Carvana's Legal Counsel Ordered to Appear In Illinois Court

Photo: Joe Raedle (Getty Images)

It’s not getting better for Carvana in Illinois, Tesla might keep manufacturing conservative in China through the remainder of the year, and Vice President Kamala Harris says she wants to ease South Korea’s concerns over the Inflation Reduction Act’s changes to federal electric vehicle tax credits, but words and effort aren’t the same thing. That’s what my gym teacher used to tell me, anyway. All that and more in this Tuesday edition of The Morning Shift for September 27, 2022.

1st Gear: It’s Adding Up

Carvana has lost its privilege to sell cars in Illinois twice in 2022, and while it is currently allowed to do business, one of its highest-ranking officials has been the subject of multiple criminal charges in the state. Paul Breaux, a Carvana vice president and general counsel, has been charged with “27 counts of failure to transfer vehicle titles by a dealership and 50 counts of improper use of titling and registration,” per Automotive News.

Elmer Garza, Illinois Secretary of State Police Director, said that the department had received more than 100 complaints from customers who reported Carvana failing to transfer their titles. That led to further investigation, which led to the discovery of yet more violations. Breaux has been held liable as legal representative, and is required to appear in Illinois circuit court on November 1.

Regulatory officials in the May 13 filing also charged Breaux with two counts of failure to comply with licensees’ requirement to keep records and make inspections; one count of failure to comply with licensees’ requirement to document evidence of right to possession; one count of failure to comply with licensees’ requirement on records for new and used vehicles; and one count related to maintaining records for special plates.

In a separate filing on May 12, the agency charged Breaux with two counts of Carvana operating as an unlicensed used-vehicle dealer.

In Illinois, failure by a dealer to transfer a title is a Class B misdemeanor that carries a penalty of up to six months in county jail and a maximum fine of $1,500. Improper use of titling and registration is a Class C misdemeanor that carries a penalty of up to 30 days in county jail and a maximum fine of $1,500, plus any mandatory court costs, Illinois Secretary of State spokesman Dave Druker told Automotive News.

G/O Media may get a commission

60% off

Jachs NY Fall Sale 60% Off

Styles starting at $29
Layer up with Jachs NY’s fall sale—60% off fall styles. Shirts start at $29, and with the promo code, you can curate a whole layered look.

Breaux responded to these charges with the following statement — which I’d describe as “insufficient,” to put it one way:

“The State of Illinois has charged me because Carvana delivered a car to a customer’s home,” Breaux said in a statement provided by Carvana. “This is surprising and confusing both because it feels extremely anti-consumer and because I proactively met with several Illinois officials in 2017 to describe this exact practice and they did not then nor have they since raised any concerns, during which time we’ve delivered tens of thousands of cars to Illinois homes and provided exceptional customer experiences.”

The problem has never really been about Carvana delivering vehicles, let alone its delivery methods; it’s been about transferring ownership to buyers and the legal record that proves it. Which is kind of as important as the car itself, at the end of the day. Carvana seems to continue to struggle with this concept.

2nd Gear: Tesla Will Run Shanghai Factory Below Capacity for Rest of 2022

The EV maker’s Shanghai plant received a sizable upgrade not long ago, but the company reportedly intends to operate the facility at 93 percent capacity through the end of the year, per sources familiar with Tesla’s plans according to Reuters. No reason was given for the shortfall.

The upgraded factory can produce 14,000 Model Ys and 8,000 Model 3s, the sources added. Tesla has sought to keep it running at full capacity, except during the upgrade and a city-wide COVID-19 lockdown for two months this year.

Now Tesla plans to turn out 20,500 units a week for the rest of the year, for a total of 13,000 Model Ys and 7,500 Model 3s, the sources said.

Tesla’s China sales jumped nearly 60% in the first eight months of this year, figures from the China Passenger Car Association showed.

But that pace is much weaker than the overall market for new energy vehicles over the same period, which saw sales more than double.

Since last month, the company has cut delivery waiting times in China at least four times, to a minimum of a week now, besides offering a rebate of 8,000 yuan ($1,100) to buyers of Tesla insurance who take delivery between Sept. 16 and 30.

Analysts have said the moves aim to lock in more orders.

You might think that the likely reason Tesla’s sales growth rate has slowed is because its market penetration was already higher, but the company actually doesn’t claim a massive slice of the EV pie in China. According to Bloomberg, it ranks third — with 7.5 percent of the market last month — while entities like BYD and SAIC continue to flourish, as they can offer vehicles for far less money in the region.

3rd Gear: Vice President Harris Wants to Work It Out

“It” being South Korea’s frustration with the Inflation Reduction Act’s new electric car tax credit system, which has basically kneecapped Hyundai and Kia’s big EV push. From Bloomberg, by way of Automotive News:

[U.S. Vice President Kamala] Harris, visiting Tokyo to attend former Japanese leader Shinzo Abe’s funeral, told South Korean Prime Minister Han Duck-soo Tuesday she “understood” his country’s concerns about tax incentives for electric vehicles under the law, according to a U.S. readout. “They pledged to continue to consult as the law is implemented,” it added.

That doesn’t seem like the most emphatic display of concern from the vice president, but Hyundai losing out with the new bill is going to strain the economic relationship between the two countries, and probably run against their shared desire to offset China’s supply chain influence. So it’s probably in everyone’s best interest if they work out a deal. Especially prospective EV buyers, who suddenly have fewer affordable make and model choices than they did just three months ago.

4th Gear: UAW Wants to Accelerate GM Toledo Union Vote

The United Auto Workers is seeking to conduct a faster “card check” authorization to gauge interest for a union at General Motors’ Toledo, Ohio facility, rather than going through an election, Reuters reports. The idea is that employees will be able to sign cards to certify their support if they so choose, which would make for a more expedient process. GM announced last week that it would invest $760 million in the plant to prepare it for EV-related manufacturing.

GM, as you’d guess, doesn’t appear to love the idea. From Reuters:

Last month, the first General Motors and LG Energy Solution joint venture Ultium battery plant began production in Lordstown, Ohio.

[UAW President Ray] Curry said 90% of workers at the plant have signed cards supporting the union. “Ultium has not agreed” to recognize the UAW without a vote, Curry said.

Ultium on Friday did not endorse the UAW proposal, but said it “respects workers’ right to unionize and the efforts of the UAW or any other union to organize battery-cell manufacturing workers at our manufacturing sites.”

The joint venture said it would comply with a federal labor law that “protects our employees’ right to decide the issue of union representation through a voluntary democratic election.”

The 2.8 million square foot Ultium Cells LLC plant in Lordstown is the first of at least four U.S. plants planned to supply GM electric vehicles. The plant has more than 800 employees and is preparing to ramp up production.

GM previously expressed support for efforts by the UAW to organize Ultium’s battery plants, but did not endorse “card check.”

Voting can’t be too easy or convenient, you see, because then people might express their autonomy in a democratic process.

5th Gear: Stellantis and Uber, Together in France

The two companies are coming together to push the ride share industry toward EVs, they announced in a joint statement on Tuesday according to Reuters:

Carmaker Stellantis and Uber announced a partnership along with the company Free2Move to focus on the French electric vehicles market.

The companies said in a joint presentation on Tuesday that Free2Move would help Uber in Uber’s plans to convert 50% of its fleet of vehicles in France over to electric models.

The production and sale of more electric and hybrid vehicles is also a key part of the plans set out in March by Stellantis Chief Executive Carlos Tavares to double Stellantis’ overall revenues to 300 billion euros ($288.8 billion) a year by 2030.

Normally I’d have no horse in this race, but then I remembered that Stellantis and Free2Move are responsible for the smaller-than-a-Smart Citroën Ami. So actually, it’s in everyone’s best interest that these companies make so much money in France that for whatever reason, the Ami’s U.S. availability expands outside Washington, D.C. Fingers crossed!

Reverse: Happy 60th, Silent Spring

Neutral: Moving Week

This week I am moving apartments. (Partially for that reason, there will not be a Tuesday Jalopnik stream today, if you’re into that sort of thing. Apologies!) I’ve moved every two years on average for basically my entire adult life thus far, and I’d love to not have to keep doing that one day. Ha.