Ford is reportedly cutting thousands of jobs, two of the Big Three want to test autonomous vehicles without steering wheels, and Porsche sees more profits in EVs. All that and more in The Morning Shift for Thursday, July 21, 2022.
1st Gear: Ford Will Lay Off Thousands of White-Collar Workers
A new report in the Wall Street Journal claims Ford will cut over 4,000 salaried positions. The cuts are said to be aimed primarily at the ICE side of the business, so your classmate’s uncle from Canada who works on the secret 1,000-horsepower EV Shelby Mustang is likely safe. From the Wall Street Journal:
The auto maker in coming weeks is expected to disclose plans to eliminate more than 4,000 jobs, the people said. The cuts would mostly come from the Dearborn, Mich.-based auto maker’s North American salaried ranks and aren’t expected to include factory workers, the people said.
The potential layoffs are tied to a goal recently set by Chief Executive Jim Farley to achieve a 10% pretax profit margin by 2026, up from 7.3% last year, the people said. Mr. Farley has said he wants to eliminate $3 billion in annual structural costs by then.
The Journal’s sources claim that plans haven’t yet been finalized, and things could change before any layoffs are announced by the company. Still, it’s a fun reminder that companies have the power to irreparably alter thousands of lives just to hit an arbitrary profit goal.
2nd Gear: Ford and GM Want Permission to Test AVs Without Steering Wheels
While some companies seem apt to just throw autonomous vehicle software out into the world with little regard for safety or testing procedures, most automakers go through the proper channels before unleashing thousands of pounds of self-directed steel onto American roads. Channels like “filing a petition with NHTSA to ask permission, which can be publicly commented on before the administration makes a decision.” From Automotive News:
General Motors and Ford have asked U.S. auto safety regulators to grant exemptions to deploy a limited number of self-driving vehicles without human controls like steering wheels and brake pedals.
The National Highway Traffic Safety Administration (NHTSA) on Wednesday published the separate petitions and opened them for public comment for 30 days.
Ford has said it intended to deploy a self-driving ride hailing and package delivery vehicle early in this decade.
GM wants to deploy the Origin, a vehicle with subway-like doors and no steering wheels. GM says the vehicles will require all passengers to buckle seat belts prior to the start of their autonomous ride.
Ford’s petition was filed way back in July of 2021, but wasn’t public knowledge until its release by NHTSA. Everyone’s racing to be the autonomous Uber (including Eats), it seems.
3rd Gear: Porsche Eyes Additional Profit in EVs
Porsche (the car company owned by Volkswagen, not the holding company that owns Volkswagen) thinks it can wring more profit out of EVs than ICE cars. How, you ask? A little-known trick they don’t teach in business school: Charging more. From Bloomberg:
The Volkswagen-owned sports-car maker sees more potential to raise prices of its EVs than its combustion engine models, Chief Financial Officer Lutz Meschke said during Porsche’s capital markets day early this week. He sees the manufacturer’s EV margins reaching parity with those of combustion vehicles in two years, then expanding because customers are willing to pay more for new technology.
The sports-car maker — which plans an initial public offering in the fourth quarter — mapped out a push to grow return on sales to more than 20% in the long term, up from 16% last year. Management expects eight in ten Porsches sold by the end of this decade to run on electricity, and for EVs to account for half the luxury automotive market in 2031.
Normally, charging extra for EVs would be counterproductive in efforts to electrify the global automotive market and reduce carbon emissions, but let’s be honest with ourselves. Porsche was never going to be the brand for reasonably-priced commuter EVs.
4th Gear: Chevrolet Still Wants to Sell You a Crate EV Conversion
Chevy, however, stands a better shot. Despite supply chain-related setbacks, the automaker still swears its electric crate motors are coming, and it wants them to be a one-stop shop for full EV retrofits. From the Detroit Free Press:
General Motors will soon offer an electric crate-motor package to allow people to replace gasoline-powered engines with fully electric propulsion systems in classic cars.
The eCrate is a motor and a package of components for use on vintage GM vehicles. But GM is not yet specifying which vehicles will be compatible with the eCrate.
“The technology will soon be available through Chevrolet Performance,” said Mark Lubin, GM spokesman. “This specific offering is part of GM’s larger strategy to provide EV component sets to a variety of different industries and applications outside of GM’s product portfolio.”
GM’s kit will be a holistic package of components needed to do a conversion to electric, Lubin said. It also will provide customers with access to the resources required to do a conversion as well as installation training, aspects that differentiate it in the marketplace, he said.
Offering a crate motor is one thing, but offering a crate conversion is substantially more helpful. It’s unclear whether Chevy will have custom solutions for specific older vehicles (say, battery packs designed to fit perfectly in the transmission tunnel of a ‘70 Chevelle) or a broader, more universal EV conversion design. Who knows, maybe both.
5th Gear: Hyundai Had a Good Quarter
The second quarter of 2022 was Hyundai’s best fiscal quarter in eight years. Why? Big margins, big demand, and a big drop in the value of South Korea’s currency. From Reuters:
Hyundai Motor Co (005380.KS) turned in its best quarterly profit in eight years on Thursday as a weak won lifted the value of its earnings abroad and demand stayed strong for the South Korean automaker’s high-margin sport-utility vehicles (SUVs).
Net profit rose to 2.8 trillion won ($2.13 billion) for the April-June period from 1.8 trillion a year earlier, beating an average analyst forecast of 2.2 trillion from Refinitiv SmartEstimate.
“A robust sales mix of SUV and Genesis luxury models, reduced incentives from a lower level of inventory, and a favourable foreign exchange environment helped lift revenue in the second quarter,” the firm said in a statement.
Hyundai said it planned to step up vehicle production in the second half to meet consumer demand, though it still expects some supply chain disruptions and fluctuations in the cost of raw materials.
It’s like Uncle Ben said: With great ride height comes great profit margins. Kia’s been making good crossovers, and it seems that buyers have noticed.
Reverse: Pink Floyd’s Best Album Returns to the Stage
The Wall – Live in Berlin was a live concert performance by Roger Waters and numerous guest artists, of the Pink Floyd studio album The Wall, itself largely written by Waters during his time with the band. The show was held in Berlin on 21 July 1990, to commemorate the fall of the Berlin Wall eight months earlier.
“I did an interview a couple of years ago for a guy called Redbeard…” Waters recalled. “He said, ‘Would you ever perform The Wall again on stage?’ And I said, ‘No’… Indoors, it made no sense financially; it’s too expensive. And, as it’s partially an attack on the inherently greedy nature of stadium rock shows, it would be wrong to do it in stadiums… I said, ‘Well, I might do it outdoors if they ever take the wall down in Berlin.’… The Memorial Fund was in a council meeting, and felt they needed some kind of an event to focus attention on it… So I agreed to have a meeting with Leonard Cheshire. And I was very impressed, and said I would do what I could, although I thought it was very unlikely that it would come off… Then, in November , when the wall started coming down, we started negotiating.”
Neutral: Do You Want To Ride In A Robotaxi?
My last couple Lyfts have involved (1) an unmasked driver, and (2) a driver going over curbs to catch missed on-ramps and nearly missing lights because he was watching videos on his phone. I’m starting to see the AV appeal, honestly.