Toyota says it still isn’t going to really boost production of its first mass-market electric vehicle for a few more years, Faraday Future is slashing salaries because the start-up EV maker is running out of cash, and Mercedes-Benz is the latest manufacturer to quit the Russian market. All that and more in The Morning Shift for Wednesday, October 26, 2022.
1st Gear: Toyota Needs Time to Boost bZ4x Production
Toyota is reportedly considering a huge jump in bZ4X production, but not before 2025. It’s said to be part of a broader strategy rethink from the Japanese company.
The automaker is mulling over the decision to increase production of its first mass-market EV by either six or 12 times its current monthly output. Right now that stands at about 1,000 cars per month. But, this isn’t happening overnight. The move would happen in 2025 if components (including semiconductors) can be secured in time. From Reuters:
The car is produced at Toyota Motor Corp’s Motomachi plant near its headquarters on a shared assembly line with gasoline cars and hybrids. Both the current and potential production numbers include those of the Subaru Corp Solterra, which is made on the same platform.
The increase would see Toyota add production at another plant near its headquarters, the Takaoka factory, said the three people, who spoke on condition of anonymity because the information was not public.
The potential ramp-up in production comes as the automaker has faced criticism for not moving faster to embrace all-electric cars and pushing hybrid technology instead. It has launched a review of its EV strategy, Reuters reported this week.
As part of that review – which could result in a more aggressive roadmap for future electric vehicles based on technologies that promise to lower cost and improve performance – it has also suspended development work on some of the 30 new EV models it announced last year and planned to launch by 2030, Reuters reported.
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Toyota recently restarted bZ4X production after a couple of recalls hampered it. At the peak of the planned production increase, Toyota would be producing over 190,000 EVs per years.
2nd Gear: Faraday’s Bleak Future
Faraday Future is reportedly slashing employee salaries by 25 percent starting next month. The move is being done in an effort to save some cash (since it is nearly out) while the company looks for new capital in order to finally launch the FF91.
In an email sent to employees last week, Faraday said the salary cuts expect to last from November 1st through the end of the year. Earlier this month, the company also laid off a few dozen employees. From Bloomberg:
Faraday has seen its cash reserves dwindle rapidly. It recently reported having $39 million in cash as of Sept. 21, down from around $47 million at the end of August.
The company said in the emailed memo, which was viewed by Bloomberg News, that employees will be granted restricted stock units, or RSUs, equivalent to the amount being cut from their salary and which will vest in December. Faraday also offered employees the option of taking a larger salary cut in exchange for more valuable RSUs, though it noted that any RSUs granted will be forfeited if the employee is terminated.
Faraday delayed the launch of its first vehicle until at least 2023. Things are not looking too hot for the Los Angeles-based company right now, though they never really have been.
3rd Gear: Mercedes-Benz Leaves Russia
Add Mercedes-Benz to a growing list of automakers who are pulling out of the Russian market. The company is reportedly selling shares in its industrial and financial service subsidiaries to a Russian investor: car dealer chain Avtodom. From Reuters:
Mercedes Chief Financial Officer Harald Wilhelm, while presenting third-quarter results, said the transaction was not expected to give rise to any further significant effects when it comes to the group’s profitability and financial position beyond those reported in previous quarters.
“Final completion of the transaction is subject to the authority’s approval and the implementation of contractually agreed conditions,” he added.
“The main priorities in agreeing to the terms of the transaction were to maximize the fulfillment of obligations to clients from Russia both in terms of after-sales services and financial services, as well as preserving jobs of employees at the Russian divisions of the company,” Natalia Koroleva, CEO of Mercedes-Benz Russia, said in a statement.
Mercedes suspended manufacturing in Russia in early March.
Mercedes now joins Volkswagen, Toyota, Nissan and Renault in leaving the Russian market. Other companies like Mazda and Kia are also considering moves out of the country.
4th Gear: $1 Billion for Busses
The U.S. Environmental Protection Agency has announced that it is allocating nearly $1 billion for about 400 school districts around the country to buy zero or low-emission school busses.
The funding will lead to the purchase of 2,463 buses. Over 95 percent of those will be electric, and a “very small number” will be powered by compressed natural gas. Another 100 will be propane-fueled buses. From The Detroit News:
School districts to receive funding were chosen through a lottery system and 99% of the projects are in districts serving low-income, rural or Indigenous students. EPA initially planned to allocate $500 million in the first round of funding, but the agency expanded it to nearly $1 billion after receiving “overwhelming demand” from districts.
Millions of children ride the bus to and from school every day, said EPA Administrator Michael Regan. “It’s a quintessential part of being a kid in America.”
“But we all know that traditional vehicles that rely on internal combustion engines emit toxic pollutants in the air,” he added. Thanks to this funding, “we are forever transforming school bus fleets across the United States.”
Right now in the U.S., over 90 percent of all school buses run on diesel. The outlet reports that the $1 billion allocation is part of a more than $5 billion plan for zero and low-emission school buses though the Infrastructure Investment and Jobs Act. A further $1 billion will be available next year.
School districts that applied and received funding will put in purchase orders with manufacturers, which will be paid directly by EPA, [Karl] Simon [director of the transportation and climate division of the EPA] said. That must be finished by April.
5th Gear: Hyundai’s EV Expansion Starts in Georgia
Hyundai broke ground Tuesday on its $5.54 billion electric vehicle and battery manufacturing project that will build vehicles for Hyundai, Kia, and Genesis.
The factory — called the Metaplant — is set to build up to six different models and has the capacity to produce as many as 500,000 vehicles per year on its 2,800-acres of land located about 30 miles northwest of Savannah, Georgia. From Automotive News:
“We are making the current investment to get to 300,000 vehicles in phase one, and then 500,000,” Munoz said at a media roundtable after the groundbreaking ceremony.
Munoz did not say which models the Metaplant will produce, but a new three-row Hyundai EV crossover called the Ioniq 7 is expected to be the first. Munoz also said Hyundai is still examining what models it will export from the new plant.
The project also will see the construction of an adjacent battery plant that will be built through a joint venture with a battery supplier that Hyundai has not identified yet.
A new supply chain also will be established to support the EV factory, Munoz said.
Because of this move, Hyundai should be back in a position to for its buyers to get federal EV tax credits under President Biden’s Inflation Reduction Act.
Right now, Hyundai/Kia/Genesis EVs aren’t eligible for the credit because they are imported from Korea, and that doesn’t jive with the criteria laid out in the IRA.
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