Departing Tesla Exec Can’t ‘See The Long Game’ As Layoffs Hit Morale, Stock Price

Good morning! It’s Friday, May 10, 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.

Tesla’s Big Discounts Worked, Sort Of

Contents

1st Gear: What’s The End Game For Tesla’s Mass Layoffs?

For weeks, Tesla has been cutting staff left, right and center. First it was teams at its California and Texas hubs, then the brains behind the Supercharger network went and this week it was the interns. Now, an exec departing from the American electric vehicle maker has questioned the “long game” behind boss Elon Musk’s cuts at the automaker.

In a post on LinkedIn, Rich Otto, who worked with Tesla’s vehicle-engineering, creative, and content teams, slammed the recent wave of job cuts at the Cybertruck manufacturer, according to a report from Barron’s. Otto claimed the redundancies were having wide-reaching affects across the company, including cutting morale and even the company’s share price. As Barron’s explains:

Rich Otto announced his resignation from Tesla on LinkedIn on Wednesday. He appeared to question the company’s direction after it said it would lay off some 14,000 people in April.

“The recent layoffs that are rocking the company and its morale have thrown this harmony out of balance and it’s hard to see the long game. It was time for a change,” Otto wrote. “There’s a lot that I’ll miss about Tesla, its people being number one.”

Extensive job cuts at the EV maker have been the tip of the iceberg for its bad press in recent weeks. The rollout of its flagship Cybertruck electric pickup have been marred by high-profile manufacturing and quality issues, including problems that meant its accelerator pedals could slip and jam on full power. The company is also facing an investigation from the U.S. government over its handling of a recall relating to its Autopilot and Full Self-Driving software.

It should come as no surprise, then, that share prices in the company are taking a bit of a dive. Barron’s reports that the price of shares in Tesla was down 0.6 percent at $173.75. This followed a 1.7 percent dip in the share price on Wednesday following the news of Tesla’s layoffs.

2nd Gear: Tariffs On Chinese EVs Are Coming

While you might think rising temperatures and increased pollution are the biggest threat to America’s future, it’s actually Chinese electric vehicles, apparently. Now, to try and stamp out the national security threat that some people believe these cheaply-made cars pose, president Biden is reportedly set to announce sweeping tariffs that will impact Chinese EVs in the coming weeks.

According to people familiar with the matter, Biden will announce new tariffs on China to target “strategic sectors” such as electric vehicles, reports Reuters. The news could break as soon as next week, as Reuters explains:

The full announcement, which could take place as soon as Tuesday, is expected to largely maintain existing levies, according to one of the people. An announcement could also be pushed back, the person said.

Specific sectors were also set to include semiconductors and solar equipment, according to one of the people.

Details on the precise value or categories of tariffs that would be imposed were sketchy, but the administration was said to have zeroed in on areas of interest within strategic competitive and national security areas, one of the people said.

Trade representatives have been advising the White House that tariffs on Chinese EVs were needed, but their announcement has been repeatedly delayed while the finer details are ironed out, reports Reuters.

Despite claims from Biden that he doesn’t want to start a trade war, it’s likely that any tariffs on Chinese EVs implemented here in the U.S. will be matched in China. This could mean strict rules on the import of U.S.-made cars into the country and troubles for American brands targeting growth in China.

3rd Gear: The Feds Are Investigating Ford’s Fuel Leak Recall

After Tesla faced the wrath of federal investigators this week following its handling of a recall impacting cars with Autopilot enabled, the National Highway Traffic Safety Administration has now set its sights on Ford.

NHTSA says it now has “significant” concerns over Ford’s handling of a recall relating to fuel leaks in certain SUV models sold by the blue oval, reports ABC News. The recall announced earlier this year was supposed to fix gasoline leaks that could cause engine fires in Bronco Sport and Escape models. However, investigators believe the recall remedy doesn’t do enough to fix the issues. As ABC News explains:

The U.S. National Highway Traffic Safety Administration is demanding volumes of information from the automaker as it investigates the fix in a March 8 recall of nearly 43,000 Bronco Sport SUVs from the 2022 and 2023 model years, and Escape SUVs from 2022. All have 1.5-liter engines.

Ford says the SUVs have fuel injectors that will crack, allowing gas or vapor to leak near hot engine parts that can cause fires, fuel odors and an increased risk of injuries.

In an April 25 letter to Ford released Thursday, the agency’s Office of Defects Investigation wrote that based on its review of the recall repairs, it “believes that the remedy program does not address the root cause of the issue and does not proactively call for the replacement of defective fuel injectors prior to their failure.”

To fix the issue, Ford planned to add drainage tubes that would direct any leaky gas away from hot surfaces in the car. It also planned to patch software to detect pressure drops in the fuel system that would disable fuel pumps, reduce power and cut temperatures if a leak was detected.

However, the NHTSA has asked for evidence from the Blue Oval that these measures go far enough to fix the issue.

4th Gear: U.S. Sales Boost Honda’s Profits

After Toyota announced bumper profits off the back of its hybrid sales, Honda decided it wanted a slice of the profit pie and shared its own positive results for the last financial year. The Japanese automaker saw its profits rise by almost three percent, reports Reuters, as a result of growing sales here in America.

Honda posted a 17 percent increase in sales across America during its full 2023 financial year, which was enough to offset declines in China during the period. As Reuters explains:

Japan’s second-largest automaker by volume forecast full-year operating profit would rise to 1.42 trillion yen ($9.13 billion) compared with an average profit estimate of 1.39 trillion yen in a poll of 22 analysts by LSEG.

Operating profit for the three months to March 31 grew more than six-fold from a year earlier to 305.6 billion yen, well ahead of the 248.3 billion yen average expected by nine analysts.

The automaker posted a 17% sales rise in its biggest overseas market, the U.S., to about 378,000 vehicles over that period. However, its sales in China fell by more than 6% in January-March to about 207,000 vehicles.

Honda is hoping that its renewed investment in electric vehicles will help it turn its fortunes around in China. Earlier this year, the company announced plans to launch six new electric models in China, which would be marketed under a new Ye brand.