Trump has hurt automakers, Hyundai is big into hydrogen fuel cells, and BMW is done with subscriptions. All that and more in The Morning Shift for January 15, 2020.
1st Gear: This Trump Guy Seems Bad
There’s been a reported chip shortage for days in the auto industry, pausing some production at Ford, Subaru, and Toyota. It originally seemed to me like a function of the pandemic, but Reuters says that, of course, decisions by the Trump administration have made it much worse.
From Reuters:
First, the White House in September banned Huawei Technologies Co Ltd, the Chinese telecommunications giant and a major smartphone maker, from buying chips made with American technology. Huawei stockpiled chips ahead of the ban in order to keep building what products it could after it took effect. And Huawei’s rivals, eyeing a chance to grab market share, started snapping up chips, analysts said.
Second, the U.S. government enacted rules that bar SMIC from using some U.S. tools to make chips, a move that has prompted at least some of SMIC’s customers to look for a different chip factory because of concerns that production could be disrupted.
“There’s a fear of using a Chinese chip factory if the United States is going to put them on an entity list,” said Daniel Goehl, chief business officer of UltraSense Systems, referring to possible further restrictions.
A Commerce Department spokesman declined to comment on the implications of the SMIC and Huawei blacklistings for the auto sector but said that the top priority was “to ensure the Export Administration Regulation protects U.S. national security, economic security, and foreign policy interests.”
Analysts said the automotive chip shortage is likely to persist for as long as six months. An AutoForecast Solutions report estimated the global auto industry had already experienced lost volume of 202,000 vehicles as of Jan. 13.
Reuters’ kicker is pure acid:
“It’s four-dimensional chess all day long,” said one auto official, who asked not to be identified.
2nd Gear: Kia Is Done With Motors
Or at least it is dropping that part of its name. It will now be known as Kia, Corp., thank you very much.
From Automotive News:
Kia is dumping “Motors” from its corporate name as part of a global brand relaunch meant to position the South Korea automaker as a mover in electric vehicles and new mobility.
In changing its name to Kia Corp., from Kia Motors Corp., the company is reaching for a new identity that better reflects its push into new fields, CEO Ho Sung Song said in news release. The move follows the adoption of a new company logo and slogan this month.
“Changing our corporate name and logo is not only a cosmetic improvement,” said Song, who took the helm last April. “It represents us expanding our horizons and establishing new and emerging businesses that meet and exceed the diverse needs of our customers worldwide.”
Tesla, you might recall, used to call itself Tesla Motors.
3rd Gear: Former Volkswagen CEO Still In The Shit
Dieselgate’s fallout has been extensive and perhaps neverending. Former Volkswagen CEO Martin Winterkorn has now dodged one criminal case against him over it but not another.
From Automotive News:
Winterkorn was charged by prosecutors in Brunswick in VW’s German home state of Lower Saxony with failing to inform investors early enough about the extent of the automaker’s emissions fraud.
The charges have now been discontinued, the Brunswick regional court said in a statement on Friday.
Winterkorn, 73, faces charges in another case for his role in allowing diesel cars with excessive pollution levels to be sold in Germany. He is due to appear in court at the end of February.
The offense of market manipulation is punishable by a fine or imprisonment of up to five years. A conviction for commercial fraud carries a punishment of 1-10 years in jail.
As with every criminal trial in Europe, I assume this case will go on interminably, and end with a light prison sentence served at a vacation home.
4th Gear: BMW Is Done With Subscriptions
All-inclusive subscriptions for cars were a thing for a while, as automakers talked up how they were a way to get young people into cars. Well, mostly luxury automakers said this, because their cars are expensive and mostly old people buy them. Anyway, BMW was one of the ones with a subscription program. It is now done with it, along with Audi.
From Automotive News:
The Access by BMW subscription pilot launched in April 2018 and never expanded beyond its initial Nashville market. It was targeted at affluent customers willing to pay high monthly fees for two tiers of service starting at $2,000.
“Our intent with the pilot was to learn about the viability of the subscription model and gauge customer interest,” a BMW spokesman told Automotive News Thursday. “We are in the process of developing the next iteration of the program,” he said, declining to elaborate on details.
Audi Select, a similar program offered by the Volkswagen Group premium brand, will be discontinued on Jan. 31, according to a notice on the service’s website. It was billed as a new interaction with Audi dealers when it was launched at five Dallas-Fort Worth stores in Sept. 2018.
Rival Mercedes-Benz ended a similar pilot last summer after seeing lackluster demand for the mobility model.
I’m actually a little surprised by this, as I thought subscriptions would have longer legs. Back to the old, very attractive model of haggling with your local dealer.
5th Gear: Hyundai Is Investing Big In Hydrogen Fuel Cell
There are lots of hot takes out there about whether hydrogen fuel cell is a thing, or should be a thing. I think it’s a thing with a big future, if only by necessity. Hyundai appears to agree.
From the Financial Times:
Hyundai Motor is to build its first overseas hydrogen fuel cell factory in China as the South Korean carmaker strengthens its foothold in a fast-growing market for vehicles powered by the energy source.
The plan, announced on Friday, comes as the company accelerates its push into environmentally friendly vehicles, introducing its own electric vehicle-dedicated platform and sharply increasing investments in fuel cell systems.
The move also highlights how some South Korean companies are expanding in China despite pressure from the US. Against a backdrop of trade tensions between Washington and Beijing, global companies are being made to build separate supply chains within China in order to serve the world’s second-biggest economy
Construction of the plant in the southern Chinese city of Guangzhou, which analysts estimate will cost about $1bn, will begin in February and is set to be completed in the second half of 2022. Hyundai will initially produce 6,500 fuel cell systems a year at the facility, which will be used for its Nexo electric SUV.
Reverse: Miracle On The Hudson
I was a stringer for the New York Post back then. I was working on some meaningless assignment in Dumbo until I got a call from the metro editor to get to the West Side ASAP. I got into a cab and went. What I remember is interviewing survivors but also seeing Katie Couric and her entourage. It was so goddamn cold that day.
Neutral: How Are You?
Today I am all about the energy of anyone who sincerely says, “TGIF.”
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