Merry Christmas, Lizards! My challenge today is to share some positive electric car news because it’s been a little bleak around these parts lately. And I will do that. But first, I’ve got to talk a little bit about Fisker and Tesla, and neither of them are exactly good news factories. Hell, Fisker doesn’t have a factory at all.
And that’s part of the problem. Fisker utilizes contract manufacturing, which seemed like a good idea at the time, but brings with it its own problems. One of those is that its contract manufacturer, Magna, is a public company and therefore has to report honestly what’s going on with its business to its shareholders.
Tesla’s problem isn’t that it has too little manufacturing but, given its current product mix and the market, probably too much of it, at least momentarily. This is leading Elon Musk to cut pretty deeply as the company engages in more layoffs.
So what’s the good news? Chinese/Swedish company Zeekr is going to IPO and so far it seems to be going well for the EV automaker that most sounds like it was named by Nick Denton. And, finally, in non-EV news it looks like Penske is going to build out a facility to help automakers build special cars. We love special cars.
Magna Assume ‘No Further Production”
There’s an argument to be made that the Inflation Reduction Act picked winners and losers, mostly because the IRA…picked winners and losers. The winners are the established American car companies with production somewhere in the USMCA zone (US, Mexico, Canada) and access to certain components sourced from outside China. The losers are everyone else.
That’s not quite fair. President Biden essentially slapped departing Senator Joe Manchin by thanking Manchin for helping to pass the IRA and then immediately making concessions to allies by allowing ‘leases’ to qualify for the full $7,500 discount. So automakers that can pull off major lease programs (Hyundai/Kia, especially, but also the Europeans) are not the biggest losers.
The biggest loser might be Fisker. This isn’t to say that Fisker would have made it work, given the problems with the cars, but someone smarter than me is going to look at the pull-forward effect of the IRA and my sense is we’ll see that the IRA had a huge temporary shift on the EV market.
Specifically, my guess is that the early period allowed a huge number of certain cars to qualify for the $7,500 (Tesla, GM, Ford) and this caused buyers who were potentially in the market for an EV to get off the fence and just buy a car. This had the double-whammy result of taking away potential buyers for EVs from other automakers and also making those EVs $7500 cheaper.
Fisker’s whole concept was to be focused on design and marketing and let someone else (in this case Magna International) actually build it. This was a great idea, in theory. Magna already makes plenty of cars for other people and can do so more efficiently than Fisker ever could, plus this lowers the initial financial outlay.
It didn’t work for reasons we’ve covered here, even though I think it could have worked. But the IRA and the pandemic put up too many obstacles. And now Magna, in its quarterly call with investors had to put it all out there. From the company’s CEO Swamy Kotagiri:
It is important that I provide an update on our current status for the Fisker Ocean program. Production of the vehicle is currently idled. Our current outlook issued today assumes no further production. Consistent with disclosure, we provided in our annual information form, this assumption reduces our 2024 sales by about $400 million and impacts our adjusted EBIT margin by about 25 basis points. We fully impaired our operating assets and warrants in the first quarter totaling $294 million. We have $195 million in deferred revenue associated with the Fisker contract that could offset the $294 million in asset impairments that cannot be recorded in Q1. This amount will be recognized in income as performance obligations are satisfied or upon termination of the fiscal contract manufacturing agreement. In order to mitigate the impact of the lower sales on this program, we recorded additional restructuring costs of $22 million in the quarter. We continue to monitor the situation, and we’ll evaluate opportunities to further mitigate the impact on our business.
At some level, Magna has to assume it isn’t going to be building more Fiskers as the Fisker is talking to bankruptcy lawyers and has already paused making cars. Still, this little bit stuck out to me:
We have $195 million in deferred revenue associated with the Fisker contract that could offset the $294 million in asset impairments that cannot be recorded in Q1.
If there is a bankruptcy… I have a good sense of which company think it’s at the front of the line to get paid.
Tesla Plans To Lay Off 10% Of Workforce But… Maybe Closer 20%?
If you want a good wrap-up of WTF is going on with Tesla I will direct you to this post. Needless to say, the automaker thinks it needs to cut costs in order to maintain margins and is doing so pretty ruthlessly. The timing of this alongside Musk asking for the biggest paycheck in human history is, uh, interesting, but I’m not quite well-versed enough in Deleware Chancery Court contract law so I’ll just let that one simmer for a minute.
Either way, Tesla said it would cut back 10%, but based on its behavior (like cutting the bulk of the Supercharging team) it might be aiming a little higher. At least that’s what Electrek thinks:
However, we reported prior to the announcement that the layoffs could be closer to 20% of the workforce once everything is said and done.
Sure enough, Tesla had another significant wave of layoffs last week.
Now, we hear of yet another round of layoffs at Tesla.
Several sources familiar with the matter told Electrek that workers across several departments, including software, service, and engineering, have received the dreaded “employment status” email between Friday and Sunday.
Layoffs suck. I’m sorry if you work at Tesla and this happened to you. I think The Autopian will always be like 10% understaffed because I can’t bear to do another round of media layoffs (don’t forget to become a member!).
Zeekr Is Probably Going To IPO This Friday
To explain the Nick Denton joke above. Denton was the creator of Gawker Media and thus the guy responsible for basically all of us meeting and having jobs. He also had a specific way of making portmanteaus and other word-mashes to name his sites (Jalopnik is Jalopy + Beatnik, Kotaku is Japanese for small + obsessive). Zeekr is apparently Gen Z + Geek?
It’s a strange name, but the company is going to probably go public in New York on Friday and, in spite of everything, the Geely-owned quasi-Sino-Swedish company might do ok:
The deal books are already multiple times oversubscribed, one of the sources said.
The sources declined to be named because they were discussing confidential information.
Zeekr declined to comment.
The company is selling 17.5 million American depository shares in a price range of $18 and $21 each, according to its filings. At the top of that range, Zeekr will be valued at $5.13 billion.
This will be a fun one to watch.
Penske Is Setting Up Its Own Custom Factory
Mega dealer/transport company/race team Penske is set to open up a new facility in Auburn Hills, Michigan to do specialty work for automakers according to Crain’s Detroit Business:
Penske Vehicle Services, a subsidiary of Penske Corp., is looking to use the building for its paint film program after winning contracts with Ford to customize special edition Mustang and Bronco models, according to details submitted to the city.
Penske might also use the building for its wet painting program, which involves disassembling parts of a vehicle, such as doors and hoods, for a custom paint job — think black stripe down the middle of a Ford Mustang Shelby GT500 or a Lincoln Navigator Black Label series topped with a black roof. Plans include about 6,000 square feet for office space as well.
In addition to low-volume paint operations, the space may also be used for customizing show cars, modifying EV products, addressing quality holds, vehicle retrofit and prototype assembly.
We love custom cars, though GAS is where all the cool people go.
What I’m Listening To While Writing TMD
I’m a little tired, but in a good mood this morning as my friend’s kid pulled through surgery and the tumor in his brain was successfully removed. The little guy had a rough night and probably has a few rough days ahead, but he’s moving in the right direction. Thanks for your thoughts/prayers yesterday. Let’s celebrate with some Andrew Bird.
The Big Question
What’s your favorite automaker- or dealer-created special edition car and why is it the Ford Ranger Splash?
Tesla has really done it wrong on these layoffs. Cut once, cut deep, don’t cut again. All they’re doing is creating mistrust within the remaining employees that next week it could happen again. Cue the resume polishing…
The Kiss special edition Mini Cooper Countrymans, I mean, who were these for?(other than a charity thing for Unicef) Kiss is an American band, Mini Coopers are all about being British, was Dodge not available with some Chargers?
I’m sure there’s other better choices but I remember seeing these at the NY auto show and going, huh?
big stan of the 997.1 GT3 RS, the louder the color, the better
Mitsubishi Pajero Mini Snoopy edition. It’s not like a sick paint job or anything. It’s just so unexpected. Who knew Japan loves Snoopy so much? Not even the other Peanuts, just Snoopy. There’s no Charlie Brown Galant, or Lucy Evo 8. And it only came in the Mini Pajero, so wasn’t for families. Were dudes in Japan like “Hey Ma, check out my Snoopy-ified mini offroad?”, “You like off-roading and American comic strips? I’m the dude for you”?
1969 Super Bee.
1970 Road Runner with the funky hood scoop.
1970 Super Bird.
All in bright yellow, buckets, and four speed, please.
Old MOPARS were the Godzilla of cars then…
Great news that your friend’s son is doing well after the surgery. Best wishes for a speedy recovery!
Best special editions? Hmm, hard choice between the AMC Pierre Cardin Javelin and the Ford Denimachine.
My favourite automaker-created special edition will always be the 1955 Dodge Royal Lancer ‘La Femme’, built especially for the fairer sex.
Better than the Ranger Splash? Perhaps not.
But, in the spirit of all the VW Harlequin noise from April, I would call out the VW GTI Fahrenheit as something that stands out in the wild, a Diablo Orange painted Mk5 Golf (sadly saddled only with DSG).
Or the Honda Civic Type R Limited Edition in bright yellow – thankfully Honda installed the 6MT in that one, along with a few go-fast bits (unlike VW – but that orange is so sweet)
Ranger Splash? Try as I might, I just can’t think of anything better. Maybe the 2004 60th Anniversary Wranglers that where in OD Green with 1944 US Army inspired decals? Then they just started putting those on everything, so it cheapened it. I’m sure there is something I’m forgetting, though.
The important take away is that more color, especially two tone paint, would really help the state of current automotive transportation.
TJ Sahara in green with the green/tan trim covers are *chef’s kiss* fantastic
I don’t disagree, but it’s not a special edition or anything.
Ford Ranger Splash or the Escort GT was the default “rich kids first car” at my high school in mid-90s suburban Detroit. They were everywhere and were CHEAP!
I of course was driving a mid-80s Ranger we owned, because we were both not rich nor did my dad work at Ford.
Not going to lie, if I came across a regular cab, manual trans, 4×4 Splash it’d be hard not to buy it as a fun 3rd car
So for a long time, Magna wanted to manufacture their own product. Remember when they showed interest in Chrysler after the nasty Daimler Chrysler divorce? If I were Fisker, I’d sell the schematics of the Ocean to Magna for the token amount of $1 while opening up the patents to them as well. Magna can continue to manufacture and improve on them while providing support/parts to current Fisker customers as part of the deal. No lawsuits, customers are kept happy and the product lives on. Magna gets to dabble in manufacturing their own product without too much investment in development. Kinda reminds me of AM General and the MV-1: https://en.wikipedia.org/wiki/Vehicle_Production_Group
I know that Penske building is a render, but the cars are parked so shittily that it can only be a real parking lot with a fake building.
But I am also torn; could the render maker attempt to make it so real that they put that foreground car 10% into the other spot? Just to mess with me?
Oi.
Must be a render, there is to much color in that parking lot. I go outside and look at our parking lot and it’s mostly white, black, silver, and 50 shades of gray.
Lollerskates.
I thought I was done using brain bandwidth on this photo today.
Some of the cars look EXACTLY the same, but when you click the image and make it normal size, the building is obvious, but the cars still…. aren’t?
Even the sun reflection is a little different on each….
With myself and my daughter having become more and more obsessed with IMSA and WEC, and the 2023 12-hours of Sebring being ground zero for that (which we arrived at in my ’94 Fleetwood), I’d say the 2023 CT4-V Blackwing Sebring IMSA edition would be the car I’d be shopping for if I had the means.
I’m still not convinced it was, and the results of this experiment suggest it was not. Outsourcing production was a shortcut to producing cars, but quite likely not sustainable in the long-term. Or the short-term, apparently.
If “yet another EV startup is doing an IPO” is the best news you can come up with, things must be pretty dire. 😉
I think it has all been downhill since the Dale and Dale Jr. edition Chevy Monte Carlos.
A coworker had an “Intimidator SS” GMT800 Silverado that was pretty damn cool. RWD 1/2 ton with the 6.0. He recently sold it for 3k more than what he paid for it 7 years ago.
The morale at Tesla must be at all time lows. Four weeks of layoffs with no end in sight. Even if I was in a department that had 20% cuts, I would be looking for a new job. This is exactly why all layoffs need to happen on one day. I’ve survived enough of them over my career to know morale comes back quickly if done all at once.
This.
I can’t imagine what it’s like to work at Tesla right now. Your last big project is being pretty widely panned by everyone except fanboys, and now your egomaniacal CEO threw a tantrum and is doing layoffs in the worst possible way. Absolute nightmare.
After the Cybertruck sales drop like the Gladiators sales did, I hope some of the new tech lives on. The 48V low voltage system and steer by wire are the big winners in that model. I hope they can use that platform for a true 3-row SUV. The third row on the Model X and Y don’t count.
Or the moral never comes back. In 2008, my employer had a meeting telling everyone how well we were doing, and rumors of layoffs were false. Less than a month later, there was a surprise meeting where they split people into groups. If you ended up in the lunchroom groups, you still had your job. About 40% of staff ended up in the other group, and when we were dismissed from the lunchrooms they were already gone.
I was in the shipping dept at the next time and spent the next few weeks shipping people’s belongings and final paperwork to them. Depressing AF.
The survivors STILL remember that day and continue to take anything management says with a grain of salt.
Two years ago, my department got hit with surprise out of the blue layoffs. People were getting called into one on one meetings seemingly at random and being let go. Not even their direct managers were aware of who was getting laid off, I know a few managers who were surprised and thought they were playing a joke when a now former employee would message them to say thanks and let them know they were laid off. Even now, I still don’t fully trust what higher up management says and have a constant thought in the back of my mind that I’m next
About a month ago my brother, who works a remote job, got a call from HR saying he had been laid off. Totally caught him off guard be cause just a couple of weeks before he had his annual review and it was great.
He has two managers, and called the first one. They said that wasn’t possible, and there was no way they were looking to get rid of him. Same thing from the other boss. One of those bosses was trying to find out from HR what was going on, while the other was calling one of the VPs in the company.
Long story short, someone in HR clicked the wrong row in the HR software and it flagged my brother for dismissal, rather than someone else!
A couple of VPs called him later to apologize, but it was a day and a half of massive stress for him.
This is a great reminder though that employees are just a row in an executive’s spreadsheet, and ultimately, no matter how much said executive may talk about the company doing well, the important and valuable workforce, the comradery, etc; They really don’t care.
Henrik Fisker kind of just follows the same playbook – contract with someone in Europe (Valmet in Finland for the Karma, Magna Steyr in Austria for the Ocean) for the first model, annouce plans to reopen a closed GM factory in the United States for the second one, but go broke and collapse before that can happen (Wilmington, Delaware for the Atlantic; Lordstown, Ohio for the Pear and Alaska).
The biggest difference is that his previous company, Fisker Automotive Inc, did intend to own and operate the Wilmington plant themselves and transition to being a full fledged automaker, whereas Fisker Inc always planned on continued outsourcing, with Foxconn owning the Lordstown plant
I am a sucker for the Yenko’s
This is the only answer. Any Yenko!
I mean the 007 edition Thunderbird is still a very pretty thing. But the KING of dealership special editions has to still be the Yenko Stinger Stage IV
Okay, i’ll be that guy (which is to say, myself).
For this headline, you want any more, not anymore.
Sorry – that particular one is a pet annoyance of mine.
Ah, I a word
Great, now my pedantry is completely useless!
Confession: i had to read your reply about 5 times before i got it. Well played.
Your pedantry was very helpful
1987 Buick Grand National GNX. Second is the 1969 Oldsmobile 442 Hurst/Olds.
Not that Musk got that absurd payout, but if he did, I wonder how many people that greedy sh*t could’ve employed with that payout…
$60,000,000,000 / $300,000 = 200,000 people, and that is being generous with salaries.
This is basically 2 times the number of people in the city I live in.
Or to put it another way, the payout he’s demanding could have paid for *every* employee he’s laid off for TEN YEARS.
Sorry to be so predictable, but it’s the 2017 Viper ACR Dealer Edition.
Something about a red white and blue color scheme on America’s supercar just sits right with me.
It is undeniably great.
Glad to hear your friend’s son made it out of surgery ok. Wishing him and everyone a peaceful recovery.
As for the big question:
3rd place: 7-Up Mustang Convertible
2nd place: Y82 Trans Am
1st place: ’76 Buick “Free Spirit” Indy Pace Car Replica
Oh man… the 7-up Mustang is great. It’s also the most “I know what I have” car I can imagine.
Hey Matt, my prayers are with the little one on their recovery.
thank you!