Tesla Scrambles To Repair Reputation With Rental Companies After Price Cuts And Poor Service
Good morning! It’s Monday, May 20, 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.
The Hype Behind Tesla Stock Success In 2023
1st Gear: Tesla ‘Damage-Control’ Begins In Order To Win Back Rental Giants
If you’re in the market for an electric car, then Tesla’s barrage of price cuts in recent months might have been the welcome push you needed to go all in on battery power. But if you’re a rental firm that plowed millions into electrifying your fleet, only for its value to be slashed by such price cuts, then Tesla might not be your favorite company right now.
Because of repeated price cuts made by Tesla, rental EV fleets are now worth a fraction of the value paid when they were new, reports Reuters. This makes offloading the electric models at a decent price much harder for rental companies, who are also complaining about poor service and expensive repairs over the lifetime of the cars they bought from Tesla. Now, the American company is in damage-control mode to try and repair its ruined reputation among renters. As Reuters reports:
The efforts include unofficial discounts on purchases of new cars if they are in stock and efforts to address widespread service, repair and ordering complaints after years in which fleet managers and leasing firms say Tesla has ignored those problems, according to Reuters interviews with nine executives from major leasing and rental-car firms, along with about a dozen corporate fleet managers.
Tesla’s retail price cuts aimed to bolster sales in response to softening electric-vehicle demand globally and rising competition, especially from Chinese EV makers such as BYD. But that damaged the bottom lines of its biggest customers in Europe — where fleet purchases represent nearly half of auto sales.
Leasing companies buy new cars and arrange leases calculated on how much they believe they can sell them for at the end of the lease. Sudden drops in price undercut those residual values, costing leasing firms money.
Despite its efforts, one expert Reuters spoke with warned that the measures may be too little, too late. This could spell trouble for the EV maker, as its sales have begun slowing in recent months as other automakers enter the EV space, the second hand market begins growing and buyers consider hybrids instead.
If Tesla can’t get rental companies back on side, storage space at its facilities in California, Texas and Europe could soon begin piling up with unsold models.
2nd Gear: UAW Loses Key Vote To Unionize Mercedes
The United Auto Workers union is on a high right now, after winning record contracts for workers across Stellantis, Ford and General Motors last year. Now, it’s targeting expansion into facilities run by other automakers, but it just faced its first setback at Mercedes-Benz.
Workers at Mercedes’ Alabama assembly plant were last week asked to vote on joining the UAW, reports the Detroit Free Press. However, workers came down against joining the union, with 56 percent of those polled voting against membership. As the Free Press explains:
Voting wrapped up Friday morning and the unofficial tally — 2,642 against to 2,045 in favor — was released in the afternoon by the National Labor Relations Board. The UAW loss means thousands of full- and part-time workers at Mercedes-Benz assembly and electric vehicle battery plants in Vance and Woodstock, Alabama, east of Tuscaloosa, will remain without union representation.
The union campaign had come under attack by politicians, including Alabama Gov. Kay Ivey, as an effort by outside forces that would hurt the state’s auto industry, and the company had been accused of union busting, which it denied.
Union supporters said they were intent on ending the “Alabama discount,” the idea that companies benefit from lower wages in the state.
The vote followed a successful campaign for unionization at a VW plant here in America and came as the union ramped up its activities at Hyundai plants as well. Despite the setback, the momentum to unionize more American auto plants has “slowed” but continues. One expert the Free Press spoke with predicted that it could mean delays to a vote at Hyundai plants in Alabama, but added that the union could hold a follow up ballot in a year’s time.
3rd Gear: Polestar Risks Being Kicked Off The Stock Market
Tesla’s struggles keeping renters on side isn’t the only concern the electric car world is facing right now. Struggling startups across the sector aren’t selling cars at the rate they expected, and this is leading investors to lose faith. Now, it looks like Swedish startup Polestar could be heading for rough waters as it’s been threatened with delisting from the U.S. stock market, reports Reuters.
The Geely-backed company has been notified by the NASDAQ that it risks being delisted after failing to meet the exchanges listing rules, reports Reuters. The company reportedly failed to file its annual reports with the U.S. securities regulator in a “timely” manner. As Reuters explains:
The company said it is working to file its annual report for the fiscal year ended Dec. 31 and to report its first-quarter financial results of 2024.
Polestar has 60 days from the date of the notice to submit a plan of compliance to Nasdaq, it said in a statement.
A deficiency notice from Nasdaq is a formal alert sent to a company that is not meeting the minimum standards for continued listing. It serves as a warning to rectify the issues or face potential delisting.
The warning came after Polestar announced plans to delay publication of its fourth-quarter results for 2023, as well as the full-year results, for a second time. The company is now projected to share the results on May 23, when it will share further details of how many cars it sold in 2023.
The company currently only markets the Polestar 2 in the U.S., but the new all-electric Polestar 3 SUV and Polestar 4 are rolling out this year and should provide a good bump to the automaker’s sales.
4th Gear: Dodge Boss Tim Kuniskis Retires
After 32 years with the company, the head of Dodge and Ram is stepping aside at Stellantis at the end of this month. From June 1 2024, Tim Kuniskis will be replaced by Matt McAlear CEO of Stellantis’ Dodge and Ram brands, reports Automotive News.
McAlear, who has been working to lead sales operations at Dodge up until now, will take control of Dodge, while the management of Ram will be handled by Chrysler CEO Christine Feuell. As Automotive News reports:
“I want to take the opportunity to warmly thank Tim for his passion, commitment and contributions to Stellantis and in defining the vision of the future electrified Ram and Dodge brands. I wish him well in his retirement,” Stellantis CEO Carlos Tavares said in a statement. “I am confident that Chris will continue the work of Tim in leading the iconic Ram brand. Matt will bring a fresh perspective, while continuing to draw on the heritage of our iconic Dodge brand and leading the transition of the brand toward a sustainable future.”
Kuniskis has headed Dodge since January 2021 and Ram since July 2023. Under Fiat Chrysler Automobiles, his roles included overseeing passenger cars and the Jeep brand in North America and heading Maserati and Alfa Romeo globally.
With Kuniskis at the helm, Dodge and Ram have undergone a raft of changes in recent years, most notably with the killing off of Dodge’s V8 engines in favor of high performance through electrification. This has included the rollout of the two brands’ first EVs, with the Charger EV and the Ram 1500 REV pickup set to launch later this year.
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