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Tesla Inc. has proposed setting up a factory in India to build electric cars for domestic sale and export, the carmaker told government officials on Wednesday, according to a source with direct knowledge of the matter. 

The proposal comes after India refused to agree to Tesla’s request last year to lower the import tax on cars, which can reach as much as 100 percent. India wanted the carmaker to build vehicles locally but Tesla wanted to test the market first with imports and the talks ended in deadlock.

While Tesla did not discuss lower import taxes with Indian officials, it proposed setting up a new factory, albeit without specifying a location or investment, said the source, who declined to be named as the talks were private.

Making cars locally aligns with Indian Prime Minister Narendra Modi’s pitch to attract companies with his “Make in India” campaign, especially as companies look to diversify their supply chains beyond China.

SAN FRANCISCO — Tesla Inc. boss Elon Musk, who has never used traditional advertising to sell cars, said that the automaker would try it and see whether it produced results.

Musk said it was “ironic” that as CEO of Tesla, he now owns Twitter. The social media platform is highly dependent on ads and will soon be led by advertising veteran Linda Yaccarino, who he hired last week.

“So I guess I should say advertising is awesome, and everyone should do it,” Musk said at Tesla’s annual shareholder meeting in Austin, Texas. “We will try out a little advertising and see how it goes.”

It underscores his efforts to shore up investor confidence in the automaker’s prospects at a time when rising competition and a slow economy has forced Tesla to slash prices.

Since Musk acquired Twitter in October, advertisers have fled the social media platform, worried that their ads could appear next to inappropriate content after the company lost nearly 80 percent of its staff.

Musk has for years resisted the idea of advertising, tweeting in 2019 that he “hates advertising” and “We use that money to make the product great.”

But on Tuesday, he said many people did not know about the affordability of Tesla cars and their “amazing” features and functionality.

Some manufacturing experts believe the unboxed process has the potential to reduce or eliminate familiar elements inside auto factories, including stamping, welding and painting unfinished car bodies and sending them down a long assembly line where seats, engines and other components are attached.

If everything works as planned, the unboxed process could rewrite the industry’s standard playbook and practices. But Tesla has often fallen short of its ambitious targets, from the oft-delayed Cybertruck to its still-unfinished “Full Self Driving” software.

Lean gurus like James Womack and Hide Oba see key differences between the Toyota production way and Tesla’s proposed overhaul.

At its core, the Tesla method “is an assembly process” while Toyota has developed a far broader and more comprehensive “production management system” that helps automakers run assembly processes and related operations more efficiently, said Womack, co-author of “The Machine That Changed the World,” the 1990 book on Toyota’s lean production philosophy and methods.

A big risk cited by Oba, an independent lean-manufacturing consultant, is what he describes as the “rigidity” of the unboxed system. Oba worked previously for the Toyota Production System Support Center, a division that helps the automaker’s suppliers and others implement TPS.

The Tesla process “won’t work unless production of these big, high-content unboxed vehicle modules are completely synchronized, and finished blocks arrive for a final put-together just-in-time,” he said.

Another question is whether Tesla can produce multiple vehicle models of different sizes and body styles on the same production line with the unboxed system.

“My guess is that’s next to impossible,” Oba said. That is because the way Tesla has sliced or “unboxed” the vehicle into several big blocks is so radical, and the dimensions of those blocks do not appear to offer much room for manufacturing variables.

“That could become a drag on the company’s overall efficiency since Tesla’s model lineup is sure to become more varied and complex” in the future, he said. 

‘WE CONTINUE TO NEGOTIATE’

A spokesperson for Champagne said Friday the “auto industry is crucial to the Canadian economy and to the hundreds of thousands of Canadian workers.”

“We continue to negotiate in good faith with our partners. Our top priority is and remains getting the best deal for Canadians,” the spokesperson said.

Earlier, Finance Minister Chrystia Freeland said Canada was having “good discussions” with Stellantis, after a newspaper reported that automaker was looking for better government subsidies than originally offered by Ottawa.

“We are, as the federal government team working very, very hard on Stellantis, we’re very, very focused on it,” Freeland told reporters on a call after meetings with G7 partners in Japan.

Stellantis is now threatening to pull the plug on the module portion of the plant unless the deal with the government is sweetened to the level Volkswagen received this year, The Toronto Star newspaper reported Friday, citing unnamed sources.

Canada’s deal with Volkswagen for a battery gigafactory in St. Thomas, Ontario, worth up to C$13 billion in incentives and announced in April, is the biggest single investment ever in the country’s EV supply chain.

The federal government has committed to provide up to C$13.2 billion in manufacturing tax credits through 2032, while Europe’s largest carmaker is investing up to $7 billion to build the plant St. Thomas, Ontario.

The incentives nearly match those in the U.S. Inflation Reduction Act, which includes a US $10 per kWh incentive for battery module production.

However, Volkswagen will receive no federal support for battery modules made in St. Thomas., according to Hans Parmar, a spokesperson for Innovation, Science and Economic Development Canada.

The planned St. Thomas investment is only for cells, Parmar told Automotive News Canada. The IRA incentive for those is US $35 per kWh of cell production.

“The U.S. Inflation Reduction Act puts Canadian battery production at a significant disadvantage. Corresponding support is needed to level the playing field if Canada is going to be part of the emerging North American battery supply chain,” said Brian Kingston, head of the Canadian Vehicle Manufacturers’ Association, which represents the interests of and lobbies on behalf of the Detroit Three in Canada.

URGED TO END DISPUTE

Meanwhile, Windsor Mayor Drew Dilkens and Unifor, the union representing Detroit 3 hourly workers in Canada issued separate statements on the weekend, urging the two sides to resolve their dispute.

“Government and Stellantis are playing a high-stakes game that is betting the livelihoods of tens of thousands of Canadian autoworkers,” said Unifor National President Lana Payne. “Commitments were made and Unifor and our members fully expect that all parties live up to them.”

Dilkens laid the blame on Ottawa. “The entire deal is in now in question due to the federal government not fulfilling their commitments, jeopardizing not only the completion of the EV plant, but also our efforts to attract additional investment to the region.”

The city, he noted, “played a crucial role … assembling land and providing funding to support servicing and preparing the lands for the facilities.”

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, also weighed in, expressing optimism that the investment will proceed.

“Fortunately, both parties are very committed to the city, the supply chain and it’s workers,” Volpe said in a tweet posted Saturday. “I expect that we will see this through.” 

What has been exposed, he added, is “a tough negotiation gone public. When Canada landed this incredible investment, the USA countered with the biggest subsidy offer in automotive history. Stellantis is addressing its fiduciary responsibility to its shareholders as it should.”

With files from Reuters and David Kennedy of Automotive News Canada.

Tesla Inc. contributed almost one-quarter of Shanghai’s total automotive production value last year, local media reported, in a sign of how quickly the electric car maker has ramped up output in China.

The U.S. company, which rolled out its first car from its Shanghai factory in 2019, generated production value of 183.9 billion yuan ($26.4 billion) in 2022, accounting for 23 percent of Shanghai’s total automotive manufacturing production, Chen Kele, an official at the Shanghai Municipal Commission of Economy and Information, said during a media tour of Tesla’s Shanghai plant, according to local media reports.

More than half of Tesla‘s global deliveries in 2022 were manufactured at the Shanghai plant, which can now produce a maximum of 1.1 million cars a year.

The production value generated by Tesla’s China factory also increased Shanghai’s overall industrial production by 1.3 percentage points last year, Chen said. The automaker’s push to localize parts procurement has created 100,000 jobs at suppliers and brought 60 Chinese parts makers into the company’s global supply chain.

Local authorities will continue to boost ties with Tesla in bringing autonomous driving and robot modules to Shanghai, Chen said. That is a pivot from the relatively conservative attitude the state has previously shown toward Tesla’s self-driving functions.

In 2021, Tesla cars were banned from Chinese military complexes and some government facilities due to concerns about sensitive data being collected by cameras.

Wrestling over control of the supply chain created friction between suppliers and automakers, which boiled over when the pandemic sparked a supply chain crisis. Suppliers bore most of the pain, but it also gave them more negotiating power with customers.

Now, the transition to EVs provides new opportunity for suppliers, particularly large Tier 1s that are either insulated from the EV shift — such as seat makers — or those that have strong engineering capabilities and can adapt quickly, Barrott said.

“The emphasis that we’ve seen mainly on the bigger suppliers is that they’ve been encouraged by the OEMs to bring in more of a complete solution, more of a design aspect to the component,” he said. “The OEM is less interested in maintaining complete control over a lot of these aspects.”

Del Grosso will gladly take that work off their hands. Pacing for $15 billion in revenue this year, Adient is among the world’s largest auto suppliers. It has invested significantly in research and development in recent years, evidenced by the newly renovated, 365,000-square-foot Plymouth Technical Center, which serves as the supplier’s North American base. The company has 3,000 engineers globally working on seating design.

Adient and other suppliers, such as competitors Lear Corp. and Magna International, are aiming to position themselves as cutting-edge designers and tech companies instead of merely just manufacturers. Even for parts as primitive as seats, those companies are looking for an edge with sleeker design, thermal comfort and more environmentally sustainable material — aspects automakers are now happy to outsource, Barrott said.

“They just don’t have the capacity to manage all aspects of the vehicle,” Del Grosso said. “Some of our customers have gone fully back and said no, ‘I’m just going to source you the complete system. You’ll present us how you’re going to source the subcomponents, but I’m ultimately going to leave that decision to you.’”

The seating CEO said its customers around the world, including in North America, have either adopted that strategy or are warming up to it.

“We just move faster than when the customer is trying to navigate all of that,” Del Grosso added. “It just shorts up that decision-making tree, and it allows us to get things done quicker for them.”

In addition to automobiles and motorcycles, Honda makes gasoline-powered mowers and equipment like generators and power tools. This equipment ranks among the best in the industry according to review sites like Pro Tool Reviews, which regularly gives Honda’s self-propelled mowers top ratings for dependability and ease of use. However, that is about to end as Honda exits the gasoline-powered lawn equipment business next year.  

According to a recent press release, Honda notified its power equipment dealers in October 2022, informing them that it would stop manufacturing lawnmowers and other gas-powered equipment effective September 2023. In the press release, the company said, “The decision to end lawn mower production is driven by market forces such as stricter environmental regulations, shifting customer preferences, and our focus on growing profitable products in our portfolio.”

Honda also said it would continue selling the remainder of its lawn and garden product line and industrial-type power products through 2024 until the inventory is gone. It also pledged to continue supporting its service and parts operations in the US market.

While Honda did not cite specific reasons, it’s apparent that ongoing supply chain issues and the growth of battery-powered lawn care equipment took their toll on its power tool division. It also has not developed any battery-powered equipment to compete with other manufacturers like Toro and Stihl and newcomers like Ego and Greenworks. This approach is similar to the one taken by Honda’s automotive division, which only recently began planning to switch some of its plants over to EV production. 

Time will tell if Honda completely exits the power equipment market or comes out with its own line of electric lawnmowers and power tools. However, other brands that use Honda gasoline engines for mowers and equipment like generators will continue to do so for the foreseeable future. Meanwhile, US manufacturing plants like the one in Swepsonville, North Carolina, will switch to building all-terrain vehicles like quad-runners and UTVs. 

Power tool enthusiasts hope that Honda will remain in the market or eventually return in some form. Pro Tool Reviews speculated in its article that the company would eventually return with a new product line and continue building high-quality, dependable equipment. 

Last week 40,055 vehicles were axed from production plans because of the microchip shortage worldwide as automakers continue grappling with supply chain woes, according to the latest estimate by AutoForecast Solutions.

Most of last week’s cuts were at European assembly plants, where about 29,300 vehicles were removed from factory schedules. There were also losses at plants in North America, Asia outside of China, and the Middle East and Africa, while factories in China and South America had no cuts.

“With every passing week, additional capacity for automotive chips comes online, but digging out from the hole that was created almost three years ago takes time,” Sam Fiorani, AutoForecast Solutions vice president of global vehicle forecasting, said in an email.

Many of us working in the connected car space are searching for explanations for the slow consumer adoption of telematics-enabled, usage-based insurance, or UBI, programs, especially as more new vehicles are embedded with connectivity, which helps power personalized insurance policies and can benefit customers.

Although insurers have widely embraced data, including driving and vehicle data or telematics data, to price policies and manage claims risk, consumer-driven usage has yet to truly expand. But as both vehicle and telematics technologies evolve, I believe we need to engage a key player often missing in the conversation to help customers discover the benefits of using their data for insurance: automakers.

In our latest U.S. Consumer Survey, conducted in December 2021, we found that 67 percent of respondents are aware that their driving and vehicle data can be used for insurance discounts. However, only 22 percent of consumers have used their data for discounts on their insurance premium.

Based on the survey results, consumers can see the value of using their driving and vehicle data but may struggle to engage in UBI programs. So, how can automakers help their customers take advantage of their telematics data?

Automakers, in fact, already play a significant role in supporting their customers’ engagement in UBI programs. They are enabling consumer participation through embedded connectivity, which allows the collection and transmission or sharing of vehicle and driving behavior data. They are also partnering with insurance companies and other third parties to find optimal opportunities to leverage their vehicle and driving data. Automakers are certainly engaged in delivering a more personalized experience for their customers.

But they can do more.

But a combination of factors is putting a pinch on shipping logistics, he said.

During the pandemic, many ship companies decided to replace their fleets with more fuel-efficient vessels, and there is now a shortage of ships as new ones are being built.

Meanwhile, exploding auto exports from China are gobbling up space on available carriers. Last year, China exported about 3 million vehicles; this year, exports could rise to 4 million, Moro said as Mazda announced its full fiscal-year financial results.

“This has led to more competition for ships,” said Moro, the former U.S. regional boss for Mazda who takes the global helm from current CEO Akira Marumoto in June.

“So we are working hard to secure ships from Japan,” he added. “We are consulting with ship companies and working to standardize our shipping schedule as much as possible.”

Mazda imports about two-thirds of the vehicles it sells in the U.S. That includes the top-selling CX-5 compact crossover and the newly launched CX-90 large crossover.

Pricing power

Mazda expects U.S. demand to swell this year as it ramps up deliveries of the U.S.-built CX-50 and the Japan-built CX-90 and cashes in on steadily improving U.S. pricing power for its products.

Rising revenue per vehicle in Mazda’s most important market helped propel a 36 percent surge in operating profit for the fiscal year that ended March 31, even amid falling vehicle sales. The impact is the result of a brand-burnishing strategy years in the making.

Over the past four years, Mazda’s average transaction price in the U.S. has risen by $7,000 – topping out at $33,700 in 2022 compared with $26,700 in 2018, the company said.

The shift drove the automaker to record-high annual revenue for the fiscal year just ended, even as global sales shrank to 1.11 million vehicles from 1.56 million vehicles four years ago.

April’s introduction of the large CX-90 will further stoke U.S. sales while moving the brand’s position upmarket. Meanwhile, output of the CX-50 will be in full swing in the fall.

“We hope to drive strong growth centering on our new product launches,” global sales chief Yasuhiro Aoyama said in announcing Mazda’s financial results. “We can achieve that.”

Alabama ramp-up

The Alabama plant that builds the CX-50 has operated on a single shift since last year as it sorts out quality and staffing issues. In July, a second shift will begin there, opening the valve on output.

U.S. sales of the CX-50 totaled only 9,764 vehicles in the first three months of 2023.

The Huntsville factory is jointly operated by Mazda and Toyota Motor Corp., with its total capacity of 300,000 split in half. Mazda has said the CX-50 alone could reach 150,000 vehicles.

Mazda expects overall brand sales in North America, its largest market by far, to rise 22 percent this fiscal year to 496,000 vehicles. That will power a 17 percent rise in global sales to 1.3 million vehicles.

In Europe, where Mazda has introduced the CX-60 crossover, volume is predicted to go up 18 percent to 189,000 vehicles. Meanwhile, sales in China are forecast to rise to 125,000 vehicles as the automaker adds localized production of the CX-50 in the world’s biggest car market.