Fisker Is Dead But Its Legal Troubles Are Just Beginning
Good morning! It’s Monday, October 7, 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: Bankrupt Fisker Subpoenaed By SEC
Sure, Fisker is dead, but its legal problems aren’t going away anytime soon. The troubled automaker is now facing multiple subpoenas from the Securities and Exchange Commission after filing for bankruptcy protection back in June because it burned through too much cash trying to ramp up Ocean EV production.
After selling off its remaining fleet of vehicles and reaching settlements with creditors, the Manhattan Beach-based automaker is winding down its operations in bankruptcy. It intends to ask a bankruptcy judge to approve its liquidation plans later this week on October 9 in Delaware.
It all sounds like a pretty smooth deal until you realize the SEC isn’t a fan of Fisker’s plans to liquidate its assets. From Reuters:
The SEC said it objects the liquidation plan, citing reasons such as the lack of clarity on how and whether Fisker intends to preserve its corporate records
The SEC had sent multiple subpoenas to Fisker as part of the investigation, and may send more, the filing said, without disclosing specific details about the probe.
The regulator has requested information from Fisker about where the company’s books and records will be maintained after a settlement plan is adopted but the SEC has not received any response, it said.
“The Commission has outstanding investigative subpoenas and may have the need to request or subpoena additional documents in the future relating to its ongoing investigation,” the SEC said.
I’m starting to feel like this godforsaken car company cannot do anything right.
While I have you, Henrik Fisker, since I know you’re reading this, please stop. I am begging you. The third time is not the charm. It’s OK to just be a good designer. You don’t need your own car company.
2nd Gear: Trump Wants 200 Percent Tariff On Cars From Mexico
Ghost of President Past and future presidential hopeful Donald Trump said he would hit vehicles imported from Mexico with 200 percent tariffs as part of his goofy plan to keep manufacturing in the U.S.
Trump has previously said that if he’s elected, he would set a 100 percent tariff on cars and trucks imported from other parts of the globe to aid the domestic automotive industry. That number apparently wasn’t big enough, so he thought of a larger one at his rally in Juneau, Wisconsin.
In 2023, Mexico exported about 3 million vehicles to the U.S. and about half of these were from the Big Three automakers. From Reuters:
“We’ll put a tariff of 200% on if we have to,” Trump said. “We’re not going to let it happen. We’re not letting those cars come into the United States.”
The former president stumped in Wisconsin for the fourth time in eight days, underscoring the importance his campaign is placing on the state with less than a month to go until Election Day.
Opinion polls have shown Harris, the U.S. vice president, with a slight edge in Wisconsin after the state voted for President Joe Biden over Trump four years ago.
Both Harris and Trump have expended a massive amount of time, money and resources in Michigan, Pennsylvania and Wisconsin, which are considered keys to victory in the U.S. electoral college. Trump swept the states in 2016 against Democrat Hillary Clinton on his way to becoming president. Biden did the same in 2020.
Harris campaigned with former Republican U.S. congresswoman Liz Cheney in Wisconsin on Thursday.
Ew. Anyway, Trump made his remarks on tariffs as he promoted to bolster the U.S. auto industry. Shockingly, experts say his plan could end up increasing vehicle prices.
The Tax Policy Center think tank has said that a massive new tariff on Mexican vehicle exports “likely would drive up the cost of motor vehicles, domestic as well as imports, used cars as well as new.”
Trump previously threatened large tariffs on cars from Mexico as president and as a candidate in 2016. Imposing up to 25% tariffs on Mexican autos and components could have severe impacts on the industry and hike vehicle costs, automakers said in 2019.
We’re less than a month away from this shit being over. I cannot wait for the year-and-a-half-long break we’re going to get before Trump announces he’s running in 2028.
3rd Gear: Helene Insurance Losses May Hit $6.4 Billion
Hurricane Helene was such a devastating storm when it hit the U.S. that insurers may now reevaluate how they price policies and what sort of coverage they offer.
The Category 4 hurricane that brought an immense amount of rain and flooding to the U.S. Southeast is the latest catastrophic natural disaster that has insurers thinking twice. From Automotive News:
Such events — Helene, hailstorms in Iowa, heat waves in the Midwest that cause metal roofs to kink, and the like — mean payouts for insurance companies that could affect their profit and loss statements, [Holcim (US) professor of sustainable enterprise at the University of Michigan, Andrew] Hoffman said. Depending on how hard a region is affected, insurance companies may decide to limit coverage in certain markets or raise rates, Hoffman said.
“It won’t be done based on just one storm,” Hoffman told Automotive News. “It’ll be based on their sense of whether this storm reflects a growing trend that they need to be alert to.”
Hoffman said he would expect to see some changes in insurance coverage as a result of such natural disasters, which would translate directly into how businesses handle their insurance needs.
Here’s how it could impact the automotive industry, according to AutoNews:
Hoffman said he would expect to see some changes in insurance coverage as a result of such natural disasters, which would translate directly into how businesses handle their insurance needs.
“We’re talking millions of dollars in cars sitting in a car lot,” Hoffman said. “We’re also talking [about] the business. Their business is now interrupted. Their revenue stream is gone, and they need to access more product to bring to their customers, who are expecting those cars to be there.”
[…]
Both the National Automobile Dealers Association and National Independent Automobile Dealers Association activated disaster relief funds for affected dealerships and their employees in the week following Helene’s landfall.
Total insurance losses are expected to hit about $6.4 billion according to preliminary estimates. That’s small potatoes when you look at the total damage and economic losses between $225 billion and $250 billion.
Some car dealerships are not just sitting on their hands waiting for a check to be cut, though:
North Carolina “had flooding waters for days and then just the impact of that on top of tornadoes at the same time, it’s just too much,” said Brooke Ellis Gatlin, vice president of human resources for Jim Ellis Automotive Group, of Atlanta.
The group, which has 21 dealerships in Georgia, started a collection campaign for essential supplies such as toothpaste, canned goods, toiletries and baby formula to be given to Helene-impacted residents in North Carolina.
“One of our vendors from Atlanta Wheel Repair said, ‘I want to do something,’ “ Gatlin said. “We both decided we wanted to do something more direct, and he had a 36-foot trailer and the names and contacts to get to these places that were affected.”
The dealership group filled the trailer with supplies. It was on its way to affected areas in North Carolina on Oct. 4, Gatlin told Automotive News that same day.
These storms are not going to get any better. Right now, Hurricane Milton is out in the Gulf gaining strength, and it is expected to make landfall in Florida as a Category 4 or 5 storm.
Insurance costs are just going to keep going up and up, and pretty soon folks are going to find that where they live is impossible to insure.
4th Gear: Stellantis Sues UAW Over Strike Threats
Stellantis is suing the United Auto Workers union in federal court following months of accusations the automaker was not honoring its contractual agreements by the union. From the Detroit Free Press:
Stellantis filed the lawsuit Thursday evening in the U.S. District Court, Central District of California. It alleges the UAW is acting in “bad faith by going on a publicity campaign, filing sham grievances” and ignoring the contractual language that gives the automaker leniency in its future production decisions and “now calling a vote to authorize a strike based on these bad faith grievances.”
The UAW said in a statement issued early Friday that a supermajority of UAW members UAW Local 230 at Stellantis’ Los Angeles Parts Distribution Center voted to request strike authorization from the International Executive Board if the company and union can’t reconcile.
Late Friday night, the UAW reacted to the lawsuit in a letter from UAW President Shawn Fain and UAW Director of the Stellantis Department Kevin Gotinsky to the UAW Stellantis Council, which was obtained by the Detroit Free Press. In the letter, Fain and Gotinsky accuse the automaker of a misinformation campaign.
“For days, they’ve been spamming our phones with messages about how harmful a strike would be,” the letter stated. “They filed a lawsuit against our union, and against UAW Local 230, the first Stellantis local to vote to authorize a strike. The company also sent letters threatening legal action to all of our locals, adding the insult of calling our grievances a “sham.”
The Detroit Free Press obtained an internal memo sent to all of Stellantis’ U.S. employees on Friday from Senior Vice President of North America Human Resources Tobin Williams. In it, Williams told the employees Stellantis is suing the UAW and the local chapter in California that approved a strike authorization at Stellantis’ Los Angeles Parts Distribution Center.
[…]
“Because the UAW has chosen to disregard this clause, they have left us with no choice but to take the necessary steps to protect the company and our employees,” Williams wrote. “We are asking the federal court to declare that the UAW’s actions are illegal, that the union cannot ignore the company approval and business factor contingencies listed in Letter 311 of the (Collective Bargaining Agreement), and that a mid-contract strike based on pending grievances violates the (Collective Bargaining Agreement). “
Williams says the lawsuit seeks to hold both the UAW International and UAW Local 230 liable for lost revenue and “other damages resulting from lost production due to an unlawful strike.”
This comes just days after UAW members and leaders railed in Sterling Heights, Michigan as part of a campaign to continue pressure on Stellantis to reopen the Belvidere Assembly Plant in Illinois and keep Dodge Durango production in Detroit.
After Thursday’s rally, Stellantis said in a news release that Fain is “spreading misinformation to the members he represents” during a time of “indisputable volatility in the market, especially as the industry transitions to an electrified future,” Stellantis said. The automaker noted at that time that the contract said all planned investments are subject to business factor contingencies, including market conditions and consumer demand.
Stellantis said while the reopening of the Belvidere Assembly Plant has been delayed, it has presented the UAW “with a nearer term alternative for the (Belvidere Consolidated Mopar) Mega Hub that would mean more favorable employment options for many UAW-represented employees even though it would require more investment by the company.”
I’ll tell ya what, this thing is going to become more of a goddamn mess than it already is before it’s sorted out.
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