Good morning! It’s Monday, December 26, 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: Canoo Can’t Keep Up
As we all know, building cars is hard, but the self-driving vehicle manufacturer Canoo suffers from more self-inflicted problems than most. Earlier this year, it was revealed that the company spent twice as much on a private jet for its CEO than it had earned for the entire year of 2023. It burned through capital and now seems unable to wrap up the year.
It’s been a tough year full of bad decisions for the automaker. Canoo previously furloughed 23 percent of its employees back in November and now, just a month later, its remaining workers received word on December 18 that they were going on the worst kind of vacation; a mandatory unpaid one until at least the start of the new year, CarScoops reports. And to make sure they don’t do any work, Canoo locked them out of its various software and systems.
Canoo was supposed to bring automotive manufacturing back to the state of Oklahoma, and the company received taxpayer-funded, performance-based incentives totaling $100 million spaced out over 10 years to do exactly that. But the way things are going right now, it’s questionable whether Canoo will last long enough to bring those promised steady jobs to the Sooner State.
An unnamed former employee who left Canoo when he saw the writing on the wall told Oklahoma news outlet KFOR that the people of Oklahoma received nothing but a subterfuge for their investment:
“They have tons of equipment,” the former employee said. “It looks great. They have literally everything to run an entire assembly line for cars.”
Last December, Canoo proudly announced it had built its first three vehicles in the Oklahoma City plant, before selling them to the state.
The former employee told News 4 that “made in Oklahoma” announcement gave him a good laugh.
“I can tell you, those did not come off our assembly line,” the former employee said. “If you talk to any Canoo employee, they’ll tell you those do not come off the assembly line.”
He says Canoo never paid the company that provided the software that the machines use to operate.
The former employee also says the company only ran the machines when showing them off to media or investors.
“The majority of those folks that were employed there, especially those hourly people, were just standing around twiddling their thumbs,” the former employee said.
The problem is pretty clear; Canoon hired too many people too fast and made too many promises that didn’t, or couldn’t, add up. As of this writing, Canoo’s share price is down to under $1.50 a share.
2nd Gear: BYD Chinese Workers Rescued From Slavery-Like Conditions Building Brazil Plant
While building cars is indeed hard, slavery is never the answer. Unfortunately, forced labor still happens in nearly every aspect of our modern global economy, and automotive manufacturing is no exception. One hundred sixty three Chinese workers needed rescuing by the Brazilian government after being forced into horrible working conditions with extreme demands made on their pay and labor while building a new plant for Chinese automaker BYD, according to Automotive News:
Prosecutors said the workers were living in conditions akin to slavery and also had their passports and large parts of their salaries withheld by the construction firm.
Among a series of shortcomings, the report found that if a worker quit after six months, they would leave without any pay since the company deducted the airfare to and from Brazil, among other costs. One victim suffered an accident at work, which occurred after they had worked for 25 days straight.
One of the accommodation facilities had beds without mattresses and only one bathroom for every 31 workers, forcing them to wake up at 4 a.m. daily to be ready to leave for work by 5.30 a.m., the report noted.
Authorities shut down the accommodation sites until local regulators deem them up to standard.
BYD Auto do Brazil ended its contract with Jinjiang Construction Brazil Ltd. once Brazilian authorities raided the work site and rescued the workers from these horrific conditions. BYD said all the affected workers are now in hotel rooms as of December 23, which is nice of them.
However, it also seems like BYD knew about the conditions long before getting into trouble with authorities, as the company said, according to Auto News: “it had conducted a ‘detailed review’ in the past few weeks of working and living conditions for subcontracted employees, and had asked on ‘several occasions’ for its construction firm to make improvements.”
Doesn’t really sound like the kind of force a giant company could use to stop, you know, actual slavery on its contractor’s work sites. I guess you really don’t ever have to hand it to them.
3rd Gear: Honda And Nissan Want To Merge, But The Clock Is Ticking
You’d think Nissan would want to rush its merger with Honda, but that’s just not how things like this are done. The delay puts both automakers at a daunting disadvantage, according to Reuters. The best the two Japanese automakers can likely do is August of 2026 and even then, the benefits of such a union likely won’t be realized until the end of the decade. That’s a problem when you are staring down potential Chinese automaker hegemony in Asia and, potentially, the world, Reuters reports:
The Japanese automakers said on Monday they had agreed to begin formal talks on a merger. While the outcome is not certain and will depend partly on troubled Nissan making progress in its turnaround, they aim to finalise the deal by August 2026.
Nissan’s junior partner, Mitsubishi Motors (7211.T) will decide by next month whether it plans to take part.
The automakers are targeting more than 1 trillion yen ($6.4 billion) in synergies by leveraging a common platform, shared research and development (R&D) and joint procurement.
Their operating profit target of more than 3 trillion yen represents a 54% increase on their combined results last year.
But the full effect of synergies is not likely to be felt until after 2030, Honda CEO Toshihiro Mibe told a joint press conference on Monday. The companies need to build up capabilities to take on Chinese rivals by then, he said, or face being “beaten”.
Both Honda and Nissan need to up their EV and hybrid game if they have any hope of facing Chinese automakers. They’re starting this three-legged race far behind China’s full-on electric vehicle sprint. If they can’t make it to the finish line in time it could be bad news for the Japanese economy as a whole.
4th Gear: Toyota, Ford And GM Each Donate $1 Million To Trump’s Inauguration
The big boys in the U.S. automotive market have made their offering to the new-old president’s big day. It’s a common practice, one that the automakers engage in no matter who wins, but it does seem a little like bending the knee to the king who would severely mess with their industries. From Automotive News:
Policies on tariffs and electric vehicles that are being considered by the incoming administration would likely affect Detroit automakers such as Ford, who are struggling to ramp up and sell their battery-powered models.
Republican Trump has proposed significant tariffs on imports from Mexico and Canada, as well as killing an EV tax credit that benefits Ford.
Ford CEO Jim Farley told reporters earlier this month he was optimistic that Trump would be open to hearing the U.S. automaker’s perspectives on these actions.
“(Given) Ford’s employment profile and importance in the U.S. economy and manufacturing, you can imagine the administration will be very interested in Ford’s point of view,” Farley said.
Yeah, I’m sure Trump is ready to listen to a reasoned argument about the American economy and in no way is just doing whatever Elon Musk says.
