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By Joseph White, Global Automotive Correspondent

Greetings from the Motor City!

And a Happy Thanksgiving! That includes readers outside of the United States. I hope you get a few minutes of peace while we are sleeping off turkey dinners and watching what we call football.

AAA forecasts this will be the busiest Thanksgiving travel week since 2019, and the third busiest since 2000. And of the 55.4 million Americans moving around this week, 88% of them will be driving. Cheer up, auto executives. People still like your products!

The Auto File will be taking a break after today until Dec. 4. I saved my long road trip for after Thanksgiving. I’m ready. I discovered a four-hour podcast about the Grateful Dead. Now the slog across northern Ohio will be a trip. Shall we go?

Today –

• • Tesla’s got more trouble

  • Automakers can’t resist CATL’s cheap batteries

  • Hybrid sales are surging

There’s your problem. Reuters/Dado Ruvic

Elon Musk has been getting a lot of attention for his latest rocket launch and his behavior on his social media platform X. On Wednesday, U.S. lawmakers asked the Securities and Exchange Commission to investigate Musk’s Neuralink brain implant company.

He’s got new troubles at Tesla as well.

The head of New York City’s pension funds, which own $946 million in Tesla shares, is demanding that Tesla’s board sanction Musk unless he apologizes for endorsing an antisemitic post on X. Smaller Tesla shareholders have also expressed concern.

Tesla’s board, led by Chair Robyn Denholm, has been steadfast in support of Musk through other controversies: Run-ins with U.S. securities regulators, questions about the distractions created by his many non-Tesla ventures, challenges over Musk’s $56 billion pay deal and federal investigations of Tesla’s Autopilot driver assistance technology and Musk’s use of Tesla resources for personal benefit.

Still, Tesla’s directors have lots they could ask about.

A Reuters Special Report on Tuesday detailed problems with Tesla’s auto insurance venture that have frustrated customers.  

A judge in Florida ruled there is evidence that Musk knew about defects in Tesla’s Autopilot driver assistance system. The case will now be moved to trial for potential damages. Up to now, Tesla has been winning against plaintiffs who allege Autopilot is defective and unsafe.

An article in The Information detailed safety lapses at Tesla’s Austin giga factory. Reuters found a pattern of workplace injuries at Musk’s SpaceX. The United Auto Workers wants to organize Tesla operations, and the union has often used concerns about workplace injuries to make its case.

Then there are the questions about demand for Tesla vehicles and the pace of the company’s expansion that Musk himself raised last month.

So far, criticism of the Tesla board has gone nowhere. But the drama at OpenAI has put corporate governance front and center in the technology industry. For corporate governance reformers, Tesla is a bigger target.

Look who’s selling now.  REUTERS/Mike Blake

Sales of gas-electric hybrid vehicles are surging in China and Europe, according to new sales data.

That’s good news for several Chinese automakers as well as Toyota and other legacy automakers that kept investing in hybrid technology when other automakers shifted focus solely to all-electric vehicles.

In China, fully electric vehicles still outsell hybrids. But hybrid sales are growing more rapidly, in part because hybrid vehicles can sell for less than EVs or internal combustion engine models.

Hybrids also solve the anxiety about recharging that Chinese consumers share with European and American motorists.

In China, sales of extended range electric vehicles, or EREVs, more than doubled during the first nine months of 2023 compared to a year ago.

EREVs use a gasoline engine as an onboard generator to recharge the battery that supplies power to electric motors. U.S. consumers may recall this was the concept behind GM’s Chevy Volt hybrid, which GM discontinued in favor of EVs. Stellantis plans to offer an EREV system in its future Ramcharger pickup truck.

In Europe, auto sales jumped 14% last month, driven by a 36% increase in electric vehicle sales and a 39% jump in sales of hybrids. Hybrid vehicles accounted for nearly three of every 10 vehicles sold in the European market.

Two words, rhymes with essential. REUTERS/Florence Lo

Ford and Stellantis are pushing forward with two electric vehicle battery manufacturing projects that have one thing in common: the participation of Chinese low-cost battery powerhouse CATL.

Stellantis will partner with CATL in a joint venture to build lithium-iron, or LFP, batteries in Europe. The deal would expand CATL’s growing presence in the European market.

Lithium-iron batteries are cheaper than batteries that rely on cobalt and nickel chemistries. With consumers balking at high-priced EVs, cheaper batteries are not just better. They are essential for automakers to meet ever-tighter climate emissions standards. CATL dominates the technology for producing lower-cost LFP batteries.

Meanwhile, Ford said Tuesday it will re-start construction of a Michigan plant that will rely on CATL lithium-iron technology, pushing past objections from U.S. lawmakers who don’t want to subsidize a Chinese entity.

Ford is scaling down the capacity of the Michigan plant by about 40% as part of a broader plan to cut EV investments by $12 billion.

But Ford’s decision to continue using CATL technology represents a bet that the Biden administration will not deny subsidies to a project that could bring 1,700 new union jobs to a state that could decide the next U.S. Presidential election.

Someday, the U.S. auto market will go into a slump. But not today. J.D. Power forecast Wednesday that November U.S. car and light truck sales will rise by 10% and should hit an annualized sales pace of 15.5 million vehicles.

EV demand remains strong, with 29% of new vehicle shoppers telling the market researcher they are “very likely” to consider an EV versus 26-27% during much of this year. That runs counter to the auto industry line that EV demand is slowing.

Inventories rose at the end of the month, Power said, despite six weeks of strikes by the United Auto Workers. That’s good news for consumers, because average vehicle prices dipped by 1.9% as the laws of supply and demand asserted themselves.

With vehicles in stock, automakers can gear up December sales drives that were muted for the past three years by the pandemic and semiconductor shortages. Lexus has broken out the “December to Remember” big red bows.

In the full report, which is here, JD Power and GlobalData see blue skies everywhere:

“With a little more than one month to go in 2023, the outlook for global light-vehicle sales has been revised upward yet again on the strength in China,” GlobalData’s Jeff Schuster wrote in a note. Worldwide vehicle sales are now within striking distance of pre-pandemic annual levels of 90 million vehicles.

In all, the JD Power take on the U.S. and global vehicle markets is what Goldilocks would have written if she had access to ChatGPT.

This will make it tougher for automakers with less rosy outlooks to share during Q4 earnings calls.

Fisker shares plunged Tuesday after the company said its chief accounting officer had left, and the New York Stock Exchange sent a warning about the company’s late 10-Q filing. On Wednesday, Fisker filed a 10-Q that disclosed the company has pledged “substantially all of the consolidated assets of the Company” as security for debt securities, in return for easing of certain terms to prevent a default. (See page 31 of the 10-Q form)

Volkswagen is the latest non-union U.S. vehicle maker to give workers a “UAW Bump” raise, matching the 11% hourly pay increase Detroit Three workers get in year one of their new United Auto Workers contracts. Meanwhile, VW began production at its first wholly-owned battery plant in China.

Chinese EV startup Nio will partner with Changan, a state-owned automaker, to develop battery-swapping vehicles. The deal could help Nio narrow its losses and extend its runway.

Toyota will build a third factory in India to meet strong demand for its vehicles.

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