The new GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan, U.S., March 16, 2021.REUTERS/Rebecca Cook/File Photo
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Jan 26 (Reuters) – General Motors Co (GM.N) said on Wednesday it would hire more than 8,000 new technical staff this year, as the U.S. automaker accelerates its development of electric vehicles and software-driven services.
The company said it is expanding teams that electrify cars, develop vehicle software and autonomous technology and engineer fuel cells.
GM’s announcement comes just a day after the company unveiled a $7 billion investment plan in Michigan, mainly toward making full-size electric pickups, intensifying a battle with rival Ford Motor Co (F.N) for EV supremacy in North America. read more
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The automaker, which was dethroned as the U.S. sales leader in 2021 by Japanese rival Toyota Motor Corp (7203.T), plans to boost its North America EV production capacity to more than a million units by late 2025.
It will also have to contend with current EV leader Tesla (TSLA.O), which will soon open a second U.S. plant in Austin, Texas, and is on pace to sell more than 1 million electric vehicles globally in 2022.
GM is also looking to expand its digital commerce footprint by launching an online used vehicle market called CarBravo. read more
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Reporting by Kannaki Deka in Bengaluru; Editing by Ramakrishnan M.
Our Standards: The Thomson Reuters Trust Principles.
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.
In the story of how the modern world was constructed, Toyota stands out as the mastermind of a monumental advance in industrial efficiency. The Japanese automaker pioneered so-called Just In Time manufacturing, in which parts are delivered to factories right as they are required, minimizing the need to stockpile them.
Over the last half-century, this approach has captivated global business in industries far beyond autos. From fashion to food processing to pharmaceuticals, companies have embraced Just In Time to stay nimble, allowing them to adapt to changing market demands, while cutting costs.
But the tumultuous events of the past year have challenged the merits of paring inventories, while reinvigorating concerns that some industries have gone too far, leaving them vulnerable to disruption. As the pandemic has hampered factory operations and sown chaos in global shipping, many economies around the world have been bedeviled by shortages of a vast range of goods — from electronics to lumber to clothing.
In a time of extraordinary upheaval in the global economy, Just In Time is running late.
“It’s sort of like supply chain run amok,” said Willy C. Shih, an international trade expert at Harvard Business School. “In a race to get to the lowest cost, I have concentrated my risk. We are at the logical conclusion of all that.”
shortage of computer chips — vital car components produced mostly in Asia. Without enough chips on hand, auto factories from India to the United States to Brazil have been forced to halt assembly lines.
But the breadth and persistence of the shortages reveal the extent to which the Just In Time idea has come to dominate commercial life. This helps explain why Nike and other apparel brands struggle to stock retail outlets with their wares. It’s one of the reasons construction companies are having trouble purchasing paints and sealants. It was a principal contributor to the tragic shortages of personal protective equipment early in the pandemic, which left frontline medical workers without adequate gear.
a shortage of lumber that has stymied home building in the United States.
Suez Canal this year, closing the primary channel linking Europe and Asia.
“People adopted that kind of lean mentality, and then they applied it to supply chains with the assumption that they would have low-cost and reliable shipping,” said Mr. Shih, the Harvard Business School trade expert. “Then, you have some shocks to the system.”
An Idea That Went ‘Way Too Far’
presentation for the pharmaceutical industry. It promised savings of up to 50 percent on warehousing if clients embraced its “lean and mean” approach to supply chains.
Such claims have panned out. Still, one of the authors of that presentation, Knut Alicke, a McKinsey partner based in Germany, now says the corporate world exceeded prudence.
“We went way too far,” Mr. Alicke said in an interview. “The way that inventory is evaluated will change after the crisis.”
Many companies acted as if manufacturing and shipping were devoid of mishaps, Mr. Alicke added, while failing to account for trouble in their business plans.
“There’s no kind of disruption risk term in there,” he said.
Experts say that omission represents a logical response from management to the incentives at play. Investors reward companies that produce growth in their return on assets. Limiting goods in warehouses improves that ratio.
study. These savings helped finance another shareholder-enriching trend — the growth of share buybacks.
In the decade leading up to the pandemic, American companies spent more than $6 trillion to buy their own shares, roughly tripling their purchases, according to a study by the Bank for International Settlements. Companies in Japan, Britain, France, Canada and China increased their buybacks fourfold, though their purchases were a fraction of their American counterparts.
Repurchasing stock reduces the number of shares in circulation, lifting their value. But the benefits for investors and executives, whose pay packages include hefty allocations of stock, have come at the expense of whatever the company might have otherwise done with its money — investing to expand capacity, or stockpiling parts.
These costs became conspicuous during the first wave of the pandemic, when major economies including the United States discovered that they lacked capacity to quickly make ventilators.
“When you need a ventilator, you need a ventilator,” Mr. Sodhi said. “You can’t say, ‘Well, my stock price is high.’”
When the pandemic began, car manufacturers slashed orders for chips on the expectation that demand for cars would plunge. By the time they realized that demand was reviving, it was too late: Ramping up production of computer chips requires months.
stock analysts on April 28. The company said the shortages would probably derail half of its production through June.
The automaker least affected by the shortage is Toyota. From the inception of Just In Time, Toyota relied on suppliers clustered close to its base in Japan, making the company less susceptible to events far away.
‘It All Cascades’
In Conshohocken, Pa., Mr. Romano is literally waiting for his ship to come in.
He is vice president of sales at Van Horn, Metz & Company, which buys chemicals from suppliers around the world and sells them to factories that make paint, ink and other industrial products.
In normal times, the company is behind in filling perhaps 1 percent of its customers’ orders. On a recent morning, it could not complete a tenth of its orders because it was waiting for supplies to arrive.
The company could not secure enough of a specialized resin that it sells to manufacturers that make construction materials. The American supplier of the resin was itself lacking one element that it purchases from a petrochemical plant in China.
One of Mr. Romano’s regular customers, a paint manufacturer, was holding off on ordering chemicals because it could not locate enough of the metal cans it uses to ship its finished product.
“It all cascades,” Mr. Romano said. “It’s just a mess.”
No pandemic was required to reveal the risks of overreliance on Just In Time combined with global supply chains. Experts have warned about the consequences for decades.
In 1999, an earthquake shook Taiwan, shutting down computer chip manufacturing. The earthquake and tsunami that shattered Japan in 2011 shut down factories and impeded shipping, generating shortages of auto parts and computer chips. Floods in Thailand the same year decimated production of computer hard drives.
Each disaster prompted talk that companies needed to bolster their inventories and diversify their suppliers.
Each time, multinational companies carried on.
The same consultants who promoted the virtues of lean inventories now evangelize about supply chain resilience — the buzzword of the moment.
Simply expanding warehouses may not provide the fix, said Richard Lebovitz, president of LeanDNA, a supply chain consultant based in Austin, Texas. Product lines are increasingly customized.
“The ability to predict what inventory you should keep is harder and harder,” he said.
Ultimately, business is likely to further its embrace of lean for the simple reason that it has yielded profits.
“The real question is, ‘Are we going to stop chasing low cost as the sole criteria for business judgment?’” said Mr. Shih, from Harvard Business School. “I’m skeptical of that. Consumers won’t pay for resilience when they are not in crisis.”
Mercedes-AMG GLA 45. The hottest of the hot? For sure, if one factors in the AMG-specific engine, which puts out a neck-bending 382 horsepower in such a small crossover. The GLA 45, part of the newly redesigned GLA range, will churn to 60 miles per hour in just over four seconds; don’t mind the industrial rasp of the engine, or the jarring ride.
Volkswagen ID.4. In the electric realm, an early candidate (and one of the very few) for spunky C.U.V. is the Tiguan-size ID.4, which is based on the platform of the ID.3 hatch already introduced in Europe. With its rather generic looks, one won’t mistake this $40,000 vehicle for a sports car, although its specs are fundamentally impressive, with 201 horsepower and an estimated range of 250 miles.
BMW X2 M Mesh. The compact X2 was introduced a couple of years ago to add some sass to a platform that supports the X1 as well as a couple of Mini models. The bodywork is sleeker than the X1 and doesn’t reduce cargo and passenger space by very much. Now the German brand is offering a dressier version of the 2, the M Mesh edition, on the front- or all-wheel-drive models. There’s little to gussy up the performance of the truck, but poseurs might embrace the exclusive grille, the 19-inch wheels and the sport steering wheel.
Toyota C-HR. It falls into the attractive/unattractive conundrum, depending on one’s taste. The interior is plain and functional, the touch screen is underwhelming, and the amenities are limited. The C-HR rides surprisingly well at moderate speeds on smooth roads, but it bucks and shakes in my Queens neighborhood. Needs more work to turn up the hot-hatch heat.
Honda HR-V. Looks swift but, like the Toyota, lacks power. Surprisingly, Honda is without a hot-hatch entry, unless you count the Civic Type R, which is essentially a track car. Perhaps the HR-V will develop some chops, especially now that the clever Fit hatchback has been axed in the United States.
General Motors reported a modest rise in car sales in North America for the first quarter, but its operations continue to be hampered by a shortage of computer chips.
The automaker said on Thursday that it sold 642,250 cars and light trucks in the first three months of the year, up just 4 percent even though sales a year ago slowed sharply as the coronavirus pandemic took hold.
By contrast, Toyota Motor showed a strong rebound in sales compared with a year ago. The Japanese company reported sales in North America jumped 22 percent in the first three months of 2021, to 603,066 cars and light trucks. Its March sales were a record high for that month.
G.M. has had to halt or slow production at a handful of plants and has resorted to making some vehicles without parts containing computer chips, with the intention of installing those components later when the supply improves.
In a statement, G.M. said that it hoped its strategy for building cars without some components would help it “quickly meet strong expected customer demand during the year.”
That approach to building cars “underscores the dire nature” of the semiconductor shortage, an analyst at CFRA Research, Garrett Nelson, said in a report. “One of the key questions is how much better the U.S. auto sales recovery can get from here.”
The chip shortage is reflected in G.M.’s unusually low inventory of 334,628 vehicles. That is about 76,000 less than at the end of the fourth quarter, and half the number of vehicles its dealers held in stock a year ago.
G.M.’s sluggish sales were confined to its Chevrolet brand, whose sales fell 2 percent in the first quarter. That includes a 13 percent decline in sales of its full-size Silverado pickup truck, a critical profit maker for the company. The Buick, Cadillac and G.M.C. brands reported strong sales in the quarter.
Toyota also reported a drop in sales of its full-size pickup, the Tundra. But the decline was more than offset by big increases in sales of its RAV4, Highlander and 4Runner sport-utility vehicles and cars from its Lexus luxury brand.
Also on Thursday, Honda Motor reported its first-quarter sales in North America increased 16 percent, to 347,091 vehicles.
TOKYO — Just over a decade ago, Nissan became the first automaker to offer a mass-produced car that ran on batteries alone. That hatchback, the Leaf, has been a smash hit, at least by electric car standards, with more than 500,000 sold by the end of last year.
But as the trail that Nissan blazed becomes increasingly crowded, Japan’s mighty auto industry is in danger of being left behind. While governments and automakers worldwide are staking out bold pledges to transition to electric-only vehicles, Japanese car companies and regulators are hedging their bets.
Japan dominates the global market for the current generation of climate-friendly vehicles — gasoline-electric hybrids — and hopes to leverage its huge investment in the technology for as long as possible. That short-term focus, however, leaves the country’s most important industry at risk of missing a transformative moment, said Masato Inoue, the original Leaf’s lead designer.
“When disruption happens, there’s always fear,” said Mr. Inoue, who retired from Nissan in 2014. But ready or not, he added, “a big wave of electric vehicles is really coming.”
became the first major automaker to declare that it would eliminate all tailpipe emissions from its cars, vowing to do so by 2035. Last week, Volvo moved to outdo its larger competitors by pledging to go electric-only by 2030.
In addition to traditional automakers, start-ups like the Chinese company Nio and titans of other industries like Apple are seeking pieces of the burgeoning market.
Automakers in the United States, China, Europe and South Korea are already sprinting past their Japanese competitors. Toyota did not release its first all-electric vehicle on the consumer market until early 2020, and then only in China. Honda is relying on G.M. to produce electric vehicles for the U.S. market.
conference in his capacity as head of the automotive association, Mr. Toyoda scoffed at the idea of Japan’s replacing hybrids with all-electric vehicles, accusing the Japanese media of inflating their commercial and environmental viability.
report by IDTechEx, a market research firm. So it is understandable that Japanese firms — and regulators — want to try to recoup the country’s enormous investments in hybrid technology and wait to see how consumer preferences and foreign regulatory regimes evolve, said James Edmondson, an analyst at the firm.
“For the manufacturers like Toyota, like Nissan, the hybrids are so prolific, there’s a good business case for them, so it’s in the interest of the government to keep pushing for them,” he said.
Kota Yuzawa, an auto industry analyst at Goldman Sachs, said it was not a matter of whether Japan’s automakers could make the transition. They have world-class technology and are putting significant resources into developing more of it. “But they are waiting for the right timing,” he said.
admission, has lost its lead and is now scrambling to catch up.
Last summer, it announced its most ambitious battery-electric vehicle since the Leaf, an S.U.V. called the Ariya. And in January, the company said it would be carbon neutral by 2050, a decision that mirrored a new national policy change late last year.
But, like Japan’s other automakers, it is moving cautiously.
“For Nissan’s key markets, every all-new vehicle offering will be electrified by the early 2030s,” the company’s chief sustainability officer, Joji Tagawa, said in an email. But “in other markets, we will gradually switch to electrified vehicles.”
In the meantime, the company will heavily promote its newer hybrid technology, which it calls e-Power: essentially, an electric motor powered by a gas generator.
In Japan, the lack of government enthusiasm for emission-free cars is likely to put its automakers at a serious disadvantage, said Kazuo Yajima, the Leaf’s former lead engineer, who now runs Blue Sky Technology, a company that develops micro-electric vehicles.
China and the European Union have lost the race for hybrid technology, Mr. Yajima said, so their governments have made a strategic decision to invest in the development of electric cars, including key technologies like batteries.
Japanese automakers’ reluctance to make the leap to all-electric vehicles, Mr. Yajima said, could lead them to suffer the same fate as the country’s consumer electronics firms, which have largely faded into irrelevance because of their failure to stay ahead of market trends.
Mr. Inoue agrees. The automotive sector is “the final battlefield” for Japanese industry, he said.
“Now Japan is winning,” he said, “but I think in 10 years if we lose the opportunity to move to the electric vehicles field, we may lose.”