It Sure Sounds Like Volkswagen Thinks Rivian Is Going To Be A VW Brand

The question I can’t seem to answer is: Does VW need Rivian more or vice versa? The best partnerships are made when strengths are combined, but short of that there’s a lot to be said about combining weaknesses. Volkswagen’s CEO got clocked talking about working with Rivian more and it sure sounds like the two companies will be, uh, collaborative to say the least.

It’s all about pairing up on this Friday installment of The Morning Dump. Will Honda/Nissan/Mitsubishi be collaborative? Sure, but there’s a fourth brand poking into this impending thruple and, while the French might be ok with that, it’s a bit much for these Japanese carmakers.

And, while we’re talking about sharing, the FTC is using federal garbage time to stop GM’s OnStar from sharing your data with credit monitoring agencies. Woohoo! It’s Friday and the streets of New York are slightly less busy than they were as congestion pricing seems to kinda be working.

Rivian And VW Are Super Into Module Swapping

I already mentioned this week that one of the big weaknesses of cars made by traditional automakers is that, rather than use a high-speed modem and a small number of computers/modules to run in-car systems using a unified code, they instead farm these systems out to suppliers. This means that a Ford might have 150 separate systems to control everything from the seats to the suspension, whereas an EV from a startup might have fewer than 10. Volkswagen says it needs about 100 modules, whereas Rivian only needs seven to do the same job.

This is a weakness and it’s something that traditional automakers know they need to fix. Ford is outsourcing the development of its next-gen EV platform to a Skunkworks team. Volkswagen, though, is going in a different direction.

A quick history lesson. Volkswagen, post-Dieselgate, understood the problem and completely whiffed on the solution. The company thought it could toss literally thousands of engineers at its software woes via its Cariad subsidiary. This was the wrong way to approach the issue and cost Volkswagen billions of dollars, the results of which were… I’m not sure. When Oliver Blume got called up from heading Porsche to heading all of Volkswagen his early target was Cariad and its mediocre performance.

Rather than try to reform Cariad, VW decided to give Rivian $5 billion in exchange for software help. It was an admission of defeat as much as it was a strategic move. At the same time, Rivian needed the money. The company has already slowed down on its plan to build cars in Georgia, instead shifting more production to its existing Illinois factory. This year, Rivian was still losing, basically, a Honda Accord on every truck sold.

The cash came at a great time and, late last year, Volkswagen agreed to up the amount to $5.8 billion and form a joint venture called Rivian and Volkswagen Group Technologies (RVWGT). It was a little unclear how it would work, but VW CEO Blume let slip a preview of the future in an interview with Der Spiegel (Translated):

The Volkswagen Group wants to deepen its partnership with the US electric car start-up Rivian beyond an existing software cooperation. “For example, we are thinking about sharing modules and bundling purchasing volumes,” says CEO Oliver Blume to SPIEGEL. “The Volkswagen Group offers great opportunities for a small brand like Rivian.”

ORLY?

Given that Rivian had to cut its production forecast by 18% last year because of one small mistake when ordering from a supplier, perhaps a little help in bundling purchasing volumes isn’t the worst thing. Right? With VW’s Scout rolling out soon maybe they can save money on big tires, though Blume doesn’t see the two companies competing:

Blume rejects the idea that Volkswagen could be developing a Scout competitor with Rivian. “The vehicles are positioned completely differently,” says the VW boss. Scout’s pick-ups start at a base price of $45,000, Rivian’s at around $70,000.

There’s something bigger going on here than saving money. Every two months Blume keeps moving the target for cooperation and, to this point, I haven’t seen Rivian CEO R.J. Scaringe push back. With Rivian securing $6.6 billion from the Department of Energy to build out its Georgia facility, perhaps eventually Rivian won’t need VW’s help. It’ll be a long time before Rivian will start producing cars in Georgia and in the interim there are a lot of investments to make.

If you have an investment, share software, and start sharing parts… at what point are you not just the same company?

As they say, you eat an elephant one bite at a time, and Rivian is a pretty small elephant compared to Volkswagen.

Honda Would Like Renault Out Of The Picture

There is a comfort in conventional wisdom. You’re not going to get in that much trouble if you parrot what everyone else is saying, even if what everyone else is saying is wrong. Everyone was saying it! is an excuse people just accept.

The conventional wisdom is that the Honda-Nissan deal is bad news. It’s not going to work. Nissan is too weak and Honda is too strong. I disagree. The deal falling apart before it even happens is a completely reasonable outcome and it’s scary to say otherwise, largely because I sometimes feel like the only one saying I think it could be a good thing.

One barrier that still exists is Nissan’s ex, Renault, which is slowly winding down its large ownership stake in Nissan. That outsized stake was the price the Japanese automaker had to pay in order to be saved by the French one. Nissan, and the Japanese government, never really got over it.

Honda is committed so far to making the deal happen, but the rumored big ask from Honda to Nissan is that Nissan gets Renault out of the picture. Like Nissan, Honda has no real interest in being tied with a company that’s partially owned by the French state. Even worse, Honda is reportedly afraid that Renault will jettison its shares and screw up the whole deal.

From Bloomberg:

Honda is concerned that Nissan could fall under an undesirable foreign influence should Renault’s stake be snapped up by a third party while negotiations to absorb Nissan are underway, Kyodo said Thursday, citing people familiar with the matter it didn’t identify.

There’s a catch! Nissan might not be able to afford to buy back those shares because, while it’s not broke, it’s certainly struggling. Here’s a crazy thought: Maybe Honda just buys those shares?

FTC To Ban GM From Sharing Your Data With Credit Agencies

I made friends with an Australian family who moved in nearby, and trying to justify why credit agencies even exist makes you sound like a crazy person. Explaining to someone that they need to go into debt to prove that they’re good with money is objectively nuts.

The Federal Trade Commission (FTC), under Lina Khan, has actively worked on behalf of consumers and, as a parting act, the FTC is making GM stop its policy of sharing driving data with credit reporting agencies.

Here’s what the FTC had to say about it:

“GM monitored and sold people’s precise geolocation data and driver behavior information, sometimes as often as every three seconds,” said FTC Chair Lina M. Khan. “With this action, the FTC is safeguarding Americans’ privacy and protecting people from unchecked surveillance.”

GM has offered OnStar as a service that will aid consumers during an emergency and provide hands-free voice assistance and real-time traffic and navigation. Over time, the company has increased the amount of data it collects through OnStar to include precise geolocation data—collected every three seconds for some users.

Tracking and collecting geolocation data can be extremely privacy invasive, revealing some of the most intimate details about a person’s life, such as whether they visited a hospital or other medical facility, and expose their daily routines.

This is good. GM already stopped the program, but this is making sure they don’t pick it up in a gentler regulatory environment.

Congestion Pricing Is Removing Personal Cars From The Streets

We’re now two weeks into congestion pricing in New York City and it seems to be working so far. Traffic is down about 8% overall and people are noting that it feels overall like a nicer experience traveling in the city. I took a commuter train into Manhattan and then took a subway further in, and the streets felt a little emptier and the trains felt a little busier. It was nice.

The question, though, is who exactly is behind this traffic reduction? Bloomberg did a camera analysis of cars and found that private car trips dropped while trips for Ubers and taxis increased.

Nearly all of the reduced vehicle entries to the congestion pricing zone appear to be due to personal vehicles no longer making the trip, according to Bloomberg’s analysis. The share of private cars traveling down Lexington Avenue dropped by six percentage points — from 40% to 34% of overall traffic — while the percentage of yellow cabs increased by seven percentage points. The share of Uber and Lyft and other commercial vehicles, like semi-trucks and delivery vans, remained largely unchanged.

“There was some concern in the environmental analysis that there would be diversion of commercial vehicles,” said Rachel Weinberger, Director of Research at Regional Plan Association. “But my suspicion is if you’re a commercial vehicle in the zone your destination is in the zone so you don’t have a diversion to make.”

This is as one would expect, said Charles Komanoff, a transport economist and New York City congestion pricing expert. Commercial vehicles pay the highest fees — up to $21.60 during peak hours — but those trips are essential to their business. For-hire vehicles pass the fees onto passengers, who may not change their behavior over 75 cents per trip ($1.50 per Uber ride), which is roughly equivalent to waiting at one extra traffic light. Passengers may even find they save money because their trips are shorter, Komanoff suggested.

It’ll take a long time to find out if this plan actually works, but getting people who could take the train out of cars while making it faster/nicer for pedestrians and people on bikes is a win. It’s also nice that your cab or Uber ride might be net cheaper because roads are clearer and traffic is reduced. Bloomberg tried to do an analysis of car value to determine if lower-income drivers were being impacted disproportionately and found no evidence of that yet, though it’s a bit of an extrapolation so I’m not sure if I entirely buy it.

What I’m Listening To While Writing TMD

It’s the last of the amazing trio of releases from The Roots, this time with “Thought @ Work” from Phrenology. Oh, and here’s my The Roots story. For some reason, in the early 2000s, it was quite reasonable to book The Roots to play your college. We did it at least twice while I was at UT Austin and the second time I remember that the band’s rider asked for a ton of fresh fruit and organic vodka. It was very specific about the type of vodka that The Roots would drink. We were a college and could not buy them fancy organic vodka. They were cool about it, though. We gave them a crap ton of fresh fruit in exchange.

The Big Question

What are the weirdest two auto brands in the same group in history?