Electric vehicle makers know time is running out for an extension of federal subsidies, Tesla is being sued again, and Renault and Nissan are also being sued, but for a different reason. All this and more in this litigation Morning shift for Tuesday, June 21, 2022.
1st gear: time is running out
Automakers know they will have virtually no chance of having extension of federal tax credits for electric vehicles if Republicans take both houses of Congress midterm. Tesla and General Motors passed the 200,000 vehicle milestone years ago and haven’t received federal subsidies for some time. Toyota, Nissan and Ford are next in line for the phase-out. A story of Reuters published Tuesday morning puts their lobbying into perspective, and what could happen if they fail:
Without incentives, automakers could move more production and innovation to Europe and raise prices further in the U.S. market to manage profit margins and cash flow, said Nathan Niese, who leads the global practice of BCG electric vehicles.
BCG estimates that the United States would see a 12 percentage point drop in expected EV sales in 2030 without incentives – from an expected 47% EV share with the $7,500 tax credits to 35% . Other research has also found a strong link between incentives and increased adoption.
Another risk is that if EV sales begin to decline due to diminished incentives, automakers could be penalized for not meeting fleet average efficiency requirements. The sticking point for the Senate is whether the rebates benefit those who don’t need the aid – which we know is most often the case anyway because 80% of EV buyers using credit earn over six figures.
In January, the 14 Republicans on the Senate Finance Committee tasked with drafting the taxes harshly criticized proposed extensions to electric vehicle tax credits, pointing to data suggesting “that nearly 80 percent of electric vehicle tax credits existing electrics went to taxpayers earning over $100,000.”
Republican Senator Deb Fischer, who wants to limit tax credits to those earning less than $100,000 and vehicles costing less than $40,000, questioned “why are we subsidizing this industry” and said lawmakers should refuse “taxpayer subsidies to the rich”.
A cap of $40,000 sounds good, if automakers sold all midsize EVs under $40,000 before incentives. Which brings us to the other dilemma, which is that automakers refuse to lower prices because in this market they don’t have to. Focusing on whether the tax credit program benefits the wealthy or the automakers misses the point – it exists to get as many EVs on the road as possible, no matter who drives them. Maybe the automakers will win this fight, maybe not. But until lawmakers have that epiphany, they will continue to talk in the same circles around this issue.
2nd Gear: Ex-Employees of Tesla Sue Company
This time it’s about the electric vehicle maker’s plans to cut its salaried workforce by 10% over the next three months, which CEO Elon Musk announced this morning but has already started. The employees, who worked at the Tesla plant in Nevada, say the company violated federal laws requiring 60 days notice of mass layoffs. Of Reuters:
Former Tesla Inc employees have filed a lawsuit against the U.S. electric car company, alleging its decision to carry out a ‘mass layoff’ violated federal law because the company failed to provide notice of the layoffs jobs.
The lawsuit was filed Sunday night in Texas by two workers who said they were fired from Tesla’s massive factory in Sparks, Nevada, in June.
According to the lawsuit, more than 500 employees were terminated at the Nevada plant.
The workers allege the company failed to comply with federal mass layoff laws that require a 60-day notification period under the Worker Adjustment and Retraining Act, according to the lawsuit.
They are seeking class-action status for all former Tesla employees across the United States who were terminated in May or June without notice.
“Tesla merely informed the employees that their layoffs would be effective immediately,” the complaint states.
Tesla, which did not comment on the number of layoffs, did not immediately respond to requests for comment on the lawsuit.
The plaintiffs are fighting over pay and benefits during that 60-day period, while Tesla is currently only offering some employees one week of severance pay. For what it’s worth, Musk deemed the case “trivial” and worthless.
3rd Gear: ‘Victims of Motorgate’
Owners of Renault and Nissan in France have filed a class action lawsuit against the automakers over allegedly faulty engines they say put their lives at risk, Reuters reported. Tuesday:
Renault and Nissan have been sued in France by customers who had encountered problems with some of their engines.
Christophe Lèguevaques, a lawyer involved in the class action lawsuit against Renault and Nissan, said the joint lawsuit represented complaints from some 1,100 people.
Renault said that although the engines had some technical issues, they never posed a safety risk. Renault added that it would consider paying compensation to customers for the issue on a case-by-case basis.
“As a first step, we encourage customers who believe they may be affected by this issue to contact their local Nissan dealership who will appropriately inspect and diagnose the vehicle and provide necessary assistance,” Nissan added in a statement.
The engine in question is the 1.2-litre TCE, offered in the Renault Mégane and Clio as well as the Nissan Micra, among other models. Supposedly the engines cut out at highway speeds. The class action seeks to force automakers to release internal documents proving they were aware of the defects, according to the French news site The connection:
Renault and Nissan are now summoned to a hearing on July 12, when an official date for a defense speech will be set.
The court orders are part of a two-step legal process that will seek to force Renault and Nissan to release internal documents which the group says show the automakers were aware of the faults.
Olivier Blanchet, president of the association “victims of Motorgate” representing several hundred drivers, said the association was convinced that Renault had information based on leaked internal documents but that it needed a legal order to that the documents be made public.
Sure, it’s called “Motorgate”.
4th gear: Audi, Hungary and electric vehicles
Audi is investing hundreds of millions of dollars in its plant in western Hungary to produce “electric motors”. These words are not mine, but Reuters’:
The Hungarian unit of German carmaker Audi will invest 120 billion fornits ($320.2 million) to ramp up production of electric motors at its plant in western Hungary, Foreign Minister Peter Szijjarto said on Tuesday. .
Szijjarto said Audi, which had earlier said it could dramatically increase production at the plant, would start making the new engines from 2025, creating 500 jobs at the plant, which Audi says is the largest engine factory in the world.
The facility will focus on the production of engine parts for Volkswagen Group small electric vehicles built on the MEB platform. Provided the company can achieves its very ambitious and attractive targets for this segmentit turned out to be a great investment.
5th Gear: Meet China’s New Hot Export
They are electric vehicles, if you haven’t guessed. And now that most of the country’s facilities are back up and running at full capacity after years of pandemic-induced downtime, the numbers look very strong. Of Bloomberg:
Chinese automakers shipped $1.2 billion worth of electric passenger vehicles, up 122% from a year earlier and almost triple the level in April, when car factories in Changchun and Shanghai , such as those operated by Tesla Inc, have been closed or barely open. Passenger cars worth $2.8 billion were exported, the fourth highest monthly total in recent years.
With domestic sales down for 11 of the past 12 months, Chinese automakers have increased overseas sales, with exports in the first five months of this year outpacing all of 2020. The biggest market is the Europe, which took nearly half of May deliveries and around three-quarters of electric car exports, with much of the rest going to Asia.
According to Stephen Dyer, managing director of Shanghai-based consultancy AlixPartners, China’s current excess production capacity and weak domestic sales mean it will continue to be an important exporter in the medium term. China accounted for nearly 60% of global electric vehicle exports in 2021 and the trend continues in 2022, although Tesla’s new factory in Europe may slow Chinese exports, he said.
Expect the United States to join this list, should the day ever come when the government ceases to be widely afraid of Chinese-made software and electronics. Nio looks like it might be the first rob.
Verso: Today In France, 30 years ago…
One of the finest prototypes ever won at home at the 24 Hours of Le Mans, with Derek Warwick, Mark Blundell and Yannick Dalmas at the wheel, the venerable Peugeot 905 Evo 1B.
Neutral: what did you do last weekend?
We here in Jalopnik were lucky enough to leave yesterday, and it was nice and reasonably cool here in PA, so I washed my car. And by “washed my car”, what I really mean is “pushed the grime”.