Good morning and welcome back to Speed Lines, The Drive's morning roundup of what matters in the world of cars and transportation. It's somehow May 19, and I don't really understand how that is possible. Today we are talking about "self-driving" Teslas, how China's auto industry is recovering from the pandemic and the "new age of air travel."
'Appreciating Assets'
We'll take a break from all the obvious doom and gloom in the world to kick off today's Speed Lines (don't worry—we have plenty of that too) so we can talk about Tesla's supposedly forthcoming "Full Self-Driving" technology. Right now, when you buy a Tesla, that's a $7,000 option and one set to go up an additional $1,000 later this summer. It doesn't let the car fully self-drive because there are no self-driving cars on the market; FSD does allow for navigation on Autopilot, automatic lane changing, automatic parking, and other special functions. But supposedly it will support greater capabilities in the future. Tesla CEO Elon Musk has claimed full-self driving will be a subscription option by the end of this year.
For this reason, Musk has claimed that unlike just about every other car on earth that isn't a Ferrari 250 GTO, this capability will make Tesla's cars rise in value—an appreciating asset, rather than a depreciating one. In fact, Musk says, it could make the "value" of a Tesla rise to the six-figure range, Musk said on Twitter last night:
As much as I fervently believe "Elon Musk Said A Thing" does not automatically equate to a story, I think it's worth being extremely skeptical of this claim on several levels. The first is the "appreciating asset" thing, because that's simply not how cars work. The second is that Tesla will get to anything close to "full" "self-driving" at the end of this year or anytime soon; as advanced as Autopilot is, that technology is many years away.
More than likely, as even Electrek notes, this feels like a cash grab ahead of what's probably going to be a tough Q2 for Tesla (and every other automaker.) If even 30,000 Tesla buyers opt for this before the price goes up, that's an extra $100 million for Tesla in this quarter alone. It's not like Musk has done similar cash grabs before, only to announce further delays once the excitement has subsided.
Anyway, if you believe this is really, really true, get in touch with me. I have a bridge, some magic beans and some hydroxychloroquine, and I can cut you a great deal on all of them.
Chinese Factories Ease Virus Protection Measures
As the originator of the novel coronavirus, China's been dealing with this outbreak longer than any other country. It's also had its auto factories back to work in varying capacities for months now. A dispatch from Reuters reports that six factories, including ones owned by Geely, Tesla and Daimler, have begun easing the tight restrictions they had in place during the earlier part of the pandemic. Workers aren't required to stand as far apart as they were, and they are allowed to sit near one another in the cafeteria.
Here's how it's going so far:
For Tesla Inc.'s Shanghai plant, workers were required to maintain a distance of 1 meter in February but like many other China plants, that rule has now been eased. In contrast, Tesla's "Return to Work Playbook" published this month for its Fremont, Calif., factory calls for workers to maintain a distance of 6 feet or about 2 meters, or for barriers to be established where that is not possible.
At Beijing Benz Automotive Co., a Daimler venture with China's BAIC Group, the 1-meter rule has also been relaxed for production line staff and workers wearing face masks could be seen working near each other.
A notice board showed weekly production for one line making E-Class sedans, GLC sport utility vehicles and other models had jumped to more than 4,000 vehicles from 1,100 in early February.
This is worth noting because many of the safety measures we're now seeing in North American factories were developed at plants in China and South Korea, so in theory, we could see them here eventually. The big and obvious question is what this could mean in terms of the virus resurging again, especially this fall when it's expected to get bad once more. But if this is successful without putting workers at risk, it could lead to getting these factories back at full speed one more.
How Air Travel Works As We Reopen
Across America, for better or worse, bars, restaurants, salons, and other businesses are opening up again, even if it's just at partial capacity. Time will tell if this leads to a resurgence of the virus that overwhelms our health care system and prolongs our economic downturn. But what about air travel? How will that work moving forward? Even if people are drinking in bars at 25 percent capacity and with masks on, I don't think many people will be eager to cram themselves into lines for boarding and security checks unless they absolutely have to. No wonder RV rentals are through the roof as people try and plan summer vacations.
The Wall Street Journal reports that airlines and airports are considering safety measures that are not unlike what we're seeing at the reopened auto factories: widespread temperature checks, mandatory seat distancing, retooled lines and possibly even "immunity passports" that document whether a passenger has or has recovered from the virus. There will probably be fewer flights, more stopovers and shorter routes overall.
All of this, as you might guess, conflicts directly with how airlines have made their money in recent years:
Carriers boosted revenue by squeezing more people into coach cabins in recent years—shrinking seats and space between rows. They had started charging for more room and for extras that were once free, like choosing seats in advance. Fees for flight changes and checked bags brought in billions of dollars each year.
Now carriers are being encouraged to keep seats empty, making it harder to turn a profit on each flight. At the same time, the corporate customers that were willing to pay high fares for seats in premium cabins could be slow to return as long as international travel restrictions remain in place, and may stay grounded longer if video conferencing becomes the norm or if companies remain cautious about business travel.
The airline industry will come out of this crisis much smaller, and it'll probably need to retool how its revenue streams actually work. At the same time, I'm all for boarding the planes from the rear. It's what we should've been doing all along.
On Our Radar
Mitsubishi slumps to quarterly loss, multiplying alliance woes (Automotive News)
UK announces new post-Brexit global tariff regime (Reuters)
European car sales doldrums will last longer than in China – VW boss (CAR)
Read These To Seem Smart And Interesting
Never Go Back to the Office (The Atlantic)
SoftBank Posts Its Worst Results Ever, Hit by Poor Tech Investments (WSJ)
Chuck E. Cheese Selling Pizza Under Different Name on Grubhub and People Are Confused (Complex)
Your Turn
When do you think you'll start flying again? Or at least, flying at the level you were at before all of this?
