Boeing Pleads Guilty To 737 Max Fraud Charges
Good morning! It’s Monday, July 8, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
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1st Gear: Boeing Guilty of Fraud, Officially A Felon
Boeing’s year is going from bad to worse. After parts began falling off its planes, production was brought to a standstill and federal investigators stepped in to see what the hell was happening the company is now set to become an actual felon.
The American plane maker has admitted to fraud charges brought against it, reports CNBC News. The charges relate to the 2021 fatal crashes of its 737 Max aircraft, which were brought back into the spotlight after further issues with the aircraft arose earlier this year:
Boeing agreed to plead guilty to a criminal fraud charge tied to the fatal 737 Max crashes, the Justice Department said Sunday, months after U.S. prosecutors said the aerospace giant violated a 2021 settlement that shielded it from prosecution.
Under the deal, Boeing agreed to pay a $243.6 million fine. An independent compliance monitor would also be installed to oversee compliance at Boeing for three years during a probationary period. Boeing would also have to invest at least $455 million in compliance and safety programs, according to a U.S. prosecutors’ court filing late Sunday. The plea deal requires the approval of a federal judge to take effect.
The plea deal came after investigators found Boeing violated the terms of a 2021 ruling following the deadly crashes of two 737 Max aircraft. At the time, Boeing was ordered to pay $2.5 billion, including a $243.6 million criminal fine, a $500 million fund for victims’ family members and compensation to airlines operating its planes. That settlement was set to expire just two days after a door panel blew off an Alaska Airlines plane flying high above America.
As a result of its guilty plea, Boeing is now technically a felon, which could “complicate its ability to sell” its planes and other products to the U.S. government, reports CNBC. This could hit its bottom line, as last year defense, space and security products accounted for more than 30 percent of the company’s revenue.
2nd Gear: Porsche Halts Production Of Some Gas-Powered Cars
Over the next six years, it’s going to become a very tricky sell for automakers looking to offload gas-powered cars as governments around the world issue bans on internal combustions engines, extra taxes and charges for driving into busy towns and cities. Now, Porsche is getting ahead of the game and has announced that one of its gas-powered cars could die off very soon.
The German automaker will kill off the gas-powered Macan SUV that it builds for non-European markets, reports Reuters. Production of the car desitned for everywhere except the European Union will stop at the end of 2026:
Porsche executive board member Albrecht Reimold said that the petrol-powered version of SUV model Macan for non-European markets would be produced no longer than 2026, sooner than initially projected.
“The platform has reached the end of its cycle,” said Reimold.
After the production stop the company would focus on electric Macan versions to push Porsche’s sustainability agenda, even though EV demand had seen a slump, Reimold was quoted as saying.
“I don’t let the success (of the electric Macan) be defined by a single number,” the executive was quoted as saying.
Porsche has already pledged to cease production of its gas-powered Boxster and Cayman models in the coming years as it prepares to roll out a new electric model. In fact, assembly of gas-powered 718 models destined for Europe have already stopped, with the gas car staying on sale in certain global markets… for now.
The move means that just the 911, Cayenne and Panamera will be left flying the flag for Porsche gas-powered ambitions going forward.
3rd Gear: EV Sales Have Battery Makers Worried
It’s been a tough time for the world’s electric car makers so far this year. Sure, they’re selling more EVs than they were this time last year, but the rate of growth across the sector isn’t matching the rate of expansion at production sites around the world. And this has some companies worried.
Now, the producers of the battery packs that go into some of the best-selling EVs out there have started voicing their concerns over the future of the EV space, with battery maker SK On declaring an “emergency” for the sector, according to Forbes. As the site reports:
SK On, the world’s fourth-largest EV battery maker behind Chinese giants CATL and BYD and South Korean rival LG Energy Solution, has recorded losses for 10 consecutive quarters since being spun off by its parent company in 2021. Its net debt has increased more than fivefold, from Won2.9tn ($2.1bn) to Won15.6tn over the same period, as western EV sales have fallen far short of its expectations.
With losses snowballing, chief executive Lee Seok-hee announced a series of cost-cutting and working practice measures last Monday, describing them as a state of “emergency management”.
“We have our back against the wall,” Lee wrote in a letter to employees. “We should all pull together.”
The words of warning from SK On come as battery maker LG shares similar concerns for its future. The company has seen its profits sink by almost 60 percent compared with the same period last year, reports Bloomberg. The company, which supplies batteries to the likes of Tesla and GM, has reportedly struggled as a result of slowing EV sales and a fall in the price of the lithium it uses to assemble battery packs.
4th Gear: Mercedes To Keep ICEs Around Longer
All the fearmongering among battery makers appears to have spread to Mercedes-Benz as well, which despite having lofty goals for its electric models has just announced that it might keep internal combustion engined cars around for a little longer than expected.
The German automaker will reportedly continue offering gas-powered models after 2030, when select countries around the world will begin banning the sale of ICE cars. According to AutoBlog, Mercedes-Benz will offer ICE cars and electric models as part of its lineup into the next decade. The site explains:
“We need flexibility for longer, until deep into the 2030s,” Källenius said, keeping intact the company’s goal of being carbon-neutral by 2039. “We remain committed to offering electric versions of the entire lineup this decade, but we have to ensure our combustion-engine cars remain competitive.”
The preeminent luxury-car maker has pared back electrification plans in recent months as EV demand has slowed. But Mercedes also has trailed archrival BMW because its lineup of electric models has put off buyers with high prices and polarizing designs. The company’s battery-vehicle sales fell 9% during the first quarter to 50,500 units, while its Munich-based competitor’s deliveries surged to 82,700 vehicles.
Mercedes’ current offering of electric models includes the EQE and EQS electric sedan and SUVs, and it also launched the electrified version of its iconic G Wagen model earlier this year. Despite plowing millions into the initial development of such models, slow sales have forced it to refresh the EQS already. This has reportedly hit the return that Mercedes earns on EVs, which has reportedly slipped from around 14 percent to below 10 percent.
The German automaker is far from being the first company to temper its pivot to electric models, with everyone from Ford to Aston Martin announcing plans to delay the rollout of their battery-powered offerings.
Neutral: 945 Days Later
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