Tesla Backs Off Goal Of Building 20 Million Cars A Year By 2030

Good morning! It’s Friday, May 24, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

Tesla Had A Very Interesting Week

1st Gear: Production Is Waning At Tesla

Tesla is having a right old time of it right now. If it’s not recalls over shoddy building of its flagship Cybertruck then its mass layoffs and declining sales. Now, the cost of those sales drops is becoming clear, as Tesla has reportedly cut production of some models and dropped one of its most ambitious targets.

The electric vehicle manufacturer reportedly slashed production of its Model Y electric SUV in Shanghai, reports Reuters. New data shows that the EV maker has cut output of its best-selling model by a “double-digit percent” from its Chinese factory. As Reuters explains:

The move is aimed at addressing weakening demand for the U.S. automaker’s aged model in China, its second largest market into which a majority of the cars produced at the Shanghai plant are sold and where a brutal price war has erupted among electric vehicle makers amid an economic slowdown.

The Shanghai plant, Tesla’s biggest manufacturing hub globally, planned to cut Model Y output by at least 20% during the March to June period, said the person, who declined to be named as the matter is private.

Data from the China Association of Automobile Manufacturers (CAAM) showed the output of Model Y in China stood at 49,498 units in March and 36,610 in April, 17.7% and 33% lower, respectively, compared to a year ago.

Alongside the drop in production in China, Tesla has also dropped one of its most ambitious targets this week. For the past few years, Elon Musk has proudly claimed that by 2030, his company will ship more than 20 million cars annually – that’s more than Toyota manages today.

However, after making the claim in the 2021 and 2022 annual impact reports, the automaker dropped the wording in its latest edition, reports Bloomberg. As the site adds:

Tesla sold 1.8 million vehicles in 2023 and already has warned that it will grow at a “notably lower” rate this year. Musk vowed in April to launch less-expensive vehicles as soon as late 2024. However, people working with the CEO say he’s mostly been focused on launching a fully driverless car that Tesla plans to unveil on Aug. 8.

With a renewed focus on autonomous taxis over cheaper electric models for the masses, is the 20 million cars a year target now simply out of reach for Tesla?

2nd Gear: Elon Musk Changed His Tune On EV Tariffs

The decision to cut production at Tesla’s Chinese factory comes merely days after the U.S. imposed a massive 100 percent tariff on Chinese-made EVs being imported into the country. This has been followed up by threats from China to strap similarly harsh penalties on gas-powered cars from Europe and the U.S. entering the country. Now, after all that, Musk has decided that, actually, he might be opposed to tariffs on EVs.

The Tesla boss originally said that tariffs would be essential to protect the competitiveness of automakers in Europe and America. However, he’s now changed his tune and warned that such measures were “not good” as they “inhibit freedom of exchange or distort the market,” reports Forbes. According to the site:

Musk’s latest remarks were a departure from the warnings he had issued about Chinese EVs earlier this year where he appeared to call for government intervention. In Tesla’s earnings call in January, Musk said Chinese EV makers were the “most competitive car companies in the world” and he believed they would have “significant success” globally “depending on what kind of tariffs or trade barriers are established.”

The Tesla CEO then warned that “if there are no trade barriers established, they will pretty much demolish most other companies in the world.” China is Tesla’s largest foreign market and the carmaker faces strong competition there from homegrown brands like BYD and Nio.

Under the new tariff rules announced by president Joe Biden last week, a 100 percent levy is added to electric vehicles, 25 percent tariffs are added to lithium-ion batteries and battery parts, and there’s an additional 25 percent tariff on essential materials for EV production such as graphite and cobalt.

With these new fees set to come into force on August 1, Tesla could be on the receiving end of some heft extra charges. As it stands, the company doesn’t yet sell any of its Chinese-made EVs in the U.S., but it does export them to Europe, Australia and New Zealand, which are all mulling over additional tariffs on Chinese EVs.

3rd Gear: Boeing Faces A Long Road To Repair Reputation

If there’s one company having a rockier start to 2024 than Tesla, it’s Boeing. The American plane maker has been hit with allegations of poor manufacturing practices and quality control issues after a door plug on one of its planes came loose mid-flight, and it was even embroiled in a scandal surrounding the death of a company whistleblower. Now, it’s facing a federal investigation into its quality control, which experts warn could take years for it to bounce back from.

Investigators from the Federal Aviation Administration have now claimed that the American plane maker faces a “long road” to making safe airplanes once again, reports the Guardian. As the site explains:

In late February Mike Whitaker, the FAA administrator, gave Boeing 90 days to develop a comprehensive plan to address “systemic quality-control issues” and barred it from expanding 737 MAX production.

He said the FAA has been working closely with Boeing over the last 90 days on “what that plan is going to look like if it’s to bring the quality back where it needs to be at their factories”.

“It’s to bring the safety system where it needs to be and bring the culture where it needs to be so that employees can speak up when they see something that is concerning.”

The FAA has meetings planned with Boeing executives next week to see the steps it is taking to address the issues. On hand will be company boss Dave Calhoun, who promised a “comprehensive action plan” that will help turn the company around.

4th Gear: GM Is All In On Autonomous Vehicles

This week we’ve been treated to first impressions for some pretty important new models from General Motors, like the Silverado EV that’s meant to take the fight to the Tesla Cybertruck. But cars like that aren’t at the top of the company’s priorities, as CEO Mary Barra has outlined her ambitions for the company to go all in on autonomy.

During an event this week, the GM boss backed her company’s plans for autonomy, reports Reuters. So far, GM’s autonomous ambitions have included investing heavily in Cruise and its fleet of self-driving taxis that have terrorized California. As Reuters explains:

Barra’s comments come at a time when companies involved in autonomous driving technology are pushing for new feature-packed cars that are expected to be safer than human-driven ones.

However, the firms have faced heavy regulatory scrutiny after accidents involving self-driving vehicles.

“If you think about autonomous vehicles, that’s the ultimate in artificial intelligence, coupled with machine learning,” [said Barra] “That really leads to a world where we’re going to be safer because 90% of accidents that happen on the roads today… were caused by human error. So if we have the technology that doesn’t drive impaired or sleepy, that knows all the traffic laws, follows all of them, that’s going to lead to safer roads for everyone.”

Autonomous vehicles are facing increasing scrutiny this year, as automakers roll out more test mules and self-driving semi trucks finally make it onto our highways. It’s because of this that countries like the UK have rolled out entire organizations dedicated to safeguarding self-driving cars and ensuring they can roll out safely.

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