Nissan is making money again, Rivian is not, and GM. All of that and more in The Morning Shift for May 12, 2022.
1st Gear: Nissan
Nissan has had a weird three years or so following the ouster of former CEO Carlos Ghosn under circumstances that can only be described as too bizarre to be made up. Current Nissan CEO Makoto Uchida subsequently promised a big turnaroundand it only took a couple more years to achieve that, with Nissan, on Thursday, reporting its first full-year profit since 2019.
From Automotive News:
The rebound underscored Nissan’s progress in regaining financial health after a period of management upheaval when it slumped to the largest operating loss in the company’s history.
For the just-ended fiscal year, which finished March 31, Nissan erased that red ink as operating profit surged to 247.3 billion yen ($2.03 billion).
“Finally, we are at the starting line,” Uchida said while announcing the company’s financial results. “Now is the time to deliver greater value and grow the company.”
Uchida unveiled his Nissan Next mid-term plan in 2020, focusing on cutting fixed cost, trimming production capacity, launching new product and improving revenue per vehicle. The campaign wraps up in the fiscal year ending March 31, 2024, but Nissan is ahead of plan by many measures.
Nissan has cut global capacity 20 percent, trimmed the number of nameplates 15 percent and slashed 350 billion yen ($2.87 billion) in fixed costs. COO Ashwani Gupta said the rationalization phase of the comeback plan is complete, and Nissan is focused now on growth.
Ghosn’s strategy was all about pumping up the volume, while Uchida’s is more or less the opposite. Nissans still seem like the kind of cars for people who believe that every car is more or less the same.
2nd Gear: Rivian Lost $1.6 Billion In The First Quarter
Rivian thinks, though, that the worst is behind it. The automaker has been struggling with various supply chain issues, like every other automaker.
From The Wall Street Journal:
The company’s net loss nearly quadrupled to $1.6 billion for the January-to-March period, compared with $414 million in the prior-year quarter, as the company continued to spend heavily on R&D and manufacturing of its first vehicles.
Rivian said higher logistics costs also weighed on results, due in part to higher spending on expedited shipping as a workaround to supply-chain disruptions. Since the end of March, the company has stopped assembly lines for longer-than-anticipated periods, leading it to lose about a quarter of its planned production because of supply constraints, Rivian said.
Chief Executive RJ Scaringe said it has been working with suppliers to ensure more parts and believes the company is moving past earlier obstacles it had with getting semiconductors. He said Rivian plans to add a second factory shift in the latter half of this year.
“We’ve seen really the worst of it, or sort of the valley if you will, of the supply constraints,” Mr. Scaringe said, referring to the computer-chip shortage.
Ford sold eight percent of its stock in Rivian, it was reported this weekwhich led some Rivian investors to panic a little, though that was a little strange because Ford retained a very big stake in Rivian, which will probably be fine in the end.
3rd Gear: GM
GM’s CEO Mary Barra recently did an interview with The New York Times, though after reading the story, I’m not really sure why given that the story isn’t very flattering. The Times, for example, notes that GM is coming out with a bunch of super-expensive EVs like the Cadillac Lyriq and Hummer EV, before quoting Barra as saying that affordability is very important with EVs, which is true, except, sadly, GM doesn’t make any affordable EVs.
The Times also says that GM’s plan is to win with economies of scale, by building its own batteries, for example, but economies of scale has been the basic strategy of every automaker for only about a century or so.
The Times also quotes Barra saying the following:
Along the way, Ms. Barra formed a close partnership with [GM President Mark Reuss]a contemporary who had been a candidate for the top job in 2014. He, too, has spent his career at GM and had followed his own father, Lloyd Reuss, a former president of the company.
While Ms. Barra was heading product development and Mr. Reuss was in charge of North America, they resolved to break away from the company’s reputation of making subpar cars. “We made a pact,” Mr. Barra recalled. “We said we are not going to do crappy vehicles. If we launch a vehicle, we want it to win.”
And then, a few grafs later, mentions that, by the way, every Bolt was recalled because of potential fire risk, so much, I guess, for the whole not-making-crappy-cars thing. The story’s kicker, meanwhile, is:
And if her team needs a reminder of the urgency of the matter, the recent fanfare generated by Ford as the F-150 Lightning went into production does the job nicely.
“Do I wish the electric Silverado launch was coming sooner?” Ms. Barra said. “Safe.”
The point of Barra granting the interview was, I suppose, to project confidence about GM’s EV vision, and maybe boost its stock price, and also brush off Tesla and Ford as competitors, which is really GM in a nutshell, being full of itself without having earned it. Please just make one (1) affordable EV, GM. I’ll buy it, I promise.
4th Gear: Subaru Has Decided To Build An Electric Car
Subaru has the Solterra, but that is basically a re-badged Toyota bZ4X. It said Thursday that it planned to build its own EV by the end of this decade.
From Automotive News:
Unlike the Solterra, the EVs produced in the latter half of this decade will be manufactured directly by Subaru.
Subaru CEO Tomomi Nakamura outlined the plans on Thursday while announcing fiscal year earnings.
Subaru will begin making its own EVs in mixed production with internal combustion vehicles at its Yajima plant in Japan in the mid-2020s. From about 2027, Subaru will build a dedicated EV factory on the site of its Oizumi plant, which now makes engines and transmission.
The EVs made there will be exported globally to markets including the US, Nakamura said. Subaru is still contemplating what kind of segment or models the upcoming EVs will be, he added.
Nakamura also declined to offer a production capacity figure for the new EV production facility but said it will start off small with room to expand over time.
Subaru has been late to the EV game, but maybe that doesn’t matter. All I know is that GM is confidant GM will crush it.
5th Gear: Foxconn Has Closed Its Deal With Lordstown Motors
Lordstown is burning through cash, but Wednesday night it announced some good news, which was that its deal with Foxconn to sell its factory and enter into a contract manufacturing agreement. Foxconn is a Taiwanese company best known for making Apple iPhones.
It sounds, more or less, to be just short of Foxconn acquiring the whole company. From Lordstown’s release:
As previously disclosed, on November 10, 2021, Lordstown Motors and Foxconn entered into an Asset Purchase Agreement (“APA”) providing for the sale of LMC’s Lordstown, Ohio vehicle assembly plant to Foxconn for $230 million plus the reimbursement of certain operating and expansion costs from September 1, 2021 to the closing date. The transaction was subject to several conditions, including that the parties enter into a contract manufacturing agreement for LMC’s flagship vehicle, the Endurance, a full-size, all-electric pickup truck.
On May 11, the transactions under the APA were completed. Total proceeds to LMC were $230 million, plus the reimbursement of approximately $27 million in operating and expansion costs. In addition, Foxconn had previously purchased $50 million of LMC Class A common stock directly from the company. Concurrently with the closing, Foxconn and Lordstown Motors entered into a manufacturing supply agreement for the Endurance. Start of commercial production of the Endurance is targeted for the third quarter of this year, with the first commercial deliveries expected in fourth quarter. Foxconn will assume manufacturing operations at the Lordstown plant immediately with no interruption. Approximately 400 skilled and talented LMC employees will transition to employment with Foxconn. LMC will retain a presence in Lordstown, Ohio along with engineering and technical centers, as well as corporate staff, in Farmington Hills, Mich. and Irvine, Calif.
Congratulations to everyone involved.
Reverse: AJ Foyt
AJ Foyt is currently 87 and probably too mean to die.
Neutral: How Are You?
So, Charles Leclerc is gonna win the Formula 1 title this year right? I was pretty sure of that until Miami, at least.