Aug 14, 2020

Axios Navigate

Joann Muller

Happy Friday! It's been a big week for me: National Middle Child Day and International Left Handers Day in the same week! I hope you had reason to celebrate, too.

Breaking: A federal judge today refused to revive GM's racketeering lawsuit against Fiat Chrysler, calling its explosive charges "too speculative," the Detroit News reports.

  • For the next two weeks, Axios is your floor pass to the political conventions. Check out Axios 2020 Conventions coverage on the app (Apple | Android) or online for news and daily virtual events with the biggest newsmakers.

Today's Smart Brevity count: 1,492 words, 6-minute read.

1 big thing: Elon Musk is channeling Henry Ford

Photo illustration: Annelise Capossela/Axios. Photo: Zhang Peng/LightRocket via Getty Images

Tesla CEO Elon Musk, who has spent more than a decade trying to disrupt the traditional auto industry, is sounding more and more like the man most closely associated with it: Henry Ford.

Why it matters: In his quest to build affordable electric cars for the masses, Musk is starting to embrace many of the ideas pioneered by Ford's founder — things like vertical supply chains and an obsession with manufacturing efficiency.

  • A century ago that approach helped to popularize the American automobile by lowering the cost of the Model T.

What's happening: Musk is making batteries, computer chips and many vehicle components in-house — and securing supplies of raw materials.

  • He's either bucking the prevailing industry trend that favors outsourcing to lower-cost global supply chains — or coming full circle.

Like Henry Ford in the early 20th century, Musk was ridiculed at first. But even Tesla skeptics are surprised by the leaps the electric vehicle company has made in its manufacturing capability and efficiency.

  • Two years ago, after taking apart a Tesla Model 3, "I couldn't believe how bad the body was [put together]," says Sandy Munro, a former Ford Motor engineer whose consulting firm, Munro & Associates, specializes in reverse-engineering and competitive analysis for the auto industry.
  • "Everything else blew me away," he tells Axios, referring to Tesla's electric power train.
  • Now, after poring over every inch of a disassembled Model Y, its newest product, Munro says Tesla's improvement is remarkable.
"They're going to go from worst to first in a short time."
— manufacturing expert Sandy Munro

Details: Tesla still has work to do on paint quality and fitting body panels together, but several engineering innovations stood out, says Munro, whose findings are summarized in this video.

  1. Tesla's new proprietary computer chip. Designed in-house to one day enable full self-driving capability, the new chip is manufactured in Texas by Samsung.
  2. The "mega-casting" of the car's body. The entire rear of car is shaped from a single aluminum casting, rather than hundreds of pieces of steel welded together. That translates into better quality, less weight and easier assembly.
  3. Tesla's unique materials. By inventing its own aluminum alloy, Tesla eliminated multiple steps in the body manufacturing process.

What to watch: With Tesla adding factory capacity on three continents (including Austin, Texas, next year) and competitors entering the EV space, too, demand for batteries is increasing, and raw materials could become an issue.

Flashback: Henry Ford's mission was to build a simple, reliable and affordable car that average Americans could afford. Efficient manufacturing was the key.

  • Aside from inventing the moving assembly line in 1913, his biggest idea was an "ore to assembly" manufacturing complex that became Ford River Rouge.
  • "He bought all the different elements so that the raw materials would go into one side of the Rouge and 28 hours later come out as a finished automobile," said Ford Motor corporate historian Ted Ryan.

One other similarity: Like Henry Ford in the 1930s, Elon Musk has a history of anti-union behavior.

The bottom line: A century apart, these two automotive pioneers shared many of the same ideas.

2. Behind Uber, Lyft threats of a shutdown in Calif.

Illustration: Lazaro Gamio / Axios

Uber and Lyft are threatening to suspend services in California if a court doesn't overturn or pause a new ruling forcing them to reclassify California drivers as employees.

Why it matters: Both companies seem to be pinning their hopes on November's election, when voters could potentially exempt them by passing a ballot measure.

Between the lines: Many critics suggest the companies are bluffing, but Axios' Kia Kokalitcheva isn't so sure. She writes:

  1. The logistics of compliance aren't trivial. They'd have to figure out staffing needs and a schedule, and then onboard everyone.
  2. It's unlikely the companies want to go through all that, just to reverse course if they win in November.
  3. Depriving customers of these services could get them more support in November. The companies have, in the past, successfully turned customers into their political advocates.
  4. With demand for ride-hailing already down significantly during the COVID-19 pandemic, the extra revenue hit from a two-month shutdown might not be that bad.

What to watch: What happens at the California ballot box in November will have ramifications beyond Uber and Lyft's ride-hailing businesses.

  • It could affect the future of Uber Eats and other food and grocery delivery services, which have become critical for many Californians while the pandemic continues.
3. Lucid Air offers a cure for EV range anxiety

The upcoming Lucid Air. Photo: Lucid Motors

Lucid Motors says its upcoming Lucid Air electric luxury sedan is expected to achieve an unprecedented driving range of 517 miles on a single battery charge.

Why it matters: Lucid's driving range is about 115 miles farther than Tesla's longest-range Model S, but more important, the efficiency breakthrough could enable the arrival of more affordable EVs in the future.

  • "It will lead to the $25,000 car, and it will come sooner because of the technology we're developing," says Lucid's CEO and CTO Peter Rawlinson.

Today, the way to get more driving range out of an electric vehicle is simple: use a bigger battery.

  • Lucid made its system more efficient so it can use a smaller battery pack, reducing vehicle weight and cost, and providing more interior space for passengers.
  • The Lucid Air's range has not yet been rated by the Environmental Protection Agency, but an independent engineering lab widely used by automakers came up with the estimate using the EPA's own testing procedure.

Between the lines: Through some nifty in-house engineering that includes the integration of miniaturized electric motors with other components and a 900+ Volt electrical architecture, Lucid optimized the powertrain's performance and efficiency.

  • The technology was perfected through the Formula E racing series for electric cars.

What's next: More details are expected when the production version of the Lucid Air makes its online debut Sept. 9.

  • Production begins in early 2021 at a new factory being completed near Phoenix.
4. Michigan plans 40-mile corridor for AVs

Source: Cavnue

Michigan plans to develop a 40-mile stretch of highway dedicated to connected and autonomous vehicles between Detroit and Ann Arbor.

Why it matters: The AV corridor would be the first in the nation, improving transit access for people who live and work along the route.

  • Automated and connected buses, shuttles and freight trucks would run in dedicated lanes along the Interstate 94 corridor, linking the University of Michigan to Detroit Metropolitan Airport and the city's downtown.

Details: The project will be led by Cavnue, a newly formed subsidiary of Sidewalk Infrastructure Partners, a high-tech infrastructure company funded by Alphabet and the Ontario Teachers' Pension Plan.

  • Several automakers and autonomous driving startups will serve on an advisory committee, including Ford, GM, Argo AI, Arrival, BMW, Honda, Toyota, TuSimple and Waymo.
  • The project will take a while to get up and running; organizers say they'll spend the first two years testing technologies and exploring roadway designs and financing models.

What they're saying: "We are taking the initial steps to build the infrastructure to help us test and deploy the cars of the future," Michigan Governor Gretchen Whitmer said in a statement.

5. Driving the conversation

What happens to viral particles on the subway (Mika Gröndahl, Christina Goldbaum and Jeremy White — New York Times)

  • Why it matters: If you're nervous about riding the subway again, this cool interactive features provides a good understanding of how air is circulated through a subway car, helping to minimize your risk of exposure to the coronavirus.

American Airlines prepares to drop some service to smaller cities as expiration of federal aid nears (Leslie Josephs — CNBC)

  • What to watch: Airline executives and labor unions have been pushing Congress for another $25 billion in payroll support to keep paying workers through the end of next March. The proposal has gained bipartisan political support in Congress but there's still no deal.

Hyundai and Aptiv name their self-driving company Motional (Joann Muller — Axios)

  • What's next: Motional will begin testing fully driverless systems later this year on a new Hyundai-built vehicle platform. CEO Karl Iagnemma says Motional's driverless systems will be available for robotaxi providers and fleet operators starting in 2022.
6. What I'm driving

Photo: Volkswagen

This week I'm driving the 2020 Volkswagen Passat 2.0T SEL, which sadly feels like a neglected child.

The big picture: In China and Europe, the Passat is built on VW's new MQB architecture, the automaker's modular new engineering platform. But the 2020 Passat sold in the U.S. still rides on a platform introduced in 2012.

  • The reason: sedan sales are faltering in the U.S., so why invest a ton of money in dolling it up?

The exterior styling is OK, if conservative, but where you really feel the Passat's age is in the driver's seat. Despite updates, the dashboard and center console feel austere, even by German standards.

  • The 6.3-inch touchscreen is tiny compared to the competition, but at least it features a Fender premium audio system.

The Passat features ample driver-assistance technology across most of the lineup, including forward collision warning and automatic emergency braking with pedestrian detection, blind spot monitoring, adaptive cruise control and lane-keep assistance.

  • There's also a parking assist feature on the $32,015 SEL trim I tested that can automatically steer the car into a parallel parking space or back into a perpendicular space.

One good thing: The Passat costs less than the class-leading Honda Accord, starting at $23,915. But most people won't find that reason enough to buy a Passat.

Joann Muller