The U.S. economy grew slowly over the summer, adding to fears of a looming recession — but also keeping alive the hope that one might be avoided.
Gross domestic product, adjusted for inflation, returned to growth in the third quarter after two consecutive quarterly contractions, according to government data released Thursday. But consumer spending slowed as inflation ate away at households’ buying power, and the sharp rise in interest rates led to the steepest contraction in the housing sector since the first months of the pandemic.
The report underscored the delicate balance facing the Federal Reserve as it tries to rein in the fastest inflation in four decades. Policymakers have aggressively raised interest rates in recent months — and are expected to do so again at their meeting next week — in an effort to cool off red-hot demand, which they believe has contributed to the rapid increase in prices. But they are trying to do so without snuffing out the recovery entirely.
The third-quarter data — G.D.P. rose 0.6 percent, the Commerce Department said, a 2.6 percent annual rate of growth — suggested that the path to such a “soft landing” remained open, but narrow.
loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.
What causes inflation? It can be the result of rising consumer demand. But inflation can also rise and fall based on developments that have little to do with economic conditions, such as limited oil production and supply chain problems.
Is inflation bad? It depends on the circumstances. Fast price increases spell trouble, but moderate price gains can lead to higher wages and job growth.
Can inflation affect the stock market? Rapid inflation typically spells trouble for stocks. Financial assets in general have historically fared badly during inflation booms, while tangible assets like houses have held their value better.
President Biden cheered the report in a statement Thursday morning. “For months, doomsayers have been arguing that the U.S. economy is in a recession, and congressional Republicans have been rooting for a downturn,” he said. “But today we got further evidence that our economic recovery is continuing to power forward.”
By one common definition, the U.S. economy entered a recession when it experienced two straight quarters of shrinking G.D.P. at the start of the year. Officially, however, recessions are determined by a group of researchers at the National Bureau of Economic Research, who look at a broader array of indicators, including employment, income and spending.
Most analysts don’t believe the economy meets that more formal definition, and the third-quarter numbers — which slightly exceeded forecasters’ expectations — provided further evidence that a recession had not yet begun.
But the overall G.D.P. figures were skewed by the international trade component, which often exhibits big swings from one period to the next. Economists tend to focus on less volatile components, which have showed the recovery steadily losing momentum as the year has progressed. One closely watched measure suggested that private-sector demand stalled out almost completely in the third quarter.
Mortgage rates passed 7 percent on Thursday, their highest level since 2002.
“Housing is just the single largest trigger to additional spending, and it’s not there anymore; it’s going in reverse,” said Diane Swonk, chief economist at the accounting firm KPMG. “This has been a stunning turnaround in housing, and when things start to go really quickly, you start to wonder, what are the knock-on effects, what are the spillover effects?”
The third quarter was in some sense a mirror image of the first quarter, when G.D.P. shrank but consumer spending was strong. In both cases, the swings were driven by international trade. Imports, which don’t count toward domestic production figures, soared early this year as the strong economic recovery led Americans to buy more goods from overseas. Exports slumped as the rest of the world recovered more slowly from the pandemic.
Both trends have begun to reverse as American consumers have shifted more of their spending toward services and away from imported goods, and as foreign demand for American-made goods has recovered. Supply-chain disruptions have added to the volatility, leading to big swings in the data from quarter to quarter.
Few economists expect the strong trade figures from the third quarter to continue, especially because the strong dollar will make American goods less attractive overseas.
About 350 miles northwest of Montreal, amid a vast pine forest, is a deep mining pit with walls of mottled rock. The pit has changed hands repeatedly and been mired in bankruptcy, but now it could help determine the future of electric vehicles.
The mine contains lithium, an indispensable ingredient in electric car batteries that is in short supply. If it opens on schedule early next year, it will be the second North American source of that metal, offering hope that badly needed raw materials can be extracted and refined close to Canadian, U.S. and Mexican auto factories, in line with Biden administration policies that aim to break China’s dominance of the battery supply chain.
Having more mines will also help contain the price of lithium, which has soared fivefold since mid-2021, pushing the cost of electric vehicles so high that they are out of reach for many drivers. The average new electric car in the United States costs about $66,000, just a few thousand dollars short of the median household income last year.
lithium mines are in various stages of development in Canada and the United States. Canada has made it a mission to become a major source of raw materials and components for electric vehicles. But most of these projects are years away from production. Even if they are able to raise the billions of dollars needed to get going, there is no guarantee they will yield enough lithium to meet the continent’s needs.
eliminate this cap and extend the tax credit until 2032; used cars will also qualify for a credit of up to $4,000.
Tax code. The law introduces a new 15 percent corporate minimum tax on the profits companies report to shareholders, applying to companies that report more than $1 billion in annual income but are able to use credits, deductions and other tax treatments to lower their effective tax rates. The legislation will bolster the I.R.S. with an investment of about $80 billion.
Low-income communities. The package includes over $60 billion in support of low-income communities and communities of color that are disproportionately burdened by climate change. Among the provisions are grants for zero-emissions technology and money to mitigate the negative effects of highways and other transportation facilities.
Fossil fuels industry. The legislation requires the federal government to auction off more public space for oil drilling and expand tax credits for coal and gas-burning plants that rely on carbon capture technology. These provisions are among those that were added to gain the support of Senator Joe Manchin III, Democrat of West Virginia.
West Virginia. The law is expected to bring big benefits to Mr. Manchin’s state, the nation’s second-largest producer of coal, making permanent a federal trust fund to support miners with black lung disease and offering new incentives to build wind and solar farms in areas where coal mines or coal plants have recently closed.
For many people in government and the auto industry, the main concern is whether there will be enough lithium to meet soaring demand for electric vehicles.
The Inflation Reduction Act, which President Biden signed in August, has raised the stakes for the auto industry. To qualify for several incentives and subsidies in the law, which go to car buyers and automakers and are worth a total of $10,000 or more per electric vehicle, battery makers must use raw materials from North America or a country with which the United States has a trade agreement.
California and other states move to ban internal combustion engines. “It’s going to take everything we can do and our competitors can do over the next five years to keep up,” Mr. Norris said.
One of the first things that Sayona had to do when it took over the La Corne mine was pump out water that had filled the pit, exposing terraced walls of dark and pale stone from previous excavations. Lighter rock contains lithium.
After being blasted loose and crushed, the rock is processed in several stages to remove waste material. A short drive from the mine, inside a large building with walls of corrugated blue metal, a laser scanner uses jets of compressed air to separate light-colored lithium ore. The ore is then refined in vats filled with detergent and water, where the lithium floats to the surface and is skimmed away.
The end product looks like fine white sand but it is still only about 6 percent lithium. The rest includes aluminum, silicon and other substances. The material is sent to refineries, most of them in China, to be further purified.
Yves Desrosiers, an engineer and a senior adviser at Sayona, began working at the La Corne mine in 2012. During a tour, he expressed satisfaction at what he said were improvements made by Sayona and Piedmont. Those include better control of dust, and a plan to restore the site once the lithium runs out in a few decades.
“The productivity will be a lot better because we are correcting everything,” Mr. Desrosiers said. In a few years, the company plans to upgrade the facility to produce lithium carbonate, which contains a much higher concentration of lithium than the raw metal extracted from the ground.
The operation will get its electricity from Quebec’s abundant hydropower plants, and will use only recycled water in the separation process, Mr. Desrosiers said. Still, environmental activists are watching the project warily.
Mining is a pillar of the Quebec economy, and the area around La Corne is populated with people whose livelihoods depend on extraction of iron, nickel, copper, zinc and other metals. There is an active gold mine near the largest city in the area, Val-d’Or, or Valley of Gold.
Mining “is our life,” said Sébastien D’Astous, a metallurgist turned politician who is the mayor of Amos, a small city north of La Corne. “Everybody knows, or has in the near family, people who work in mining or for contractors.”
Most people support the lithium mine, but a significant minority oppose it, Mr. D’Astous said. Opponents fear that another lithium mine being developed by Sayona in nearby La Motte, Quebec, could contaminate an underground river.
Rodrigue Turgeon, a local lawyer and program co-leader for MiningWatch Canada, a watchdog group, has pushed to make sure the Sayona mines undergo rigorous environmental reviews. Long Point First Nation, an Indigenous group that says the mines are on its ancestral territory, wants to conduct its own environmental impact study.
Sébastien Lemire, who represents the region around La Corne in the Canadian Parliament, said he wanted to make sure that the wealth created by lithium mining flowed to the people of Quebec rather than to outside investors.
Mr. Lemire praised activists for being “vigilant” about environmental standards, but he favors the mine and drives an electric car, a Chevrolet Bolt.
“If we don’t do it,” he said at a cafe in La Corne, “we’re missing the opportunity of the electrification of transport.”
More than six months after one of the largest infant formula manufacturing plants in the United States issued a recall and was then shut down because of contamination concerns, a newborn staple remains in short supply.
In parts of the country, parents and their families are scrambling to locate precious containers of formula for their babies and many large retailers remain out of stock of popular brands. Some companies like Walmart and Target are limiting the number of containers that can be purchased at one time.
While the situation has improved since mid-July, the out-of-stock figures for powder formula on store shelves in late August remained at 23 percent, still above the 10 percent it was before the recall and shutdown, according to the Chicago-based market research firm IRI.
infections in four babies — two of them fatal — who had consumed formula manufactured at the plant. On Feb. 17, two days after the shutdown, Abbott recalled batches of three powdered formulas over complaints of serious bacterial contamination. (Abbott has said that there is no “conclusive evidence” to link the company’s formulas to the illnesses.) That disruption made it clear just how dependent Americans were on a few formula manufacturers, and the Biden administration found itself scrambling to figure out how to make more product available.
ending around Nov. 14, the F.D.A. said it would release guidance this month on how the new companies can continue to sell in the United States past this fall.
“Parents in the U.S. have been looking for a better product than what they were being offered,” said Will McMahon, one of the members of the family who owns the British baby formula Kendamil. The company has spent the last three years working through the formal process, including clinical trials, necessary to get its organic infant formula approved by the F.D.A.
Kendamil was one of the earliest formulas to get its application approved by the F.D.A. in the wake of the Sturgis plant shutdown, and the company has begun sending two million cans of formula to the United States.
dropped in early August after it said the F.D.A. had notified it that it was “deferring further consideration” of its application to import formula into the United States.
resume manufacturing of Similac formulas at its plant in Sturgis.
The company also said that it increased production at other U.S.-based manufacturing plants and one in Ireland, and that it would supply the United States with more than eight million pounds of formula in August, an increase from the year before. But it noted it would take six weeks for the Similac product from the Sturgis plant to start to hit store shelves.
But some industry experts say it will take time for Abbott to gain back the market share it once had. “To be frank, there is a lot of consumer mistrust around Similac right now,” said Mr. Dittmeier of the W.I.C. program.
That could be a boon for Reckitt Benckiser, which has been running its formula manufacturing plants at full tilt all summer, hoping to hold on to the market share it has gained at Abbott’s expense. Its market share has climbed to nearly 60 percent from 35 percent before the recall, said Robert Cleveland, who oversees the Mead Johnson nutrition business at Reckitt.
“We remain committed to making as much formula as we can,” Mr. Cleveland said. “We continue to maximize our domestic manufacturing, running overtime and going 24/7.” He added that the company had received approval to bring in formula from its plants in Singapore and specialty formula from its facilities in Mexico.
Still, in late August, when Lori Sharp, a first-time mother in Port Hueneme, Calif., realized she was down to one container of Reckitt’s Enfamil Sensitive infant formula for her 3-month-old daughter, the formula was out of stock on Walmart.com.
Panicking, she scoured more websites and widened her geographic search. She eventually discovered a container of formula at a Target 40 minutes away in Moorpark, Calif. “I went into the store and they actually had four more, but their shelves were so bare,” Ms. Sharp said. “I bought all of them.”
In Georgia, some of the most acute shortages are in rural areas. Jennifer Kelly, who is the family services manager at the early Head Start program in Swainsboro, which is between Macon and Savannah, said trying to find formula earlier this summer had become a “daily chore.”
The 14 babies she watches drink seven different kinds of formula. She and her staff were often driving to Walmart, Walgreens or a local grocery chain or scouring Amazon for some of the more obscure brands.
“It’s not like it was a few months ago when the shelves were bare,” Ms. Kelly said. “I am hoping we are on the other side of this dilemma.”
When the formula shortage was at a crisis point in May, Ms. Robinson of Bucks County, Pa., created a Facebook group that connected parents around the country. The group, called Formula Hunters, does not exchange money to keep out profiteers who have been hoarding formula and seeking to resell it at a markup.
The group operates on the notion that a parent who buys a hard-to-find formula brand and sends it to another parent in the group will eventually be repaid when others do the same for them.
Formula Hunters now has 1,500 members, who are still actively helping each other locate formula. “This has been going on for so many months,” Ms. Robinson said. “The frustration has been high.”
DEVENS, Mass. — The machines stand 20 feet high, weigh 60,000 pounds and represent the technological frontier of 3-D printing.
Each machine deploys 150 laser beams, projected from a gantry and moving quickly back and forth, making high-tech parts for corporate customers in fields including aerospace, semiconductors, defense and medical implants.
The parts of titanium and other materials are created layer by layer, each about as thin as a human hair, up to 20,000 layers, depending on a part’s design. The machines are hermetically sealed. Inside, the atmosphere is mainly argon, the least reactive of gases, reducing the chance of impurities that cause defects in a part.
“The Mainstreaming of Additive Manufacturing.”
a report by Hubs, a marketplace for manufacturing services.
The Biden administration is looking to 3-D printing to help lead a resurgence of American manufacturing. Additive technology will be one of “the foundations of modern manufacturing in the 21st century,” along with robotics and artificial intelligence, said Elisabeth Reynolds, special assistant to the president for manufacturing and economic development.
Additive Manufacturing Forward, an initiative coordinated by the White House in collaboration with major manufacturers. The five initial corporate members — GE Aviation, Honeywell, Siemens Energy, Raytheon and Lockheed Martin — are increasing their use of additive manufacturing and pledged to help their small and medium-size American suppliers adopt the technology.
VulcanForms was founded in 2015 by Dr. Hart and one of his graduate students, Martin Feldmann. They pursued a fresh approach for 3-D printing that uses an array of many more laser beams than existing systems. It would require innovations in laser optics, sensors and software to choreograph the intricate dance of laser beams.
By 2017, they had made enough progress to think they could build a machine, but would need money to do it. The pair, joined by Anupam Ghildyal, a serial start-up veteran who had become part of the VulcanForms team, went to Silicon Valley. They secured a seed round of $2 million from Eclipse Ventures.
The VulcanForms technology, recalled Greg Reichow, a partner at Eclipse, was trying to address the three shortcomings of 3-D printing: too slow, too expensive and too ridden with defects.
Arwood Machine this year.
Arwood is a modern machine shop that mostly does work for the Pentagon, making parts for fighter jets, underwater drones and missiles. Under VulcanForms, the plan over the next few years is for Arwood to triple its investment and work force, currently 90 people.
VulcanForms, a private company, does not disclose its revenue. But it said sales were climbing rapidly, while orders were rising tenfold quarter by quarter.
Cerebras, which makes specialized semiconductor systems for artificial intelligence applications. Cerebras sought out VulcanForms last year for help making a complex part for water-cooling its powerful computer processors.
The semiconductor company sent VulcanForms a computer-design drawing of the concept, an intricate web of tiny titanium tubes. Within 48 hours VulcanForms had come back with a part, recalled Andrew Feldman, chief executive of Cerebras. Engineers for both companies worked on further refinements, and the cooling system is now in use.
Accelerating the pace of experimentation and innovation is one promise of additive manufacturing. But modern 3-D printing, Mr. Feldman said, also allows engineers to make new, complex designs that improve performance. “We couldn’t have made that water-cooling part any other way,” Mr. Feldman said.
“Additive manufacturing lets us rethink how we build things,” he said. “That’s where we are now, and that’s a big change.”
Tesla’s chief executive, Elon Musk, plans to cut 10 percent of the electric carmaker’s salaried work force, he told staff in an email on Friday.
The job cuts will not apply to employees who build cars or batteries or who install solar panels, and the number of hourly employees will increase, Mr. Musk said in the email, a copy of which was reviewed by The New York Times. “Tesla will be reducing salaried head count by 10 percent, as we have become over staffed in many areas,” he said.
Reuters reported the news earlier, citing a different email that Mr. Musk sent only to Tesla executives. The automaker’s share price closed on Friday down about 9 percent after that article was published.
Tesla’s staff has grown substantially as sales have surged and it has built new factories, including two that opened this year near Berlin and Austin, Texas. The company employed more than 99,000 workers at the end of last year. Just two years earlier, Tesla had 48,000.
2017 and 2018.
In recent weeks, investors have begun questioning the company’s sky-high stock price. The market values the company at more than $728 billion, more than several other large automakers combined. Tesla’s shares are down about 40 percent from their high at the end of last year, bringing attention to the risks the company faces from growing competition, accusations of racial discrimination and production problems at its factory in Shanghai.
buy Twitter for roughly $44 billion. Here’s how the deal unfolded:
The initial offer. Mr. Musk made an unsolicited bid worth more than $40 billion for the influential social network, saying that he wanted to make Twitter a private company and that he wanted people to be able to speak more freely on the service.
“From a corporate good-governance perspective, Tesla has a lot of red flags,” Andrew Poreda, a senior analyst who specializes in socially responsible investing at Sage Advisory Services, an investment firm in Austin, told The Times last month. “There are almost no checks and balances.”
Mr. Musk’s management style and success — he is listed as the world’s richest man by Bloomberg and Forbes — have earned him admirers but have made him a lightning rod. Tesla has lost a number of top executives in recent years, many of whom have gone on to top jobs at other automakers, tech companies and battery makers.
Recently, Mr. Musk praised the work ethic in China, where labor conditions can be harsh or even abusive, suggesting that workers in the United States were lazy. “They won’t just be burning the midnight oil. They’ll be burning the 3 a.m. oil,” he said about Chinese workers in an interview with The Financial Times. “So they won’t even leave the factory type of thing. Whereas in America, people are trying to avoid going to work at all.”
Still, some analysts remain bullish about Tesla’s prospects. “In our view, Tesla likely does not need to hire any more employees to maintain its growth, and we think the plan to reduce the work force likely shows that Tesla over hired last year,” Seth Goldstein, a senior equity analyst at Morningstar, said in a note on Friday.
Some feature more than 50 billion tiny transistors that are 10,000 times smaller than the width of a human hair. They are made on gigantic, ultraclean factory room floors that can beseven stories tall and run the length of four football fields.
Microchips are in many ways the lifeblood of the modern economy. They power computers, smartphones, cars, appliances and scores of other electronics. But the world’s demand for them has surged since the pandemic, which also caused supply-chain disruptions, resulting in a global shortage.
That, in turn, is fueling inflation and raising alarms that the United States is becoming too dependent on chips made abroad. The United States accounts for only about 12 percent of global semiconductor manufacturing capacity; more than 90 percent of the most advanced chips come from Taiwan.
Intel, a Silicon Valley titan that is seeking to restore its longtime lead in chip manufacturing technology, is making a $20 billion bet that it can help ease the chip shortfall. It is building two factories at its chip-making complex in Chandler, Ariz., that will take three years to complete, and recently announced plans for a potentially bigger expansion, with new sites in New Albany, Ohio, and Magdeburg, Germany.
Why does making millions of these tiny components mean building — and spending — so big? A look inside Intel production plants in Chandler and Hillsboro, Ore., provides some answers.
What chips do
Chips, or integrated circuits, began to replace bulky individual transistors in the late 1950s. Many of those tiny components are produced on a piece of silicon and connected to work together. The resulting chips store data, amplify radio signals and perform other operations; Intel is famous for a variety called microprocessors, which perform most of the calculating functions of a computer.
Intel has managed to shrink transistors on its microprocessors to mind-bending sizes. But the rival Taiwan Semiconductor Manufacturing Company can make even tinier components, a key reason Apple chose it to make the chips for its latest iPhones.
Such wins by a company based in Taiwan, an island that China claims as its own, add to signs of a growing technology gap that could put advances in computing, consumer devices and military hardware at risk from both China’s ambitions and natural threats in Taiwan such as earthquakes and drought. And it has put a spotlight on Intel’s efforts to recapture the technology lead.
How chips are made
Chip makers are packing more and more transistors onto each piece of silicon, which is why technology does more each year. It’s also the reason that new chip factories cost billions and fewer companies can afford to build them.
In addition to paying for buildings and machinery, companies must spend heavily to develop the complex processing steps used to fabricate chips from plate-size silicon wafers — which is why the factories are called “fabs.”
Enormous machines project designs for chips across each wafer, and then deposit and etch away layers of materials to create their transistors and connect them. Up to 25 wafers at a time move among those systems in special pods on automated overhead tracks.
Processing a wafer takes thousands of steps and up to two months. TSMC has set the pace for output in recent years, operating “gigafabs,” sites with four or more production lines. Dan Hutcheson, vice chair of the market research firm TechInsights, estimates that each site can process more than 100,000 wafers a month. He puts the capacity of Intel’s two planned $10 billion facilities in Arizona at roughly 40,000 wafers a month each.
How chips are packaged
After processing, the wafer is sliced into individual chips. These are tested and wrapped in plastic packages to connect them to circuit boards or parts of a system.
That step has become a new battleground, because it’s more difficult to make transistors even smaller. Companies are now stacking multiple chips or laying them side by side in a package, connecting them to act as a single piece of silicon.
Where packaging a handful of chips together is now routine, Intel has developed one advanced product that uses new technology to bundle a remarkable 47 individual chips, including some made by TSMC and other companies as well those produced in Intel fabs.
What makes chip factories different
Intel chips typically sell for hundreds to thousands of dollars each. Intel in March released its fastest microprocessor for desktop computers, for example, at a starting price of $739. A piece of dust invisible to the human eye can ruin one. So fabs have to be cleaner than a hospital operating room and need complex systems to filter air and regulate temperature and humidity.
Fabs must also be impervious to just about any vibration, which can cause costly equipment to malfunction. So fab clean rooms are built on enormous concrete slabs on special shock absorbers.
Also critical is the ability to move vast amounts of liquids and gases. The top level of Intel’s factories, which are about 70 feet tall, have giant fans to help circulate air to the clean room directly below. Below the clean room are thousands of pumps, transformers, power cabinets, utility pipes and chillers that connect to production machines.
The need for water
Fabs are water-intensive operations. That’s because water is needed to clean wafers at many stages of the production process.
Intel’s two sites in Chandler collectively draw about 11 million gallons of water a day from the local utility. Intel’s future expansion will require considerably more, a seeming challenge for a drought-plagued state like Arizona, which has cut water allocations to farmers. But farming actually consumes much more water than a chip plant.
Intel says its Chandler sites, which rely on supplies from three rivers and a system of wells, reclaim about 82 percent of the freshwater they use through filtration systems, settling ponds and other equipment. That water is sent back to the city, which operates treatment facilities that Intel funded, and which redistributes it for irrigation and other nonpotable uses.
Intel hopes to help boost the water supply in Arizona and other states by 2030, by working with environmental groups and others on projects that save and restore water for local communities.
How fabs are built
To build its future factories, Intel will need roughly 5,000 skilled construction workers for three years.
They have a lot to do. Excavating the foundations is expected to remove 890,000 cubic yards of dirt, carted away at a rate of one dump truck per minute, said Dan Doron, Intel’s construction chief.
The company expects to pour more than 445,000 cubic yards of concrete and use 100,000 tons of reinforcement steel for the foundations — more than in constructing the world’s tallest building, the Burj Khalifa in Dubai.
Some cranes for the construction are so large that more than 100 trucks are needed to bring the pieces to assemble them, Mr. Doron said. The cranes will lift, among other things, 55-ton chillers for the new fabs.
Patrick Gelsinger, who became Intel’s chief executive a year ago, is lobbying Congress to provide grants for fab construction and tax credits for equipment investment. To manage Intel’s spending risk, he plans to emphasize construction of fab “shells” that can be outfitted with equipment to respond to market changes.
To address the chip shortage, Mr. Gelsinger will have to make good on his plan to produce chips designed by other companies. But a single company can do only so much; products like phones and cars require components from many suppliers, as well as older chips. And no country can stand alone in semiconductors, either. Though boosting domestic manufacturing can reduce supply risks somewhat, the chip industry will continue to rely on a complex global web of companies for raw materials, production equipment, design software, talent and specialized manufacturing.
A German retiree facing sky-high energy bills is turning to a wood-burning stove. The owner of a dry cleaning business in Spain adjusted her employees’ work shifts to cut electric bills and installed solar panels. A mayor in France said he ordered a hiring freeze because rising electrical bills threaten a financial “catastrophe.”
Europeans have long paid some of the world’s highest prices for energy, but no one can remember a winter like this one. Lives and livelihoods across the continent are being upended by a series of factors, including pandemic-induced supply shortages and now geopolitical tensions that are driving some energy prices up fivefold.
Matters could get worse if tensions between Russia and Ukraine escalate further, potentially interrupting the flow of gas. Russia provides more than a third of Europe’s natural gas, which heats homes, generates electricity and powers factories. Even as politicians and leaders in capitals across Europe are freezing prices, slashing taxes on energy and issuing checks to households hardest hit by the price increases, concerns are growing about what the persistently high prices could mean for people’s jobs and their ability to pay their bills.
“People are very upset and very distressed,” said Stefanie Siegert, who counsels consumers in the eastern German state of Saxony who find themselves struggling to pay their gas and power bills.
rocked France in 2018. But Ms. Siegert, whose agency counseled more than 300 customers in January — three times its monthly average — said she wouldn’t be surprised if the anger currently directed at the prospect of a vaccine mandate shifted its sights to energy prices.
“When you talk with people, you feel their anger,” she said. “It is very depressing.”
price cap on energy bills was recently raised 54 percent, increasing annual charges to 1,971 pounds. That increase will affect 22 million households beginning in April, contributing to broadening worries in Britain about the rising cost of living.
Similar concerns can be found throughout the continent.
Athina Sirogianni, 46, a freelance translator in Athens, said she remembered fondly the day about a decade ago when her building switched from oil to natural gas. The move cut her utility bill in half.
Nyrstar, the world’s second-largest zinc processor, produces nearly 500 tons of the metal each day at a sprawling factory in Auby, in northern France, a complex that consumes as much energy as the French city of Lyon.
When its electrical rates surged from €35 to €50 per megawatt-hour to €400 last December, it made no sense to keep the factory running, said Xavier Constant, Nyrstar France’s general manager. At that rate, he said, “the more we produce the more we lose,” and so the plant shut down last month for three weeks.
Nyrstar temporarily halved production at its other European plants in October when the energy crisis set in, prompting a brief spike in the global price of zinc.
Last fall, fertilizer plants in Britain were forced to close because of gas prices. And several German companies that produce glass, steel and fertilizer have also scaled back production in recent months.
To ease the burden of the high prices, the government in Berlin reduced by half an energy surcharge on bills aimed at funding the country’s transition to renewable sources of power, and plans to phase it out by the end of next year.
on Twitter. He said the facility’s electricity prices had increased 100 percent.
He and other hospital directors have appealed to the government in Warsaw to intervene, saying the recent cuts to taxes on energy and gasoline were not enough.
In Germany, there is rising tension in municipally owned utilities that must accept customers, like Mr. Backhaus in Saxony, whose relatively low-cost contracts have been dropped by private energy companies because the companies can’t pay ballooning energy rates.
The municipal utilities are forced to increase the rates for these new customers, often almost astronomically high, to cover the cost of buying extra energy on the spot market at record prices. That leads to tensions in communities, and can threaten municipal finances.
“Anyone who wants to will be supplied with energy by the municipal utilities,” said Markus Lewe, president of the German Association of Cities and Towns. “But it must not lead to the municipal utilities and their loyal customers being asked to pay for questionable business models of other providers and having to answer for their shortsighted financing.”
He called on the federal government to intervene, to protect cities from the price instability.
In France, local leaders are also looking to the federal government to help ease the sting of skyrocketing energy bills.
Boris Ravignon, the mayor of Charleville-Mézières, said his city is facing “a catastrophe” after its January energy bill more than tripled, wiping out the region’s budget surplus for infrastructure and public services in a single month. The city is trying to cut costs by switching streetlights to LED bulbs, which use less electricity, and has proposed a new hydroelectric project.
The mayor has already frozen planned hirings and said the city may have no choice but to raise the cost of public services like water, transportation, fees to use sports halls like the city’s public pool, and cultural events.
“We really want to protect citizens from these increases,” Mr. Ravignon said. “But when prices reach such crazy heights, it’s impossible.”
Reporting contributed by Adèle Cordonnier in France, Raphael Minder in Spain and Niki Kitsantonis in Greece.
The company also did not tell investors that its chief operating officer, Rod Copes, a Harley-Davidson veteran, left the company last year. Public companies and those in the process of listing their shares generally disclose the departures of top executives. The news was first reported by The Wall Street Journal.
Understand the Supply Chain Crisis
Ms. Mast said Mr. Copes had a “phased transition from Rivian in fall 2021, prior to the I.P.O.” and retired in December, after the offering.
Mr. Copes, 55, said in an interview that he did not leave Rivian because of concerns about his performance or because there were problems with production. He said that he had achieved key goals and that the structures were in place for Rivian’s ramp-up in production. “It was a smooth and seamless transition,” Mr. Copes said.
But corporate governance experts think Rivian ought to have disclosed his impending departure to investors during the I.P.O., given his senior role. “If they knew he was leaving, the optimal disclosure would have been to identify their C.O.O. but indicate that he was leaving,” John C. Coffee Jr., a professor at Columbia Law School, said in an email.
According to one former executive, Rivian has a poor management culture.
The executive, Laura Schwab, said she was fired last year from a high-ranking sales and marketing position after expressing concerns about what she called the “boys’ club culture” and “gender discrimination” at the company. She filed a lawsuit in state court in California accusing Rivian of violating the state law prohibiting employment discrimination and retaliation.
Ms. Schwab said she had been part of 30 vehicle introductions in prior auto industry jobs, including at Aston Martin and Jaguar Land Rover. Soon after arriving at Rivian, she said, she felt compelled to express concerns that the company was in danger of missing delivery targets.
“The production line doesn’t go from zero to thousands of cars overnight; it just doesn’t work that way,” she said.
Sales of cars powered solely by batteries surged in the United States, Europe and China last year, while deliveries of fossil fuel vehicles were stagnant. Demand for electric cars is so strong that manufacturers are requiring buyers to put down deposits months in advance. And some models are effectively sold out for the next two years.
Battery-powered cars are having a breakthrough moment and will enter the mainstream this year as automakers begin selling electric versions of one of Americans’ favorite vehicle type: pickup trucks. Their arrival represents the biggest upheaval in the auto industry since Henry Ford introduced the Model T in 1908 and could have far-reaching consequences for factory workers, businesses and the environment. Tailpipe emissions are among the largest contributors to climate change.
While electric vehicles still account for a small slice of the market — nearly 9 percent of the new cars sold last year worldwide were electric, up from 2.5 percent in 2019, according to the International Energy Agency — their rapid growth could make 2022 the year when the march of battery-powered cars became unstoppable, erasing any doubt that the internal combustion engine is lurching toward obsolescence.
The proliferation of electric cars will improve air quality and help slow global warming. The air in Southern California is already a bit cleaner thanks to the popularity of electric vehicles there. And the boom is a rare piece of good news for President Biden, who has struggled to advance his climate agenda in Congress.
more than a dozen new electric car and battery factories just in the United States.
“It’s one of the biggest industrial transformations probably in the history of capitalism,” Scott Keogh, chief executive of Volkswagen Group of America, said in an interview. “The investments are massive, and the mission is massive.”
But not everyone will benefit. Makers of mufflers, fuel injection systems and other parts could go out of business, leaving many workers jobless. Nearly three million Americans make, sell and service cars and auto parts, and industry experts say producing electric cars will require fewer workers because the cars have fewer components.
Over time, battery ingredients like lithium, nickel and cobalt could become more sought after than oil. Prices for these materials are already skyrocketing, which could limit sales in the short term by driving up the cost of electric cars.
The transition could also be limited by the lack of places to plug in electric cars, which has made the vehicles less appealing to people who drive long distances or apartment residents who can’t charge at home. There are fewer than 50,000 public charging stations in the United States. The infrastructure bill that Congress passed in November includes $7.5 billion for 500,000 new chargers, although experts say even that number is too small.
could take decades unless governments provide larger incentives to car buyers. Cleaning up heavy trucks, one of the biggest sources of greenhouse gas emissions, could be even harder.
Still, the electric car boom is already reshaping the auto industry.
The biggest beneficiary — and the biggest threat to the established order — is Tesla. Led by Elon Musk, the company delivered nearly a million cars in 2021, a 90 percent increase from 2020.
Tesla is still small compared with auto giants, but it commands the segment with the fastest growth. Wall Street values the company at about $1 trillion, more than 10 times as much as General Motors. That means Tesla, which is building factories in Texas and Germany, can easily expand.
“At the rate it’s growing now, it will be bigger than G.M. in five years,” said John Casesa, a former Ford executive who is now a senior managing director at Guggenheim Securities, at a Federal Reserve Bank of Chicago forum in January.
Most analysts figured that electric vehicles wouldn’t take off until they became as inexpensive to buy as gasoline models — a milestone that is still a few years away for moderately priced cars that most people can afford.
But as extreme weather makes the catastrophic effects of climate change more tangible, and word gets around that electric cars are easy to maintain, cheap to refuel and fun to drive, affluent buyers are increasingly going electric.
outsold diesel cars in Europe for the first time. In 18 countries, including Britain, more than 20 percent of new cars were electric, according to Matthias Schmidt, an independent analyst in Berlin.
Inevitably, a transition this momentous will cause dislocation. Most new battery and electric car factories planned by automakers are in Southern states like Georgia, Kentucky, North Carolina and Tennessee. Their gains could come at the expense of the Midwest, which would lose internal combustion production jobs.
Toyota, a pioneer in hybrid vehicles, will not offer a car powered solely by batteries until later this year. Ram does not plan to release a competitor to Ford’s Lightning until 2024.
Chinese companies like SAIC, which owns the British MG brand, are using the technological shift to enter Europe and other markets. Young companies like Lucid, Rivian and Nio aim to follow Tesla’s playbook.
Old-line carmakers face a stiff learning curve. G.M. recalled its Bolt electric hatchback last year because of the risk of battery fires.
The companies most endangered may be small machine shops in Michigan or Ontario that produce piston rings and other parts. At the moment, these businesses are busy because of pent-up demand for all vehicles, said Carla Bailo, chief executive of the Center for Automotive Research in Ann Arbor, Mich.
“A lot of them kind of have blinders on and are not looking that far down the road,” Ms. Bailo said “That’s troubling.”
For much of last year, established automakers like General Motors and Ford Motor operated in a different reality from Tesla, the electric car company.
G.M. and Ford closed one factory after another — sometimes for months on end — because of a shortage of computer chips, leaving dealer lots bare and sending car prices zooming. Yet Tesla racked up record sales quarter after quarter and ended the year having sold nearly twice as many vehicles as it did in 2020 unhindered by an industrywide crisis.
Tesla’s ability to conjure up critical components has a greater significance than one year’s car sales. It suggests that the company, and possibly other young electric car businesses, could threaten the dominance of giants like Volkswagen and G.M. sooner and more forcefully than most industry executives and policymakers realize. That would help the effort to reduce the emissions that are causing climate change by displacing more gasoline-powered cars sooner. But it could hurt the millions of workers, thousands of suppliers and numerous local and national governments that rely on traditional auto production for jobs, business and tax revenue.
Tesla and its enigmatic chief executive, Elon Musk, have said little about how the carmaker ran circles around the rest of the auto industry. Now it’s becoming clear that the company simply had a superior command of technology and its own supply chain. Tesla appeared to better forecast demand than businesses that produce many more cars than it does. Other automakers were surprised by how quickly the car market recovered from a steep drop early in the pandemic and had simply not ordered enough chips and parts fast enough.
G.M. and Stellantis, the company formed from the merger of Fiat Chrysler and Peugeot, all sold fewer cars in 2021 than they did in 2020.
Tesla’s production and supply problems made it an industry laughingstock. Many of the manufacturing snafus stemmed from Mr. Musk’s insistence that the company make many parts itself.
Other car companies have realized that they need to do some of what Mr. Musk and Tesla have been doing all along and are in the process of taking control of their onboard computer systems.
Mercedes, for example, plans to use fewer specialized chips in coming models and more standardized semiconductors, and to write its own software, said Markus Schäfer, a member of the German carmaker’s management board who oversees procurement.
traced to the outbreak of Covid-19, which triggered an economic slowdown, mass layoffs and a halt to production. Here’s what happened next:
A reduction in shipping. With fewer goods being made and fewer people with paychecks to spend at the start of the pandemic, manufacturers and shipping companies assumed that demand would drop sharply. But that proved to be a mistake, as demand for some items would surge.
Demand for protective gear spiked. In early 2020, the entire planet suddenly needed surgical masks and gowns. Most of these goods were made in China. As Chinese factories ramped up production, cargo vessels began delivering gear around the globe.
Then, a shipping container shortage. Shipping containers piled up in many parts of the world after they were emptied. The result was a shortage of containers in the one country that needed them the most: China, where factories would begin pumping out goods in record volumes
Demand for durable goods increased. The pandemic shifted Americans’ spending from eating out and attending events to office furniture, electronics and kitchen appliances – mostly purchased online. The spending was also encouraged by government stimulus programs.
Strained supply chains. Factory goods swiftly overwhelmed U.S. ports. Swelling orders further outstripped the availability of shipping containers, and the cost of shipping a container from Shanghai to Los Angeles skyrocketed tenfold.
It also helps that Tesla is a much smaller company than Volkswagen and Toyota, which in a good year produce more than 10 million vehicles each. “It’s just a smaller supply chain to begin with,” said Mr. Melsert, who is now chief executive of American Battery Technology Company, a recycling and mining firm.
recall more than 475,000 cars for two separate defects. One could cause the rearview camera to fail, and the other could cause the front hood to open unexpectedly. And federal regulators are investigating the safety of Tesla’s Autopilot system, which can accelerate, brake and steer a car on its own.
“Tesla will continue to grow,” said Stephen Beck, managing partner at cg42, a management consulting firm in New York. “But they are facing more competition than they ever have, and the competition is getting stronger.”
The carmaker’s fundamental advantage, which allowed it to sail through the chip crisis, will remain, however. Tesla builds nothing but electric vehicles and is unencumbered by habits and procedures that have been rendered obsolete by new technology. “Tesla started from a clean sheet of paper,” Mr. Amsrud said.