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By Joseph White, Global Automotive Correspondent

Greetings from the Motor City!

I woke up to the news that a startup in Seattle has developed pseudo-coffee made without real beans. The stuff is made with “superfoods and upcycled ingredients,” among them date pips. The underlying goal: Reduce the climate impact created by clearing forests to grow real coffee beans.

Is this the coffee equivalent of the challenge posed to carbon-heavy combustion vehicle technology by software-driven electric vehicles? If so, I’ll need a minute to adjust. I am almost ready to commute in an electric car that pilots itself while delivering geo-targeted ads to a massive screen.

But a hot cup of date pips and “upcycled ingredients”? That’s still a bridge too far.

Speaking of needing a minute, I will be away on Friday. The Auto File will take a day off. Perhaps this will assure a resolution of the Detroit Three labor standoff on Friday morning. In that unlikely event, you’re welcome.

Today –

• • Another accident tests GM’s Cruise strategy

  • Detroit hunkers down for a siege

  • Can U.S. auto sales outrun the Fed?

San Francisco firefighters at the scene where a Cruise robo-taxi ran over a pedestrian. San Francisco Fire Department via X/Handout via REUTERS

Federal and state authorities are investigating an incident in San Francisco that resulted in a Cruise robo-taxi rolling over a pedestrian who was first struck by another vehicle.

The Cruise robo-taxi, a Chevy Bolt, was not able to stop in time to avoid the victim who was thrown into its path by the initial collision. The injured pedestrian was taken to a hospital. Authorities said Cruise is cooperating.

For the robo-taxi business, any incident involving an autonomous vehicle striking a pedestrian is a crisis. Uber’s efforts to develop its own self-driving vehicle technology were derailed after one of its self-driving vehicles struck and killed a pedestrian in Arizona in 2018.

In Cruise’s case, the incident Monday happened as city and state authorities had already pushed the General Motors (GM) autonomous vehicle unit to park half its fleet. Officials are investigating a series of “concerning incidents” in which Cruise vehicles obstructed or collided with emergency vehicles. Federal safety regulators are also investigating crashes involving Cruise. Unions and San Francisco city officials oppose further Cruise expansion.

Cruise CEO Kyle Vogt told investors this summer the operation was poised for “exponential growth” as it expanded operations in San Francisco, Phoenix, Austin, and other cities. GM Chief Executive Mary Barra has stuck with her bet on Cruise despite mounting losses.

The recent setbacks raise the question of how long GM can afford to lose $2 billion a year at Cruise if regulatory hurdles delay revenue-generating deployment at scale – especially if a United Auto Workers (UAW) strike clamps off cash flow from the core combustion truck business.

Picket lines and picket signs. What’s going on in Detroit. Reuters /Rebecca Cook.

The Detroit Three automakers are rolling into Day 20 of the UAW’s campaign of coordinated, escalating strikes with no signs of a resolution in sight.

Ford on Tuesday put forward a new offer that improved but did not significantly change the core wage and benefits proposal the union has so far refused to accept.

UAW President Shawn Fain has herded GM, Ford, and Chrysler parent Stellantis into an industrial version of the TV reality game “Survivor.” Each Friday at noon, the union decides which company has put enough new concessions on the table to win a week without an additional factory going down. So far, the score is GM with three strikes, Stellantis and Ford with two each.

It is not clear how long this will go on – which is the point. But there are more signs the automakers are getting close to the end of their respective ropes.

GM disclosed Wednesday that it has set up a new, $6 billion credit facility  – good through October 2024 – and expects to lose $200 million in Q3 because of the UAW strikes. Ford secured another $4 billion in revolving credit in August. The new credit lines give the companies the financial equivalents of food, water, and ammunition to survive a long UAW siege.

“I don’t think we’ve reached the point where we think we’re at impasse,”  Ford CEO Jim Farley said last week. “But that day could come if this continues.”

It is not easy under U.S. labor law for a company to declare negotiations with a union are at an impasse and seek to impose the last, best offer. Unions can argue negotiations have not gone on long enough to warrant a formal declaration of stalemate.

The automakers also will be pleading their case to officials appointed by a president who just days ago joined a UAW picket line and urged strikers to fight for big pay increases.

The health of smaller suppliers without the capacity to borrow large sums is a growing concern.  Layoffs in the Detroit Three supply chain are adding up. Industry experts and executives say many suppliers could hit their financial red lines within two to three weeks, once the last checks for goods delivered before assembly lines shut down are cashed.

Investors are getting anxious and looking ahead to Detroit Three third quarter results calls later this month. The UAW could be doing the same. The UAW’s limited strikes had little impact on Q3 numbers, analysts said. Automakers could still report robust numbers thanks to steady U.S. demand, reinforcing the union argument for sharing more of the wealth with workers. What happens next depends on how Detroit Three executives paint the picture of what lies ahead.

Step right up! Reuters/Andrew Kelly

U.S. vehicle sales for some major automakers rose by double-digit percentages last month, and hit an annualized pace of 15.67 million vehicles.

This despite rising interest rates, continued high core inflation, stock market jitters and chaos in Washington, D.C. The auto market’s resilience is a wonder on a par with the once-hapless Detroit Lions football team occupying first place in the NFL North division. Consumers are paying premium prices for Detroit brand pickups and pumped-up SUVs such as the Ford Bronco.

Now for the caveats: Rising borrowing rates “make it very, very challenging for consumers to purchase a vehicle,” Hyundai’s U.S. operations chief Randy Parker told reporters. Hyundai Motor America had a record September, but the company and its dealers worked for it, he said.

Incentives, aka discounts, are higher than a year ago. The industry is still coasting on sales that were put off when semiconductor shortages choked off production. The UAW strikes could expand and leave dealer lots empty again – giving an opening for Tesla, Asian and European automakers to gain share.

China rebuked Europe for trying to rush negotiations over EV subsidies. The EU has threatened to impose tariffs on Chinese-made EVs – including Teslas – to counter what it charges are unfair government subsidies. China rejects the EU claims and has threatened tariffs of its own.

Russian auto sales surged by 148% in September, powered by demand for Chinese cars. As Ukraine war sanctions cleared Western automakers out of the Russian market, Chinese automakers have rushed in.

Stellantis will launch five new electric and hybrid vehicles at a factory in Melfi, Italy. The announcement smoothes over a dispute with Italian unions. Unions staged a one-day strike to show dismay at the company’s lack of a clear product strategy for the former Fiat factory, which has 5,800 workers.

U.S. e-fuels producer HIF Global and Japan’s Eneos are exploring an alliance to produce carbon neutral liquid fuels for planes, ships, and cars.

The swappable battery concept won another adherent: Indian oil refiner Reliance Industries. The company showed off prototypes for swappable EV batteries at a renewable energy conference.

Watch that yen! Japan’s automakers could get a lift from the weakness of the Japanese yen, which bounced off its lowest levels in nearly a year after traders began to suspect Tokyo could intervene to stop the slide. Toyota, Honda, and Nissan rely far less on Japanese-built vehicles in the U.S. market than they did 30 years ago, but a weak yen still makes dollar-denominated profits look bigger when brought home.

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