NZ Motoring News Weekly: GM And Ford Sales Drop, Tesla Software Bug, And EV Safety Scores

Date Nov 12, 2021
Blog category car loans
By Huey A
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Plenty of difficult news for the industry ahead, with the shortage affecting several key brands and providers. Nonetheless, it’s nice to hear that more and more manufacturers are focusing on driver safety, hopefully helping with widespread EV adoption in the future.

Get the latest stories from the road and auto industry! See the latest stories and developments prior to heading out on your next weekend drive!

Tesla self-driving software found bugs

Tesla dials back its ‘Full Self-Driving’ software after bugs were found in the new batch of the software beta, company CEO Elon Musk announced last Sunday. Tesla had rolled out this new version of their driver-assistance software to more users over the weekend but the patch proved to be problematic.

The company is now working on fixes, with the software rolled back to its previous version.

“Seeing some issues with [version] 10.3, so rolling back to 10.2 temporarily,” Elon Musk says in a tweet. “Please note, this is to be expected with beta software. It is impossible to test all hardware configs in all conditions with internal [quality assurance], hence public beta.”

After the update was rolled out, users have reported a myriad of different issues which include hard braking events, forward collision warnings, and all sorts of system misfires that drivers claim weren't present in previous versions. These incidents had disrupted the typical car industry practices as more and more safety regulators checked in on Tesla’s decision to let the public use untested software on their cars. The company said that it proceeded with the rollout, relying on the public to gather data on road conditions and parameters.

The company had used a ‘safety score’ beta that rates drivers on a zero-to-a hundred scale based on factors such as aggressive turning and hard braking in order to determine which drivers get the Full Self-Driving beta to a group of around 2,000 users. The first rollout was given to around 1,000 users that scored 100 in the assessment. After that, the software had also included users who scored 99 on the test for the software.

On the other hand, some users have reported losing the Full Self-Driving feature after the rollback instead of receiving the earlier version. Tesla hasn’t responded to a request for comment regarding this incident.

The National Highway Traffic Safety Administration (NHTSA) is already pressing Tesla for more information on the software, with its chief counsel sending the automaker a letter decrying its use of nondisclosure agreements for example, to prevent users from speaking up about their experiences on the Full Self-Driving beta.

“Despite Tesla’s characterisation of FSD as ‘beta’ it is capable of and is being used on public roads,” says Ann Carlson, the NHTSA official wrote. “Given that NHTSA relies on reports from consumers as an important source of information in evaluating potential safety defects, any agreement that may prevent or dissuade participants in the early access beta release program from reporting safety concerns to NHTSA is unacceptable.”

After this, Musk has indicated that users will not be bound by NDAs moving forward.

Tesla’s Full Self-Driving is an expanded iteration of the brand’s Autopilot program. This can help the car navigate highways, summon and park cars and conduct other manoeuvres so long as an attentive driver is behind the wheel. Full-Self Driving would have expanded these capabilities to the city streets and even residential areas.

Nonetheless, the program is still not considered a full autonomous program by both the industry and regulatory bodies.

Car Industry and Vehicle Importer’s Woes

With the global car industry facing difficulties as a result of the superconductor chip shortage, importers are now dealing with literal bugs as well as a magnesium shortage; an element critical in producing the magnesium alloys used in various parts.

The magnesium shortage came from China; its largest producer, delivering 85% of supply. The country has closed the majority of its magnesium smelting plants, cutting production by half as the country faces an energy crisis, with their government decreeing heavy industries to do their parts to help in any way they can. Add to that the fact that magnesium is notoriously difficult to store for long periods of time due to its quick oxidation and the problem could last a while.

There is even conjecture that European car makers might start running out of aluminum alloy to use as early as mid-November. And while New Zealand is quite a long way from the global chain hence, the impact might not be felt for some time, Motor Industry Association’s chief executive has said that if the shortage is now starting to hurt elsewhere, it will eventually be felt here.

Other territories, including NZ, also have to deal with an ongoing bug problem as countries enter into brown marmorated stink bug season.

Due to the threat posed by these insects, tighter biosecurity rules have been levied against vessels and goods coming from countries where the pest is endemic. Goods and cargo vessels need to be fumigated prior to unloading in order to kill the invasive species, especially as these bugs have now been able to hitchhike across territories via car carriers.

Crawford has stated that this is proving to be a challenge, even as manufacturers implement strong pre-loading mitigations. As the bug has been well-established in so many places that produce cars, “the list of where it isn’t is now much shorter than the list of where it is.”

“North America has always been well known as a problem area, but now it is into parts of Europe; basically China and South Korea are the only source countries for cars that are not presenting a problem.”

For now, the problem hasn’t been as widespread in the current season. However, Kiwis mustn’t be complacent as something could always crop up, given the bug’s ability to wreak havoc on agriculture thanks to its ability to fly, hitchhike, and feed across a wide array of flora, allowing it to spread rapidly across the country. 

The insect also emits a foul smell whenever it is disturbed or crushed, and can even hide for months in a dormant state before emerging during warmer temperatures. This bug has been annoying Kiwis for almost a decade, with some years being tougher than others like 2018. NZ once had to turn away some car carriers bringing some 12,000 cars from Japan to NZ due to the discovery of hundreds of these bugs on board.

Fumigation is the best defence against this infestation but it takes time, especially once it is compounded by the Covid restrictions. For now, it seems the global automobile supply chain will have to deal with the issues regarding stock, resources, and the ability to bring them into the country as part of the long lists of hurdles it was already dealing with.

Profits fall for GM and Ford

The full brunt of the global semiconductor shortage is now being felt completely as it starts cutting into the third-quarter profits of automobile makers Ford and its rival General Motors (GM), forcing both companies to temporarily close some of their factories, pinching supplies on dealer lots.

Ford’s net income fell by around 23% from a year ago. On the other hand, GM’s profit dropped 40% to just US $2.4 billion. The drop in overall profit from low sales was only eased thanks to the sale of their more expensive vehicle types such as pickup trucks and larger SUVs. Both companies have now looked into other steps to take in order to help their bottom line.

Ford reported that it would resume paying dividends at 10 cents per share, starting in the fourth quarter, costing the company around US $400 million per quarter. Their stock has jumped 7.5% in after-market trading, even as their revenue dropped 5% from a year ago to US $35.68 billion, a little below Wall Street estimates of US $38.2 billion.

The carmaker had also lost 2.4% of US Market share, due to its inability to produce enough vehicles to meet the demand. Their sales also fell 27% from July through September in the US, its most lucrative market. Nonetheless, the average new Ford vehicle did sell for more than US $51,000 during the quarter, which is up by almost 13% from a year ago.

Chief Financial Officer John Lawler stated that the company still has the cash and the income to continue investing in EVs and related services despite the setbacks.

“That’s providing us the financial flexibility to fully fund our plan and all of our other capital needs,” he says. “We are also focused on total shareholder returns, not only appreciating stock price but also the dividends.”

Lawler also thinks that globally, Ford should be able to sell 200,000 Mustang Mach-E EVs per year. He also thinks that the chip shortage may ease a bit between October through December, forecasting that sales to dealers should rise by around 10% this quarter over the previous one, despite talks of the shortage continuing until next year and possibly even up to 2023.

The company had raised its full-year pretax earnings outlook to between US $10.5 billion and US $11.5 billion, as well as making plans to make capital investments of around US $40 billion to US $45 billion from 2020 to 2025, including a US $15 billion investment towards developing more EVs during the period.

Lawler however, cautions that the company should expect to face higher costs when it comes to freight and materials as common commodities such as steel are expected to rise by US $3 billion to $3.5 billion this year, with an additional US $1.5 billion increase next year.

On the other hand, GM’s earnings fell from US $4 billion last year as sales slump in the US; also its most profitable territory. However, GM CEO Mary Barra had said that the company is still ‘pretty confident’ that their San Francisco-based Cruise autonomous vehicle subsidiary will start driving passengers without the need of human safety drivers sometime next year; just missing a final permit from California regulators.

The global conductor shortage and the ongoing Covid outbreaks at supplier factories hit the company hard during the third quarter, making the whole situation somewhat volatile. Nonetheless, GM has said that it is seeing improvements in the current quarter once additional supplies come in during the first three months of 2022. GM expects to produce around 200,000 fewer vehicles in the second half of this year, with most of the impact occurring from July through September.

According to Barra, she’s spoken with the CEOs of most of the world’s major chip manufacturers, and that they’re supposedly working on newer strategies in order to ensure that such a shortage never happens again.

“I think we’ll definitely see changes to ensure we have the right supply.”

Barra expects the company’s market share to bounce back once their factories return to regular production, despite losing 3.8% of US market share.

“We are selling everything we can. I wish we had more vehicles.”

Same as Ford, consumers willing to pay high prices for the very limited number of brand new vehicles available enabled the cash flow to continue for GM, with the average sale price for their vehicles topping at US $50,000 for the quarter; a 16% increase from last year. Barra assures consumers however, that the high prices should start easing up once vehicle supplies grow.

Shares of GM closed last Wednesday down 5.4% at US $54.26.

New EVs Top Safety Scores

For some good news, the latest EVs have recently pulled in with top marks for safety, according to the Australian New Car Assessment Programme (ANCAP). Both the Hyundai Ioniq 5 as well as the Volvo XC40 Recharge received five stars in the recent Euro NCAP testing. The Hyundai experienced the full gamut of testing, while the Volvo received its rating back when the XC40 engine was tested in 2018, with additional testing conducted for the EV and PHEV models.

“To ensure safety is not compromised for consumers wanting to buy an alternative-powered vehicle, for battery and hybrid electric vehicles we conduct additional checks to make sure they don’t pose unique risks such as battery rupture or electrical hazards to the occupants or first responders”, ANCAP Chief Executive Officer, Carla Hoorweg, says.

The Ioniq 5 received high scores in the full-width frontal test featuring two female crash test dummies, the side impact test which simulates the effects of a T-bone intersection crash, and the oblique pole test aimed at evaluating the risk of head injury for the driver in case the vehicle runs off the road and hits a pole or a tree on the side.

The Ioniq’s design presented a low risk to the ‘crash partner’ vehicle, with a minimal 0.22 point penalty applied, resulting in one of the best scores ANCAP observed in this assessment area since the vehicle compatibility scoring system was introduced last 2020.

“The Ioniq 5’s good measure of safety performance coupled with its green drivetrain provides families and fleet buyers with a good all-round choice,” says Hoorweg. “We know safety and environmental performance are top-of-mind considerations for the majority of new car buyers today, and it’s pleasing to see Hyundai prioritise five-star safety in this new market offering.”

Likewise, the Ford Mustang Mach-E also received five stars after overseas testing by the Euro NCAP. This is the result ANCAP will base on should the vehicle be brought to the NZ market. The result also comes as a relief to those worried about the Mustang brand name bringing in the same three-star safety rating its ICE sports car brethren received.

Aside from the two cars, the hydrogen-powered Toyota Mirai received a five-star rating as well though there hasn’t been any confirmation as to whether or not the brand is bringing this model to the NZ market at this time. 

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Have a great weekend! Stay safe and happy driving!

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