Cruise’s not-so-great week isn’t getting better, Europe just recorded the lowest new car sales in June in more than a quarter of a century, and Tesla wants a U.S. District Court in Texas to tell the employees suing it to go take a walk. All that and more in this TGIF edition of The Morning Shift for July 15, 2022.
1st Gear: Drama at Cruise
Last week, General Motors’ autonomous taxi unit Cruise gained attention for all the wrong reasons when a California DMV report surfaced, detailing that one of its vehicles was involved in an accident with a Toyota Prius at an intersection in San Francisco on June 3. That immediately sparked an NHTSA investigation.
This past Thursday, the Wall Street Journal reports that an individual claiming to be a Cruise employee wrote a letter to the California Public Utilities Commission dated May 19, expressing concern over the company’s handling of safety issues. From the article:
The Journal hasn’t been able to independently verify the employment status of the letter’s author or the allegations raised by this person. Requests for comment sent to the email address listed on the letter weren’t returned.
In the letter, the person describes himself as a father and a Cruise employee for a number of years and asks that his comments remain private.
The letter also raises concerns about Cruise’s internal safety-reporting system, with the self-described employee citing one incident in which he filed a complaint that hadn’t been processed for six months.
The letter also claims that Cruise had regularly experienced incidents where vehicles stopped and were stranded individually or in clusters, blocking traffic. In some cases, the fallback systems designed to take control of the vehicle remotely failed, leaving Cruise employees unable to move the vehicles out of traffic until they were physically towed away, the person states in the letter.
“My subjective opinion from experiencing this and speaking with others at the company is that employees generally do not believe we are ready to launch to the public,” the letter writer states.
One incident in which a gaggle of Cruise taxis blocked the flow of traffic actually occurred days after this letter was sent, at the end of May. Previously, a Cruise autonomous vehicle got in the way of a fire truck responding to an emergency call.
Automotive News has also apparently seen the letter, and goes into a bit more detail as to its contents, emphasis mine:
The person further said information from traffic crashes involving the company’s vehicles was hidden from employees who worked on critical safety systems.
Based on those experiences, clusters of vehicles getting stuck at intersections and discussions with fellow employees, the person wrote, “employees generally do not believe we are ready to launch to the public, but there is fear of admitting this because of expectations from leadership and investors.”
This is pretty much the last thing any company pushing self-driving services should want to be known for, but the culture of breaking eggs to make omelets is strong in Silicon Valley, even if the safety of occupants and other drivers and passengers on the road hangs in the balance. Cruise told the Journal it’s “proud of” its record and that “it speaks for itself:”
A Cruise spokesman said the company has a transparent relationship with regulators, speaks with them on a regular basis and strictly follows reporting requirements.
“Our safety record is tracked, reported, and published by multiple government agencies,” he said, in response to the concerns laid out in the letter. “We’re proud of it and it speaks for itself.”
2nd Gear: Flagging Car Sales in Europe
Europe is ground zero for the shifting automotive landscape, with one out of every 10 new cars sold there in the first quarter of 2022 being an EV. Europe is also reflecting the industry in another way: this past June tallied the lowest number of new car sales for a single month on the continent since 1996. From Reuters:
Volkswagen Group was the hardest-hit major carmaker with nearly a quarter less sales than last June. Across the first half year, however, Stellantis has seen the biggest drop so far at 21.1%.
Among smaller brands, Volvo’s new registrations fell 47.9% in June and 28.5% across the first half of the year, while Jaguar Land Group saw a lesser fall in June at 13.2% but the steepest hit this year so far at 34.7%.
Inflation, supply chain bottlenecks, rising coronavirus cases in some countries and an ongoing chip shortage are just a few of the problems plaguing the auto industry in the region, which has now registered 12 consecutive months of declines.
Major carmakers from BMW to Stellantis have in recent weeks reported falling sales globally ahead of their second quarter results later this month.
All four of the major European Union markets - Spain, Italy, Germany and France - reported a decline in car registrations.
Total passenger vehicle sales in the U.S. in June were down 12 percent — or about 150,000 cars — compared to June 2021, according to data from MarkLines. However, that was still roughly 30,000 units better than May 2022.
3rd Gear: Tesla v. Employees, Again
Last month, Tesla was sued by a group of employees for conducting a mass layoff without sufficient prior notice, allegedly running afoul of Texas’ Worker Adjustment and Retraining Notification (WARN) Act. Tesla had been sued for exactly this sort of thing before, in California.
On Thursday, the EV maker asked the U.S. District Court for the Western District of Texas to dismiss the case, because the employees in question supposedly agreed in writing to settle legal matters in arbitration, not in court. From Reuters:
Tesla in a filing in federal court in Austin, Texas, where the company is based, said the workers who were terminated signed valid agreements to bring employment-related legal disputes in arbitration and to refrain from participating in class-action lawsuits.
Even if the case remained in court, it should be dismissed because the company was merely “right-sizing” by firing poorly performing workers and not engaging in layoffs that require advance notice, Tesla said.
Lawyers for the plaintiffs did not immediately respond to a request for comment.
The federal Worker Adjustment and Retraining Notification (WARN) Act requires businesses to notify workers of mass layoffs at least 60 days in advance unless they are caused by natural disasters or “unforeseeable business circumstances.”
The lawsuit filed in June by two former Tesla employees accuses the company of violating the law by abruptly laying off more than 500 workers at its Sparks, Nevada gigafactory as part of a nationwide purge of its workforce.
The plaintiffs are seeking class action status for all former Tesla employees throughout the United States who were laid off in May or June without notice.
Tesla’s defense in this WARN suit is the same as its defense in that California one from five years ago: that these were firings that happened as a result of poor performance, not layoffs triggered by business constraints. That assertion might be more defensible if CEO Elon Musk didn’t call for the recent cuts in the same email in which he professed a “super bad feeling” about the economy.
4th Gear: Saudi Arabia Now Owns Part of Aston Martin
If you ask Aston Martin CEO Lawrence Stroll, he’ll tell you that Geely just tried to sweep the independent luxury and performance brand out from under them. Stroll and his team have spurned that offer and chosen to raise about $772 million through Saudi Arabia’s sovereign wealth fund, per the Telegraph:
Mr Stroll on Friday said the company had turned down the offer of £1.3bn of fresh capital from Chinese car maker Geely and private equity house InvestIndustrial, which would have handed the two firms control of the troubled luxury car maker.
“They were really just trying to make an offer, in the banks’ and our opinion, to buy the company on the cheap, coming through the back door rather than going through the front door and paying a premium,” Mr Stroll said. “We believe it was a disguised approach.”
News of the spurned approach came as Aston Martin unveiled a plan to raise £653m from investors, led by Mr Stroll and Saudi Arabia.
Saudi Arabia’s sovereign wealth fund, together with existing shareholders Mercedes-Benz and investors led by Mr Stroll, will inject new funds to pay off debt and fund the company’s plan to roll out battery-powered versions of its cars.
The Saudi Public Investment Fund will invest £78m, with the remaining £575m raised through a rights issue. Mercedes will invest £56m and Mr Stroll’s investment company will pay £105m, maintaining his position as the largest shareholder.
He defended the company’s new Saudi shareholders, who will also receive at least one board seat at Aston Martin and own 17pc of the firm.
Saudi Arabia likes to own random shit these days, including once-beloved Japanese video game developer and King of Fighters-maker SNK, so this seems on brand.
5th Gear: They’re Still Going With That Name, Huh
BlueOvalSK is the battery-making partnership between Ford and battery supplier SK Innovation. They have finalized their joint venture as of this week, which started as a memorandum of understanding last year, that looks to raise battery production facilities in Tennessee and Kentucky. From Reuters:
Ford Motor Co and South Korean battery maker SK On Co along with its subsidiary on Thursday finalized setting up a joint venture for building and operating battery production facilities in the United States.
The JV, BlueOval SK LLC, will establish a battery plant for electric vehicles (EV) in Tennessee and two other facilities in Kentucky, the U.S. automaker said in a regulatory filing.
Both the companies had signed a memorandum of understanding for the JV in May last year. BlueOval SK is expected to produce about 60 gigawatt hours of power annually that could be raised further.
Additionally, Ford will put up $6.6 billion for the initiative between now and 2026. “Blue Oval” remains a silly nickname, but Ford seems to back it. I’ve used it in my writing before, but only begrudgingly out of a need for a synonym for “Ford.” Approximately 30 percent of writing is rifling through a thesaurus, it’s true.
Reverse: The Thing Elon Musk Is Desperate Not to Own Is Born
On this fateful day in 2006, the internet was made a lot angrier and more exhausting:
Neutral: Popular Opinion
The Hyundai Vision 74 is the best concept car I’ve seen in years. Sure it’s pure nostalgia bait, but I don’t care. It also vehemently upsets me, because automakers love to dangle these sorts of tastefully retro designs in front of us with no ambition to sell them.