Tesla is under federal scrutiny again, Ferrari is thrilled it can keep building old-fashioned engines for many years to come, and Polestar has its entire US future on its first SUV. All that and more in this edition of The Morning Shift for Tuesday 28th March 2023.
1st gear: Now it’s the seat belts
Back in October, Tesla recalled around 24,000 Model 3s due to problems with second-row seat belt buckles and anchors. Now it’s under investigation by the National Highway Traffic Safety Administration (NHTSA) over two customer complaints of improperly fastened seat belts on the 2022 and 2023 Model X that became detached from the seat frames during normal driving without an accident. From the Associated Press:
The National Highway Traffic Safety Administration’s investigation includes an estimated 50,000 Model X SUVs from the 2022 and 2023 model years.
The agency says it has two complaints from Tesla owners that the front seat belts were not properly connected at the factory.
Documents released Tuesday by the agency say the seat belt linkage and pre-tensioners, which tighten the seat belts before a crash, are anchored to the seat frames.
Both complaints allege that the linkage and pretensioner had become detached from the frames as the vehicles were moving and violence was being used. There was no crash in any of the incidents.
The agency says it is opening the investigation to examine Tesla’s manufacturing processes, how common the problem is and how widespread it is. Investigations may result in recalls.
As you may know, this isn’t NHTSA’s only Tesla probe at the moment. The administration is currently reviewing reports of Model Ys being shipped to customers without key steering wheel mounting bolts and recently closed an investigation into the company’s Full Self-Driving technology that resulted in a 360,000 vehicle recall.
Compared to the software gremlins, seatbelt problems are relatively straightforward — the kind of manufacturing problems automakers typically solve before the government has to get its hands dirty. But with Teslas that come off the assembly line these days, things seem to be loose, so it’s not entirely surprising that this one slipped right by.
2nd gear: Ferrari feels good
Why not? The European Commission is about to approve a regulatory exemption for synthetic fuels – an expensive way to keep internal combustion engine cars on the road at a lower environmental cost. Of course, Ferrari owners can foot that bill, and CEO Benedetto Vigna has to reckon they will. From Portal:
“The good news for us as a company (…) is that we can continue with our combustion engines alongside electric cars,” said CEO Benedetto Vigna at a Portal Newsmaker event.
“This decision is very interesting for us because it allows ICEs to go beyond 2036,” he added. […]
Presenting its new business plan last year, Ferrari said that by 2030, 80% of the models in its range would be all-electric and hybrid, while 20% would continue to be powered by internal combustion engines.
“That doesn’t change,” Vigna said. “We don’t want to tell customers which car to take. We want to give them three types of propulsion – hybrid, electric and ICE – and they will choose.” [sic].
You have to believe that a Ferrari EV will be a big seller, just like Maranello’s first SUV. You also have to believe that there are self-proclaimed purists out there who will settle for nothing less than the raspiest V12. It’s frankly ridiculous to imagine that 13 years from now, when everyone else has quit, Ferrari could very well build a car with such an engine. Given the exclusivity and allowance for inflation history, I’m guessing it’ll cost around $50 million new.
3rd gear: Polestar makes its grand entrance in the USA
The forthcoming Polestar 3, the Volvo spinoff’s first mid-size SUV, is slated to arrive in North America later this year. We love SUVs in this part of the world, and that’s why Polestar is jumping at this opportunity, for the first time, to remind, or perhaps inform, Americans that they exist, and that there are options in this segment alongside Tesla’s Model X. From automotive news:
Polestar plans to launch a $20 million marketing campaign in the second quarter as the Swedish electric vehicle maker primes the pump for its first crossover in the truck-dominated US
The investment will exceed Polestar’s marketing spend in the first quarter of 2021, when the fledgling EV brand splurged on a Super Bowl commercial.
The Volvo Cars subsidiary will spend more marketing the Polestar 3, a Porsche Cayenne-sized crossover, to Americans in the second quarter than it has in the last nine months combined, Polestar’s North American boss Gregor Hembrough told Automotive News.
[…]
North America, made up of the US and Canada, will be the largest market for Polestar 3, accounting for about 25 percent of global sales, Hembrough said.
Polestar USA boss Gregor Hembrough added that unlike the Polestar 2, which was neither a sedan nor an SUV, the manufacturer has ensured that “the US market is first in the production line” for this model. The Polestar 3 will be a bit too expensive to qualify for EV tax credits — it starts at $85,300 and the limit for an SUV is $80,000, assuming all battery sourcing conditions are met. But considering the category it’s in, one has to imagine that buyers won’t be put off by this.
4th gear: Japan, the USA and batteries
The Biden administration on Tuesday announced a trade deal with Japan on export tariffs on raw materials used in the manufacture of electric vehicle batteries. From the Wall Street Journal:
According to a US announcement, as part of the deal, the US and Japan have agreed not to impose export tariffs on critical minerals they trade and to coordinate labor standards in the production of minerals. The pact builds on a limited trade deal the two countries reached in 2019, and they will review the minerals deal every two years to determine if they should end or amend it.
The Biden administration has begun forging trade deals with close allies on critical minerals to address two issues: restrictions it has imposed on new electric vehicle subsidies and China’s current dominance in supplies of minerals like lithium and graphite, which fuel it necessary to produce electric vehicles.
It’s important to be clear here that the agreement applies only to batteries and other energy-related technologies – it does not broadly extend to all goods traded between nations. And depending on how the US Treasury Department presents its battery procurement guidelines due this week, Japanese-origin electric vehicles and batteries may not necessarily qualify for IRA credit. Courtesy of CNBC:
When asked whether the trade deal would qualify batteries, components and vehicles from Japan for this portion of the tax credit, officials said the decision rested with the Treasury Department.
Officials said the USTR does not intend to seek congressional approval for the minerals trade agreement because it falls under the agency’s authority to negotiate executive-level sectoral trade agreements.
But they said the deal’s provisions to promote labor rights and recycling in their battery mineral supply chains would help both countries.
“Japan is one of our most valuable trading partners and this agreement will allow us to deepen our existing bilateral relationship,” U.S. Trade Representative Katherine Tai said in a statement.
The anticipation of these damn rules, now nearly four months late, is killing me.
5th gear: Magna buys a future factory
Anyone who is anyone is building a North American electric vehicle manufacturing plant to share in available subsidies. Magna also likes the idea. However, all of the major automakers have pretty much figured out what, where, and with whom they will build their American base of operations, and the nature of Magna’s business is that it builds specific models for a range of brands. That makes the company’s next move unclear at the moment. From automotive news:
“We are working with a number of customers on ideas to help them in North America,” said Prettner. “We have a team that selects locations, reviews options, works on layouts and offers various solutions for customers on how we can help them manufacture a vehicle in North America.” […]
This would allow Magna Steyr to partner with EV startups and other new market entrants. A strategy that the company is pursuing in Graz, where it placed the order to build the SUV Ocean for the EV startup Fisker. For new EV manufacturers with less capital than the big automakers, Magna Steyr offers itself as a one-stop shop for engineering and manufacturing. With this strategy, emerging EV entrants and lower-volume manufacturers could rely on Magna to get their vehicles to market faster without requiring huge amounts of capital to build these in-house capabilities. “We have extensive vehicle know-how [and] technical know-how,” said Prettner. “This gives us access to the entire supply base.”
One analyst cited in the story — RBC Capital’s Tom Narayan — is skeptical about how profitable a strategy of working with startups will ultimately prove for Magna. The contract manufacturer could be forced to foot the bill for cash-strapped companies and you never want to be in a position of waiting for a Fisker or Faraday to pay. Perhaps Magna should have jumped at the opportunity to include the production version of the EV prototypes it built for Sony before the tech company teamed up with Honda.
Back: Geely buys Volvo
13 years ago on this day, China’s Geely bought Volvo from Ford for $1.8 billion. They have to hand it over to Geely chairman Li Shufu, who said at the time he was “firmly convinced that the production facility in Gothenburg and Belgium will remain in the longer term”. It was and similar to Mazda and Land Rover, Volvo is much more unique than it was under Ford these days. However, the same cannot really be said for Jaguar.
Neutral: By the way
Has anyone contacted Jaguar lately? The latest, apparently, is that Jaguar dealerships are being pressured by companies to consider selling Land Rovers instead. JLR is something like the American part of Stellantis in that Land Rover is Jeep and Jaguar is Chrysler, and the latter is technically alive solely through Caché.