Tesla Motors Inc

More stories

  • 113 Shares109 Views

    in Economy

    Battle Over Electric Vehicles Is Central to Auto Strike

    by

    Carmakers are anxious to keep costs down as they ramp up electric vehicle manufacturing, while striking workers want to preserve jobs as the industry shifts to batteries.A battle between Detroit carmakers and the United Auto Workers union, which escalated on Friday with targeted strikes in three locations, is unfolding amid a once-in-a-century technological upheaval that poses huge risks for both the companies and the union.The strike has come as the traditional automakers invest billions to develop electric vehicles while still making most of their money from gasoline-driven cars. The negotiations will determine the balance of power between workers and management, possibly for years to come. That makes the strike as much a struggle for the industry’s future as it is about wages, benefits and working conditions.The established carmakers — General Motors, Ford Motor and Stellantis, which owns Chrysler, Jeep and Ram — are trying to defend their profits and their place in the market in the face of stiff competition from Tesla and foreign automakers. Some executives and analysts have characterized what is happening in the industry as the biggest technological transformation since Henry Ford’s moving assembly line started up at the beginning of the 20th century.Nearly 13,000 U.A.W. workers walked off the job at three plants in Ohio, Michigan and Missouri on Friday after talks between the unions and the companies in three separate negotiations failed to result in agreements before a Thursday deadline. Pay is one of the biggest sticking points: The union is demanding a 40 percent pay increase over four years but the automakers have offered roughly half as much.But the talks are about more than pay. Workers are trying to defend jobs as manufacturing shifts from internal combustion engines to batteries. Because they have fewer parts, electric cars can be made with fewer workers than gasoline vehicles. A favorable outcome for the U.A.W. would also give the union a strong calling card if, as some expect, it then tries to organize employees at Tesla and other nonunion carmakers like Hyundai, which is planning to manufacture electric vehicles at a massive new factory in Georgia.“The transition to E.V.s is dominating every bit of this discussion,” said John Casesa, senior managing director at the investment firm Guggenheim Partners who previously headed strategy at Ford Motor.“It’s unspoken,” Mr. Casesa added. “But really, it’s all about positioning the union to have a central role in the new electric industry.”Under pressure from government officials and changing consumer demand, Ford, G.M. and Stellantis are investing billions to retool their sprawling operations to build electric vehicles, which are critical to addressing climate change. But they are making little if any profit on those vehicles while Tesla, which dominates electric car sales, is profitable and growing fast.Ford said in July that its electric vehicle business would lose $4.5 billion this year. If the union got all the increases in pay, pensions and other benefits it is seeking, the company said, its workers’ total compensation would be twice as much as Tesla’s employees.Union demands would force Ford to scrap its investments in electric vehicles, Jim Farley, the company’s chief executive, said in an interview on Friday. “We want to actually have a conversation about a sustainable future,” he said, “not one that forces us to choose between going out of business and rewarding our workers.”Attendees at the Detroit Auto Show looking at a 2024 Chevy Silverado EV in Detroit this past week. Talk of the autoworkers’ strike loomed over the show.Brittany Greeson for The New York TimesFor workers, the biggest concern is that electric vehicles have far fewer parts than gasoline models and will render many jobs obsolete. Plants that make mufflers, catalytic converters, fuel injectors and other components that electric cars don’t need will have to be overhauled or shut down.Many new battery and electric vehicle factories are springing up and could employ workers from the plants that have shut down. But automakers are building most aggressively in the South where labor laws are tilted against union organizers, rather than in the Midwest, where the U.A.W. has more clout. One of the union’s demands is that workers in the new factories be covered by the automakers’ national labor contracts — a demand that the automakers have said they can’t meet because those plants are owned by joint ventures. The union also wants to regain the right to strike to block plant shutdowns.“We are at the dawn of another industrial revolution and the way we’re going is the way we went in the last industrial revolution — a lot of profit for a few and misery and not good jobs for the many,” said Madeline Janis, executive director of Jobs to Move America, an advocacy group that works closely with the U.A.W. and other unions.“The U.A.W. is really taking a stand for communities across the country to make sure this transition benefits everybody,” Ms. Janis added.Automakers have been racking up record profits during the last decade, but they cannot afford to lose time from work stoppages in their race to compete with Tesla and foreign automakers.The three companies are already struggling to get their electric vehicle business going. A new G.M. battery factory in Ohio has been slow to produce batteries, delaying electric versions of the Chevrolet Silverado pickup and other vehicles. Ford this year had to suspend production of its electric F-150 Lightning in February after a battery caught fire in one of the pickups that was parked near the factory for a quality check. And Stellantis won’t even begin selling any fully electric vehicles in the United States until next year.Those problems and Tesla’s growing sales could put the union in a strong position to extract a good deal.On Thursday, in a sign that automakers are willing to go much further than they had previously, G.M. offered a 20 percent pay raise over four years. That is half of what the union is seeking but far more than workers received in recent contracts. President Biden on Friday strongly supported the union in remarks at the White House. The administration has been pouring billions into programs to promote electric vehicles and does not want a strike to delay a centerpiece of its climate policy.Despite all the money that automakers have made in recent years, their executives express a profound unease about the growth of electric vehicles, which account for 7 percent of the U.S. new car market so far this year and are on track to surpass sales of one million this year. Managers are acutely aware that traditional companies like theirs have a poor track record of retaining dominance after a big change in technology. Witness the way that Apple sidelined Nokia and Motorola as cellphones became smartphones.Auto company executives and most industry analysts underestimated how quickly electric vehicles would catch on and cannot confidently forecast how sales, which have been bumpy lately, will grow in the future. “I don’t think anyone can perfectly predict what the adoption will be,” Mary T. Barra, the chief executive of General Motors, said in an interview with The New York Times last month.Speaking to “CBS Mornings” on Friday, Ms. Barra said an excessive pay raise would undermine G.M.’s ability to continue producing vehicles with internal combustion engines while also developing electric vehicles. “This is a critical juncture where investing is very important,” she said.Still, unions and their supporters are unlikely to express much sympathy for auto executives. Ms. Barra and the leaders of Ford (Jim Farley) and Stellantis (Carlos Tavares) have gotten tens of millions of dollars in compensation packages in recent years. The companies’ shareholders have been rewarded with dividends and share buybacks.Unions “are not going to have a lot of patience for sob stories,” said Karl Brauer, executive analyst at iSeeCars.com, an online marketplace.Adjusted for inflation, wages for autoworkers in the United States have fallen 19 percent since 2008, according to the Economic Policy Institute, a left-leaning research group.At the same time, union officials are aware of the changes in the industry and have said they do not want to handicap G.M., Ford and Stellantis as the companies try to recover ground they have lost to Tesla, which has aggressively resisted attempts to unionize its factories. The Detroit carmakers also face challengers like Rivian, a start-up that makes electric pickup trucks and sport utility vehicles in Illinois, as well as foreign-owned rivals like Mercedes-Benz and Toyota, whose U.S. factories, mostly in the South, are not unionized.“That’s the biggest challenge here,” Mr. Brauer added, “trying to commit to a long-term contract in an industry that is very uncertain and unpredictable over the next five years.”Union supporters say it would be wrong to blame workers if the traditional carmakers cannot compete with Tesla and other rivals.“If you look at the breakdown at what it costs to build an E.V., labor is a very small part of the equation. Batteries are the most,” Ms. Janis of Jobs to Move America said. “This idea that the U.A.W. is going to price Ford, G.M. and Stellantis out of the market is not true.”But other analysts said that a long work stoppage could help Tesla and foreign automakers gain ground on G.M., Ford and Stellantis.“If something happens to disrupt their business, does that give a leg up to the emerging electric vehicle makers?” said Steve Patton, who overseas the consulting firm EY’s work with auto companies. “Who stands to benefit if there is a protracted strike?” More

  • 113 Shares99 Views

    in Economy

    U.A.W. Starts Strike Small, but Repercussions Could Prove Far-Reaching

    by

    Autoworkers walked off the job on Friday at three factories that produce some of the Detroit carmakers’ most popular vehicles, the opening salvos in what could become a protracted strike that hurts the U.S. economy and has an impact on the 2024 presidential election.Nearly 13,000 members of the United Auto Workers at plants in Ohio, Michigan and Missouri joined early Friday in what the union described as a targeted strike that could expand to more plants if its demands for pay raises of up to 40 percent and other gains were not met.The union’s four-year contracts with three automakers — General Motors, Ford Motor and Stellantis, which owns Chrysler, Jeep and Ram — expired Thursday, and the companies and the union remained far from striking new deals.The U.A.W.’s president, Shawn Fain, used sweeping language on Thursday to describe why his members were going on strike against all three automakers at the same time — something the union had never done in its nearly 90-year history.“This is our generation’s defining moment,” Mr. Fain, the union’s first leader elected directly by members, said in an online video. “The money is there, the cause is righteous, the world is watching, and the U.A.W. is ready to stand up.”The union and the companies did not negotiate on Friday, but the U.A.W. said it planned to resume bargaining on Saturday. President Biden dispatched two senior administration officials to Detroit on Friday to encourage the companies and union to reach agreements.At a Ford plant in Wayne, Mich., west of Detroit, strikers waved placards — one read, “Record Profits; Record Contracts” — and gave thumbs-up to honking vehicles. A metal sign on a chain-link fence read, “Absolutely NO foreign cars allowed.” The protesters were assigned to a six-hour shift on the picket line. If the strike continues, they will be called to one shift per week.While first and foremost a battle between autoworkers and automakers, the conflict could have far-reaching consequences. A lengthy strike would reduce the number of new cars available for sale, which could fuel inflation and force the Federal Reserve to keep interest rates high.The U.A.W.’s president, Shawn Fain, center, at the walkout early Friday at Ford Motor’s assembly plant in Wayne, Mich.Cydni Elledge for The New York TimesA strike also presents a quandary for Mr. Biden, who has called for rising incomes but must also be mindful of the strike’s economic impact and his goal to promote electric vehicles as a solution to climate change.Speaking at the White House on Friday, the president strongly supported the union. “Over the past decade, auto companies have seen record profits, including in the last few years, because of the extraordinary skill and sacrifices of U.A.W. workers,” he said. “But those record profits have not been shared fairly.”The U.A.W. says its pay demands roughly correspond to the increases in the compensation of the top executives at Ford, G.M. and Stellantis. The raises are also meant to help compensate workers for the ground they have lost to inflation and big concessions the union made to the automakers after the 2007-8 financial crisis, when G.M. and Chrysler were forced to restructure themselves in bankruptcy court.But auto executives say they already pay production workers substantially more than rivals, like Tesla and Toyota, whose U.S. workers are not unionized. The companies also contend that such big raises would undermine their efforts to develop electric vehicles and remain relevant as the industry makes a difficult and costly shift from gasoline cars and trucks to electric vehicles.If unions got all that they were asking for, “we would have to cancel our E.V. investments,” Jim Farley, the chief executive of Ford, said in an interview on Friday. Instead, Ford would need to concentrate on large sport utility vehicles and pickups that generate the most profit, he said.Ford, which employs the most union members, reported a profit of $1.9 billion in the second quarter, equal to 4 percent of its sales. Tesla made $2.7 billion in the same period, about 11 percent of its sales.Mr. Farley sounded pessimistic about the chances of agreeing on a contract soon. “They are not negotiating in good faith if they are proposing deals that they know are going to crater our investments,” he said.Mr. Fain’s decision to shut down just three factories is a departure for the union, which in previous strikes typically walked out of all the factories of a single automaker. By interrupting production of some of the most profitable vehicles, while allowing most plants to keep operating, the union hopes to inflict pain on the carmakers while allowing most of its members to continue collecting paychecks.But it may be difficult for the union to limit the damage to its members’ incomes. Ford told workers at a facility in Michigan, who were not on strike, to stay home Friday because of parts shortages caused by the strike. G.M. said it would probably lay off 2,000 workers at a factory in Kansas next week because of a lack of parts produced at the factory near St. Louis that is on strike.Fewer than 10 percent of the nearly 150,000 U.A.W. members at the three companies are on strike. Limited strikes could allow the union to maintain the pressure longer by preserving its strike fund of $825 million. The union will pay striking workers $500 a week and cover their health insurance premiums.Automakers have been earning record profits “because of the extraordinary skill and sacrifices of U.A.W. workers,” President Biden said at the White House on Friday.Anna Rose Layden for The New York TimesIn addition to the Ford plant in Michigan, which makes the Bronco and the Ranger pickup truck, and the G.M. plant in Wentzville, Mo., which makes the GMC Canyon and the Chevrolet Colorado, workers shut down a Stellantis complex in Toledo, Ohio, that makes the Jeep Gladiator and Jeep Wrangler. If no agreement is reached, the union is expected to target additional factories in weeks to come.The union is also seeking cost-of-living adjustments that would protect workers if inflation flares up again. And it wants to reinstate pensions that the union agreed to do away with for newer workers after the financial crisis, improved retiree benefits and shorter work hours. The union also wants to eliminate a wage system that starts new hires at much lower wages than the top U.A.W. pay of $32 an hour.As of Friday last week, the companies had offered to raise pay by around 14.5 percent to 20 percent over four years. Their offers include lump-sum payments to help offset the effects of inflation, and policy changes that would lift the pay of recent hires and temporary workers, who typically earn about a third less than veteran union members.In a last-minute attempt to keep assembly lines running, G.M. offered its employees a 20 percent raise late Thursday and said it was willing to pay cost-of-living adjustments to veteran workers. The 20 percent increase would be far more than employees had received in decades. But the union rejected the offer, which it says would barely compensate for inflation.Autoworkers striking at the G.M. factory in Wentzville, Mo.Neeta Satam for The New York TimesLeaders of the automakers have criticized the U.A.W.’s tactics, focusing on Mr. Fain, who became president in March and declared an end to what he said were overly friendly relations between union leaders and auto executives. He took office after a federal corruption investigation resulted in prison terms for two former U.A.W. presidents.Carlos Tavares, the chief executive of Stellantis, has called Mr. Fain’s strategy “posturing.” Mr. Farley of Ford said the two sides should be negotiating instead of “planning strikes and P.R. events.” And Mary T. Barra, the G.M. chief executive, said that “every negotiation takes on the personality of its leader.”If the autoworkers are successful, they could inspire workers in other industries. Union activism is on the rise: Hollywood screenwriters and actors have been on strike for months, and in August, United Parcel Service employees won their biggest raises ever in a contract negotiated by the International Brotherhood of Teamsters.“Workers have been squeezed for too long and now are realizing they can do something about it,” said Mijin Cha, an assistant professor at the University of California, Santa Cruz, who studies the relationship between labor’s interests and the fight against climate change. “People see there is a pathway to more economic security and workers do have power together.”Late on Friday, at an outdoor rally in downtown Detroit attended by several hundred U.A.W. members, Mr. Fain introduced Senator Bernie Sanders, a Vermont independent, who told the crowd: “The fight you are waging here is not just about decent wages and working conditions and pensions in the auto industry. It’s a fight to take on corporate greed.”The strikes come as auto production is still recovering from the effects of the pandemic, which caused shortages of semiconductors and other components. Car prices and wait times have come down, but dealer inventories remain low and a lengthy strike could eventually make it hard to find popular U.S.-made models.“We’re not back to speed inventory-wise,” said Wes Lutz, the owner of Extreme Dodge, a car dealership in Jackson, Mich.Wes Lutz, the owner of Extreme Dodge in Michigan said, “We’re not back to speed inventory wise.”Brittany Greeson for The New York TimesScarcity is not always bad for carmakers. It allowed them to earn higher profit margins during the pandemic. And it would benefit any carmakers that were having trouble moving some models. Pat Ryan, chief executive of the car-shopping app Co-Pilot, said that Stellantis had at least 100 days of inventory for brands like Dodge and Chrysler, and that a strike could help it clear many dealers’ lots.Still, if prices for popular models rise, that will be yet another speed bump in the Federal Reserve’s road to lowering inflation, and a political liability for Mr. Biden. The president, who has no formal role in the negotiations, said Friday that he had been in touch with union leaders and auto executives, in addition to dispatching the two administration officials to Detroit.Reporting was contributed by More

  • 113 Shares139 Views

    in Economy

    UAW Standoff Poses Risk for Biden’s Electric Vehicle Commitment

    by

    A looming auto industry strike could test the president’s commitment to making electric vehicles a source of well-paying union jobs.President Biden has been highly attuned to the politics of electric vehicles, helping to enact billions in subsidies to create new manufacturing jobs and going out of his way to court the United Automobile Workers union.But as the union and the big U.S. automakers — General Motors, Ford Motor and Stellantis, which owns Chrysler, Jeep and Ram — hurtle toward a strike deadline set for Thursday night, the political challenge posed by the industry’s transition to electric cars may be only beginning.The union, under its new president, Shawn Fain, wants workers who make electric vehicle components like batteries to benefit from the better pay and labor standards that the roughly 150,000 U.A.W. members enjoy at the three automakers. Most battery plants are not unionized.The Detroit automakers counter that these workers are typically employed in joint ventures with foreign manufacturers that the U.S. automakers don’t wholly control. The companies say that even if they could raise wages for battery workers to the rate set under their national U.A.W. contract, doing so could make them uncompetitive with nonunion rivals, like Tesla.And then there is former President Donald J. Trump, who is running to unseat Mr. Biden and has said the president’s clean energy policies are costing American jobs and raising prices for consumers.White House officials say Mr. Biden will still be able to deliver on his promise of high-quality jobs and a strong domestic electric vehicle industry.The head of the United Automobile Workers, Shawn Fain, center, wants his union’s wages and labor standards to apply to nonunion workers who make electric vehicle components.Brittany Greeson for The New York Times“The president’s policies have always been geared toward ensuring not only that our electric vehicle future was made in America with American jobs,” said Gene Sperling, Mr. Biden’s liaison to the U.A.W. and the auto industry, “but that it would promote good union jobs and a just transition” for current autoworkers whose jobs are threatened.But in public at least, the president has so far spoken only in vague terms about wages. Last month, he said that the transition to electric vehicles should enable workers to “make good wages and benefits to support their families” and that when union jobs were replaced with new jobs, they should go to union members and pay a “commensurate” wage. He is encouraging the companies and the union to keep bargaining and reach an agreement, one of Mr. Biden’s economic advisers, Jared Bernstein, told reporters on Wednesday.A strike could force Mr. Biden to be more explicit and choose between his commitment to workers and the need to broker a compromise that averts a costly long-term shutdown.“Battery workers need to be paid the same amount as U.A.W. workers at the current Big Three,” said Representative Ro Khanna, a Democrat from California who has promoted government investments in new technologies.Mr. Khanna added, “It’s how we contrast with Trump: We’re for creating good-paying manufacturing jobs across the Midwest.”At the heart of the debate is whether the shift to electric vehicles, which have fewer parts and generally require less labor to assemble than gas-powered cars, will accelerate the decline of unionized work in the industry.Foreign and domestic automakers have announced tens of thousands of new U.S.-based electric vehicle and battery jobs in response to the subsidies that Mr. Biden helped enact. But most of those jobs are not unionized, and many are in the South or West, where the U.A.W. has struggled to win over autoworkers. The union has tried and failed to organize workers at Tesla’s factory in Fremont, Calif., and Southern plants owned by Volkswagen and Nissan.A Ford Lightning plant in Dearborn, Mich. The U.A.W. worries that letting battery makers pay lower wages will allow G.M., Ford and Stellantis to replace much of their current U.S. work force with cheaper labor.Brittany Greeson for The New York TimesAs a result, the union has focused its efforts on battery workers employed directly or indirectly by G.M., Ford and Stellantis. The going wage for this work tends to be far below the roughly $32 an hour that veteran U.A.W. members make under their existing contracts with three companies.Legally, employees of the three manufacturers can’t strike over the pay of battery workers employed by joint ventures. But many U.A.W. members worry that letting battery manufacturers pay far lower wages will allow G.M., Ford and Stellantis to replace much of their current U.S. work force with cheaper labor, so they are seeking a large wage increase for those workers.“What we want is for the E.V. jobs to be U.A.W. jobs under our master agreements,” said Scott Houldieson, chairperson of Unite All Workers for Democracy, a group within the union that helped propel Mr. Fain to the presidency.The union’s officials have pressed the auto companies to address their concerns about battery workers before its members vote on a new contract. They say the companies can afford to pay more because they collectively earned about $250 billion in North America over the past decade, according to union estimates.But the auto companies, while acknowledging that they have been profitable in recent years, point out that the transition to electric vehicles is very expensive. Industry executives have suggested that it is hard to know how quickly consumers will embrace electric vehicles and that companies needed flexibility to adjust.Even if labor costs were not an issue, said Corey Cantor, an electric vehicle analyst at the energy research firm BloombergNEF, it could take the Big Three several years to catch up to Tesla, which makes about 60 percent of fully electric vehicles sold in the United States.A strike could force Mr. Biden to choose between his commitment to workers and the need to avert a costly shutdown of the U.S. auto industry.Bill Pugliano/Getty ImagesData from BloombergNEF show that G.M., Ford and Stellantis together sold fewer than 100,000 battery electric vehicles in the United States last year; in 2017, Tesla alone sold 50,000. It took Tesla another five years to top half a million U.S. sales. (The Big Three also sold nearly 80,000 plug-in hybrids last year.)The three established automakers had hoped to use the transition to electric cars to bring their costs more in line with their competitors, said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, a research firm. If they can’t, he added, they will have to look for savings elsewhere.In a statement, Stellantis said its battery joint venture “intends to offer very competitive wages and benefits while making the health and safety of its work force a top priority.”Estimates shared by Ford put hourly labor costs, including benefits, for the three automakers in the mid-$60s, versus the mid-$50s for foreign automakers in the United States and the mid-$40s for Tesla.Ford’s chief executive, Jim Farley, said in a statement last month that the company’s offer to raise pay in the next contract was “significantly better” than what Tesla and foreign automakers paid U.S. workers. He added that Ford “will not make a deal that endangers our ability to invest, grow and share profits with our employees.”Mr. Biden and Democratic lawmakers had sought to offset this labor-cost disadvantage by providing an additional $4,500 subsidy for each electric vehicle assembled at a unionized U.S. plant, above other incentives available to electric cars. But the Senate removed that provision from the Inflation Reduction Act.Such setbacks have frustrated the U.A.W., an early backer of Mr. Biden’s clean energy plans. In May, the union, which normally supports Democratic presidential candidates, withheld its endorsement of Mr. Biden’s re-election.“The E.V. transition is at serious risk of becoming a race to the bottom,” Mr. Fain said in an internal memo. “We want to see national leadership have our back on this before we make any commitments.”The next month, Mr. Fain chided the Biden administration for awarding Ford a $9.2 billion loan to build three battery factories in Tennessee and Kentucky with no inducement for the jobs to be unionized.A BMW battery plant in South Carolina. The U.A.W. has struggled to unionize autoworkers in the South.Juan Diego Reyes for The New York TimesMr. Biden tapped Mr. Sperling, a Michigan native, to serve as the White House point person on issues related to the union and the auto industry around the same time. By late August, the Energy Department announced that it was making $12 billion in grants and loans available for investments in electric vehicles, with a priority on automakers that create or maintain good jobs in areas with a union presence.Mr. Sperling speaks regularly with both sides in the labor dispute, seeking to defuse misunderstandings before they escalate, and said the recent Energy Department funding reflected Mr. Biden’s commitment to jump-start the industry while creating good jobs.Complicating the picture for Mr. Biden is the growing chorus of Democratic politicians and liberal groups that have backed the autoworkers’ demands, even as they hail the president’s success in improving pay and labor standards in other green industries, like wind and solar.Nearly 30 Democratic senators signed a letter to auto executives this summer urging them to bring battery workers into the union’s national contract. Dozens of labor and environmental groups have signed a letter echoing the demand.The groups argue that the change would have only a modest impact on automakers’ profits because labor accounts for a relatively small portion of overall costs, a claim that some independent experts back.Yen Chen, principal economist of the Center for Automotive Research, a nonprofit group in Ann Arbor, Mich., said labor accounted for only about 5 percent of the cost of final assembly for a midsize domestic sedan based on an analysis the group ran 10 years ago. Mr. Chen said that figure was likely to be lower today, and lower still for battery assembly, which is highly automated.Beyond the economic case, however, Mr. Biden’s allies say allowing electric vehicles to drive down auto wages would be a catastrophic political mistake. Workers at the three companies are concentrated in Midwestern states that could decide the next presidential election — and, as a result, the fate of the transition to clean energy, said Jason Walsh, the executive director of the BlueGreen Alliance, a coalition of unions and environmental groups.“The economic effects of doing that are enormously harmful,” he said. “The political consequences would be disastrous.” More

  • 100 Shares149 Views

    in Economy

    G.M.’s Sales Jumped 19% in the Second Quarter

    by

    General Motors, Toyota and other automakers sold more trucks and sport utility vehicles as supply chain problems eased and demand remained strong despite rising interest rates.Some of the country’s biggest automakers reported big sales increases for the second quarter on Wednesday, the strongest sign yet that the auto industry was bouncing back from parts shortages and overcoming the effects of higher interest rates.General Motors, the largest U.S. automaker, said it sold 691,978 vehicles from April to June, up 19 percent from a year earlier. It was the company’s highest quarterly total in more than two years.Automakers have struggled in the last two years with a shortage of computer chips that forced factory shutdowns and left dealers with few vehicles to sell. More recently, rising interest rates have made auto loans more expensive, causing some consumers to defer purchases or opt for used vehicles.“I’m not saying we are on the cusp of exciting growth here,” said Jonathan Smoke, chief economist at Cox Automotive, a research firm. “But we are now at a turning point where the auto market returns to more balance. It’s the beginning of returning to normal.”The easing of chip shortages has allowed automakers to restock dealer lots, making it easier for car buyers to find the models and features they want, Mr. Smoke said. At the end of June, dealers had about 1.8 million vehicles in stock, nearly 800,000 more than at the same point in 2022, according to Cox data.Sales have also been helped by strong job creation and rising wages, Mr. Smoke said.At the same time, however, higher interest rates and higher car prices have put new-car purchases out of reach of many consumers. In the first half of the year, the average price paid for a new vehicle was a near-record $48,564. The average interest rate paid on car loans in the first six months of 2023 was 7.09 percent, up from 4.86 percent a year earlier, according to Cox. The average monthly payment in the first half was $784, up from $691.“Demand will be limited by the level of prices and rates, which are not likely to come down enough to stimulate more demand than the market can bear,” Mr. Smoke said.Cox estimated that total sales of new cars and trucks rose 11.6 percent in the first half of the year, to 7.65 million. The firm now expects full-year sales to top 15 million, which would be a rise of 8 percent.Several automakers reported solid quarterly sales on Wednesday. Toyota said its U.S. sales rose 7 percent, to 568,962 cars and light trucks. Stellantis, the company that owns Jeep, Ram, Chrysler and other brands, reported a 6 percent rise, to 434,648 vehicles.Honda, which had been severely hampered by chip shortages, said its sales rose 45 percent to 347,025 cars and trucks. Hyundai and Kia, the South Korean automakers, each sold more than 210,000 vehicles, posting gains of 14 percent and 15 percent.Electric vehicles remain the fastest-growing segment of the auto industry. Rivian, a maker of electric pickup trucks and sport utility vehicles, said on Monday that it delivered 12,640 in the second quarter, a 59 percent jump from a year earlier. And on Sunday, Tesla reported an 83 percent jump in global sales in the second quarter.Cox estimated that more than 500,000 electric vehicles were sold in the United States in the first six months of the year, and that more than one million would be sold in 2023, setting a record for battery-powered cars and trucks in the country.Tesla, which does not break out its sales by country, remains the largest seller of E.V.s in the U.S. market. Cox estimated that the company sold more than 161,000 electric cars in the second quarter in the United States. Ford Motor, which offers three fully electric models., reports its quarterly sales on Thursday.G.M. sold more 15,300 battery-powered cars and trucks, but nearly 14,000 were the Chevrolet Bolt, a smaller vehicle that the company will stop making at the end of the year. The company also sold 1,348 Cadillac Lyriq electric S.U.V.s and 47 GMC Hummer pickup trucks. Chevrolet will soon start delivering a new electric Silverado pickup truck, which uses the same battery technology as the Lyriq and Hummer. More

  • 125 Shares139 Views

    in Economy

    As U.S. and Chinese Officials Meet, Businesses Temper Their Hopes

    by

    Chief executives in the U.S. have long pushed for closer ties between the two countries. Now they just hope a rocky situation won’t get worse.In a meeting in Beijing on Friday, China’s leader, Xi Jinping, traded warm smiles with Bill Gates and praised Mr. Gates as “the first American friend” he had met this year.The encounters in Beijing between Secretary of State Antony J. Blinken and his Chinese counterparts, starting on Sunday, are likely to feel noticeably chillier.The high-level meetings are aimed at getting the U.S.-China relationship back on track, and many American business leaders have been pushing the Biden administration to try to restore some stability in one of the world’s most important bilateral relationships.But for business leaders, and for officials on both sides, expectations for the meetings appear modest, with two main goals for the talks. One is to restore communication between the governments, which broke down this year after a Chinese surveillance balloon flew into U.S. airspace and Mr. Blinken canceled a visit scheduled for February. The other is to halt any further decline in the countries’ relationship.There is already evidence of the impact of the fraying ties. Foreign direct investment in China has fallen to an 18-year low. A 2023 survey by the American Chamber of Commerce in China showed that companies still see the Chinese market as a priority, but that their willingness to invest there is declining.“The economic relationship has become so dismal that any sign of progress is welcome, though expectations are low for any sort of a breakthrough,” said Jake Colvin, the president of the National Foreign Trade Council, which represents multinational businesses.“The hope is that high-level dialogues like this can start to inject some certainty for business into an increasingly fraught and unpredictable trade relationship,” he said.Still, as one of the world’s largest consumer markets and home to many factories that supply global businesses, China exerts a powerful pull. This year, as it eased its travel restrictions after three years of pandemic lockdowns, a parade of chief executives made trips to China, including Mary Barra of General Motors, Jamie Dimon of JPMorgan Chase and Stephen Schwarzman of Blackstone.On a visit to China this month, Elon Musk, the chief executive of Tesla and owner of Twitter, described the American and Chinese economies as “conjoined twins” and said he opposed to efforts to split them. Apple’s chief executive, Tim Cook, traveled to China in March and lauded the company’s “symbiotic” relationship with the nation.Sam Altman, the leader of OpenAI, which makes the ChatGPT chatbot, appeared virtually at a conference in Beijing this month, saying American and Chinese researchers should continue to work together to counter the risks of artificial intelligence.The tech industry, which has forged lucrative relationships with Chinese manufacturers and consumers, has warily watched Washington’s aggressive approach to China. While industry groups acknowledge the importance of moves to safeguard national security, they have urged the Biden administration to carefully calibrate its actions.Wendy Cutler, a former diplomat and trade negotiator who is now vice president at the Asia Society Policy Institute, said the United States and China might announce some small steps forward at the end of the meetings. The governments might agree, she said, to increase the paltry number of flights between their countries or the visas they are issuing to foreign visitors.But both sides will have plenty of grievances to air, Ms. Cutler said. Chinese officials are likely to complain about U.S. tariffs on goods made in China and restrictions on U.S. firms selling coveted chip technology to China. American officials may highlight China’s deteriorating business environment and its recent move to bar companies that handle critical information from buying microchips made by the U.S. company Micron.“I’m not expecting any breakthroughs, particularly on the economic front,” Ms. Cutler said, adding, “Neither side will want to be smiling.”American officials hope Mr. Blinken’s visit paves the way for more cooperation, including on issues like climate change and the restructuring the debt loads of developing countries. Other officials, including Treasury Secretary Janet L. Yellen, are considering visits to China this year, and Mr. Xi and President Biden may meet directly at either the Group of 20 meetings in Delhi in September or an Asia-Pacific economic meeting in San Francisco in November.In recent months, Biden officials have tried to mend the rift between the countries by arguing for a more “constructive” relationship. They have echoed European officials in saying their desire is for “de-risking and diversifying” their economic relationships with China, not “decoupling.”But trust between the governments has eroded, and Chinese officials appear to be skeptical of how much the Biden administration can do to restore ties.The extensive U.S. restrictions on the semiconductor technology that can be shared with China, which were issued in October, continue to rankle officials in Beijing. The United States has added dozens of Chinese companies to sanctions lists for aiding the Chinese military and surveillance state, or circumventing U.S. restrictions against trading with Iran and Russia.Biden administration officials are weighing further restrictions on China, including a long-delayed order covering certain U.S. venture capital investments. And the White House faces intense pressure from Congress to do more to crack down on national security threats emanating from Beijing.Not all companies are pushing for improved ties. Some with less exposure to China have tried to reap political benefits in Washington from the growing competition with the country. Meta, the parent company of Facebook and Instagram, has repeatedly raised concerns about TikTok, the Chinese-owned video app that has proved a formidable competitor to Instagram.“It’s really a dispute over the degree,” said James Lewis, a senior vice president at the Center for Strategic and International Studies. “How accommodating are you? How confrontational are you?”How aggressively companies are resisting the tensions with China, Mr. Lewis said, is linked to their exposure to the country’s market.“I think a lot of this has to do with your presence in China,” he said. More

  • 100 Shares149 Views

    in Economy

    Ford Follows Tesla in Cutting Electric Vehicle Prices

    by

    The automaker reduced the price of the Mustang Mach-E by up to $5,900 after Tesla slashed prices of its cars by as much as 20 percent.Ford Motor said on Monday that it was cutting prices on its top-selling battery-powered model, the Mustang Mach-E, and increasing production of the sport utility vehicle. It was the latest sign of intensifying competition in the electric car market.Two weeks ago, Tesla slashed prices of its electric cars by as much as 20 percent in response to softening demand around the world.The price cuts for the two most affordable versions of the Mach-E amounted to less than $1,000 each. Other models, with longer-range batteries and premium options, were reduced $3,680 to $5,900, reductions of 6 percent to 9 percent.“We want to make E.V.s more accessible, so we’re increasing production and reducing prices across the Mach-E lineup,” Ford’s chief executive, Jim Farley, said on Twitter. He added that “with higher production, we’re reducing costs, which allows us to share these savings with customers.”The lowest-priced Mustang Mach-E — a rear-wheel-drive model with a standard battery — now has a list price of $45,995, a reduction of $900. The high-performance Mach-E GT with an extended-range battery now sells for $63,995, a cut of $5,900.Tesla’s least expensive car is the Model 3, which is smaller than the Mustang Mach-E and starts at $43,990. The all-wheel-drive Model Y, a more direct competitor of the electric Mustang, starts at $53,490. An all-wheel-drive Mustang Mach-E with comparable battery range now lists for $53,995.Electric vehicles priced below $55,000 can qualify for federal tax credits of $7,500 that were made available starting Jan. 1 under the Inflation Reduction Act. Ford’s price cuts will make more versions of the Mach-E eligible for the credit.Ford said the new prices would automatically apply to customers who had placed orders and were waiting for their cars. Ford’s credit division is also offering subsidized interest rates as low as 5.34 percent on Mach E orders placed between Jan. 30 and April 3.Tesla has long dominated the electric car market, which it largely had to itself until the last couple of years, but is increasingly encountering stiff competition. Its rate of growth has slowed in China, where its is now outsold by a local manufacturer, BYD. In addition to Ford, Volkswagen, Hyundai, Kia and other automakers have introduced electric models in the United States that are selling well and are generally cheaper than Tesla’s luxury models.In 2022, Ford sold just under 40,000 Mach-Es, about 45 percent more than in 2021. That made the Mach-E the third-best-selling electric model after Tesla’s Model Y and Model 3.For much of the last two years, Tesla, Ford and other automakers raised prices of electric vehicles because demand for battery-powered cars far outstripped supply. But demand for cars and other big-ticket goods has weakened in recent months as the Federal Reserve has raised interest rates significantly. Fed policymakers are expected to slow their rate increases at their first meeting of the year on Wednesday. More

  • 138 Shares139 Views

    in Economy

    Supply Problems Hurt Auto Sales in 2022. Now Demand Is Weakening.

    by

    A global semiconductor shortage is easing, which could allow carmakers to lift production this year. But higher interest rates could keep sales low.Last year, sales of new cars and trucks fell to their lowest level in a decade because automakers could not make enough vehicles for consumers to buy. This year, sales are likely to remain soft, but for an entirely different reason — weakening demand.The Federal Reserve’s interest rate increases, which are intended to slow inflation, have made it harder and more expensive for consumers to finance automobile purchases, after prices had already risen to record highs.Analysts expect that higher rates and a slowing economy will force some U.S. shoppers to delay car purchases or steer away from showrooms altogether in 2023 even if automakers crank out more vehicles than they did last year because they can get more parts.“For over a decade, low interest rates have helped people buy the big cars that Americans like,” said Jessica Caldwell, executive director of insights at Edmunds, a market research firm. “Low rates from the Fed are what made those attractive offers for zero-percent financing and 72-month loans possible, but with the higher rates, it’s a pretty unfriendly market for people buying a car.”Edmunds estimates that automakers will sell 14.8 million cars and trucks in the United States this year, which would be well below the sales that automakers became accustomed to in the previous decade.Inflation F.A.Q.Card 1 of 5What is inflation? More

  • 150 Shares109 Views

    in Economy

    This Remote Mine Could Foretell the Future of America’s Electric Car Industry

    by

    Hiding a thousand feet below the earth’s surface in this patch of northern Minnesota wetlands are ancient mineral deposits that some view as critical to fueling America’s clean energy future.Tim Gruber for The New York TimesA company called Talon Metals is drilling here around the clock, extracting samples of rock rich with nickel in a bid to become the country’s sole source of a material used to power zero-emission vehicles.But some locals are fighting the mine, for fear it could pollute their environment. The pushback hints at how difficult it may be to build an all-American supply chain that powers the country’s transition to electric vehicles.This Remote Mine Could Foretell the Future of America’s Electric Car IndustryTAMARACK, Minn. — In this isolated town of about 100 people, dozens of employees are at work for Talon Metals, drawing long cylinders of rock from deep in the earth and analyzing their contents. They liken their work to a game of Battleship — each hole drilled allows them to better map out where a massive and long-hidden mineral deposit is lurking below.The company is proposing to build an underground mine near Tamarack that would produce nickel, a highly sought-after mineral that is used to power electric vehicles. It would be a profitable venture for Talon, which has a contract to supply nickel for Tesla’s car batteries, and a step forward in the country’s race to develop domestic supply chains to feed the growing demand for electric vehicles.But mines that extract metal from sulfide ore, as this one would, have a poor environmental record in the United States, and an even more checkered footprint globally. While some in the area argue the mine could bring good jobs to a sparsely populated region, others are deeply fearful that it could spoil local lakes and streams that feed into the Mississippi River. There is also concern that it could endanger the livelihoods and culture of Ojibwe tribes whose members live just over a mile from Talon’s land and have gathered wild rice here for generations.Talon says it will invest heavily to design the world’s greenest and most responsible mine yet, one that they say “Joe Biden can love.” But some people in the community remain skeptical, including about the company’s promises to respect Indigenous rights, like the tribes’ authority over lands where their members hunt and gather food. Part of that mistrust stems from the fact that Talon’s minority partner, Rio Tinto, provoked outrage in 2020 by blowing up a 46,000-year-old system of Aboriginal caves in Australia in a search for iron ore.Kelly Applegate, the commissioner of natural resources for the Mille Lacs Band of Ojibwe, said he was “very concerned” about how the mine might damage the environment. “This again is an assault on Native culture, a disturbance of our way of being, another trauma that could potentially happen to our people,” he said.He described it as a “huge environmental justice issue” to mine local resources for electric cars that the tribe’s members would be unable to afford. Except for some wealthy homeowners who spend their summers around the lakes, the area is one of the poorest parts of Minnesota. Native Americans in Minnesota experience poverty at higher rates than any other racial or ethnic group in the state. Locals say the only Tesla for miles is Talon’s company car.“Talon and Rio Tinto will come and go — greatly enriched by their mining operation. But we, and the remnants of the Tamarack mine, will be here forever,” Mr. Applegate said.The project, which lies 50 miles west of Lake Superior, highlights some of the challenges that are emerging as the Biden administration tries to transition America to electric vehicles. The administration has said it wants to make the supply chains for batteries more resilient by sourcing minerals inside North America. But that desire could bring its own potential for environmental damage and infringement of the rights of Indigenous Americans. Much of the nation’s supply of battery materials is near tribal land.The world urgently needs to switch to cleaner cars to limit the global damage from climate change, many climate activists say. Last week, California approved a plan to ban the sale of new gas-powered cars by 2035.But current supply chains for electric vehicle batteries — and the batteries that would be needed for the electric grid that would charge that fleet of vehicles — rely on some adversarial and heavily polluting foreign nations. Much of the nickel that goes into car batteries is produced by strip mines that have decimated rainforests in Indonesia and the Philippines, releasing vast amounts of carbon dioxide before being refined in Chinese factories powered by coal.Read More on Electric VehiclesBanning Gasoline Cars: California is leading the way in the push to electrify the nation’s car fleet with a plan to ban sales of new internal-combustion vehicles by 2035, but the rule will face several challenges.Inflation Reduction Act: The law extends tax incentives in an effort to steer more U.S. consumers toward electric cars. But new rules complicate the qualification process.Plug-In Hybrids: After falling behind all-electric cars, U.S. sales of plug-in hybrids have been surging. The high cost of electric cars and gasoline have given them an opening.Car Crashes: Tesla and other automakers capture data from their vehicles to operate their products. Experts say the collected information could also improve road safety.Another source of nickel is a massive mining operation north of the Arctic Circle in Norilsk, Russia, which has produced so much sulfur dioxide that a plume of the toxic gas is big enough to be seen from space. Other minerals used in electric vehicle batteries, such as lithium and cobalt, appear to have been mined or refined with the use of child or forced labor.With global demand for electric vehicles projected to grow sixfold by 2030, the dirty origins of this otherwise promising green industry have become a looming crisis. The Democrats’ new tax and climate bill devotes nearly $400 billion to clean energy initiatives over the next decade, including electric vehicle tax credits and financing for companies that manufacture clean cars in the United States.New domestic high-tech mines and factories could make this supply chain more secure, and potentially less damaging to the global environment. But skeptics say those facilities may still pose a risk to the air, soil and water that surrounds them, and spark a fierce debate about which communities might bear those costs.The project is near lakes and streams that feed into the Mississippi River, and where Ojibwe tribes have gathered wild rice for generations.The potential risks to plants and wildlife come from the sulfide ores; the ores, in which materials like copper and nickel are lodged, can leach out sulfuric acid and heavy metals. More than a dozen former copper mines in the United States are now Superfund sites, contaminated locations where taxpayers can end up on the hook for cleanup.In January, the Biden administration canceled leases for another copper-nickel mine near a Minnesota wilderness area, saying the Trump administration had improperly renewed them.Talon Metals insists that it will have no such problems. “We can produce the battery materials that are necessary for the energy transition and also protect the environment,” said Todd Malan, the company’s chief external affairs officer and head of climate strategy. “It’s not a choice.”The company is using high-tech equipment to map underground flows of water in the area and create a 3-D model of the ore, so it can mine “surgically” while leaving other parts of the earth undisturbed, Mr. Malan said. Talon is also promising to use technology that will safely store the mine’s toxic byproducts and do its mining far underground, in deep bedrock where groundwater doesn’t typically penetrate.Talon has teamed up with the United Steelworkers union on work force development. And Rio Tinto has won a $2.2 million Department of Energy grant to explore capturing carbon near the site, which may allow the mine to market its products as zero emission.“We can produce the battery materials that are necessary for the energy transition and also protect the environment,” said Todd Malan, the chief external affairs officer and head of climate strategy at Talon.In a statement, Talon said it was committed to “meaningful consultations with tribal sovereign governments and tribal people” and producing a mine plan that addressed their concerns, as well as working with tribal governments interested in economic benefit sharing.The company has held several informational meetings with tribal staff and members, but some tribal members say they still need far more details from Talon about its plans.If the mine comes online in 2026 as scheduled, it will be positioned to feed a hungry market. The United States currently has one operating nickel mine, in Michigan, but its resources will be exhausted by 2026.In Washington, a bipartisan consensus is growing that the country should reduce its reliance on risky overseas minerals. To limit global warming to the levels that advanced countries have agreed on, the International Energy Agency estimates, the world will need roughly 20 times as much nickel and cobalt by 2040 as it had in 2020 and 40 times as much lithium.Recycling could play a bigger role in supplying these materials by the end of the decade, and some new car batteries do not use any nickel. Yet nickel is still highly sought after for electric trucks and higher-end cars, because it increases a vehicle’s range.The infrastructure law passed last year devoted $7 billion to developing the domestic supply chain for critical minerals. The climate and tax law also sets ambitious thresholds for ensuring that electric vehicles that receive tax incentives are partly U.S.-made.Elisabeth Kachinske logged core samples containing nickel at Talon’s offices in Tamarack, Minn.Talon’s proposed mine could help Tesla meet those thresholds. Tesla gets its nickel from China, Australia, New Caledonia and Canada, and its chief executive, Elon Musk, has begged miners to produce more.Some environmental and left-leaning groups that have long been skeptical of domestic mining are adjusting those positions, arguing that resources are needed for the energy transition.Collin O’Mara, the chief executive of the National Wildlife Federation, said that there was a growing need for battery materials that were mined responsibly, and that Talon was promising to use state-of-the-art techniques to minimize the mine’s footprint.But he acknowledged that for local residents it would still take a leap of faith in new technologies and Talon’s ability to apply them. “There still isn’t an example of an existing mine that has had no impacts,” he said.The economic potential — and the environmental risks — may go far beyond a single mine. The entire region is home to deposits of nickel, copper and cobalt, which were formed 1.1 billion years ago from a volcano that spewed out miles of liquid magma.Talon has leased 31,000 acres of land in the area, covering an 11-mile geological feature deep under the swamp. The company has zealously drilled and examined the underground resources along one of those 11 miles, and discovered several other potential satellite deposits.Elizabeth Skinaway, a member of the Sandy Lake Band of Minnesota Chippewa, is especially concerned about damage to the wild rice, which she has gathered in lakes near the proposed mine for 43 years.In August, the company announced that it had also acquired land in Michigan’s Upper Peninsula to explore for more nickel.Talon will start Minnesota’s environmental review process within a few months, and the company says it anticipates a straightforward review. But legal challenges for proposed mines can regularly stretch to a decade or more, and some living near the project say they will do what they can to fight the mine.Elizabeth Skinaway and her sister, Jean Skinaway-Lawrence, members of the Sandy Lake Band of Minnesota Chippewa, are especially concerned about damage to the wild rice, which Ms. Skinaway has been gathering in lakes several miles from the proposed mine for 43 years.Ms. Skinaway acknowledges the need to combat climate change, which also threatens the rice. But she sees little justice in using the same kind of profit-driven, extractive industry that she said had long plundered native lands and damaged the global environment.“The wild rice, the gift from the creator, that’s going to be gone, from the sulfide that’s going to leach into the river and the lakes,” she said. “It’s just a really scary thought.”“We were here first,” said her sister. “We should be heard.”The Talon drill site near Tamarack. More