Stellantis Sued By Shareholders Over Godawful Earnings
Good morning! It’s Friday, August 16, 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: Stellantis Shareholders Sue Over Sucky Earnings
Stellantis is being sued by its U.S. shareholders. They allege the automaker defrauded them by concealing rising inventories and other issues before posting disappointing earnings. Those disappointing earnings caused the stock price to fall.
The complaint, filed on August 15 in Manhattan federal court, argued that Stellantis artificially inflated its stock price for much of 2024 by making “overwhelmingly positive” assessments about inventories, pricing power, new products and its operating margin. From Reuters:
Shareholders said the truth came out on July 25 when Stellantis said first-half adjusted operating income fell 40% to 8.46 billion euros ($9.28 billion), below the 8.85 billion euros that analysts expected.
“This lawsuit is without merit and the company intends to vigorously defend itself,” Stellantis said in an emailed statement to Reuters.
Stellantis also said adjusted operating income margin had fallen below its double-digit full-year target.
Its U.S.-listed shares fell $1.94, or 9.9%, to $17.66 in the two trading days after the announcement.
Chief Executive Carlos Tavares and Chief Financial Officer Natalie Knight are also defendants.
Stellantis was created in 2021 from the merger of Fiat Chrysler and France’s PSA. Its 14 brands include Alfa Romeo, Citroen, Dodge, Jeep, Maserati, Opel, Peugeot, Ram and others.
Reuters says it’s fairly common for shareholders to sue companies in the U.S. after unexpected stock price declines, but damn if it’s not a bad look for the automaker.
The lawsuit is seeking unspecified damages for Stellantis shareholders between February 15 and July 24 of this year.
2nd Gear: GM Sued By Texas For Privacy Issues
The state of Texas is suing General Motors for allegedly installing technology on more than 14 million vehicles meant to collect drivers’ data. That data was then sold to insurance companies and other businesses without their knowledge or consent. From the Detroit Free Press:
Texas Attorney General Ken Paxton said Tuesday’s lawsuit arose from a probe announced in June into whether several automakers collected and sold mass amounts of data without drivers’ knowledge.
Paxton said GM’s data were used to compile “Driving Scores” assessing whether more than 1.8 million Texas drivers had “bad” habits such as speeding, braking too fast, steering too sharply into turns, not using seat belts and driving late at night.
Paxton told Freep that insurers could then use the data when deciding whether to raise premiums, cancel policies or deny coverage. This stuff has apparently been installed on GM vehicles all the way back to the 2015 model year.
Paxton said GM’s practice was for dealers to subject unwitting consumers who had just completed the stressful buying and leasing process into believing that enrolling in its OnStar diagnostic products, which collected the data, was mandatory.
“Companies are using invasive technology to violate the rights of our citizens in unthinkable ways,” Paxton said in a statement. “Our investigation revealed that General Motors has engaged in egregious business practices that violated Texans’ privacy and broke the law. We will hold them accountable.”
GM said in a emailed statement: “We’ve been in discussions with the Attorney General’s office and are reviewing the complaint. We share the desire to protect consumers’ privacy.”
Texas filed its lawsuit in a state court in Montgomery County, near Houston.
It seeks the destruction of improperly collected data, compensation for drivers, civil fines and other remedies for violations of the Texas Deceptive Trade Practices Act.
We’ve previously reported on how GM was able to spy on the driving habits of millions of drivers through the years. It is not a good look.
3rd Gear: Rivian Pauses Amazon Van Output
Rivian has paused production of its electric van, which it built for Amazon, because of a parts shortage. It’s the latest supply chain issue for the nascent EV maker.
The shortage began earlier this month, according to Rivian, but the automaker declined to say exactly which components were in short supply. A spokesperson for the company did say it expects to recover all missed production, however, there’s no timeline for that. From Bloomberg:
Part shortages are common in the industry, a Rivian spokesperson told Bloomberg, adding that production of R1 electric pickup and SUV models is unaffected. All affected employees have the opportunity to continue working 40 hours a week during the pause.
The interruption marks another production hiccup for the EV maker as it works toward boosting output of its EV lineup next year. Irvine, California-based Rivian currently makes battery-electric SUVs and pickups at its Illinois factory, along with the delivery van that it supplies primarily to Amazon, its biggest shareholder.
Rivian has amassed a surplus of the delivery vans at the plant that are awaiting delivery to Amazon. The carmaker has a deal to supply the company with 100,000 vans by the end of the decade, and about 15,000 are already in service in the US.
A spokesperson for Amazon told Bloomberg it is aware of the issue Rivian is having, but it doesn’t expect to be impacted by it.
Rivian’s vans account for a fraction of the overall fleet used to deliver packages for Amazon, which taps gig workers who drive their own vehicles, as well as traditional couriers such as UPS Corp.
Rivian Chief Financial Officer Claire McDonough has said the carmaker expects Amazon to take fewer deliveries during the fourth quarter, consistent with the online merchant’s seasonal pattern when it focuses on the holiday sales rush.
Earlier this month, Rivian doubled down on its target to build around 57,000 EVs this year between the van, the R1s SUV and the R1T pickup truck. That’s right in line with its 2023 levels.
4th Gear: Ford Recalls 85,000 Police Explorers
Ford is recalling around 85,000 Explorers with the Police Interceptor Unit package over concerns the engines could well, catch fire, according to the National Highway Traffic Safety Administration. You don’t have to be an expert to know that’s not ideal. From Reuters:
In the event of an engine failure, engine oil and fuel may be released into the engine compartment and accumulate near ignition sources such as hot engine or exhaust components, possibly resulting in an engine compartment fire, the regulator said.
The recall affects SUVs from model years 2020-2022 equipped with 3.3L hybrid and gas engines.
This is just the latest recall in a long string that has come from the Blue Oval. So far in 2024, Ford has been the “leader” in recalls, and this isn’t going to help matters. This year alone, Ford has recalled over 2.3 million vehicles.
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