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By Joseph White, Global Automotive Correspondent

Greetings from the Motor City!

This was another dark, quiet morning in Detroit, and then: Pow!

Tesla dropped its 10-Q for the third quarter with news that the world’s most valuable automaker is facing Justice Department investigations on multiple fronts.

Reports of federal inquiries into Tesla’s financial and marketing behavior have been cropping up for months, but it matters that the company has now confirmed their existence – with the important proviso that none of these investigations has resulted in charges of wrongdoing.

Meanwhile, the United Auto Workers (UAW) on Monday slammed Stellantis with a walkout at its biggest Ram pickup truck plant. The move made good on UAW President Shawn Fain’s warning that Stellantis and the other Detroit automakers still hadn’t done enough to secure contracts.

Today –

• • The UAW’s Shawn Fain is still not satisfied

  • Tesla: Under investigation and busting its capex budget

  • Why startups are racing to value used EVs

Elon Musk in Washington earlier this year. REUTERS/Julia Nikhinson

Tesla said it has received subpoenas from the U.S. Justice Department, confirming investigations of the company’s claims for Autopilot and Full Self Driving (FSD) technology, issues involving vehicle driving range and “personal benefits.”

The company did not detail the last item, but the Wall Street Journal has reported that federal prosecutors have launched an investigation of whether Elon Musk improperly used Tesla shareholders’ resources to build a glass house for himself.

The federal investigations of Autopilot and FSD, which Reuters reported in October 2022, compound the legal challenges that threaten Elon Musk’s efforts to deliver self-driving vehicle technology that he has promised for years.

Tesla has more than $3.2 billion in deferred revenue on its books. Recognizing much of that money depends on delivering fully functional FSD capability.

Reuters had reported that Tesla manipulated in-vehicle displays and created a secret team to suppress customer complaints about driving range falling short of the company’s claims.

The disclosures about the Justice Department probes overshadowed Tesla’s forecast that capital spending will exceed a previous $9 billion target this year, and remain between $7 billion and $9 billion a year for the next two years.

Ramping up new factories and the complex, drawn-out launch of the Cybertruck are pushing an already-aggressive capex budget out of bounds. “We dug our own grave with Cybertruck,” Musk said with a chuckle last week.

(The full text of the 10-Q is here.)

UAW President Shawn Fain. He’s not done yet. REUTERS Rebecca Cook

UAW President Shawn Fain on Monday ordered a new walkout at Stellantis, taking down the automaker’s highly-profitable Ram truck assembly plant in Sterling Heights, Michigan.

The UAW said it hit Stellantis because the company “has the worst proposal on the table regarding wage progression, temporary worker pay and conversion to full-time, cost-of-living adjustments (COLA), and more.”

The surprise strike came after Fain told UAW workers on Friday they could get more from General Motors, Ford and Stellantis than the record pay offers already on the table.

How much more, he did not say. The automakers are offering 23% base wage increases. Analysts speculate the union wants at least 25%.

Other hangups include retirement benefits and the complex issues around pay and unionization for workers at battery plants owned by joint ventures between Detroit Three companies and South Korean battery makers.

Fain did not mention battery plants Friday. Under U.S. law, the automakers do not have to negotiate labor terms for those plants as part of their own contract negotiations. Nevertheless, the battery plants are on the table.

Fain targeted GM for lagging behind Ford and Stellantis on job security and shortening the time it takes new hires to get to the top union pay rate – currently $32 an hour.

But even though Ford’s offers are best in many categories, that company has been hit with the most expensive strike – the walkout at the Kentucky Truck Super Duty factory that generates $25 billion in revenue and easily $2 billion-plus in profits for Ford each year.

Fain suggested that Ford consider cutting its $600 million per quarter dividend to add $1 an hour to UAW-Ford workers’ pay for the next four and a half years. Ford’s dividend yield is currently 6.12%, according to Refinitiv data. If investors want to retain that yield with a smaller dividend, Ford’s share price would drop.

“There is no reward for offering concessions,” Wells Fargo analyst Colin Langan wrote in a note Monday.

GM and Ford this week will give investors a first look at the costs of more than a month of conflict with the UAW. GM has already warned of a $200 million hit to third quarter results ahead of its report Tuesday. Shares of both companies fell Monday.

Ford has not previewed its strike costs. Losing a month or more of production at Kentucky Truck and nearly two months of Bronco SUV and Ranger pickup production – likely outcomes even if a deal is reached this week – will blow a hole in the financial forecast Ford CEO Jim Farley outlined for investors in May.

A small ray of sunshine for the Detroit Three: The UAW on Monday said it had settled contract talks with military vehicle maker General Dynamics ahead of a threatened strike.

What do those sell for second-hand? REUTERS Mike Blake

What should a shopper pay for a used EV?

Great question, because the information customers would need to evaluate the health of a used electric vehicle (EV) battery doesn’t exist in a standardized, easy-to-comprehend form. That’s a problem several startup companies are racing to address as more second-hand EVs head for used car lots.

“Battery health” is the catch-phrase for the nascent used EV industry. An EV battery can lose as much as 30% of its range over 100,000 km (62,140 miles) depending on how it was charged. (Too much fast-charging is not good for battery health.)

Reliable ways to assess EV battery health are essential to creating a functioning market for used EVs – which in turn is crucial to expanding the market for new EVs. Resale value determines the terms of new vehicle leasing. Customers who buy a vehicle take resale into consideration.

Remember the Tokyo Motor Show? If not, you are forgiven because there hasn’t been one for four years.

But on Thursday, the Tokyo Motor Show is back, rebranded as the Japan Mobility Show.

You could call it the Japan Fighting for Relevance Show. That’s the challenge Toyota, Honda, Nissan and other Japanese automakers face as Tesla, BYD and other electric vehicle companies steal the thunder that once belonged to them.

Volkswagen shares dropped to their lowest level in more than three years on Monday following the automaker’s late Friday disclosure that profit margins will take a beating from bad bets on materials prices.

Toyota will restart factories on Tuesday that were shut down after an explosion at a Japanese supplier’s plant.

Hyundai will partner with South Korean battery maker Samsung SDI to deliver batteries for Hyundai’s European EVs starting in 2026.

Tevva, a British electric commercial truck startup, is once again looking for a buyer. U.S. startup ElectraMeccanica backed out of an agreement to acquire Tevva earlier this month blaming Tevva for failing to disclose material information. Tevva’s travails have coincided with Swedish electric truck startup Proterra seeking bankruptcy protection.

Fisker tweaked pricing for its Ocean electric SUVs, raising the starting price of the two cheapest models and cutting the price of the top-of-the-line Ocean Extreme by 11%. All in response to Tesla and the choppy demand in the U.S. EV market.

India should cut taxes on gas-electric hybrid vehicles by 21% the world’s leading producer of hybrids, Toyota, argued in a letter. India’s government is trying to drive a shift to fully-electric vehicles by taxing them at just 5%, while imposing a 43% tax on hybrids.

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