It’s Membership Day here at The Autopian and we’ve got shipping conglomerates asking for zero emissions (from trucks), Elon Musk asking for cheaper loans, dealers asking the Fed to slow down, and Volkswagen asking for a little help. We all get buy with a little help from our friends.
Welcome to The Morning Dump, bite-sized stories corralled into a single article for your morning perusal. If your morning coffee’s working a little too well, pull up a throne and have a gander at the best of the rest of yesterday.
Maersk Says Zero Emissions Trucks NOW! (Or In 12 Years)
Environmental groups and certain political parties have been pushing for a reduction in greenhouse gases through various means, including bans on emissions-producing cars. While not entirely ignored, commercial trucks haven’t been included in most of these bans.
It’s therefore interesting that a large group of companies doing business in Europe have, through the non-profit The Climate Group, published a letter asking for a ban on ICE trucks by 2035. That would put big trucks on the same timetable as regular passenger vehicles (with a notable exception for construction, logging, and mining vehicles).
Here’s what the letter says:
Despite accounting for just 2% of vehicles on European roads, heavy-duty trucks are responsible for over a quarter of the EU’s road transport emissions. Road transport and HDVs are also one of the largest sources of air pollution which causes 350,000 premature deaths per year in the EU.
The technologies to decarbonise trucking and tackle harmful air pollution are already here. A 2035 zero-emissions target for new freight trucks would provide investment certainty for vehicle manufacturers, and ensure the replacement of fossil-powered truck fleet in time for the EU to reach climate neutrality by 2050.
The alliance of progressive industry stakeholders advocates for:
- All new freight trucks should be zero emission from 2035
- The 2030 CO2 reduction target needs to be significantly increased to 65%
- Fuel credits should not be included in the HDV CO2 standards
- The scope of the regulation should be extended to cover all heavy-duty vehicles
The letter also goes on to say the goal of reducing CO2 by 30% by the end of the decade should be raised to a 65% reduction.
Some of the signatories shouldn’t surprise you. Volta Trucks, which is building EV commercial vehicles and stands to benefit greatly from the increased subsidies implied if this happens, is on the list. This is the equivalent of my daughter writing a letter stating that bedtime should be rolled back to 9:30 pm and getting all her friends to sign it. Pepsi, which ordered a bunch of Tesla Semis, is also on the list.
What’s the most conspicuous name on this list? Maersk, which is typically the largest shipping company in the world, put its name to the letter. If I’m being optimistic this is because Maersk believes in saving our environment. If I’m being pessimistic, it’s because maritime shipping accounts for more greenhouse gas emissions than the airlines.
[Editor’s Note: The amount of energy in a gallon of diesel is truly incredible, and especially when payload matters, going EV for long distance over-the-road truck applications becomes very difficult. To get the range you need, you end up with a giant and expensive battery, which eats into cargo capacity and cranks up charging time. For around-town hauling, I think EV works; for long-distance hauling? I’m not seeing it working out by 2035, but I also recognize the value of ambitious deadlines. On a smaller passenger vehicle, it’s easier to replace the function of ICEs given current technology, but with big trucks it’s just a much taller ask. Personally, I’m a big fan of Siemens’s E-Highway idea. -DT].
It’s The Economy, Stupid
Cox Automotive, the consumer/B2B automotive data company behind Kelly Blue Book, does this quarterly survey of dealers in the United States to determine where the market is going. The latest report is out and it shows that the average dealer is more concerned about the economy than it’s been during any point during the pandemic:
“High loan rates and a generally slowing economy are clearly weighing heavily on U.S. auto dealers right now,” said Jonathan Smoke, Cox Automotive Chief Economist. “Dealers are normally optimistic, so the drop in the 3-month outlook to a new low in our survey history is particularly noteworthy. As the year began, dealers were telling us about one obvious problem: inventory. Now, as 2022 comes to a close, it’s all about the economy and interest rates.”
I don’t want to spill any trade secrets here, but if you’re in the car-selling business it’s usually helpful to have cars to sell. A lack of inventory has plagued dealers for the last two years and it would be absolutely crap timing to suddenly have vehicles in stock and then get hit with high interest rates and slowing demand.
Concerns over inflation led the Federal Reserve to dramatically raise interest rates to try and slow the economy, which has sort of worked. The two biggest purchases most regular people make are housing and transportation, which means interest rates going up end up putting downward pressure on both. This pattern is clear in new housing starts.
If you can pay in cash then it might be a good time to buy a car (or house) soon as prices should stabilize or go down, especially if this ends up putting us into a recession. I’m personally not convinced that a recession next year is a definite outcome and I’d prefer if the Fed didn’t hike rates again as it’s basically the equivalent of trying to slow down the skateboard you’re on by dragging your knuckles along the ground; effective and painful.
Volkswagen Calls Supply Chain ‘Flat Out Chaos’
Dealers may be less concerned about inventory, but Volkswagen is still sweating the supply chain. The company’s famed Wolfsburg plant is only producing about 400,000 cars a year, which is less than half of its full capacity.
According to Automotive News, Volkswagen CEO Thomas Schaefer told local reporters yesterday that the supply chain was “flat out chaos.”
First of all, “Flat Out Chaos” is an excellent album name. Foo Fighters, maybe? Second of all, Super Beetles need few, if any, microchips. I’m just saying.
Rather than try and restart urBeetle production, Volkswagen is reportedly considering making larger direct purchase agreements as opposed to trying to save money by buying on the open market.
Musk May Use Tesla Stock As Collateral For Twitter Loans: Report
Fun times in Elon Musk-land as the Tesla/Twitter/SpaceX/Pluckers Wing Bar/Solar City Boss is reportedly working with his bankers to maybe find a way to deal with the super high interest rates on his Twitter purchase. Bloomberg had the scoop first and, yet, I shall link to the Reuters story since it’s easier to read:
The margin loans are one of the options that the Morgan Stanley-led bank group and Musk’s advisers have discussed to ease the $13 billion debt Twitter took on as part of Musk’s $44 billion deal, the report said, citing people with knowledge of the matter.
The discussions have so far centered around replacing the $3 billion of unsecured debt on which Twitter pays an interest rate of 11.75%, the maximum banks had agreed to finance the acquisition in April, the report said.
A margin loan allows Twitter to use Musk’s Tesla stock as collateral to borrow money and, since it’s backed by Tesla and not Twitter, the interest rate should be lower than the 18-year-old-with-part-time-job-financing-a-Hellcat-Charger-at-Carvana rate that’s currently in place.
Of course, Tesla stock ain’t what it used to be and it’s not likely that this move is going to help.
[Editor’s Note: There are few things I want to discuss less than Tesla stock. Commenters, please resist! -DT]
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