Uber and Google, a Budding Rivalry

Anthony Levandowski is at the center of a major lawsuit from the Google affiliate, Waymo, against Uber. Before his recent demotion, his autonomous vehicle technology startup known as Otto, was acquired by Uber for $680 million. However, Waymo claims that Levandowski downloaded thousands of confidential files before leaving the company. Uber will probably fire the engineer, and they are trying to resolve the lawsuit in private court, though their recent request was denied.

New York Times

Uber’s CEO, Travis Kalanick, attempted to make friends with the lead engineers and several executives in Google’s autonomous vehicle group. He befriended Levandowksi and allegedly talked for hours about the future of driving and autonomy. An anonymous source said the men even took long walks together, and it is possible that secrets were exchanged. Google claims that Levandowski left the company in 2016 to start Otto and enter into an executive position at Uber and share the company’s secrets.

Google started openly testing their first autonomous vehicle prototype in mid-2014, and Uber’s CEO was one of the first to see it. The rivalry will only intensify with this latest scandal, but the balance is tipping towards Google. With Uber’s inability to make a profit, being first to market in the ride-sharing world with autonomous vehicles is huge. This lawsuit could cripple their long-term plans and viability as a company.




Uber Threatens to Fire Chief Engineer

Uber has put out a statement calling for Anthony Levandowski, the engineer in charge of their autonomous vehicles program to acquiesce to the company’s demands or be terminated.  Levandowski was at the center of the current Google scandal with Waymo, which alleges that he stole hundreds of files from the company before he jumped ship to Uber along with all of the classified information.  Uber has stated that he needs to either deny any wrongdoing or publicly release all of the information he allegedly took as part of the arbitration processes as the feud with Google continues.  Levandowski’s lawyer has stated that this ultimatum must be waived, as it will force his client to revoke his fifth amendment right to avoid self incrimination.

Image result for uber logo  For the time being, Uber still publicly states that all of its research has been done without any trade secrets acquired from Waymo, and says that the public testimony from Levandowski will allow them to clear their names and move on with their own business.  This will be a very important case moving forward, as it can quickly shift the balance of power in terms of the autonomous vehicle market and create a new industry leader.  For now, the case is set to begin litigation in October, but Uber has filed a petition to move the case out of public court and into private.  Time will tell who will come out on top as we move closer to the planned date.


Canadian Labor Regulations Changing the Field for Suppliers

Labor laws in Canada are undergoing some change, namely with regards to the minimum wage, union certification process, and how temporary workers are treated. The “Changing Workplace Review” is proposing that the minimum wage should increase to C$15 an hour (roughly $11 in the US), changing the voting process for union certification (total number of signed cards as opposed to the old secret-ballot vote), and giving more job security for temporary workers. Flavio Volpe, the president of the Automotive Parts Manufacturers, says that all three of these proposals will hurt the industry competitiveness of Canadian parts suppliers in the global market.Image result for automotive parts manufacturers canada

Being required to pay temporary workers more and giving them more job security especially hurts Canadian suppliers’ ability to meet just-in-time demand. According to Volpe, “there’s a difference between ‘temporary employment’ and ‘precarious employment'”, and in the automotive supplier market, that is an important distinction to make. Being forced to hire more full-time employees or paying more for temporary ones is a cost that manufacturers will have a hard time fronting, and therefore makes them less competitive with American companies that operate under right-to-work laws. The proposed reforms have not been brought before cabinet, but Volpe said that it will be presented within the week.

Source: Automotive News

True Car Creating Tension with Dealers

True Car has been at odds with many dealers for some time now. True car offers used car pricing information to customers by partnering with dealers who are willing to become “True Car Certified” in exchange for pricing information on their used car sales. They are in the market of offering customers reassurance that they have not overpaid for a used vehicle. By providing pricing information to customers, True Car’s services are reducing profit margins for dealers on used cars, which is a major source of profit for dealers due to the already small margins on new vehicles. Dealers who reject the service in order to preserve their margins are at risk of losing skeptical customers.

Recently True Car has been plagued with lawsuits from dealers claiming that the pricing information that they provide is false. They claimed that True Car was undervaluing used vehicles and killing dealers profit margins.Many dealers split with True Car leaving only 3734* certified dealers in 2012. Auto Nation split with True Car, only to return to using their services in 2017. When Auto Nation split with True Car it offered its own pricing services which promised customers a quicker purchase. While customers seem to be pleased with True Car’s services, dealers are naturally fed up. More information to the consumer means less profits for the dealer. Used cars make up a big portion of the profit for most dealers. Losing these margins could be catastrophic for many dealers in the industry. Dealers are coming together and making their voices heard that they will not be bullied by True Car. It is unclear how this battle will play out. If enough dealers drop the service then True Car will not have enough information to be a viable service, but if more dealers buy into the service, dealers who refuse the service may be left behind in the market.



Expected Reduction of Ford’s Global Work Force by 10%

According to recent reports by people high up in Ford’s management Ford might be seeing a large reduction  in worldwide workforce due to Ford’s CEO Mark Field’s renewed efforts to raise profits and try and bring up the company’s stock price that has recently been dropping. According to the reports Ford might try and slash its work force in North America and Asia by 10% by offering generous early retirement incentives to bring employment numbers down by Oct 1st. However these incentives wont be joined by cuts to Ford’s hourly workers or production. In Germany, according to IG Metall union official Witich Rossmann,the company has followed a similar path by making “voluntary buyout offers” to some of their staff members over the past few months in hopes of reducing their workforce without forcing cuts. (Automotive News)

These renewed efforts by Ford’s management are in line with their current target of $3 billion in cost reductions this year to try and beef up their earnings in 2018 as U.S. light-vehicle demand  has started to slow down despite seven straight years of gains. When asked about the cuts Ford mentioned that “reducing costs and becoming as lean and efficient as possible also remain part of that work. We have not announced any new people efficiency actions, nor do we comment on speculation”. (Automotive News)

Some groups are afraid that Ford could face potential fallout from President Trump who has made increasing U.S. employment, with a special focus on the auto industry, a top priority. The company plans to emphasize that these reductions are voluntary in nature and are not cuts. Either way we will have to wait to see if the incentives offered to the workers lead to the reduction Ford’s management hopes to see.

Highway to Automation

In today’s biggest automotive news, BMW announced a partnership with Detroit-based automotive supplier Delphi for their venture into automated vehicles. This BMW partnership has lofty aims of a level 4 an 5 autonomous vehicle. This news follows the March announcement of a BMW-Intel partnership for the same purposes. Intel also acquired autonomous technology leader Mobileye in recent months for $15B. All of these acquisitions and partnerships must leave consumers wondering, “What’s next for autonomy?”

This BMW-Intel-Delphi partnership has expressed plans to produce this fully autonomous vehicle by the year 2021. There are currently only low level autonomous vehicles on the road featuring features such as lane departure warning and adaptive cruise control. The partnership plans to implement the potential fully autonomous technology into 40 vehicles for testing later this year. This big name coalition allows these companies to distribute costs among multiple large corporations. More importantly, however, is the ability for a technology company, an infotainment specialist, and a car manufacturer to work together utilizing individual strengths.

Delphi has also recently spun off its powertrain division in order to focus its efforts fully on electric and autonomous vehicles. This is a huge gamble for the company. There are no guarantees of success in this new market. However, partnering with the manufacturing and tech giants does provide a groundwork in which success would not be a surprise to many.

There are undoubtedly many obstacles facing the move toward autonomy. This group is not alone in their venture as many others are currently working toward the same goal. Daimler has partnered with Bosch, Toyota has paired with NVIDIA, and Left has partnered with Google’s former autonomous vehicle division. There is also the current lack of national legislation for autonomy. After my recent experience in an “autonomous” vehicle at the University of Michigan’s MCity, in which the vehicle failed in all kinds of ways, I have extremely low hopes for a successful venture from any companies involved.

Automotive NewsABC News

Assembly Video – Ford China

Here is a really nice video that follows a vehicle through the assembly process. During our trip we didn’t see welding robots, and because they’re not metal parts we didn’t see e-coat in the paint shop of Continental Structural Plastics in Carey, OH. We did see the stamping of body panels, not shown in this video. We did see the roof liner being inserted in the Ford Rouge plant (though given the large number of things being done, you won’t likely have that particular step in your memory). In any case much of this video should now be familiar. Oh, and China is not much different from the U.S. It’s driven first and foremost by quality and speed considerations, not by labor costs.

NYTimes video

Tesla is Changing the Infotainment Systems Game, But is it All For Nothing

Vehicle infotainment systems have been advancing at a rapid pace driven by the development of new technologies. Once composed of AM radios and cigarette lighters, infotainment systems now include voice controls, navigation, parking assistance, and much more. The infotainment technologies market is dominated by a select few auto suppliers, but Tesla is disrupting the supply chain by manufacturing much of its own technologies in house. While Tesla may have started  a trend that some major manufacturers are following, this may be a non-factor for increasing vehicle sales. Studies show that many consumers pay little attention to their infotainment systems, often finding them confusing. In the age of the smart phone, most consumers prefer to use their smart phones for many of the services that in-car infotainment systems have to offer such as navigation and music.

The infotainment sector is dominated by top suppliers such as Denso, Harman, Delphi, Blaupunk GmbH, and Continental. Audio Systems manufacturers such as Bose and Kenwood have also found a foothold in the market due to in car audio being possibly the most recognizable component of the infotainment system. While these manufacturers have solidified their place in the supply chain, Tesla is disrupting the status quo. In making the model S, Tesla reportedly “spent almost as much time designing the infotainment system as they did the car itself”. Some manufacturers such as Ford are following Tesla’s lead in manufacturing infotainment systems partially in house. Other manufacturers such as Volkswagen and Audi maintain collaborative relationships with suppliers lower on the supply chain to produce their infotainment systems. While it seems that the supply chain for infotainment in vehicles is changing, this may have less of an effect on overall car sales and customer satisfaction than Tesla would hope.

A JD Power study showed that “more than 50% of car owners never used their infotainment systems after 90 days of purchase”. Consumers find these systems too technical and difficult to understand. While many cars now come with GPS navigation as a part of the infotainment system, many consumers prefer to use an application such as google maps on their smartphones. This does not mean that infotainment systems are obsolete and have no impact on a consumers decision to purchase a vehicle. Consumers are more satisfied with collision prevention systems such as rear view backup cameras and lane assistance. Manufacturers may want to focus more on collision prevention technologies than fancy dashboard entertainment systems.





Airbags That Hurt More Than Help

Japanese automotive parts manufacturer Takata is currently involved in the largest automotive recall in history. The company has had defective airbags in vehicles since 2013, when several reported incidents following deployment received international attention. Executives released a statement on the issue, but they initially only thought six makes were involved in the recall. They later admitted they had no idea which vehicles had the faulty airbags or what caused the problem. Takata later said that propellant chemicals were improperly stored and handled during production, causing the metal airbag inflators to burst open, and in July of last year, they blamed humid weather.

Image result for takata

New York Times

The issue involves defective inflator and propellant devices that may deploy improperly in a crash, ejecting metal fragments into the driver and passengers. Drivers continue to see issues with these airbags worldwide; two weeks ago, an Australian woman needed medical attention to address metal lodged in her head after a low-speed collision. Around 42 million vehicles are potentially impacted in the United States, and 7 million have seen recalls worldwide, with this number expected to increase.

Police are urging people to check if their car has a faulty Takata airbag, as the recall affects models from BMW, Chrysler, Ferrari, Ford, Honda, Jeep, Lexus, Mazda, Mitsubishi, Nissan, Subaru and Toyota. Owners of the affected cars need to take their vehicles to their dealership to replace this part, but this is a lengthy process and many of these cars remain on the road with the faulty airbags.




Finnish Company Nokian Tyres Set To Expand

Finnish tire producer Nokian Tyres stated on Wednesday that they have plans to open a new plant in the United States located in Dayton, Tennessee. Construction is due to start in 2018 and production is expected to start in 2020 with an estimated capacity to produce 4 million tires a year. CEO Andrei Pantioukhov stated in a conference call that “To increase our sales in North America significantly… we need local production”. In 2016 North America only accounted for 11 percent of Nokian’s sales, although their overall global operating margin was 22.3%, compared to 13.5% at Bridgestone, 13.3% at Michelin, and 10.1% at Continental.

The majority of Nokian’s sales last year were made in the Nordics and Europe, closely followed by Russia and central Asia. Their primary production and sales focus is on high-margin winter tires, and as a result of this focus they experienced a large boost in profits. The success of these tires in places like Russia and the Nordics could be replicated in the Northern USA and Canada, where the demand for high quality winter tires is high. Nokian also increased their future expected profits and sales, forecasting 10% growth in sales and 5% growth in profits within the next year.

Analysts do not share quite the same amount of confidence in Nokian’s growth. Their first quarter operating profit increased 17% from the previous year to 64.2 million euros, but it fell short of the average forecast in a Reuters poll of analysts of 67.5 million euros. Sauli Vilen from Inderes Equity Research put a “reduce” rating on their stock, stating “Impact from raw materials [in the first quarter] was surprisingly high, which raises concern over profitability in the coming quarters”. If Nokian can manage to keep their profits and sales up outside of North America while preparing for local North American production, they will likely have a successful expansion and increase their total profits and sales worldwide.

Source: Automotive News