Jul 24, 2020

Axios Navigate

By Joann Muller
Joann Muller

Happy Friday! If you've got tips or feedback, send me an email at joann@axios.com.

Today's Smart Brevity count is 1,654 words, a 6-minute read.

1 big thing: Tesla's election-year gift to Texas

Illustration: Sarah Grillo/Axios

Tesla's decision to build a $1 billion factory in Texas is a good bit of economic news for a state that's suffering in the throes of the pandemic.

Why it matters: The creation of 5,000 new manufacturing jobs near Austin comes as the state's ongoing coronavirus outbreak threatens to overwhelm hospital systems and tears at the economy.

  • It's also an election-year gift that could feed competing political agendas.

Driving the news: Tesla CEO Elon Musk disclosed the location of the company's second U.S. auto assembly plant during an investor call Wednesday to discuss its latest financial results.

  • Construction of the nearly 5 million-square-foot factory will begin this fall.
  • It will produce Tesla's unorthodox Cybertruck pickup and an electric Tesla Semi truck, as well as Model 3 and Model Y passenger cars for shipment to the eastern half of the U.S.
"We're going to make it a factory that is going to be stunning. It's right on the Colorado River, so there's actually going to be a boardwalk where there'll be a hiking and biking trail. It's going to basically be an ecological paradise, birds in the trees, butterflies, fish in the stream, and it will be open to the public as well."
— Elon Musk

Context: In Texas, a red state where the race for president is viewed as a tossup, per a Quinnipiac University poll out this month, people care more about the economy than the pandemic or racial inequality.

  • On this issue, Trump has the advantage, leading Biden by a 16-point margin (56% to 40%), according to Quinnipiac.

What to watch: Both candidates could try to use Tesla's move to bolster their own economic narratives.

President Trump, elected in 2016 on a pledge to bring manufacturing jobs back to America, often takes credit for companies' decisions to add jobs or expand U.S. production, while attacking CEOs like GM's Mary Barra that do the opposite.

  • On Thursday, Trump told Fox's Sean Hannity: "I said, 'Elon, build a factory in Texas' .... He called me up just a little while ago to say 'I got it done,' meaning he got it done but I was pushing that job very hard from Elon."
Screenshot: @realDonaldTrump (Twitter)

The other side: Democrat Joe Biden, meanwhile, can point to Tesla's factory as a symbol of the types of clean energy jobs he'll promote if elected.

Of note: Three other electric vehicle factories are currently under construction in the U.S.

  • This week, Nikola broke ground on a $600 million factory near Phoenix that will build electric semi trucks starting next year and hydrogen fuel cell trucks in 2023.
  • Lucid Motors' electric sports car will start production by the end of the year at its new factory, also near Phoenix.
  • Rivian, which plans to build electric pickups, SUVs and Amazon delivery trucks, is renovating a mothballed Mitsubishi plant in Illinois.

The bottom line: Both candidates could try to use Tesla's gift to their own political advantage as they try to lift Texans past the pandemic.

2. Musk's car-making agony is over

Illustration: Sarah Grillo/Axios

Two years ago, Elon Musk was lamenting that Tesla was mired in "production hell." Now, he's singing a different tune.

"I just want to be clear, at Tesla, we love manufacturing. It's awesome, and I really think more smart people should be working on manufacturing."

Why it matters: Musk's about-face comes as Tesla is stomping on the accelerator to meet global demand for its electric vehicles, adding production capacity on three continents.

"Just think about the next 12 to 18 months. We'll have three new factories in place. ... There's so much to be excited about," Musk told investors on Wednesday's earnings call.

Flashback: Musk once vowed Tesla's super-automated factories would resemble an "alien dreadnought."

  • He even bragged to industry analysts in early 2018 that Tesla would school Toyota on lean manufacturing, but later admitted to overreaching on factory automation and production targets for its Model 3.

Now, Tesla's manufacturing seems to be on track — and getting better.

  • The company managed to produce more than 82,000 vehicles in the second quarter, despite a six-week shutdown of its Fremont, California, factory due to the coronavirus.
  • Tesla rapidly ramped up production of Model 3 in China, where it learned lessons about how to redesign the underpinnings of the Model Y to make it even easier to manufacture at its next plant, in Germany.
  • "We're getting way better at making cars," Musk said, and lauding manufacturing engineering as an exciting profession with a bad rap.

Yes, but: Tesla is still dogged by quality problems, and its cars lag behind other U.S. auto brands in J.D. Power's 2020 Initial Quality Survey of issues reported in the first three months of ownership.

  • Common problems include paint imperfections and poorly fitting body panels, according to J.D. Power.

The bottom line: Tesla's long-term competitive advantage won't be its cars, but its efficient manufacturing techniques, says Musk.

3. Congestion, carpools and COVID-19

Illustration: Annelise Capossela/Axios

A cash rewards app that encourages people to use cleaner forms of transportation might also help coax virus-leery commuters back into shared rides, buses and trains.

The big picture: Since the coronavirus pandemic, most people surveyed say they'd feel safer driving their personal car to work, and the Centers for Disease Control and Prevention advises workers to avoid mass transit if possible. But cities can't return to normal without safe, affordable public transportation.

Hytch, the commuter mobile app, found a second use for its technology during the pandemic: tracking COVID-19 infections.

How it works: Hytch partners with employers, brands and governments to provide cash rewards to commuters who choose low-emission forms of transport such as public transit, car pooling, cycling or walking.

  • After a two-year pilot in Nashville, 10,000 Hytch users logged 11.8 million vehicle miles in the city and earned $250,000 in rewards.
  • More important were the vehicle miles not driven in personal cars (7.58 million) and the number of single-occupancy vehicle trips not taken (more than 420,000).
  • That data, released Thursday, is being shared with the U.S. Department of Transportation, which is studying car-sharing incentives, Hytch CEO Mark Cleveland said.
  • Seattle and San Francisco are adopting similar programs while South Bend, Indiana, is using Hytch's carpooling incentives to support workers with limited transportation options.

What's next: Now Hytch is partnering with companies to pay employees for using the app to self-screen before they commute to work, and for contract tracing in the event of an outbreak.

4. Bike sales are up, but biking is down
Expand chart
Reproduced from Streetlight Data; Map: Axios Visuals

Biking in America’s biggest cities has dropped due to the coronavirus pandemic, but the decline is less than for driving, according to new data exclusively shared with Axios' Amy Harder and Naema Ahmed.

Why it matters: Skyrocketing bike sales and anecdotal evidence suggests cycling could emerge a winner in the pandemic. But this data suggests a bike boom is — so far — unlikely to materialize or make a dent in oil demand.

Where it stands: Cities where commuting by bike is most common, like New York, Philadelphia and San Francisco, are also the ones that saw the sharpest declines in bike travel in May compared to last year, according to research from Streetlight Data, a transportation analytics firm.

  • The data shows, though, that cycling dropped less than driving.

How it works: Streetlight Data uses location-based data, essentially pings from cell-phone apps, that can differentiate between driving, cycling and walking based on the cadence of pings.

What we're watching: Although we know bike sales are skyrocketing, we don't know if people will actually end up riding them long-term. The data suggests those bikes will start collecting dust soon.

5. Driving the conversation

Tesla sues Rivian over "disturbing pattern" of alleged trade secret theft (Sean O'Kane — The Verge)

  • The intrigue: Unlike most trade secret cases, this isn't a fight over intellectual property or technology. Instead, it's a dispute over the secrets of recruiting the best talent to work on vehicles of the future.

Waymo and Fiat Chrysler team up on automated delivery trucks (Joann Muller — Axios)

  • Why it matters: The two companies have been working together on robo-taxi minivans for several years, but the coronavirus pandemic has highlighted the exploding opportunity for automated delivery, making the commercial trucking market the top priority now.

Southwest Airlines, American Airlines say no more mask exceptions for anyone over 2 years old (Kyle Arnold — Dallas Morning News)

  • The big picture: Airlines are tightening mask rules as they try to reassure passengers and their own employees about safety during the pandemic. United is now requiring masks in its terminals, too.
6. What I'm driving

Honda CR-V hybrid (left) and BMW X3 xDrive30e plug-in hybrid. Photos: Honda and BMW.

This week I'm test-driving two fuel-efficient crossover utilities, the 2020 Honda CR-V hybrid and the BMW X3 xDrive30e plug-in hybrid.

The big picture: Most buyers probably wouldn't cross-shop these particular SUVs — the BMW starts at $48,550, while the Honda tops out at $35,950 — but it's interesting to drive them side-by-side to understand the range of options in a hybrid SUV.

Between the lines: The most important thing to know is that they're powered by different technologies.

The Honda CR-V is a traditional hybrid, combining a 2.0-liter gasoline engine with a 1.4-kWh battery and two electric motors.

  • It's the most powerful version of the CR-V, with 212 horsepower and 232 pound-feet of torque, and is rated 40 miles per gallon in city driving.

The BMW X3 xDrive30e is a plug-in hybrid that can travel up to 34 miles on pure electricity before the 2.0-liter engine kicks in.

  • The combined powertrain delivers 288 horsepower and 310 pound-feet of torque, and gets the equivalent of 60 miles per gallon.

Both SUVs let you choose various driving modes, depending on whether you're seeking more power or maximum efficiency.

You get more luxury features with the BMW, naturally — the cognac leather interior smells sumptuous and the $4,500 "executive package" adds everything from a surround-view camera to a panoramic moonroof.

  • But the Honda is no slouch, either, with a power moonroof, push button gear selector and wireless phone charging pad.
  • And it has more cargo space than the BMW.

Both SUVs come loaded with safety and assisted-driving features.

The bottom line: If you've been waiting to buy a fuel-efficient SUV, you can find a hybrid no matter your price range.

Joann Muller