UAW's New President Wants Big Three To Know He Isn't Playing Around

Good morning! It’s Thursday, July 13, 2023 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.

New York Joins California, Banning Non-Electric Vehicles After 2035

1st Gear: No Handshakes

Contract negotiations between the United Auto Workers and Detroit’s Big Three automakers formally kicked off Thursday, first with Stellantis followed by Ford and General Motors next week. Bargaining season typically starts with a handshake; rather, three handshakes, between the UAW president and each brand’s top executive. The UAW’s new leader Shawn Fain wasn’t feeling that this time around, though. From The Wall Street Journal:

The three automakers face a wild card entering contract negotiations in the coming days: a new reform-minded president who is trying to restore camaraderie at the UAW after a multiyear corruption scandal. He is already throwing out the traditional playbook used by past union leaders and girding for a strike, potentially at more than one company.

Fain’s rejection of this long-celebrated ceremony, in which auto chief executives and union leaders would gather before the press for a cordial handshake, is yet another sign that this summer’s talks are going to be challenging.

“There’s no point in having a big pomp and [circumstance] ceremony where we act like we’re friends, and we’re working together, when we’re not,” said Fain, while meeting with workers at a Ram truck factory in Sterling Heights, Mich.

“The membership comes first. That’s our job.”

The handshake tradition dates back to at least the 1960s and has long marked a nervous period in the Motor City as work rules and contract economics are laid out for the following years. The pageantry around the negotiations’ start has become symbolic for both sides.

During the expiring contract’s negotiations in 2019, GM lost about $3 billion due to a 40-day work stoppage at its plants. With Fain at the helm, a strike again seems likely — this time, at more than one company. EV production has allowed carmakers to increase margins on the vehicles they sell, while eliminating components like engines and transmissions that previously required union members to produce. The battery joint ventures GM, Ford and Stellantis have entered into aren’t creating union jobs that guarantee the same wages nor protections. WSJ continues:

Fain is looking to protect jobs and boost hourly wages, especially for less-senior workers, in an era when all three car companies are converting their fleets from gas-powered vehicles to electric ones.

Inflation has also hit a four-decade high, hurting workers’ pocketbooks, and the union plans to push for the return of yearly cost-of-living adjustments and other benefits lost during harder times when the union made concessions to help the car companies survive.

Mike Caldwell, a union representative at the Ram truck factory, said many of these items are must-haves to win his support for any tentative agreement reached.

“It seems like they’re willing to step up and address a lot of these things,” Caldwell said of the new union leadership.

Fain talked a big game leading up to his election in March. Not shaking hands is a good start, but results are better. The current contract expires September 14.

2nd Gear: Lucid Can’t Make The Price Cuts It Needs

The Lucid Air is a beautiful car, but pretty much everyone agrees it’s too expensive. Trouble is, Lucid isn’t yet at the level of growth where it can build enough of the things, so prices must stay high. A partnership with Aston Martin is a nice feather in its cap, and the wealth of Saudi Arabia is convenient to fall back on, but overall the startup is struggling. Its shares tumbled another 12 percent Wednesday. From Reuters:

Lucid Group said its second-quarter production dropped from the previous three months while deliveries stayed flat, sending the shares of the luxury electric-vehicle maker down about 12% on Wednesday.

The Saudi Arabia-backed startup has been struggling to ramp up production in the face of supply chain issues, while a price war started by market leader Tesla in January has intensified competition.

Lucid delivered 1,404 vehicles in the quarter to June 30, compared with 1,406 deliveries in the previous quarter. Its production fell 6% sequentially to 2,173 vehicles.

The company had trimmed its 2023 production forecast and reported a lower-than-expected first-quarter revenue in May as it took a hit from Tesla’s price war and rising interest rates.

Will Lucid make it out of this one? It’ll need to get the word out, rein in prices and bring that SUV to market. Those are some tough errands on the to-do list.

3rd Gear: BMW Hoping For Banner Year In U.S. EV Sales

BMW wants to sell 50,000 EVs in the U.S. in 2023. Thing is, 2023 is about halfway in the books, and the German marque only moved just under 18,000 battery-powered cars thus far. It’s leaning on the i4 to get it over the line. From Automotive News:

“We’re driving electric more in the transition from a combustion-only to a world that includes combustion and BEV,” said Shaun Bugbee, BMW of North America’s executive vice president of operations. “The No. 1 volume car for us within BEV is i4.”

The electric compact sedan accounted for nearly 60 percent of BMW’s first-half EV volume, or 10,724 units.

“We have an accelerated Q3 and Q4,” Bugbee said, noting the arrival of BMW’s fourth battery model — the i5 sedan — in late 2023.

But BMW isn’t alone among luxury brands in getting a sales lift from EVs. Several competitors also hope to mount a fight with segment leader Tesla Inc. with an expanding portfolio of competitively specced and sleek battery models.

Mercedes-Benz expects EVs to account for 40 percent of its new-car sales in the U.S. by 2026 and 70 percent by 2030. They accounted for just 15 percent of the brand’s U.S. sales in the second quarter.

“We are in the middle of a transformation,” Mercedes-Benz USA CEO Dimitris Psillakis told Automotive News in May.

That “transformation” is I’m sure very exciting for German luxury brands, but consumers don’t seem quite as enthusiastic. Not yet, anyway.

4th Gear: NHTSA Wants Robotaxis On Roads Faster

It’s obvious, particularly with all the troubles San Francisco has endured as Cruise and Waymo have operated self-driving taxi services on its streets, that the certification process for such vehicles could certainly be improved. The National Highway Traffic Safety Administration has a plan for how to change it, and it’s called AV STEP. Unfortunately, it doesn’t seem like it’s going to encourage these companies to exercise any more caution that they already have. In fact, it sounds like quite the opposite scenario will play out. One final time from Auto News:

Companies could potentially deploy large numbers of self-driving vehicles under the proposed ADS-Equipped Vehicle Safety, Transparency and Evaluation Program, known as AV STEP.

“This is a new and exciting opportunity for all of us,” Ann Carlson, the acting administrator of the National Highway Traffic Safety Administration, told an audience of industry executives, transportation officials and academics gathered at the Automated Road Transportation Symposium.

She said NHTSA expects to publish a notice of proposed rulemaking on AV STEP this fall.

While the exact number of vehicles allowed remains to be determined, industry experts expect it to be substantially more than the 2,500-vehicle maximum currently permitted through a process that allows companies to request an exemption from federal motor-vehicle safety standards.

That has proven cumbersome.

The proposed AV STEP would not replace the exemption-request process but instead offers an alternate regulatory avenue to the road — one without the caps on the maximum allowable number of vehicles.

This is concerning, because one of the things the San Francisco Municipal Transportation Agency has repeatedly begged for from its statehouse colleagues is “incremental expansion” of robotaxis, rather than widespread, 24-hour service. Should AV STEP enter play, it seems likely to ease, not slow, deployment. The one silver lining is that these companies would be required to share data with the government to expand through AV STEP — data they typically prefer to keep to themselves.

Reverse: ‘Sometimes You Just Don’t Like Somebody’

On this day in 1978, 45 years ago, Henry Ford II told Lee Iacocca to pack his things, and had some other choice words, too.

Neutral: Rollin’

Credit: Nightowl Studio via YouTube

The ‘90s were a wild time when a kids’ channel could set a song about being high on ecstasy to a 1933 Betty Boop cartoon and just let it fly over commercial breaks. Hope you appreciated this random view into my childhood.