Photo: Refugio Ruiz (AP)
Good morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.
1st Gear: I Make All Of My Promises Right Around 1 A.M
Tesla CEO Elon Musk has been trying to be forthright about the automaker’s troubles ramping up production of the Model 3, and even acknowledged this weekend that he relied on too many robots to make it happen. At the same time, he doubled down on a truly righteous pledge that seems even more impossible than Tesla hitting that very impossible target of making 500,000 cars in 2018.
Around 1 a.m. Friday, he took a shot at an article by The Economist that cited Wall Street analysts who believe Tesla will need more cash this year to support the Model 3 ramp. Musk thinks that’s a load of shit, and went as far as to say it won’t need additional funding from investors this year. Tesla, he swears, will be profitable in 2018.
Bloomberg laid out why that’s a—in its charitable phrasing—“a rosy projection.”
Tesla is projected to burn through about $994 million in the second half of the year, according to analysts’ average estimates compiled by Bloomberg. Analysts also are expecting adjusted net losses of about $192 million and $35 million in the third and fourth quarters, respectively.
Musk told CBS This Morning that he believes Tesla should sustain a rate of 2,000 Model 3s per week now, Bloomberg reports, which still undercuts his previous guidance of 2,500 per week by now. At least Musk doesn’t have a history of over-promising things.
2nd Gear: Escalade Discount
General Motors and Ford are duking it out right now to win over fans of the Very Big cars. So to prevent any fans of the Escalade from jumping ship for the new Lincoln Navigator, GM’s offering a whopping $10,000 discount for some current customers, reports Bloomberg.
The nationwide $10,000 deal applies to lessees of all 2016 model Escalades, and owners are being offered a $7,500 discount. The promotion runs through May 31, according to a memo GM sent dealers that was obtained by Bloomberg News. Jim Cain, a GM spokesman, confirmed its authenticity, calling it “an exclusive private offer” designed to “keep people in the family.”
GM has ample reason to keep Escalade buyers coming back. The big sport utility vehicle generates outsize profit from relatively modest sales: Morgan Stanley analyst Adam Jonas has estimated it produces about $1 billion in annual profit, contributing to a $2 billion earnings advantage GM has across all its large SUVs over Ford.
You can see why GM’s probably a little skittish, when you realize Navigator deliveries are up 63 percent this year, according to Bloomberg. That’s some stiff competition.
3rd Gear: NAFTA NAFTA NAFTA
The U.S., Mexico and Canada continue to wrestle over terms of the North American Free Trade Agreement, and one key demand pushed for months by President Donald Trump’s team appears to be getting dialed back now, according to Reuters.
The Trump administration had initially demanded that North American-built vehicles contain 85 percent content made in NAFTA countries by value, up from the current 62.5 percent, along with half the value coming from the United States – levels that Canada, Mexico and automotive groups had said was unworkable.
But this has been cut by 10 percentage points, and the U.S. specific percentage demand dropped, industry officials said.
“The U.S. put on the table 75 percent instead of 85 percent for the regional content value of the vehicle and its core components,” said Eduardo Solis, head of Mexico’s AMIA automotive industry association.
Trump’s team had been reportedly pitching a plan that would require certain parts to be made by workers who earn certain wages, which is interesting though I’m not sure how it’d be put into practice. Reuters says trade leaders feel like NAFTA talks have made progress, slowly, which is something I know I’ve written for months. And I’m sure next week we’ll hear, again, about Trump wanting to scrap the plan altogether.
4th Gear: Ford Focus On A New Platform
Ford introduced a new Focus compact in China last week, and it has one significant change: the car is on a new platform that’s modeled after Volkswagen’s MQB modular architecture, reports Automotive News. It’s part of the automaker’s effort to rein in $4 billion of costs over the next five years through “engineering efficiencies,” as the news outlet puts it.
The new architecture underpinning the Focus is flexible enough to encompass subcompacts such as the Fiesta as well as midsize models and crossovers such as the Edge and Escape, Bakaj told Automotive News at the global launch of the Focus here. “It’s very scalable,” said Bakaj (pronounced ba-KAI’).
The U.S. version of the next- generation Focus will be sourced from China in the second half of 2019, Ford said. It’s unclear what body styles will come stateside.
There’s no sharp name for the platform just yet. Automotive News says it’s referred to internally as the “unibody front-wheel drive architecture.” What ever it is, make it weird and cool Ford, just to make life hell for auto journalists who have to reference it.
5th Gear: Jaguar Land Rover To Cut U.K. Staff
Jaguar Land Rover had a big news round recently, having introduced a new I-PACE, including an autonomous version that’s intended for the upcoming self-driving car service from Google’s self-driving car unit, Waymo. But all isn’t well at Jaguar’s homeland; the automaker is cutting 1,000 jobs and reducing production at two of its English factories, according to Reuters.
The issue? Lower diesel car demand, higher taxes and, as Reuters puts it, “a regulatory crackdown.”
Here’s more from Reuters:
The company, which builds nearly one in three of Britain’s 1.7 million cars, will lay off some of its agency workers at its central English Solihull site and move just over 360 people to the location from its nearby Castle Bromwich plant.
“We are not renewing the contracts of 1,000 agency workers at Solihull,” a spokesman told Reuters.
Jaguar sales in particular are down 26 percent this year, Reuters says. That’s a grim situation indeed.
On this day in 1946, Arthur Chevrolet, an auto racer and the brother of Chevrolet auto namesake Louis Chevrolet, commits suicide in Slidell, Louisiana.
Reverse: Tesla And Profit?
It’s never been done for more than a quarter, and that was years ago. Is this the promise Elon can be trusted on?