Disaster
An explosion at a nickel-processing plant in Indonesia, owned by PT Indonesia Tsingshan Stainless Steel (ITSS), has resulted in 18 deaths, with dozens injured.
The incident occurred during furnace repair work at the Morowali Industrial Park in Central Sulawesi. Preliminary investigations suggest the explosion was caused by residual slag from the furnace, under maintenance, coming into contact with flammable materials.
The plant is part of a Chinese-funded industrial park, with Tsingshan Holding Group holding a majority stake. The accident follows previous safety concerns at the facility, including a fatal riot in January and a fire in June.
Expanding
Toyoda Gosei Irapuato Mexico has completed its expansion to increase production capacity. The upgrades include an enlarged manufacturing facility and new equipment, focusing on large painted products like rear spoilers and bumper peripheral parts.
Human Capital
The EV battery industry has experienced significant job cuts $ due to the automotive sector's recalibration of the transition to electric vehicles. Companies like Our Next Energy, LG Energy Solution, SK On, Freyr Battery, and Enovix have laid off hundreds of employees in response to automakers scaling back EV-related investments.
Yet, battery production capacity investment remains strong, with companies adjusting to slower growth rather than viewing it as a fundamental threat. This situation echoes broader issues in the EV market, including vehicle affordability, high interest rates, and insufficient charging infrastructure.
General Motors and other automakers are increasingly recruiting software developers and coders from Silicon Valley $ to support their investments in electrification, autonomy, and software-enabled services.
This trend is part of a broader industry shift towards software-defined vehicles, requiring a change in product development processes and a more agile, tech-startup-like culture. Key hires from tech giants are leading this transformation, highlighting the integration of software engineering into vehicle development from the onset.
Southwestern Ontario's electric vehicle industry faces a skilled worker shortage, with upcoming major EV plants like PowerCo's and Stellantis's exacerbating the demand. The shortage reflects a larger challenge in the global shift to electric vehicles, emphasizing the need for targeted education and workforce development to support this transformative sector.
Stellantis has initiated the process of reactivating its idled Jeep plant $ in Belvidere, Illinois, by recalling 165 employees for parts distribution roles. This move is part of a nearly $5B investment in Belvidere, which includes opening a $100M Mopar parts hub in 2024, manufacturing midsize pickups, and adding a battery plant.
Industry Directions
Under CEO Koji Sato's new leadership, Toyota Motor is refocusing its strategy to catch up in the EV market.
Despite being late in introducing pure battery-powered cars, Toyota's strength lies in its hybrid technology, pioneered with the Prius in 1997. Toyota's sales of hybrids have surged, contributing to record operating profits, and the company is investing in new technologies, including solid-state batteries.
While EV sales globally are increasing at a slower rate, Toyota's balanced approach between gas and electric vehicles positions it uniquely in the market.
Labor
An ongoing strike by Tesla technicians in Sweden exemplifies a clash between Swedish labor culture and American corporate management.
The workers, represented by the IF Metall union, seek a collective bargaining agreement that aligns with Sweden's traditional labor model, emphasizing cooperation and shared profit benefits. However, Tesla's approach, characterized as a "typical US model," involves demanding work schedules and often unclear promotion evaluations.
Despite Tesla's popularity in Sweden, with the Model Y being a top seller, the strike has polarized opinions among the public and Tesla owners. Union actions have extended to solidarity strikes, affecting Tesla's regional operations.
The situation underscores a significant cultural and operational divide between American and Swedish workplace norms.
Mergers, Ventures, Acquisitions
Changan Automobile and Ganfeng Lithium announced a 50/50 joint venture to accelerate the development and manufacturing of solid-state batteries. This collaboration will explore various cooperation areas, including lithium mining, processing, battery materials, and recycling.
Opening
Tesla has purchased land in Shanghai for a megapack battery manufacturing plant adjacent to Tesla's existing facility, which manufactures Model 3 and Model Y cars. The new plant, expected to start production in Q4 2024, aims to produce 10,000 megapacks annually.
Recalls
Tesla will recall over 120k Model S and Model X vehicles in the US due to cabin doors being unlocked during a crash and has released an over-the-air software update to address the issue.
According to Reuters, Tesla has been aware of significant defects in its vehicle parts but has not fully disclosed this information to the public. The report indicates that Tesla has experienced persistent issues with suspension and steering parts across various models and regions, affecting tens of thousands of owners.
Despite internal recognition of these parts' "flaws" and "failures," Tesla has frequently attributed these failures to owner misuse, even in cases where the vehicles were relatively new. This approach is said to include denying warranty claims and shifting repair costs to customers.
The records suggest that Tesla engineers internally acknowledged the issues and discussed redesigns and potential supplier reimbursements for the defective parts.
While not a recall, Chevrolet has implemented a stop-sale order on the 2024 Blazer EV due to a software quality issue affecting a limited number of these electric midsize crossovers.
The issue, which is not safety-related, involves sporadic problems with vehicle screens and occasional charging issues at some public DC fast chargers. Chevrolet is currently working on a software update to address these issues.
Regulation
Cummins has agreed to pay a record $1.6B penalty for installing emissions defeat devices in approximately 960k Ram 2500 and 3500 pickup truck engines between 2013 and 2023.
This agreement, reached with the Justice Department, is the largest-ever penalty for a Clean Air Act violation and the second-largest environmental penalty deal overall.
The US Treasury's proposed guidelines for clean-hydrogen tax credits, part of President Joe Biden's climate law, include stringent environmental safeguards.
The guidance aims to foster a domestic clean hydrogen market, which is crucial for decarbonizing industries like steel and cement but faces opposition for potentially making green hydrogen uneconomical.
This policy reflects a significant push $ in the US to develop a clean hydrogen industry while balancing environmental concerns, which could have substantial implications for energy decarbonization efforts and the broader energy market.
Risk Analytics
In 2023, the automotive industry has seen a significant increase in delayed vehicle launches $, with EVs being a major factor, as reported by PwC.
These delays are attributed to the challenges in transitioning to EVs, including less mature designs and supplier struggles. The proportion of vehicle launches experiencing delays rose to 34% in 2023 from just 5% in 2018.
The report also highlights that delayed launches can be costly for automakers and suppliers, with a 12-month delay potentially costing automakers up to $200M and suppliers $15M.
Factors contributing to these delays include:
supply chain issues (particularly with electronic powertrain components)
quality standards
emissions regulations
workforce constraints
changing consumer preferences
Despite these challenges, legacy automakers could leverage their manufacturing experience to gain an edge over startups in the competitive EV market.
This trend of delayed EV launches reflects the growing pains of the automotive industry's shift towards electrification. It highlights the need for improved supply chain management, design maturity, and skilled labor in this evolving sector.
→ Pwc: Automakers and suppliers have a failure-to-launch problem. How can they fix it?
Automakers are preparing for a challenging sales environment $ in 2024, with high-interest rates and tighter credit impacting consumer purchases. Incentive spending has increased, and average transaction prices for new vehicles have declined.
The industry forecasts slow growth, with sales estimates ranging from 15.6M to 16.1M units.
Electric vehicles remain a key focus, though growth in this segment is also slowing. Automakers like Hyundai are heavily investing in EV production, while others like Ford and GM are shifting emphasis back to gasoline vehicles.
The automotive industry's slow growth and shifting focus towards EVs amidst economic challenges reflect significant market dynamics and consumer behavior changes, impacting the broader economic landscape.
Shutdown
Daihatsu, a subsidiary of Toyota known for small passenger cars, has ceased production in all four Japanese factories, including its Osaka headquarters, due to a scandal involving tampered safety tests.
This halt, affecting approximately 9k employees, follows revelations of manipulated safety test data for 64 vehicle models over 30 years. The issue, which extends to some Toyota-branded vehicles, has prompted Daihatsu to suspend domestic and international vehicle shipments and consult with authorities.
This scandal at Daihatsu risks undermining the credibility of Toyota as its parent company and raises serious concerns about safety standards and regulatory compliance in the automotive industry.
Supply Chain
Denmark's Maersk has decided to route almost all its container vessels between Asia and Europe through the Suez Canal, diverting only a few around Africa.
This shift follows a temporary rerouting via the Cape of Good Hope due to attacks by Yemen's Houthi militants on ships in the Red Sea.
Maersk's decision, influenced by the commencement of a US-led military operation to protect vessels, contrasts with the Mediterranean Shipping Company and Hapag Lloyd's ongoing avoidance of the Suez Canal due to safety concerns.