Biden and Belvidere

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“Congratulations to Stellantis and the UAW for their dedication and focus in coming together to reach a hard-won tentative agreement. The significance of this historic achievement coming just days after the UAW and Ford reached an agreement cannot be overstated.

 “This tentative agreement includes a number of important provisions including a commitment to reopen the Belvidere plant in Illinois, which will bring good, union jobs back that community. The parties are also charting a future of good middle-class jobs in battery manufacturing, consistent with the President’s vision for a just transition where building a clean economy and creating good union jobs go hand-in-hand.

 “Today’s agreement demonstrates what is possible when workers have a voice and a seat at the table. On behalf of the most pro-worker, pro-union administration in history, we applaud the parties on what they have achieved.”—Julie A. Su, U.S. Acting Secretary of Labor

A couple of considerations.

  1. What does it matter that there is the self-proclaimed “pro-worker, pro-union administration in history”? Wasn’t this contract worked out by the UAW and Stellantis? How was the Biden Administration involved? One of the points that the UAW used in bargaining was that the Administration is shoveling money into battery plants and while the OEMs can take advantage of that, there was no certainty that the workers would benefit from it, as that wasn’t written into the language of the Fed’s largess, only geography and material sourcing, not worker representation. Pro-labor?
  2. That plant in northern Illinois had been closed earlier this year because the Jeep Cherokee that was built there wasn’t selling. Obviously, making something that someone doesn’t want to buy is not a good idea. (OK: that only a few people want to buy.) According to UAW vice president Rich Boyer, the plant will build a midsize pickup and there will also be jobs at a battery plant in Belvidere. Should that midsize pickup be an electric pickup, given what’s happening in the market right now, that may put the workers back in the situation that had occurred with the Cherokee. EVs are not selling at the rate that had been anticipated, which is causing Ford to cut a shift from its F-150 Lightning production and GM to push back the construction of an EV assembly plant. Seems like more EVs isn’t what’s required at present. However, UAW president Shawn Fain pointed out: “We not only won the right to strike over plant closure, we won the right to strike over product and investment. That means if the company goes back on their word over any of these plans, we can strike the hell out of them.” Stellantis better hope its product planning is on target for Belvidere as well as its other U.S. plants.

Fisker: Emotional or Updateable?

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By Gary S. Vasilash

Henrik Fisker is an automotive designer whose work includes the BMW Z8 and the Aston Martin DB9. And, of course, there was the Fisker Karma, the car that continued long after the Fisker Automotive ceased to exist. In 2016 Fisker Inc. was established.

Fisker Inc. says of itself: “Passionately driven by a vision of a clean future for all, the company is on a mission to create the world’s most sustainable and emotional electric vehicles.”

Fisker Inc.’s first vehicle, the Fisker Ocean, is an electric SUV. (The Karma was part of the way to clean: a hybrid.)

Fisker Ocean (Image: Fisker Inc.)

Henrik Fisker recently said something interesting (well, he’s probably said plenty of interesting things of late, but this one, in particular):

“In the 21st century, our vehicles are more like rolling computers than the cars of the past, so we need to ensure that our customers are seeing frequent improvements and updates to software.”

He was talking about having over-the-air (OTA) update capability for the Ocean.

When one thinks of a computer, the word emotional probably doesn’t come to mind (unless something has just gone seriously awry and there is a thought about throwing it against a wall).

Although Apple once designed computers that had form factors that were far more appealing (or off-putting) than the run-of-the-mill IBM or Dell—think of the colorful iMac G3, iMac G4, PowerMac G4 Cube—today the products are well-designed, but not particularly emotional.

Henrik Fisker is a chairman and a CEO as well as being a designer.

Consequently, he has to be concerned with what sells.

Which seems to be things that are OTA-capable.

Let’s hope the design doesn’t become an occasional afterthought.

EVs and Oil Investments

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By Gary S. Vasilash

Although there seems to be a propulsive inevitability of the electric vehicle such that by the time 2030 arrives we’ll all be rolling around in electron-powered machines, there are a few things that are making this seem less. . .inevitable.

Last week ExxonMobil announced it is acquiring Pioneer Natural Resources, an oil and gas exploration and production company, for $59.5-billion.

As ExxonMobil described this: “Together, the companies will have an estimated 16 billion barrels of oil equivalent resource in the Permian. At close, ExxonMobil’s Permian production volume would more than double to 1.3 million barrels of oil equivalent per day (MOEBD), based on 2023 volumes, and is expected to increase to approximately 2 MOEBD in 2027.”

Or simply put: More access to more oil.

Today Chevron announced it is buying Hess Corp. for $53-billion. Hess “is a leading global independent energy company engaged in the exploration and production of crude oil and natural gas with leading positions offshore Guyana, the Bakken shale play in North Dakota, the deepwater Gulf of Mexico and the Gulf of Thailand.”

Chevron “produces crude oil and natural gas; manufactures transportation fuels, lubricants, petrochemicals and additives; and develops technologies that enhance our business and the industry. We aim to grow our traditional oil and gas business, lower the carbon intensity of our operations and grow new lower carbon businesses in renewable fuels, hydrogen, carbon capture, offsets and other emerging technologies.”

With Hess it will most certainly grow its traditional oil and gas business.

McKinsey & Company just released its “Global Energy Perspective,” which looks at the likelihood of the industrialized world meeting the goal of keeping global warming growth below 1.5°C. There are four scenarios about the energy transition, ranging from “Fading momentum” to “Achieved commitments.”

In all cases they predict that oil will peak in 2030.

But then there is a question of what happens next: what is the angle of decline by 2050?

It could be big: as much as a decrease of barrels of oil by 50%

It could be small: as little as a 3% decline.

Odds are ExxonMobil and Chevron are betting on something closer to 3 than 50.

Which leads to a bit of wonder about the rate of adoption of EVs in the U.S.

As of August, J.D. Power had the share of EV sales in the U.S. at 8.6%. That number is a bit opaque because Tesla accounts for 63% of all of those EV sales, so it is not like EVs that aren’t Teslas are growing in ubiquity. (Even Ford has taken a shift out of the production of the F-150 Lightning, and F-150s (well, with combustion engines) are otherwise produced at such a rate that other vehicle manufacturers can only look on with envy.)

So while the number is easily going to be greater than 3% come 2030, perhaps the idea that EVs will be 50% of the market by 2030 is a bit too optimistic.

Robo Woes

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As the National Highway Traffic Safety Administration (NHTSA) begins an investigation into Cruise based on a couple of incidents regarding the self-driving vehicles and their protocols (behaviors?) around pedestrians, there is more not-so-good news for the purveyor of driverless taxis rides.

Cruise driverless vehicle at night. (Image: Cruise)

J.D. Power has released results of a survey, the J.D. Power U.S. Robotaxi Experience Study, the indicates consumers are not all that chuffed with the prospect of driverless rides and aren’t all that keen on having the vehicles rolling around in their neighborhoods.

As in:

  • Only 20% of all consumers are comfortable with automated vehicle tech being tested on the streets and highways in their locale.

What’s more, although Cruise never fails to point out that it maintains its vehicles are safer than humans, J.D. Power found that “nearly 60% of both riders and non-riders say they don’t think a robotaxi drives any better than a human.”

While those who have never taken a ride can be dismissed (e.g., would you believe someone who never ate chocolate ice cream who said it isn’t as good as vanilla?), that even riders are in that cohort isn’t good from a PR point of view.

Kathleen Rizk, senior director of user experience benchmarking and technology, J.D. Power:

“Automated vehicle technology is built on the promise of alleviating distracted driving, impaired driving and collisions attributed to human error.

“However, the benefits result from consumer acceptance, which is why it’s imperative to ensure these first deployments are flawless—not only for the riders but also especially for those who are not early adopters, including non-riders who are experiencing AVs in their community and those learning from a distance through social media and other news outlets.”

When people are learning about things like NTHSA investigations, that can’t be good for Cruise (and to be fair, Waymo).

Best Elon Musk Quote from the 2023 Q3 Earnings Call

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While discussing how to reduce the cost of building vehicles. . .

Musk:

“We’re trying to be very rigorous about improving the quality and capability of the car because it’s like any fool can reduce the cost of a car by making it worse and just deleting functionality and capability and that’s how I call this sort of any fool like—if you want to like lose weight and you said, ‘Well, I need to lose over 15 pounds right away,’ well, you could chop your arm off, but then you’re sitting with one arm.

“You know, you’re still fat.

“So, sort of like, yes, you actually have to eat less food and work out. That’s the actual way. And doctor’s advice. Yeah.

“It’s not super fun because food is delicious. And personaly, I’m not–I don’t love working out. I know I say I do. I wish I did, but I don’t.

“Unless moving the mouse consists of working out. In which case, I love moving the mouse.”

Underwhelming Domestic OEM EV Sales

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If you listen to the pronouncements of traditional OEMs about their EV efforts, you’d think that there is probably some sort of parity vis-à-vis their internal combustion engine business.

As in GM (remember: “All in” on EVs) selling plenty of EVs, and the Ford F-150 Lightning being in demand the same way the ICE versions of the truck are.*

So it comes as a surprise how few EVs the traditional OEMs are selling in the U.S.

According to the just-released Kelley Blue Book “Electric Vehicle Sales Report” for Q3, when it comes to General Motors, year-to-date it has sold:

  • 49,531 Chevrolet EVs
  • 5,334 Cadillacs
  • 1,216 GMCs

That’s a total of 56,081 EVs over nine months. If we include Brightdrop commercial vehicle sales, it boosts the number to 56,414.

The GMC HUMMER EV was introduced in October 2020. During the past three years, there have been 2,071 of them sold. (Image: GMC)

GM sold 65,255 Chevy Trax models, or 15,761 more units than sales of the Bolt EV/Bolt EUV sold through Q3.

Meanwhile, over at Ford:

  • 46,671

To put that in perspective: during the first three quarters of 2023 it sold 56,427 of its giant Expedition SUVs. So the Mustang Mach-E, Lightning and E-Transit commercial van summed are nearly 10,000 fewer.

And while adding things together: GM and Ford combined sold 103,085 electric vehicles.

Meanwhile, according to KBB Tesla sold 493,513 EVs.

Think about that: two of the biggest, most legendary OEMs in the U.S. together sold about a fifth of a company that was established 20 years ago.

*To be fair, Stellantis brands (Chrysler, Dodge, Jeep) sold 0 EVs.

Language and Leadership

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Remember those radio commercials that included the line “People judge you by the language that you use”?

Well, an on-line tutoring firm, Preply, has taken that idea and applied it to making a determination of the “intelligence” of CEOs based on transcripts of public appearances available on YouTube.

The firm analyzed from 60 to 180 minutes of dialog and assessed the execs based on:

  • Vocabulary breadth: The extent of word diversity
  • Vocabulary sophistication: The complexity of words used
  • Textual readability: The complexity of sentence structures and ideas
  • Critical thinking: The quality of argument construction, deconstruction, and analysis
  • Contextual relevance: The speaker’s ability to interconnect the dialogue with broader contexts or other fields

That led to the scoring based on a 100-point scale.

And the auto CEOs included in the rankings don’t score in the top 10, not even Elon Musk.

Ranking first is Demis Hassabis, CEO of AI firm DeepMind, with a score of 87.33. Presumably he is exceedingly articulate (and/or has great speechwriters) because Stephen Schwarzman of investment firm Blackstone is in second place with a score of 74.33, a precipitous drop.

As for the people in auto, Musk is in 16th position with 64.33, behind Brian Chesky of Airbnb with 65.00 and ahead of Whitney Herd of Bumble, at 64.00. (Strange correlation with Airbnb and Bumble. . . .)

Mary Barra of GM isn’t far behind, in 20th position with 63.00.

There is one more U.S. auto exec on the list of the top 100: Ford CEO Jim Farley at 98, with a score of 32.00.

That just seems mean.

What Do Potential EV Pickup Buyers Think?

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By Gary S. Vasilash

It is always interesting to see surveys that ask about how people perceive autonomous vehicles because most people have only seen an AV on TV.

Things are a bit better with electric vehicles. But still, if you take Tesla out of the calculations (in the first half of 2023 Kelley Blue Book calculates that there were 556,707 EVs sold in the U.S., of which 336,892, or 60% of the total were Teslas), there aren’t all that many EVs out there for people to buy.

Cox Automotive (which, incidentally, owns KBB) recently ran a study of pickup shoppers who are planning to buy a truck within the next two years.

The information related to those considering EV pickups is interesting.

For example, consideration for an EV from a brand that one already owns is solid, which perhaps help explain why the Ford F-150 Lightning has the highest level of consideration.

What’s more, Cox found Lightning is clearly the most appealing to people.

Ford F-150 Lightning frunk. (Image: Ford)

When asked about appeal before a truck was revealed and consideration after the reveal, of the Ram 1500 REV, Chevy Silverado EV, GMC Hummer EV pickup, Rivian R1T, and Tesla Cybertruck, and the Lightning, only the Lightning had a higher post-reveal consideration number.

And when looked at from the perspective of the following metrics, the Lightning got the top score in all of them:

  • Mileage range/fuel efficiency
  • Driving performance
  • Price
  • Overall look/styling
  • Technologically advanced

Which brings us back to the aforementioned survey about AVs.

Of the vehicles on the list, only the Lightning, Rivian R1T, and Hummer EV pickup are out there, and the number of Hummers is capable of being parked in a strip mall lot with spaces to spare.

How do people know about driving performance?

And how does the Lightning, with a top range of 320 miles, out score the Silverado EV, which has an estimated range of 450 miles?

When it comes to technology, it is hard to figure how the Lightning is more advanced than the R1T—unless it is that the Lightning has a 14.1-cubic foot frunk and the R1T’s is just 11.

Don’t Count Out Cars: Lesson from Honda August Sales

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By Gary S. Vasilash

For those who think that cars—those lower-roofed vehicles with two or four doors that aren’t designed to be able to or pretend to be able to traverse Moon-like surfaces—have had their day, August sales results from Honda are instructive.

For the month Honda sold 17,661 Accords, which is a 52% increase over August 2022. The car sales are up 36.3% for the year compared to 2022.

(Image: Honda)

And Civic sales increased 133.1% in August over the previous year, 17,077 vehicles. For the year Civic sales are up 47.5%.

To be sure, Honda sold a lot more non-cars in August: 65,047 compared with 34,738.

However, there are five vehicles in the non-car category vs. two.

The CR-V crossover is the brand’s biggest seller, 30,991 units.

However, the closest sales number to either of the cars is achieved by the HR-V, which was at 11,404. That’s a third lower than Civic sales.

Who Gets Support in the (Potential) Strike?

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By Gary S. Vasilash

In a couple weeks, September 14, the contracts between the Detroit Three and the United Auto Workers will come to their conclusions.

And it seems likely that there will be a strike. (If there isn’t, credit must go to both sides for some incredible negotiating because at this point in time it sounds like the UAW feels exceedingly undervalued by their employers and want that changed and the OEMs seem like they’re already squeezing everything they can into the workers’ paychecks.)

It might also seem that the UAW would be perceived in a negative light by other people in the country—after all, this isn’t just about Detroit physical or metaphorical, but about the entire U.S. economy because the auto industry plays a non-trivial role: the Anderson Economic Group calculates that if there is a 10-day strike against all three OEMs there would be an economic cost of $5.6-billion, so the impact would go far beyond the Motor City per se.

But there is apparently some solid support throughout the U.S. for the labor movement.

A recent Gallup study finds that 67% of American approve of labor unions.

What’s more, when specifically asked about who they would side with if there is a strike, Gallup found—and realize this survey was conducted August 1-23, so it is comparatively real-time, that 75% are pro-worker and 19% the employer.

It should be interesting to see how this gets resolved. And will it will get resolved, it is worth noting that the Writers Guild of America walked off moved away from their keyboards on May 2, and have yet to return.