A great deal of ink, both the internet kind and the real kind, has been spilled over Ford’s big losses this year on the electric vehicle front—and many have speculated those shocking numbers will lead to a retrenching and rethinking of EVs. In reality? Not quite, according to its future plans.
That leads off a Monday edition of the morning news roundup, and one where I hope you aren’t working too hard right before Labor Day. Also on today’s docket: the United Auto Workers union clear the way for a potential strike, Tesla’s Autopilot goes on trial, and more VinFast shenanigans. Let’s take a look.
Ford To Axe Escape, Edge And Transit Connect Amid EV Push
Yes, Ford is set to lose $4.5 billion more this year than expected on EV and battery production. You know who else has said that sort of thing is normal? Elon Musk. Getting ready for a different sort of future costs money, and though EV critics have thrown that huge cost up as an example of this pivot not being worth it, for Ford, it’s that or face a future where it’s less relevant and less competitive against new rivals.
But that does mean losing some gas cars to EVs, too. Automotive News reports that the Escape, Edge and Transit Connect are all headed for cancellation soon enough. The Escape will become an EV crossover (and the Bronco Sport is outselling it anyway), the Edge won’t be super missed and the Transit Connect will just live on in Europe. More on those future plans:
Although the company is finding the electric transition to be harder than previously expected — it delayed some production goals this year — executives are speeding ahead with development of a second-generation platform to underpin EVs assembled at the new Blue Oval City plant in Tennessee and a retooled plant in Oakville, Ontario.
CEO Jim Farley recently said the company plans to quadruple hybrid sales in the next five years, following success with hybrid Maverick and F-150 pickups.
It’s got plenty of other gas cars and trucks to print money in the meantime.
UAW OKs Strike Against Big Three If Negotiations Fail
On Friday, UAW members sent the message they’ve been waiting to send by “overwhelmingly” voting to clear union leadership to potentially strike during negotiations with the Big Three Automakers.
Note that this does not mean they’re on strike. They just OK’d their leadership to make that call for them if a deal cannot be reached, and have signaled they’re serious about all of it. The Detroit Free Press has a good rundown of the situation:
The strike authorization vote is more of a formality and was expected to pass, but given the strong rhetoric around the potential action against the automakers, it was given more weight this time than in the past.
On Friday midmorning, the UAW said final votes were still being tabulated, but the current combined average across the three automakers was 97% in favor of strike authorization. The UAW did not provide raw vote numbers or release how many of the 150,000 members who work across the Detroit Three automakers turned out to vote.
The vote does not guarantee a strike will be called, only that the union has the right to call a strike if it cannot reach an agreeable tentative contract. The current contract expires Sept. 14.
“Our goal is not to strike, our goal is to bargain a good contract for our members. But we prepare for a strike so that we’re ready no matter what happens,” UAW President Shawn Fain told members during a Facebook Live broadcast Friday from UAW Local 862 near Ford Motor’s Louisville Assembly Plant in Kentucky. Union members there were holding practice pickets Thursday and Friday.
Are the automakers prepared for a strike, parts- and inventory-wise? Kinda, but there’s only so much you can do:
Ford’s inventory, which the automaker does report, has dropped by more than 12% in August compared with July, he said. Ford’s inventory drop is normal for this time of the year, he said, noting that production of some key vehicles, like the Explorer and Expedition, were abnormally low in June and July, possibly due to a lack of parts. Additionally, the Mustang and Ranger small pickup are transitioning between generations.
“While dealer inventories haven’t grown significantly, there are a few more vehicles available to cover a short strike, but there’s simply no way the automakers could prepare for a protracted factory shutdown,” [Sam Fiorani, vice president of Global Vehicle Forecasting at AutoForecast Solutions] said of the Detroit Three.
The UAW’s contract with the automakers expires a minute before midnight on Sept. 15.
Autopilot On Trial In California And Florida
People often forget this, but a big reason Tesla’s stock price is valued so highly is that Elon Musk keeps saying it’s got the whole “self-driving car” totally handled. Never mind the fact that he’s been saying so since 2016, or thereabouts—autonomy is key to Tesla’s future value.
But Autopilot is about to face two major court cases that could shape its future, both in terms of liability and the overall legal bills that are piling up. Here’s Reuters:
Tesla faces two trials in quick succession, with more to follow.
The first, scheduled for mid-September in a California state court, is a civil lawsuit containing allegations that the Autopilot system caused owner Micah Lee’s Model 3 to suddenly veer off a highway east of Los Angeles at 65 miles per hour, strike a palm tree and burst into flames, all in the span of seconds.
The 2019 crash, which has not been previously reported, killed Lee and seriously injured his two passengers, including a then-8-year old boy who was disemboweled. The lawsuit, filed against Tesla by the passengers and Lee’s estate, accuses Tesla of knowing that Autopilot and other safety systems were defective when it sold the car.
The second trial, set for early October in a Florida state court, arose out of a 2019 crash north of Miami where owner Stephen Banner’s Model 3 drove under the trailer of an 18-wheeler big rig truck that had pulled into the road, shearing off the Tesla’s roof and killing Banner. Autopilot failed to brake, steer or do anything to avoid the collision, according to the lawsuit filed by Banner’s wife.
Horrific on both counts. And here’s why the two matter so much:
“If Tesla backs up a lot of wins in these cases, I think they’re going to get more favorable settlements in other cases,” said Matthew Wansley, a former General Counsel of nuTonomy, an automated driving startup and Associate Professor of Law at Cardozo School of Law.
On the other hand, “a big loss for Tesla – especially with a big damages award” could “dramatically shape the narrative going forward,” said Bryant Walker Smith, a law professor at the University of South Carolina.
Tesla also faces a probe into Autopilot by NHTSA, which is due to wrap soon, and a Justice Department criminal investigation over its self-driving claims as well. It’s all looking… not great, to put it simply. [Ed note: Patrick covers all of this in the latest episode of Vox’s Land of the Giants podcast, which I can recommend – MH.)
VinFast’s Stock Price Continues To Prove That Wall Street Is Mostly Make-Believe For Grown-Ups
As I write this, Vietnam’s VinFast is now the world’s third-most valuable automaker by stock price, despite, well, reviews where the headline is just “Yikes.” Keep in mind it’s because it went public in the U.S. with a SPAC deal and then nearly all of the shares were bought by one man, VinFast’s billionaire owner. But since then the small amount of shares that are for sale have spiked prices upward in crazy ways, reports Reuters:
Shares of Vietnamese electric-vehicle maker Vinfast surged 30% in premarket trading on Monday, extending a rally from last week that more than quadrupled its market value to $160 billion.
The company made a blowout debut on Wall Street this month and has quickly grown in valuation to become the third-most valuable automaker – only behind Tesla (TSLA.O) and Toyota (7203.T).
But Vinfast’s small amount of publicly available shares has made the stock prone to volatility, with shares jumping or slumping more than 14% in 11 of the past 12 sessions.
The stock was on track to add nearly $50 billion to its market capitalization, based on the premarket share price of $90.55.
That potential one-day gain will be more than the individual valuations of major U.S. automakers Ford Motor (F.N) and General Motors (GM.N).
I hope everyone involved with this is just having such a fun little time.
Is Ford doing the right thing with its future strategy?