Texas Hits Volkswagen With $85 Million Dieselgate Settlement
Good morning! It’s Friday, May 26, 2023, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
1st Gear: Today In Dieselgate
Even though the federal government dressed down Volkswagen for Dieselgate long ago, the states get to do it too. The latest is Texas, and VW has just agreed to an $85 million settlement for emissions cheating in the Lone Star land. Courtesy Reuters:
The settlement stipulates that the German automakers pay a civil penalty of $85 million for their unlawful actions, [Texas Attorney General Ken] Paxton said.
Earlier this month, the Texas Supreme Court ruled the state environmental lawsuit against Volkswagen and Audi could go forward.
Volkswagen, which declined to comment on Thursday, previously settled U.S. actions prompted by the emissions scandal for more than $20 billion, but that did not shield it from local and state government liability, courts ruled previously.
“If a company thinks they will avoid accountability when they violate Texas laws, endanger Texans, and pollute our environment, they’re dead wrong. Volkswagen and Audi are finding that out the hard way, and now they are paying the price,” Paxton said in a statement. […]
Volkswagen’s U.S. subsidiary in 2021 unsuccessfully argued that under the Clean Air Act, the landmark U.S. environmental law, only the federal government can pursue emissions claims.
That avoidance strategy didn’t work out too well for the German automaker, though the penalties in Ohio last year were less severe, amounting to a measly $3.5 million. As of 2022, there were still pending lawsuits in counties in Utah and Florida, so this surely won’t be the last we hear of Dieselgate on the local level.
2nd Gear: Today In Battery Plants
It really is every day now. Yesterday we discussed how General Motors and Samsung gained approval for their battery-making facility in Indiana, and now Hyundai and LG’s is official as well. The place: Bryan County, Georgia. The price? $4.3 billion. The timeframe? Ground’s expected to break sometime during the back half of 2023, with the site online before the end of 2025. Per Bloomberg:
“We will create a strong foundation to lead the global EV transition through establishing a new EV battery cell plant with LG Energy Solution, a leading global battery producer and long-time partner,” Jaehoon Chang, chief executive officer of Hyundai Motor Co. said in the statement.
Automakers and EV battery makers alike are increasingly rushing to make investments in North America in order to receive tax credits provided by Biden’s landmark climate change bill, the Inflation Reduction Act. Carmakers are also seeking to diversify their supply of EV batteries, a market that’s dominated by China’s Contemporary Amperex Technology Co. Ltd.
Hyundai is planning to invest $5 billion on another battery plant with SK On Co. in Georgia. Affiliate Hyundai Mobis Co. will make battery packs to supply EVs built at at Hyundai’s new plant in Georgia.
“Two strong leaders in the auto and battery industries have joined hands, and together we are ready to drive the EV transition in America,” said Youngsoo Kwon, chief executive officer of LG Energy Solution.
We’ve mentioned many times before how important having battery and EV production plants in North America is for Hyundai and Kia. 2025 is shaping up to be a pivotal year for the brands’ EV business.
3rd Gear: Today In Tesla Data Breaches
Everyone’s favorite EV maker may have a whopper of a data breach in Europe. A whistleblower leaked 100 gigabytes of sensitive, personal information to German newspaper Handelsblatt, and data protection officials in the region have taken notice. Apparently, Elon Musk’s social security number was in the dump. Wow! From Reuters, by way of Auto News:
The files include tables containing more than 100,000 names of former and current employees, including the social security number of Tesla CEO Elon Musk, along with private email addresses, phone numbers, salaries of employees, bank details of customers and secret details from production, Handelsblatt reported.
Citing the leaked files, the newspaper reported about thousands of customer complaints regarding the carmaker’s driver assistance systems with around 4,000 complaints on unintended acceleration or phantom braking.
Last month, a Reuters report showed that groups of Tesla employees privately shared via an internal messaging system sometimes highly invasive videos and images recorded by customers’ car cameras between 2019 and 2022.
The data protection office in the German state of Brandenburg, which is home to Tesla’s European factory, described the data leak as “massive.”
“I can’t remember such a scale,” Brandenburg data protection officer Dagmar Hartge said, adding that the case had been handed to the Dutch authorities who would be responsible if the allegations led to an enforcement action. […]
The breach would violate the European Union’s General Data Protection Regulation (GDPR). If such a violation was proved, Tesla could be fined up to 4 percent of its annual sales, which could be 3.26 billion euros.
German union IG Metall said the revelations were “disturbing” and called on Tesla to inform employees about all data protection violations and promote a culture in which staff could raise problems and grievances openly and without fear.
“These revelations … fit with the picture that we have gained in just under two years,” said Dirk Schulze, IG Metall incoming district manager for Berlin, Brandenburg and Saxony.
Of course, this isn’t the first time we’ve heard of Tesla employees passing around “funny” (read: potentially traumatizing) videos recorded by cameras in customers’ cars. It’s just that now, a government might actually step up and do something about it. Thank goodness for GDPR, every advertiser’s worst nightmare.
4th Gear: Today In Cummins News
We rarely talk about Cummins, the diesel engine maker whose name has been deified by truck stans everywhere. Cummins recently decided to spin off its engine filtration division on the stock market, which is very specific and went all-in with a bold $27 million initial public offering that had some analysts scratching their heads in this volatile economy. From Reuters:
Atmus Filtration Technologies sold 14.1 million shares at $19.5 a piece, the company said in a press release. The company had previously guided the IPO could be priced at between $18 and $21 per share.
The IPO values Atmus at $1.6 billion. The stock is scheduled to start trading on Friday on the New York Stock Exchange under the symbol “ATMU”.
Financial markets have been on edge over the timing of a deal between the White House and Republicans in Congress to raise the debt ceiling ahead of the June 1 deadline set by the U.S. Treasury.
Despite the elevated volatility, however, the Cboe Volatility Index, known as Wall Street’s “fear gauge,” remains below 20, the level many bankers say makes it difficult to price IPOs.
The VIX has been above 20 most of the time since the first quarter of 2022 as the war in Ukraine and interest rate hikes by central banks fueled market jitters. This created an IPO drought, with only a few stock market hopefuls bucking the trend.
Best of luck to Atmus, a name that I don’t expect to carry quite the same cache as Cummins.
5th Gear: Today In Companies Exiting Russia
It’s Michelin! One last time, Reuters:
French tyre maker Michelin said on Friday it was selling its Russia Tyre Manufacturing Company and Camso CIS in Russia to Power International Tires, a tyre distributor in the country.
The group did not provide details on the sale price. […]
The agreement, approved by local authorities, will keep 250 jobs, mainly based at Michelin’s sole Russian plant in Davydovo, the group said.
The Davydovo plant, located near Moscow, employs 750 people. It produces up to 2 million tyres per year, mainly for passenger cars for the Russian and some Northern European markets.
Michelin said it was impossible for every employee to be transferred to Power International Tires and so those who wished to leave the company would be allowed to do so “under good conditions”.
Sales in Russia apparently represented 2 percent of the company’s total, so this probably isn’t a huge loss for the French tire maker. However, the Russian government has made it quite expensive to close up shop there since it invaded Ukraine, as some carmakers have found out. Hey, it’s a revenue stream.
Reverse: 15 Million Served
On this day in 1927 — 96 years ago — the Model T ended production, with the final example rolling off the production line. From History.com:
Neutral: The Long Weekend?
What are you doing for it? I’m headed to a house up in the mountains.