay over time for features that were once baked into the total purchase price of the car. “Recurring revenue” will be a huge part of the way they do business soon and that’s all driven by software.
Now, that’s not exactly what’s happening here, but Tesla has a great example of the software-driven control automakers will have over future cars. Those new Standard Range versions of the Model S and Model X will have the same battery pack as the Long Range versions of those cars (a sizable 100 kWh) but its “true range” will be locked by software. This is from the tech site Not A Tesla App, which follows such developments closely:
Tesla has previously utilized software-locking strategies, allowing the company to streamline its manufacturing process. The new Standard Range Model S and Model X vehicles are no exception to this approach. These cars have the same battery packs as their Long Range counterparts, but 21% of the capacity has been locked.
Tesla’s software-locking strategy for the new Standard Range Model S and Model X continues its innovative manufacturing and market positioning approach. Whether or not Tesla will offer the option to unlock additional battery capacity in the future remains an open question.
There are a few ways to look at this. For one, I think it is a clever approach for Tesla, rather than having to develop all-new battery packs for the relatively slow-selling Model S and Model X—both are older and more expensive and vastly outsold by the Model 3 and Model Y. But I worry about a waste of resources involved with building a big 100 kWh pack, and then “locking” its true capacity. Then again, Tesla sells so few of these cars and may have 100 kWh production so dialed-in it may not matter.
But even beyond Tesla, this is the kind of thing you can expect more of in the future. You want to “unlock” all your car’s features? You’re gonna pay up. Or you find some way to grease it yourself like jailbreaking a smartphone.
Would you ever “hack” your car to unlock its true features? You can tell me, I’m not a cop. If I was a cop, I’d have to tell you I was a cop. That’s how it works.
Either way, I think that like nature, the car tuners find a way, and there could be a whole new generation of enthusiasts figuring out crazy stuff to do—not with parts, but with code.
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