General Motors

More stories

  • 150 Shares199 Views

    in Economy

    Supply Chain Problems Mean Buying a Car Sometimes Takes a Plane Ride

    by

    The limited supply of new and used vehicles is forcing some Americans to go to great lengths to find and buy them, including traveling to dealers hundreds of miles away.When Rachael Kasper started shopping for a new car in August, she had her heart set on a Ford Escape plug-in hybrid. The problem was that Ford hasn’t made many of them this year because of a computer chip shortage that has slowed auto production around the world.Ms. Kasper first came up empty in her home state of Michigan and, later, in neighboring states. When she expanded to the East Coast, she found one — at a dealership 537 miles away, in Hanover, Pa.“I flew to Baltimore, took a Lyft to the dealer, and then drove all the way home,” said Ms. Kasper, who owns a water-sports equipment retailer. “It was quite an adventure.”The shortage of computer chips, in large part caused by decisions made in the early days of the pandemic, has rippled through the auto industry this year. Manufacturers have had to close plants for lack of parts, leaving car dealers with millions fewer vehicles to sell.As a result, car buyers have had to travel hundreds of miles to find the vehicles they want, give up on haggling and accept higher prices, and even snap up used cars that have been repaired after serious accidents.The supply squeeze coincides with an apparent increase in demand. Some people are trying to avoid mass transit or taxis. Others simply want a vehicle. Many families have saved thousands of dollars thanks in part to government benefits and stimulus payments and because they have been spending less on travel, restaurant meals and other luxuries that have fallen by the wayside because of health concerns.The end of the year is normally a peak selling season, with some automakers running ads in which cars are presented as gifts complete with giant bows. But this year consumers are finding that locating the car of their desires is not quick, easy or cheap.As Ed Matovcik, a wine industry executive in Napa, Calif., neared the end of his lease on a Tesla Model S, he decided to switch to a Porsche Taycan, a German electric car. He ordered one, but it won’t arrive until May, three months after he has to give up the Tesla.He is planning on renting cars until the Taycan arrives and is looking on the bright side. “It’s a different world now, so I don’t really mind the wait,” he said. “I’m thinking of renting a pickup for a week so I can finally clear out my garage.”The disruption to car production has rippled through the automotive world. For a time in the spring and summer of 2020, rental car companies stopped buying new cars and sold many of their vehicles to survive while travel was restricted. Now those companies are seeking to take advantage of a hot rental market and are scrambling to buy cars, often competing with consumers and dealers.The big discounts and incentives that were once standard features of car-buying in the United States have all but disappeared. Instead, some dealers now add an extra $2,000 or $3,000 on top of the list price for new cars. That has left car buyers fuming, but the dealers who are jacking up prices know that if one customer balks, another is usually waiting and willing.In November, the average price of a new car was a record $45,872, up from $39,984 a year ago, according to Edmunds, an auto-data provider. The average price paid for a used car is now more than $29,000, up from $22,679 in 2020, and Edmunds expects it to exceed $30,000 next year for the first time ever.Because of the rising prices of used cars, some consumers are spending to fix up older vehicles and keep them going for longer. More cars that have been damaged in accidents are getting fixed instead of being declared a total loss by insurers and sent to the scrap yard.“The math has changed on whether a car is totaled,” said Peter DeLongchamps, a senior vice president at Group 1 Automotive, a Houston-based auto retailer that operates its own chain of auto-body shops. “Our parts and service business is very good. We’re seeing more cars getting fixed based on the high used values.”Workers assembled a Jeep Grand Cherokee L at a Stellantis plant in Detroit in June. A computer chip shortage has slowed auto production around the world.Bill Pugliano/Getty ImagesThe auto industry’s chip shortage stems from the start of the pandemic, in the spring of 2020, when automakers closed factories for weeks and cut orders for computer chips and other parts. At the same time, homebound consumers were snapping up laptops, game consoles and other electronics, spurring makers of those devices to increase orders for semiconductors. When automakers resumed production, they found chip suppliers had less production capacity for them.As a result, automakers have produced significantly fewer trucks and cars this year than they had planned. In addition to closing plants, they’ve built vehicles without certain features, such as heated seats and electronics that maximize fuel economy. Tesla dropped power lower-back support in the passenger seat of certain models.The Coronavirus Pandemic: Key Things to KnowCard 1 of 4The Omicron variant. More

  • 113 Shares199 Views

    in Economy

    GM’s EV Efforts Reportedly Include a Bigger Michigan Presence

    by

    General Motors intends to spend several billion dollars to set up production of batteries and electric pickup trucks at two locations in Michigan, giving the company’s home state an economic boost, a person with knowledge of the plans said Friday.The automaker has started sketching out proposals to convert an electric car plant in Orion Township to produce electric pickups and to build a new battery plant with a partner, LG Electronics, near the existing Lansing Delta Township plant, this person said.The company, which has laid out ambitious goals for a shift to electric vehicles, was more circumspect about its plans in a statement issued Friday. “G.M. is developing business cases for potential future investments in Michigan,” it said. “As part of developing a competitive business case, we are having discussions with the appropriate local officials on available incentives.”G.M.’s prospective development of the Michigan sites was reported earlier by The Wall Street Journal.The total investment is likely to be more than $4 billion. G.M. previously spent $2 billion to convert a Detroit plant to electric vehicle production. Incentive applications filed to the City of Lansing on Friday showed that G.M. and LG envision investing $2.5 billion in the battery plant and creating 1,700 jobs there.Production of a high-volume pickup truck could significantly increase employment at the Orion Township plant, which has been used to make the Chevrolet Bolt, an electric compact car. Bolt output has been limited and is currently suspended because of a recall of the battery packs used in the car. When in operation, the factory has 1,100 workers on a single shift, and E.V. production would probably increase production to two or even three shifts.The investment would be a victory for Michigan as automakers race to begin making battery packs and electric vehicles in high volumes. Several factories are planned for Southern states. Toyota said this week that it would build a battery plant in North Carolina that is supposed to employ 1,750 people.Ford Motor is spending $11.4 billion to build two battery plants in Kentucky and a third battery plant and a new electric truck plant in Tennessee. G.M. has battery plants under construction in Ohio and Tennessee, and it plans to add others in Ontario and Mexico.The spate of investments and job commitments has caused concern among some economic development officials in Michigan that the state was not winning a significant portion of the jobs being created by the auto industry’s conversion to electric vehicles.G.M., Ford, Toyota and other traditional automakers are trying to catch up to Tesla, which leads in global sales of electric vehicles by a wide margin and has captured the imagination of investors. Tesla has a market value of about $1 trillion — more than G.M., Ford, Toyota and several other automakers combined.G.M. plans to introduce 20 electric vehicles in the United States by 2025. The first few include the GMC Hummer electric pickup and sport-utility models, and the Cadillac Lyriq, a luxury S.U.V. Those will be built at a plant in Detroit that G.M. now calls “Factory Zero.” A variety of other E.V.s are supposed to follow, including an electric version of the Chevrolet Silverado pickup that is supposed to go into production in early 2023.These models will use modular battery packs — produced in a joint venture with LG — that G.M. is counting on to help reduce the cost of electric vehicles.Ford is slightly ahead of G.M. in electric vehicles. It began selling the electric Mustang Mach-E S.U.V. nearly a year ago, and it plans to start making an electric pickup, the F-150 Lightning, in early 2022.Ford’s chief executive, Jim Farley, told CNBC on Thursday that his company had 200,000 reservations from customers for the truck and that it was scrambling to increase production capacity to meet demand. More

  • 113 Shares119 Views

    in Economy

    Chip Shortage Makes Big Dent in Automakers’ U.S. Sales

    by

    General Motors, Toyota, Honda, Stellantis and Nissan reported recent declines as problems in the global supply chain held down output and inventories.Four of the biggest sellers of cars and trucks in the United States said Friday that their sales had plunged recently, reflecting the intense squeeze that a global semiconductor shortage has put on auto production.General Motors, Honda, Nissan and Stellantis reported significant declines in sales in the three months that ended in September — in G.M.’s case, a drop of one-third from a year earlier — as chip shortages forced them to idle plants, leaving dealers with few vehicles to offer customers.Toyota had a slight increase for the quarter, but its sales in September fell sharply after it was forced to slash global production because of the chip shortage and other disruptions to its parts supplies stemming from the coronavirus pandemic.“We are in uncharted waters,” said Alan Haig, president of Haig Partners, an automotive consultant. “We’ve never seen a vehicle shortage like this. There are just not enough cars to sell.”The shortage of semiconductors stems from the beginning of the pandemic, when automakers around the world closed factories for weeks and suddenly cut their orders for computer chips. At the same time, manufacturers of laptops, game consoles and other electronics were demanding more chips as sales of their products took off among homebound consumers.When automakers resumed production, chip makers had much less production capacity to allocate for automotive chips.Strong auto sales, spurred in part by government stimulus checks, helped prop up consumer spending during the first year of the pandemic. But now production delays and depleted inventories are hurting sales when waning government support and the rise of the Delta variant of the coronavirus are acting as a drag on consumer spending.The forecasting firm IHS Markit on Friday lowered its estimate of third-quarter consumer spending growth to an annual rate of just 0.4 percent, down from 12 percent in the second quarter, contributing to a sharp slowdown in overall economic growth.Automakers have tried to use the electronic components they have in stock for their most profitable vehicles, such as pickup trucks and large sport utility vehicles. But in recent months those models have been affected, too.With fewer vehicles rolling off assembly lines, dealers’ inventories have become skimpy. On Friday, Kenosha Toyota in Wisconsin had a single new vehicle for sale — a two-wheel-drive Tacoma pickup. Suburban Chevrolet of Ann Arbor in Michigan was displaying just 11 new models for sale on its website.Despite the shortage, automakers and dealers alike are reaping hefty profits because tight inventories have forced consumers to pay higher prices. J.D. Power estimated that the average selling price of a new vehicle in September was $42,802, up more than $12,000 from the same month in 2020.“It’s a bonanza for the dealers and the factories, despite the shortage of inventory,” Mr. Haig said.With new cars scarce, prices of used cars have also shot up. And the latest sales figures raise concerns that the inventory shortage is worsening and crimping sales.“There are simply not enough vehicles available to meet consumer demand,” said Thomas King, president of J.D. Power’s data and analytics division.At General Motors, sales were down 33 percent in the quarter. The automaker sold 446,997 vehicles, compared with 665,192 light trucks and cars a year earlier. In the same quarter of 2019, G.M. sold 738,638.Honda’s sales were down 11 percent in the quarter, to 354,914 cars and trucks. But a decline in September of nearly 25 percent from the prior year showed the increasing squeeze on production. Stellantis, which was formed by the merger of Fiat Chrysler and France’s Peugeot, reported a 19 percent drop in third-quarter sales. At Nissan, the decline was 10 percent.Toyota said its sales in the quarter were about 1 percent higher than a year earlier, at 566,005. But its sales for September were down 22 percent.General Motors does not report monthly sales figures. Ford is expected to report its third-quarter sales on Monday.The shortage of semiconductors has forced manufacturers to idle plants for weeks at a time. G.M. idled several pickup truck plants for parts of August and September. Toyota cut global production by 40 percent in September, and expects a similar cut in October.General Motors emphasized that a lack of potential buyers was not the problem. “Underlying demand conditions remain strong, thanks to ample job openings, growing pent-up vehicle demand and excess savings accumulated by many households during the pandemic,” Elaine Buckberg, G.M.’s chief economist, said in a company statement.And the company signaled that the chip supply was improving. “We look forward to a more stable operating environment through the fall,” said Steve Carlisle, the president of G.M. North America.At the end of September, G.M. had 128,757 vehicles in dealer inventories, down from 211,974 at the end of June and more than 334,000 at the end of the first quarter. In years past, the figure was often about 800,000.Toyota had 37,516 vehicles on dealer lots at the end of the quarter, and 61,208 at ports serving the U.S. market. At the current sales rate, that is enough to last about 18 days.Ben Casselman More

  • 138 Shares169 Views

    in Economy

    The Car Market 'Is Insane': Dealers Can't Keep Up With Demand

    by

    Rick Ricart is expecting nearly 40 Kia Telluride sport utility vehicles to arrive at his family’s dealership near Columbus, Ohio, over the next three weeks. Most will be on his lot for just a few hours.“They’re all sold,” Mr. Ricart said. “Customers have either signed the papers or have a deposit on them. The market is insane right now.”In showrooms across the country, Americans are buying most makes and models almost as fast as they can be made or resold. The frenzy for new and used vehicles is being fed by two related forces: Automakers are struggling to increase production because of a shortage of computer chips caused in large part by the pandemic. And a strong economic recovery, low interest rates, high savings and government stimulus payments have boosted demand.The combination has left dealers and individuals struggling to get their hands on vehicles. Some dealers are calling and emailing former customers offering to buy back cars they sold a year or two earlier because demand for used vehicles is as strong as it is for new cars, if not stronger. Used car prices are up about 45 percent over the past year, according to government data published this week. New car and truck prices are up about 5 percent over the past year.Those price increases have fed a debate in Washington about whether President Biden’s policies, particularly the $1.9 trillion American Rescue Plan he signed in March, are responsible for the sharp rise in inflation. The government said this week that consumer prices across the economy rose 5.4 percent in the last year through June.Republican lawmakers have argued that the March legislation is overheating the economy and are citing the rise in prices to oppose additional government spending. But Biden administration officials have pointed out that temporary supply shortages are largely responsible for the surge in prices of cars and other goods.Government stimulus may have helped some consumers, but it is hard to say how much. Several large forces are at play.The chip shortage, for example, is affecting automakers all over the world and is not directly related to U.S. policies. Industry officials blame limited production capacity for semiconductors and pandemic-related disruptions in supply and demand for the shortage.To make the most of limited chip supplies, General Motors has temporarily done away with certain features in some models, like stop-start systems that automatically turn off engines when cars stop for, say, a traffic light. And the French carmaker Peugeot has replaced digital speedometers with analog ones in some cars.Rental car companies that sold off thousands of cars during the pandemic to survive are now in the market to buy cars and trucks. They want to take advantage of a summer travel boom that has driven up rental rates to several hundred dollars a day in some places.“The industry has had strikes and material shortages before that have left us short of inventory, but I’ve never seen anything like this,” said Mark Scarpelli, the owner of two Chevrolet dealerships near Chicago. “Never, never, never.”His dealerships normally have 600 to 700 cars in stock. Now, he has about 50. Once or twice a week, a truck arrives with five or 10 vehicles. The cars disappear quickly because of customer waiting lists, Mr. Scarpelli said.Industry executives said the last time demand and supply were this out of sync was most likely after the end of World War II, when U.S. auto plants returned to making cars after years of churning out tanks and planes.Dealers said virtually everything was selling, from luxury vehicles and sports cars that cost more than $100,000 to basic used cars that many parents buy for teenagers.Even though the unemployment rate is still higher than before the pandemic, many people have money to spend. Government payments have helped lots of people, but many Americans, kept from vacationing or eating out, saved money. Financing cars is also relatively cheap — at least for people with good credit. Some automakers like Toyota, which has been less affected by the chip shortage than others, are advertising zero-interest loans on some cars.Mr. Ricart’s family businesses include a custom shop that sells high-end, special-edition trucks and sports cars. “We had a $125,000 Shelby pickup, and I said, ‘Who’s going to buy that?’” he recalled. “The next day it was gone. There’s so much free cash in the market. People are paying full price, even for the most expensive vehicles we have.”Buyers often have to take vehicles that don’t meet their specifications, and move fast when they find one close enough.Gary Werle, a retiree in Lake Worth, Fla., recently traded in a 2017 Buick Encore for a 2021 version, drawn by its safety features such as blind-spot monitoring and automatic braking. “I’m 80, and I thought it would be good to have those,” he said.On Memorial Day, his dealer called, and Mr. Werle didn’t hesitate. “I was at a party and left to buy the car,” he said. “I’d heard about the shortages, so I wasn’t sure the car would be there the next day.”Dealers are selling fewer vehicles, but their profits are up a lot. That’s a huge change from the spring of 2020, when most dealerships shut down for roughly two months and they had to lay off workers to survive.“The strong demand from consumers paired with a lack of supply from the manufacturers has created a gusher of profits for dealers,” said Alan Haig, president of Haig Partners, an automotive consultant.Now, dealers typically dictate the price of new or used cars. New cars typically sell for the manufacturer’s suggested retail price or, in some cases, thousands of dollars more for models in very high demand. Haggling over used cars is a distant memory.“There’s not a lot of negotiating that goes on right now on price,” said Wes Lutz, owner of Extreme Dodge in Jackson, Mich.Some customers have balked at paying top dollar for new cars and have opted to make do with older vehicles. That has increased demand for parts and service, one of the most profitable businesses for car dealers. Many dealers have extended repair-shop hours. Mr. Ricart said he had some repair technicians putting in 10- or 12-hour days three or four days in a row before taking a few days off.Of course, the shortage of cars will end, but it isn’t clear when.As Covid-19 cases and deaths rose last spring, automakers shut down plants across North America from late March until mid-May. Since their plants were down and they expected sales to come back slowly, they ordered fewer semiconductors, the tiny brains that control engines, transmissions, touch screens, and many other components of modern cars and trucks.At the same time, consumers confined to their homes began buying laptops, smartphones and game consoles, which increased demand for chips from companies that make those devices. When automakers restarted their plants, fewer chips were available.Many automakers have had to idle plants for a week or two at a time in the first half of 2021. G.M., Ford Motor and others have also resorted to producing vehicles without certain components and holding them at plants until the required parts arrive. At one point, G.M. had about 20,000 nearly complete vehicles awaiting electronic components. It began shipping them in June.Ford has been hit harder than many other automakers because of a fire at one of its suppliers’ factories in Japan. At the end of June, Ford had about 162,000 vehicles at dealer lots, fewer than half the number it had just three months ago and roughly a quarter of the stock its dealers typically hold.This month, Ford is slowing production at several North American plants because of the chip shortage. The company said it planned to focus on completing vehicles.Mr. Ricart recently took a trip on his Harley-Davidson to Louisville, Ky., and got a look at the trucks and S.U.V.s at a Ford plant that are waiting to be finished. He said he had seen “thousands of trucks in fields with temporary fencing around them.”He said he hoped to get some of those trucks soon because Ricart Ford had only about 30 F-150 pickup trucks in stock. “We’re used to selling a couple hundred a month.” More

  • 150 Shares199 Views

    in Economy

    Lordstown Motors halves the number of vehicles it will make in 2021.

    by

    Lordstown Motors, a start-up aiming to make electric pickup trucks, said on Monday that it would “at best” make just 50 percent of the vehicles it had previously hoped to this year, unless it is able to raise additional capital.“What we are saying is that if we don’t get any funding, we might only make half of what we thought,” Lordstown’s chief executive, Steve Burns, said during a conference call.Mr. Burns said the company was still on track to begin making trucks by September.Lordstown has had discussions with some strategic investors who could pump money into the company, he said, and it has looked into borrowing money by using its plant or other assets as collateral.He also said the company was looking into borrowing from a federal government program meant to support the development of electric vehicles, but it is unclear if it has any funds left to lend out.Lordstown would be able to make as many as 2,200 trucks by the end of the year if it gets funding, Mr. Burns said. Without additional capital, it would probably make fewer than 1,000.Mr. Burns has been hoping Lordstown would be the first to produce an electric pickup truck aimed at commercial fleets such as large construction and mining companies, but it will soon face some formidable competition. Ford Motor last week unveiled an electric version of its F-150 pickup that is supposed to go on sale next spring.Lordstown gained attention because it bought an auto plant in Lordstown, Ohio, that General Motors had closed. It was also once hailed by former President Donald J. Trump for saving manufacturing jobs.It became a publicly traded company last year by merging with a special purpose acquisition vehicle, a company set up with cash from investors and a stock listing. Several other electric vehicle and related businesses have gone public through similar mergers in recent months, taking advantage of investors’ desire to find the next Tesla.Lordstown, which is being investigated by the Securities and Exchange Commission, said it lost $125 million in the first quarter of 2021, but ended the period with $587 million in cash.After the news of its production outlook was released, Lordstown’s stock fell more than 9 percent in after-hours trading, to just under $9. The stock briefly traded at about $30 last year. More

  • 125 Shares99 Views

    in Economy

    U.S. Asks Mexico to Investigate Labor Issues at G.M. Facility

    by

    The administration learned of what appeared to be “serious violations” of labor rights, it said, and is using a new tool in the North American trade deal to seek a review.WASHINGTON — The Biden administration announced on Wednesday that it was asking Mexico to review whether labor violations had occurred at a General Motors facility in the country, a significant step using a new labor enforcement tool in the revised North American trade deal.The administration is seeking the review under the novel “rapid response” mechanism in the United States-Mexico-Canada Agreement, which replaced the North American Free Trade Agreement and took effect last summer. Under the mechanism, penalties can be brought against a specific factory for violating workers’ rights of free association and collective bargaining.The administration “received information appearing to indicate serious violations” of workers’ rights at the G.M. facility, in Silao in the central state of Guanajuato, in connection with a recent vote on their collective-bargaining agreement, the Office of the United States Trade Representative said.The vote was stopped last month amid accusations that the union at the facility had tampered with it, according to news reports. Mexico’s Labor Ministry said on Tuesday that it had found “serious irregularities” in the vote and ordered that it be held again within 30 days.The updated North American trade agreement required Mexico to revamp its labor system, and the country overhauled its labor laws in 2019. Sham collective-bargaining agreements known as protection contracts, which are reached with employer-dominated unions, are widespread in the country. Now unions are holding votes to affirm the existing agreements.G.M. said it would cooperate with Mexico’s Labor Ministry and the U.S. government.Henry Romero/ReutersIn a statement, Katherine Tai, the U.S. trade representative, said the announcement on Wednesday “shows the Biden-Harris administration’s serious commitment to workers and a worker-centered trade policy.”“Using U.S.M.C.A. to help protect freedom of association and collective-bargaining rights in Mexico helps workers both at home and in Mexico, by stopping a race to the bottom,” she said, using the initials for the trade deal. “It also supports Mexico’s efforts to implement its recent labor law reforms.”In a statement, General Motors said that it believed it had no role in the alleged labor violations and that it had asked a third-party firm to review the matter. The company, which makes Chevrolet Silverado, Chevrolet Cheyenne and GMC Sierra pickup trucks at the Silao facility, said it would cooperate with Mexico’s Labor Ministry and the U.S. government.“General Motors respects and supports the rights of our employees to make a personal choice about union representation and any collective bargaining on their behalf,” the statement said. “G.M. condemns violations of labor rights and actions to restrict collective bargaining.”In announcing its request for a review by Mexico, the Biden administration avoided striking an adversarial tone with the Mexican government.Ms. Tai praised the government “for stepping in to suspend the vote when it became aware of voting irregularities,” adding, “Today’s action will complement Mexico’s efforts to ensure that these workers can fully exercise their collective-bargaining rights.”On Monday, the A.F.L.-C.I.O. and other groups filed a complaint under the rapid response mechanism in which they alleged labor violations at the Tridonex auto parts plants in the Mexican city of Matamoros, across the border from Brownsville, Texas.The Biden administration will review that complaint, an official in the trade representative’s office said. It could then ask Mexico to conduct a review of that matter akin to the one it is seeking of the G.M. facility.Oscar Lopez More

  • 125 Shares189 Views

    in Economy

    Biden's Plan for Electric Vehicles: What You Need to Know

    by

    The president is hoping to make electric vehicles more affordable to turn a niche product into one with mass appeal.President Biden is a muscle-car guy — one of his most prized possessions is a 1967 Corvette that he got from his father. But he’s trying to make this an electric vehicle world.The $2 trillion infrastructure plan that he unveiled on Wednesday is aimed at tackling climate change in part by spending up to $174 billion to encourage Americans to switch to cars and trucks that run on electricity, not gasoline or diesel. That is a large investment but it might not be enough to push most Americans toward E.V.s.Despite rapid growth in recent years, electric vehicles remain a niche product, making up just 2 percent of the new car market and 1 percent of all cars, sport-utility vehicles, vans and pickup trucks on the road. They have been slow to take off in large part because they can cost up to $10,000 more than similar conventional cars and trucks. Charging E.V.s is also more difficult and slower than simply refilling the tank at far more prevalent gas stations.Mr. Biden hopes to address many of those challenges through federal largess. He aims to lower the cost of electric vehicles by offering individuals, businesses and governments tax credits, rebates and other incentives. To address the chicken-and-egg problem of getting people to try a new technology before it is widely accepted, he hopes to build half a million chargers by 2030 so people will feel confident that they won’t be stranded when they run out of juice. And he is offering help to automakers to get them to build electric vehicles and batteries in the United States.“We find ourselves at a unique moment here where most American businesses and many states are looking toward a decarbonized future, but recognize there’s a big lift on the infrastructure side,” said Bob Perciasepe, president of the Center for Climate and Energy Solutions, an environmental research group. “This investment alone obviously won’t solve the climate problem or fix all of the infrastructure in the United States but it will be a huge boost.”Automakers see the writing on the wall and many, including General Motors, Volkswagen and Ford Motor, have made big E.V. promises. But even they acknowledge that they will need federal help.A charging station at a housing complex in Utah.Lindsay D’Addato for The New York Times“This transformation is greater than any one policy, branch or level of government, or industry sector,” a group representing manufacturers, suppliers and automotive workers said in a letter to Mr. Biden on Monday. “It will require a sustained holistic approach with a broad range of legislative and regulatory policies rooted in economic, social, environmental and cultural realities.”The letter called for grants, loans, tax credits and tax deductions to promote research and manufacturing. The authors of the letter, which included industry groups and the United Auto Workers union, called for investment in job training programs and federal help in promoting development of minerals and other raw materials in the United States.But production is only one piece of the puzzle. The transition away from gas-powered vehicles rests on convincing consumers of the benefits of electric vehicles. That hasn’t been easy because the cars have higher sticker prices even though researchers say that they cost less to own. Electricity is cheaper on a per mile basis than gasoline, and E.V.s require less routine maintenance — there is no oil to change — than combustion-engine cars.The single biggest cost of an electric car comes from the battery, which can run about $15,000 for a midsize sedan. That cost has been dropping and is widely expected to keep falling thanks to manufacturing improvements and technical advancements. But some scholars believe that a major technological breakthrough will be required to make electric cars much, much cheaper.“There’s a good sense that at least for the next maybe five years or so they’re going to keep declining, but then are they going to level off or are they going to keep declining?” Joshua Linn, a professor at the University of Maryland and a senior fellow with Resources for the Future, an environmental nonprofit, said about battery costs. “That won’t be enough, so then that’s given rise to a lot of attention to infrastructure.”The federal government and some states already offer tax credits and other incentives for the purchase of electric cars. But the main such federal incentive — a $7,500 tax credit for the purchase of new electric cars — begins to phase out for cars once an automaker has sold 200,000 E.V.s. Buyers of Tesla and G.M. electric cars, for example, no longer qualify for that tax credit but buyers of Ford and Volkswagen electric cars do.Mr. Biden described his incentives for electric car purchases as rebates available at the “point of sale,” presumably meaning at dealerships or while ordering cars online. But the administration has not released details about how big those rebates will be and which vehicles they would apply to.Another big concern is charging. People with dedicated parking spots typically charge their E.V.s overnight at home, but many people who live in apartments or have to drive longer distances need to use public charging stations, which are still greatly outnumbered by gas stations.“The top three reasons consumers give for not buying E.V.s are lack of charging stations, time to charge, and the cost of E.V.s,” said Sam Abuelsamid, an analyst at Guidehouse Insights. “They seem to be really emphasizing all three. So, over all, it looks very promising.”There are well over 100,000 gas stations in the United States, most with multiple pumps. Mr. Biden’s plan calls for a national network of 500,000 electric vehicle chargers within the decade, up from about 41,000 charging stations with more than 100,000 outlets today, according to the Energy Department.“One of the things that needs to be addressed is getting chargers into places where people only have on-street parking, like in cities and urban areas where you don’t have a driveway or garage,” Mr. Abuelsamid said. “If they can address that, it will make E.V.s available to a lot more people.”The government in China, which leads the world in the use of electric cars, has done much more than the United States to speed up the installation of chargers.“It is, famously, one of the ways that China has become the No. 1 country in E.V.s on most dimensions,” John Paul MacDuffie, a professor of management at the Wharton School at the University of Pennsylvania, said in an email.Even with incentives for manufacturers, a robust charging network and a willing public, the transition to electric cars may take a few decades. Carmakers have improved vehicle reliability in recent years, so many cars stay on the road a long time. The average age of cars and light trucks in the United States is approaching 12 years, up from 9.6 years in 2002, according to IHS Markit, an economic forecasting firm.Neal E. Boudette More

  • 113 Shares119 Views

    in Economy

    Global Chip Shortage Challenges Biden’s Hope for Manufacturing Revival

    by

    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesVaccine RolloutSee Your Local RiskNew Variants TrackerAdvertisementContinue reading the main storySupported byContinue reading the main storyGlobal Chip Shortage Challenges Biden’s Hope for Manufacturing RevivalA global shortage of a key component for cars and electronics has shuttered American factories and set off fierce competition to secure supplies.The shortage of a vital component for automobiles, phones, refrigerators and other electronic devices is posing an early challenge to the Biden administration’s promise to revive a manufacturing sector depressed by the coronavirus pandemic.Credit…Thomas Samson/Agence France-Presse — Getty ImagesFeb. 18, 2021, 4:11 p.m. ETWASHINGTON — President Biden came into office with plans to help the economy recover from the coronavirus pandemic and spur a domestic manufacturing revival for goods such as automobiles and semiconductors.But one month into his presidency, a global chip shortage has shuttered auto factories in the United States, slowed shipments of consumer electronics and called into question the security of American supply chains.The shortage of a vital component for automobiles, phones, refrigerators and other electronic devices is posing an early challenge to the administration’s promise to revive a manufacturing sector depressed by the pandemic. And it has spurred an effort by the administration to reach out to U.S. embassies and foreign governments to try to alleviate the shortage, even as the White House acknowledges that there are most likely few solutions to the supply crunch in the short term.The White House plans to issue an executive order soon that will take steps to address these kinds of vulnerabilities in critical supply chains over the longer term, an administration spokesperson said on Thursday. The order will begin a review of domestic manufacturing and supply chains for critical materials — including rare earths, medical supplies and semiconductors — with a particular focus on reducing dependencies on unreliable or unfriendly foreign actors.In the meantime, administration officials have begun looking for ways to ease the immediate shortage. Jake Sullivan, the national security adviser, and Brian Deese, the director of the National Economic Council, have been involved in efforts to increase chip availability; Sameera Fazili, the deputy director of the National Economic Council, and Peter Harrell, a senior director at the National Security Council, are leading the focus on supply chains, the White House spokesperson said.The United States has also tried to leverage its ties with Taiwan, one of the world’s largest chip manufacturers, to make sure American customers are not disadvantaged. In a letter sent on Wednesday, Mr. Deese thanked Wang Mei-Hua, the Taiwanese minister of economic affairs, for her “personal attention and support in resolving the current shortages faced by American automobile manufacturers.”Over the past year, the Trump administration tried to strengthen ties with the Taiwanese government and manufacturers like Taiwan Semiconductor Manufacturing Company to counter China’s growing influence over the chip market.The Biden administration is also meeting with auto companies and suppliers to identify bottlenecks and to urge them to work together to address the shortage. But the White House has acknowledged that its options to alleviate any shortfall are likely to be limited, given the fierce global competition for semiconductors. Many chip makers are already running near maximum capacity, and it will take at least several months to further ramp up production, analysts say.The shortage has been particularly disruptive for auto manufacturers because the production of vehicles relies on dozens of computer chips for electronic components that control engines, transmissions, entertainment systems, brakes and other systems. Both General Motors and Ford have estimated that the shortage will lower their operating profit by at least $1 billion this year.G.M. has halted production at one plant in the United States, one in Canada and another in Mexico until at least mid-March. At a fourth plant, the company has decided to produce vehicles without the electronics that are in short supply. When components become available, G.M. will install them and then ship the vehicles to dealers.The Coronavirus Outbreak More