Toyota Says The World Is 'Decades' Behind Supporting An All-EV Market

Good morning! It’s Friday, May 19, 2023 and this is The Morning Shift, your daily roundup of the top headlines from around the automotive world, in one place. Here are the important stories you need to know.

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1st Gear: Take-It-Slow Toyota

Stop me if you’ve heard this one before: Toyota is a laggard with respect to electric vehicles. The auto giant’s top researcher, Gill Pratt, has come out before and defended the company’s emphasis of hybrids and plug-in EVs at the expense of battery electric cars, saying that if the goal is to reduce carbon emissions as quickly as possible across the largest number of vehicles as possible, then data suggests those half measures are more impactful than full electrification. Pratt doubled down in the lead up to this weekend’s G7 summit in Japan. From Bloomberg:

“Eventually, resource limitations will end, but for many years we will not have enough battery material and renewable recharging resources for a BEV-only solution,” Pratt said, referring to battery-electric vehicles.

“Battery materials and renewable charging infrastructure will eventually be plentiful,” he said. “But it will take decades for battery material mines, renewable-power generation facilities, transmission lines and seasonal energy-storage facilities to scale up.”

Pratt argued that pushing full electrification exclusively before both the supply chain and infrastructure are prepared to handle it could push people back toward gas-burning cars. That’s why Toyota remains committed to hybrids in the interim — the corporate line, anyway.

Could it also be influenced by the reality that Toyota has no compelling EVs to offer? Sure, there’s nothing wrong with diversification. But when your only option is generally considered inferior to everyone else’s despite taking forever to come out, you can’t honestly claim your heart’s in the fight. Nobody’s forcing Toyota to go fully electric right away, but it’d probably work to the company’s best interest if it sold at least one good one.

Pratt has a point, but Toyota doesn’t really have a choice now but to repeat that point over and over again until it finally delivers that first EV that convinces everyone that it’s actually invested. Toyota didn’t start developing and honing its EVs as early as it could’ve, despite being the world’s top automaker by volume over the past three years, and now it’s got plenty of catching up ahead. All it can do in the meantime is preach its gospel and lobby Congress.

2nd Gear: Hyundai And Kia’s Class Action Frenzy

There are plenty of lawsuits facing Hyundai and Kia over their decision eternities ago not to outfit their cars with immobilizers, and now one of those class action suits has resulted in a $200 million settlement, NPR reported Friday morning:

The settlement covers some 9 million owners of Hyundai or Kia vehicles made between 2011 and 2022 and have a traditional “insert-and-turn” steel key ignition system, lawyers for the owners said in a press release on Thursday.

Compensation to owners includes up to $145 million in out-of-pocket losses that will be distributed to people who had their vehicles stolen. Affected owners can be reimbursed up to $6,125 for total loss of vehicles, and up to $3,375 for damages to the vehicle and personal property, as well as insurance-related expenses. […]

The car companies said in February that they would begin rolling out software upgrades to the 8.3 million U.S. vehicles that lack engine immobilizers — a feature that prevents a car from starting unless it receives an electronic signal from a key.

Since then, pressure on the company to do more to curb the thefts has only mounted.

Citing the uptick in theft, several cities including Seattle, St. Louis, Mo., Columbus, Ohio, and Baltimore have sued Kia and Hyundai. Last month, attorneys general in 17 states and the District of Columbia urged the NHTSA to issue a mandatory recall of the vehicles in question.

This is far from the end of this story. If you were unlucky enough to get your Hyundai or Kia stolen, or had to give up your first-born for insurance, lawyers want to talk to you.

3rd Gear: Rich Italians Fighting

John Elkann, chairman of Stellantis and CEO of Exor, the entity that owns Ferrari among many things, is currently locked in a battle with his mother Margherita over ownership of the family’s business holdings. It’s a long, long story that is set to be ruled on in a court in Turin this summer. Here’s everything you need to know to get up to speed, courtesy Reuters:

The dispute has its origins in an inheritance deal known as the “Geneva pacts” that Margherita, an artist and philanthropist, signed in 2004 after the death of her father [Fiat boss Gianni Agnelli] the previous year and agreed when Fiat was on the brink of bankruptcy.

Under the first pact, Margherita received property, works of art and other liquid assets from Gianni’s estate and renounced any future influence in the Dicembre (December) company, a key part of the ownership structure of Exor, the Agnelli-family holding.

The pacts cemented John Elkann’s position as Gianni Agnelli’s chosen successor and effectively took his mother Margherita out of the equation. […]

The second pact covered what would happen to the estate of Margherita’s mother Marella, who died only in 2019 aged 91.

Marella passed her Dicembre stake to three of her grandchildren, John, his brother Lapo and sister Ginevra, from Margherita’s first marriage to journalist Alain Elkann.

Margherita wants the pacts to be rescinded to be able to give her children with second husband Serge De Pahlen, a Franco-Russian former Fiat executive, a share of their grandmother’s estate, sources close to her say.

Margherita also argues that undeclared wealth belonging to her father was discovered after his death and that she is entitled to a share of this along with other family members.

There’s also an element of this that hinges on whether Margherita’s mother’s legal residence was in Italy or Switzerland, which could negatively effect Elkann’s standing. So you see it’s all very complicated, and excellent fodder for a Peacock original. Look for an update on the outcome in the coming weeks.

4th Gear: Hitachi’s Been Slacking

Hitachi Astemo, a joint venture between Hitachi and Honda that produces automotive and railway components, reported Friday that it’s been botching testing of its own products going back as far as the 1980s. Wow! From Reuters:

Hitachi Astemo … worked with customers to redo tests on nearly two dozen affected products following an investigation, Chief Executive Brice Koch told reporters.

“We have now taken all the relevant measures to improve, to increase the robustness of our system and our company,” Koch said, saying he did not expect any impact on growth or costs. […]

The company, a joint venture between Hitachi Ltd and Honda Motor Co Ltd, found that employees had wrongly handled test and other procedures at 11 domestic and four overseas plants, in China, Mexico, Thailand and the United States.

The misconduct affected 22 products for 69 customers, including rear shock absorbers and brake systems for cars, railcar dampers and connecting rods, as well as other components, the company said.

About three-fourths of the customers were Japanese and the rest from overseas, Koch said.

“The major root causes of the misconduct were basically lack of compliance understanding (and) resources,” Koch said, adding that employees had in some cases prioritised costs and delivery times over quality and compliance.

I’d say so! Forty years of carelessness is almost impressive. I’ve heard of twenty years, but how do you both 1) continue getting business over that span and 2) face your customers ever again after totally spacing on testing of safety-critical parts for four whole decades? Eh — the CEO says he doesn’t expect it to have any impact on growth, so it must not be a big deal.

5th Gear: JLR’s Battery Plant Is (Maybe) Coming Home

Tata is looking to the United Kingdom rather than Spain, as previously reported, for its next battery plant. That’s probably a good idea, as there’s a real good marketing story somewhere in there for Jaguar and Land Rover. From Bloomberg, by way of Automotive News Europe:

Tata, a conglomerate involved in industries from cars to salt, is currently favoring a factory in England after the U.K. government offered a support package, according to people familiar with the matter.

No final decision has been made, and Tata could still decide on another location, the people said.

A decision in favor of the U.K. by Tata would secure the future of JLR’s plants in the country and mark a major coup for the government, as Spanish authorities were battling to win the investment.

The plant — to be based in Somerset, England — would make batteries for Jaguar Land Rover’s planned range of full-electric models that are due from 2024.

The U.K. government has been desperate to score some auto manufacturing wins, so this must come as welcome news to locals. The latest reinvention of Jaguar has plenty riding on this.

Reverse: The Champion From Gold Coast

On this day in 2014 — nine years ago — we lost Australian motor-racing legend Jack Brabham.

Neutral: Two Cents On Toyota

Do you think Toyota’s being pragmatic, or coming up with excuses? Maybe a little of both? It’s always a little of both, isn’t it?