Carvana Is Suing Michigan Over the State Banning it From Selling Cars

Photo: Joe Raedle (Getty Images)

Online car dealer Carvana will fight to regain its license to operate in Michigan, Cybertruck bodies have been spotted at the Tesla factory in Texas and tanker insurance is hitting Exxon’s oil operations in Russia. All this and more in The Morning Shift for Wednesday October 5th, 2022.

1st Gear: Carvana Sues Michigan Over License Dispute

Carvana is a relative newcomer to the online car-selling space, but that hasn’t stopped it grabbing headlines for a wild variety of reasons. The company has been bleeding cash all year, laid off thousands of workers and lost its right to sell cars in Illinois, twice.

Now, it’s facing problems in Michigan, where the company had its license suspended after state officials claimed “employees destroyed documents, odometer records weren’t maintained, and investigators found more than 100 customer title delays and probation violations.”

To fight the suspension, Carvana last week announced it was turning to the very same customers it had screwed over, asking them to petition lawmakers to reinstate the company’s license in Michigan. Now, presumably after spotting the flaw in this plan, Carvana has decided to just sue the state instead. According to Automotive News:

In a complaint filed Thursday in the Michigan Court of Claims, Carvana asked for a temporary restraining order against Michigan Secretary of State Jocelyn Benson, whose office issued the license suspension and revocation. In its complaint, Carvana called the state’s actions ‘baseless,’ saying the company was not provided with a hearing or an adequate opportunity to respond to allegations laid out in the suspension decision.

Carvana, in court filings Thursday, said it was forced to cease all in-state Michigan sales, which it said has delayed scheduled deliveries to 48 customers.

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The steps taken by Carvana in Michigan mirror its actions in Illinois. There, the company was granted a temporary restraining order against the Illinois secretary of state after its license was suspended. Now, Carvana execs are facing criminal charges in Illinois over its business practices in the state.

2nd Gear: Cybertruck Bodies Spotted in the Wild

Remember the Tesla Cybertruck? How could you forget about it! It’s the angular behemoth from Elon Musk’s electric car company that promised performance that could rival a Porsche. Production of the pickup truck was also promised to begin in 2021, but that clearly didn’t happen. Then, Tesla was meant to start building its electric pickup before the end of this year, and now it sounds like that won’t happen until late 2023 at the earliest.

All these delays haven’t stopped Tesla fans from getting excited about the impending arrival of the ugly pickup. And now, the one-million-plus people sitting on the Cybertruck’s waiting list have a reason to pick up their spirits, as two new truck bodies have been spotted at Tesla’s Texas factory. Electrek reports:

We don’t have a lot of ways to track progress with Cybertruck production, but several people are often flying drones over Gigafactory Texas, where the Cybertruck is going to be built. Now one of them, Joe Tegtmeyer, has spotted what appears to be two new Cybertruck bodies.

Tegtmeyer refers to them as ‘prototypes,’ but that’s hard to confirm. There are for sure at least Cybertruck bodies since the proportions are perfect.

The site notes that the arrival of these new bodies could “double” the number of Cybertrucks Tesla now has at its disposal. Clearly, there’s still a long way to go before Tesla can start clearing its backlog of orders.

3rd Gear: Exxon Can’t Ship Oil Out of Russia

When Russia invaded Ukraine back in March, the world was rightly outraged. In response, economic sanctions were placed on Russia and its high-ranking officials, and multinational firms including Nissan, Apple and McDonalds all said they would cease business in the nation. At the time, oil giant Exxon had no qualms continuing to work in Russia, but is now finding it much harder to do its job there.

The American oil giant manages the Sakhalin-1 Russian Pacific project with Russian oil company Rosneft. But under new sanctions imposed by the European Union, the project is struggling to ship oil extracted from the offshore wells around the world.

The latest wave of sanctions placed on Russia and its businesses includes a move from the EU “to impose a ban on Russian oil tanker insurance,” according to Reuters. As such, if Exxon wants to ship the oil away from the wells and around the world, it must use ships insured by Russian companies. Reuters reports:

Western insurers withdrew cover from tankers operated by state-run Sovcomflot (FLOT.MM), Russia’s biggest shipping group, which was sanctioned following Moscow’s invasion of Ukraine.

‘Exxon has refused to take Sovcomflot’s tankers,’ one industry source said. Some cargoes meant for supplies to Indian refiners were also hit as Exxon did not recognise the alternative cover Sovcomflot had arranged from Russian insurers, according to the sources.

According to Reuters, production at Sakhalin-1 has “collapsed following Exxon’s refusal to work with Sovcomflot.” Earlier this year, the site was producing 10,000 barrels per day, which was dramatically down from the 220,000 it could produce before Russia’s invasion.

4th Gear: Behind the Scenes on EV Tax Breaks

After your car’s range and the amount of time it takes to recharge, the next biggest talking point with electric vehicles is tax breaks. Whether it’s the cars that do qualify, the models that don’t, or the changes to regulations that require any EV be built in the U.S. if you want to save $7,000, tax breaks for electric cars are a big deal.

But the sector is awarded more than just saving for the end consumer in order to try and encourage mass adoption. Production facilities, assembly plants and research and development centers for EVs are all offered incentives by local and national governments to try and entice firms to set up shop here in the land of the free. Bloomberg reports:

First, there was the $7 billion tucked into the infrastructure bill last year. Then, hundreds of millions made available by invoking the Defense Production Act. And now, the mother of them all, the Inflation Reduction Act, which extends generous tax credits to buy, build and charge EVs, and localize the battery supply chain to power them.

All this global competition gets a lot of attention, but there’s another subsidy battle raging within America’s shores: a cutthroat fight among states to land EV and battery investments.

According to Bloomberg, companies rarely disclose the incentives they are awarded by states for building their shiny new EV plants there. It found that there could be more than $10 billion in corporate subsidies on offer across the U.S.

All this does make me wonder, what might be the most subsidies EV on the market right now?

5th Gear: VinFast Recalls One Third of Its EVs

One company that’s been on the receiving end of these government grants is VinFast, which was awarded more than a billion dollars to support construction of its plant in North Carolina. But that’s not why the Vietnamese firm is in the news today. No, we’re discussing VinFast because the upstart company has just recalled one third of the EVs it has ever built.

Automotive News reports that VinFast will “recall 730 of its model VF e34 electric cars, which are available only on the domestic market.” This accounts for a third of the EVs VinFast has so far sold. The recall will allow the company to make checks and replace the car’s side crash sensors. According to Automotive News:

VinFast, which began operations in 2019, is a unit of Vietnam’s biggest conglomerate Vingroup and has sold 2,208 EVs in total since its launch late last year.

‘The side crash sensor of the airbag system equipped with the VF e34 model is likely to encounter an incompatibility error with the airbag controller… and therefore may send an incorrect signal to the controller,’ VinFast said in a statement.

The company has so far not reported any breakdowns or complaints from customers about the sensor errors.

Reverse: Happy Birthday, Evel

Neutral: No More Heroes?

If Evel Knievel were still around today, do you think people would like watching him jump buses, gorges or other large objects as much as they did back in the day? Is there still a market for the daredevil when we’re increasingly told that we’ve seen it all? And, if there is, are there any stunt riders out there today that we need to know about?