Good morning! It’s Monday, October 28, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
1st Gear: VW To Shut German Plants And Announce ‘Major Layoffs’
Volkswagen has been through the wringer recently, with the company facing falling profits and struggling sales as it tries to pivot to electric cars around the world. For weeks, the automaker has been looking for a solution to its money troubles and now appears to have found a way to cut costs: lay off staff and shut factories.
Volkswagen is planning a “deeper-than-expected overhaul” of its manufacturing facilities to try and cut its costs around the world, reports Reuters. The overhaul will include shutting “at least” three factories in Germany, laying off thousands of staff and “permanently shrink” its remaining plants in Europe:
“Management is absolutely serious about all this. This is not sabre-rattling in the collective bargaining round,” Daniela Cavallo, Volkswagen’s works council head, told several hundreds of employees in Wolfsburg.
“This is the plan of Germany’s largest industrial group to start the sell-off in its home country of Germany,” Cavallo added, not specifying which plants would be affected or how many of Volkswagen Group’s roughly 300,000 staff in Germany could be laid off.
The comments mark a major escalation of a conflict between Volkswagen’s workers and the group’s management, which is under severe pressure to cut costs and remain competitive in light of weaker demand from China and Europe.
The moves across Europe are part of a desperate attempt from VW to save itself as it battles against a shrinking car market, falling demand in Europe and struggling sales. It’s because of these woes that the car maker was given “one, maybe two” years to turn itself around by its own finance chief.
The car maker currently has an excess of around 50,000 cars, which equates to the output of roughly two factories. This means it either needs to find a whole heap of new VW buyers or start cutting output – maybe the launch of its new Scout sub-brand could help with the former?
2nd Gear: Ford Under Fire For Backtracking On Inclusivity
American automaker Ford is facing backlash this week, but it’s not because of another recall hitting its cars or dismay over its CEO’s love for Chinese EVs. Instead, it’s because the Blue Oval has backtracked on some pretty major diversity, equity and inclusion measures after facing pressure from right-wing activists.
Earlier this year, the Mustang maker revealed to staff that it would no longer be taking part in the Human Rights Campaign’s Corporate Equality Index, said it “does not, and does not plan to use quotas for minority dealerships,” and added that all employee resource groups would now be open to every employee, reports the Detroit Free Press. Following the news, the moves were welcomed by conservative activist Robby Starbuck, who went so far as to take credit for the changes across social media.
Now, customers, civil rights groups and even Democrats in congress have criticized Ford’s stance on DEI, adds the Free Press. The Human Rights Campaign, an advocacy group that supports the LGBTQ+ community, has gone so far as to deliver letters signed by customers to Ford’s headquarters warning that the automaker risks losing money as a result of the move. As the Free Press explains:
“LGBTQ+ people and our allies are your employees and your customers — and dropping us will have huge implications on your business, your fiduciary responsibilities and future profits,” said the Human Rights Campaign’s letter, to which 35,000 consumers signed their names and which was delivered in paper copies to Ford’s headquarters last week.
A Ford spokesperson said in an email, “The communication to our global employees speaks for itself. We have nothing further to add.”
This decision by Ford has left some customers considering whether they’ll buy another vehicle from the automaker. More broadly, DEI experts are left wondering if some of the recent progress on making both companies more diverse and inclusive has been thrown away.
Ford announced the cuts to key DEI initiatives in August after facing pressure from Starbuck online. Its move to curtail the initiatives followed similar steps from Tesla and Harley-Davidson, which both also cut DEI schemes this year.
The moves mark a stark contrast to general thinking just a few years ago, when buyers were looking to shop with brands that supported minorities across America. Now, a certain section of the internet is fearful of support for other people, with the Free Press adding that some right-wing posters believe “women and people of color are being handed jobs and promotions,” which is clearly a load of rubbish.
3rd Gear: Investors Aren’t Buying Elon Musk’s Tesla Targets
American automaker Tesla has faced a tough year in 2024, with recalls hitting the rollout of its flagship Cybertruck EV, it being one of the few EV makers to see sales fall compared with last year and profits across the company dropping. Now, investors aren’t so sure about company boss Elon Musk’s plans to turn things around with cheaper models, self-driving cars and a focus on autonomous tech.
Last Week, Musk announced that Tesla was eyeing sales growth of around 30 percent in 2025 thanks to updates across its lineup, reports Reuters. Industry experts don’t share Musk’s confidence though, with many insiders unsure that the company will be able to deliver on those promises, as the site explains:
His forecast of 20-30% growth, after a negligible bump this year, is roughly double what Wall Street has been expecting. Deutsche Bank, after Musk’s forecast, predicted 12% growth next year, even with a sub-$30,000 new model and a refreshed Model Y. RBC analysts maintained their 13% growth forecast.
“There’s hardly an analyst anywhere in the world who’s going to agree with 20% growth in the company next year” even with a lower cost model, said Sam Fiorani, vice president at research firm AutoForecast Solutions. “Tesla, aside from this quarter, has been seeing a slowdown in its demand for its products. And one quarter is not a trend.”
Tesla did not respond to a request for comment.
Global electric vehicle sales have fallen short of lofty expectations and growth has moderated in recent years. But competition is heating up.
The products doing the heavy lifting in this growth will be the Cybertruck and the Tesla Model Y, reports Reuters, as a refresh to the popular SUV is in the pipeline. However, growth of the Cybertruck faces more challenges, as it’s currently only available for sale in America and the company has already worked through most of its reservation holders.
What’s more, the self-driving cars that are supposed to herald the future of Tesla are unlikely to launch next year, with the Cybercab not due to hit the streets before 2027, and that’s if Tesla can hit Musk’s goal.
4th Gear: Elon Musk’s Union Bashing Is Fine, Actually
While investors are doubting Musk’s plans for Tesla’s future, U.S. courts are protecting his right to say whatever he wants. The Tesla boss was ordered to delete a Tweet he sent in 2018 about stock options that would be available to union members, but an appeals court has now ruled that his remarks were totally above board, reports Automotive News.
The federal appeals court has reportedly ruled that the National Labor Relations Board “exceeded its authority” when it ordered Musk to delete a 2018 post that warned Tesla employees that they could lose stock options if they unionized, reports Automotive News. As the site explains:
The 5th U.S. Circuit Court of Appeals in New Orleans said Friday the Tesla CEO’s Tweet was protected speech and didn’t have to be deleted. The ruling overturns a decision last year by a three-judge panel of the same court, which ordered him to remove the post.
“We hold that Musk’s tweets are constitutionally protected speech and do not fall into the categories of unprotected communication like obscenity and perjury,” the court said in its decision.
Musk, a self-styled free speech absolutist, has cultivated a reputation as a bombastic tweeter, who freely shares his opinion on politics, business and conspiracy theories. His online comments frequently land him in legal trouble, but that hasn’t discouraged him from incendiary language and courts have rarely restricted what he could say.
The Tweet in question saw Musk ask “Nothing stopping Tesla team at our car plant from voting union. Could do so tmrw if they wanted. But why pay union dues & give up stock options for nothing?” Those comments were, the NLRB claimed, “an unlawful threat” against Tesla workers, added Reuters.
The New Orleans-based 5th U.S. Circuit Court of Appeals didn’t agree, however, and threw out the NLRB order following a 9-8 vote.