Good morning! It’s Thursday, August 29, 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: Ford Panders To Right By Cutting DEI Policies
Ford just told its employees it would be modifying its diversity, equity and inclusion initiatives and end participation in a notable ranking by an LGBTQ advocacy group. It’s the latest major company to curtail its inclusion programs to appeal to conservatives, joining the likes of Lowe’s and Harley-Davidson. From Bloomberg:
“We are mindful that our employees and customers hold a wide range of beliefs,” Ford Chief Executive Officer Jim Farley wrote in an internal email, which was shared with Bloomberg by anti-DEI activist Robby Starbuck and confirmed as authentic by the company. “The external and legal environment related to political and social issues continues to evolve.”
Ford said it will no longer engage with the Human Rights Campaign’s Corporate Equality Index and various “best places to work” lists, and that it refocused employee resource groups and opened them to all its workers. The carmaker also said it would shift some of its corporate sponsorships, and comment less on polarizing issues.
Who knew inclusion was so polarizing?
The Human Rights Campaign responded to Ford’s decision by saying consumers should take note that the automaker has “abandoned its commitment to our communities.”
“The Human Rights Campaign could not be more disappointed to see Ford Motor Company shirking its responsibility to its employees, consumers, and shareholders,” said the HRC President Kelley Robinson. “By failing to support women leaders, employees of color, and LGBTQ+ employees, Ford Motor Company is abandoning its financial duty to recruit and keep top talent from across the full talent pool.”
The HRC’s Robinson added that nearly 30% of Gen Z identify as LGBTQ, with the community wielding $1.4 trillion in spending power, and Ford’s “shortsighted decisions will have long-term consequences.”
Ford’s decision is a very big reversal of course from where it was just a few years ago in the wake of political unrest and mass protests about police brutality.
The letter marks a shift in tone from the carmaker since the 2020 murder of George Floyd, when Chairman Bill Ford and then-CEO Jim Hackett pledged “to lead from the front and fully commit to creating the fair, just and inclusive culture that our employees deserve.”
I don’t know, folks. Maybe it’s just me, but this feels like an incredibly shitty thing for Ford to do, all to just appease some folks on the internet who use the word DEI because they can’t get away with saying a slur in polite society. It’s a real shame, and I hope that other automakers and companies stop this trend before it’s too late.
Time will tell if folks in the LGBTQ community and their allies remember Ford left them high and dry to appeal to online shitposters.
2nd Gear: Chinese EV Tariffs Are Killing Lotus’ Dreams
Lotus has dramatically lowered its sales targets after being hit by additional tariffs because of its China-built electric crossover, the Eletre. The Geely-owned company now expects to sell just 12,000 vehicles globally in 2024. That is down a massive 78 percent from the previous target of 55,500 units. It has also revised its 2025 target to 30,000 vehicles from 76,000. Brutal.
This all stems from the U.S.’s (and other markets’) decision to impose a 100 percent import tariff on Chinese-built electric vehicles. Lotus CEO, Qingfeng Feng, said the move will “dramatically affect our forecast,” and I fear that’s a bit of an understatement. From AutoCar:
As a brand, Lotus sold a record 4873 cars in the first half of the year globally, split evenly between the Eletre electric SUV and the Emira petrol sports car, which is made by UK-based Lotus Cars.
Lotus Technology posted an operating loss of $438 million (£332m), compared with $344m (£261m) over the same period last year.
The US was the largest market for Lotus in the first half of 2024, accounting for around a quarter of its sales. Sales were predominately the Emira, with the Eletre and Emeya electric saloon yet to be launched there.
Lotus will “relaunch or reposition [its] product in Europe” toward the end of the year in response to the tariffs, Feng said, adding: “Specifically in Europe, we are thinking about launching different variants.”
Lotus has been looking to bolster its average selling price with special editions such as the Chinese-market Emeya Blossom Enchantment, which features 42 natural sapphires and showcases some of the firm’s new Chapman Bespoke extras.
To make matters even more difficult for Lotus, the company is being hit by weaker-than-expected global demand for high-end EVs.
Feng also referenced a 50% drop in the overall Chinese luxury car market.
“We are also in the process of recalibrating our product strategy to explore ways for faster and easier go-to-market globally,” Feng said.
Lotus Tech would cut staff and streamline operations in its goal to hit profitability in two years as part of its new Win26 strategy, he added.
Sales will be bolstered by the launch of a new mid-size electric SUV, now due for launch in 2025, with sales starting in 2026. Its technology will be revealed at the Guangzhou motor show in November, Feng said.
Lotus is in a really rough place right now, man. I sincerely hope it’s able to weather the storm because from all accounts the Emira is a brilliant little sports car.
3rd Gear: Tesla Wants Lower Chinese Tariffs In Canada
Before Canada announced it was imposing a 100 percent tariff on Chinese-made electric vehicles on August 26, Tesla actually tried to ask for a lower tariff on its cars. The duties, effective on October 1, apply to all EVs shipped from China, including Teslas. The automaker apparently made a similar appeal to the European Union. From Reuters:
Tesla does not disclose its Chinese exports to Canada. However, vehicle-identification codes showed that the Model 3 compact sedan and Model Y crossover models were being exported from Shanghai to Canada.
The EU softened its stance on Tesla this month when it imposed a 9% tariff on cars the company made in China, compared to a 36.3% rate it slapped on other Chinese EV imports.
While the EU only considered direct subsidy costs when calculating its tariff for Tesla, the United States and Canada looked at subsidies, industrial over-capacity, non-market policies as well as environmental and labor standards, the source said.
[…]
Canadian imports of automobiles from China to its largest port, Vancouver, jumped 460% year over year to 44,356 in 2023, when Tesla started shipping Shanghai-made EVs to Canada.
Listen, I do not really agree with the tariffs on Chinese cars. I feel like it’s stopping the American (or Canadian, in this case) buyer from being able to get a really good, cheap EV. However, I’m not sure why Tesla would be granted an exception.
4th Gear: BYD Is So Successful It’s Hurting Small Companies
BYD’s massive growth is actually squeezing out smaller Chinese automakers. Both Li Auto and Xpeng released disappointing earnings reports while BYD continued to dominate.
BYD just posted a 33 percent jump in second-quarter profits. Meanwhile, Li Auto posted a bigger-than-anticipated 52 percent drop in earnings. Last week, Xpeng forecasted third-quarter revenue would fall well below analysts’ expectations From Bloomberg:
BYD’s rise to become the dominant force in China’s auto market — overtaking established western automakers like Volkswagen AG to sell 3 million units last year — comes amid a broad slowdown in EV demand globally. Ford Motor Co., Porsche AG and Mercedes-Benz Group AG have all walked back their EV ambitions in recent months, while Tesla Inc. is well off the pace of 1.8 million cars sold last year.
In another sign of slowing demand for EVs, automotive researcher J.D. Power said Wednesday that battery-powered models will account for just 9% of sales in the US this year, down from its previous forecast of 12.4%.
BYD’s result is “impressive, as most of its EV peers in China and around the world have been incurring significant losses for some time and are faced with potential liquidity issues,” Barclays analysts Jiong Shao and Lian Xiu Duan wrote in a note.
The profits will also arm BYD with the power to accelerate EV industry consolidation, they added. Consultancy AlixPartners said in July that fewer than 20 Chinese electric car brands will be profitable by the end of the decade, as market leaders like BYD and Tesla further entrench their positions.
“You can easily tell from the sales data that top carmakers are accounting for a bigger share now, while low ranked performers may be phased out as soon as in two years,” said Yale Zhang, managing director at Shanghai-based consultancy AutoForesight. “The consolidation is pushed by the market, and the price war is one of the most effective and cruel methods.”
BYD has established its dominance in recent years by pioneering battery and hybrid technologies that it’s deployed across a wide lineup. Offerings include the affordable Seagull hatchback, now one of China’s best-selling EVs, which starts from 69,800 yuan ($9,800), to the luxury Yangwang supercar series, which sell for more than 1 million yuan. The carmaker’s growth has also been supported by the popularity of plug-in hybrids, whose sales are increasing at a faster pace than battery EVs.
Tesla may have started the price war in China a couple of years ago, but since then BYD has taken it up a notch. It’s about to do this because of how big it is and the fact it’s vertically integrated.
“BYD isn’t immune to the price pressure, but its scale and vertical integration provide crucial support to profitability, and allow it to cut prices more if necessary to squeeze out smaller rivals and accelerate industry consolidation,” said Joanna Chen, Bloomberg Intelligence’s China auto analyst.
China’s best-selling car brand also has ambitions for the global market. In an interview with Bloomberg News on Monday, Executive Vice President Stella Li said she expects international sales to grow to nearly half of BYD’s total in the future. Overseas deliveries of passenger vehicles made up about 12% of total as of July. The company is chartering its own fleet of ships to help achieve that goal, with the BYD 01 embarking on export voyages this year.
BYD’s July sales actually surpassed Honda’s and Nissan’s for the fourth consecutive month. In July, BYD sold 340,799 passenger cars in comparison to Nissan’s 261,386 and Honda’s 302,625. That’s might impressive for a company that is just 21 years old.
