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Automakers face reality of EVs' cost — to jobs, and their bottom line

Related: We obsessively covered the Frankfurt Motor Show — here's our complete coverage FRANKFURT, Germany — European car bosses gathering for the Frankfurt auto show are beginning to address the realities of mass vehicle electrification, and its consequences for jobs and profit, their minds focused by government pledges to outlaw the combustion engine. As the latest such announcement by China added momentum to a push for zero-emissions motoring, Daimler, Volkswagen and PSA Group gave details about their electric programs that could give policymakers some pause. Planned electric Mercedes models will initially be just half as profitable as conventional alternatives, Daimler warned — forcing the group to find savings by outsourcing more component manufacturing, which may in turn threaten German jobs. "In-house production is almost irrelevant to the consumer," Daimler boss Dieter Zetsche told reporters on the eve of the Frankfurt Motor Show, in the midst of a German election campaign in which automotive jobs have loomed large. The company set a target of saving 4 billion euros ($4.8 billion) by 2025 to help fund the cost of its electric cars. "Daimler is the first company to state explicitly how much electric vehicles are going to hurt margins," said Bernstein analyst Max Warburton. "It was brave to go first — but of course it won't be the last." Volkswagen, for its part, said it was seeking new global supplier contracts to source 50 billion euros ($60 billion) of electric car content including batteries, which are not yet manufactured competitively in Europe. "A company like Volkswagen must lead, not follow," Chief Executive Matthias Mueller told reporters. VW diesel emissions-cheating exposed by U.S. regulators in 2015 triggered global public outrage, dozens more investigations into test-rigging by the wider industry and a push by some lawmakers to ban diesel and eventually all engines. TIGHTENING NOOSE Tesla shares jumped nearly 6 percent on Monday after a Chinese minister said it was a question of when, not if, Beijing bans fossil-fuel cars, tightening the noose around the combustion engine. France and Britain have promised its outright abolition by 2040. But PSA, the maker of Peugeots and Citroens, said it was concerned about the risks if consumers were left behind in the rush, and a new generation of battery cars does not sell.

Auto sales in March and first quarter down nearly across the board

Nearly every major automaker reported weak U.S. sales for March and the first quarter of 2019, citing a rough start to the year, but said a robust economy and strong labor market should encourage consumers to buy more vehicles as 2019 rolls on. GM, which no longer releases monthly sales figures, saw first-quarter sales fall 7 percent, with declines across all brands. Sales of Silverado pickup trucks fell nearly 16 percent and the high-margin Chevy Suburban large SUV dropped 25 percent. Ford also no longer releases monthly sales numbers, but is due to release its first-quarter sales figures on Thursday. According to industry data, Ford's sales fell 2 percent in the quarter and 5 percent in March. Ford representatives did not immediately respond to requests for comment. FCA reported a 7 percent fall in U.S. sales in March and a 3 percent drop for the first quarter. All of FCA's brands dropped in March, except for Ram, which saw a 15 percent increase in pickup truck sales. "The industry had a tough first quarter, but with spring finally starting to show its face and continued strong economic indicators ... we are confident that new vehicle sales demand will strengthen going forward," FCA's U.S. head of sales, Reid Bigland, said in a statement. Toyota reported a 3.5 percent fall in U.S. sales in March and 5 percent for the first quarter, hurt by declining demand for its Corolla sedans and Camry vehicles. "While some of our competitors are abandoning sedans, we remain optimistic about the future of the segment," Toyota said in a statement. Nissan posted a 5.3 percent drop in sales in March, and its first-quarter sales were down 11.6 percent. Honda and Hyundai bucked the trend. Honda's U.S. sales rose 4.3 percent in March and 2 percent in the quarter, while Hyundai's were up 1.7 percent and 2.1 percent, respectively. Passenger-car sales suffered throughout the January-March quarter compared with the same period in 2018 as Americans continued to abandon them in favor of larger, more comfortable pickup trucks and SUVs, which are far more profitable for automakers. The battle for market share in the particularly lucrative large-pickup truck market intensified in the quarter, as Fiat Chrysler Automobiles' Ram brand outsold the U.S.' No. 1 automaker General Motors' Chevrolet-brand trucks. The two automakers have both launched redesigned pickup trucks.

Anti-UAW VW workers move to form own union

The struggle over unionization at the Volkswagen factory in Chattanooga, TN, continues to get more complicated. There's now a second union fighting to organize at the plant; although this one is staunchly against the actions of the United Auto Workers. At the same time, the UAW is still signing up voluntary members to its recently created Local 42 at the facility and is reportedly near having a majority of the hourly employees on its side.
The new, anti-UAW union campaign is being spearheaded by employee Mike Burton, according to Reuters, and he calls his group the American Council of Employees. He claims to already have 108 signatures in support of his organization. Burton believes that the UAW is harmful to businesses, and his goal is to force another vote to determine a preferred union among workers.
The UAW was initially defeated (712 to 626) when it attempted a union vote at the Tennessee plant in February. However, UAW secretary-treasurer Gary Casteel told Reuters that Local 42 has already signed up over 700 members. If it can reach a majority of the roughly 1,500 employees, the group hopes VW might consider recognizing it as the factory's union.