Auto Industry News: Gas Prices Up, EV Prices (Sort Of) Down, UAW Raring To Fight, & New Toyota Land Cruiser Ringing In Retro

This week, we see supply and demand playing out in an interesting way across the auto industry. Gas prices surge just as summertime travel hits its peak, with refineries blaming last month’s record-breaking hot weather for the massive drop in production. Meanwhile, on the EV side of things, supply is rising faster than demand, causing automakers to slip into a price war as they scramble to capture customers in a market that seems lukewarm about their offerings.

As for the folks tasked with building those vehicles, they’re standing firm on their demands for higher pay and better benefits. The Engine Block unpacks current union contract negotiations, which include the UAW’s demand of 40% wage gains from the Detroit 3 automakers.

Plus, the new Toyota Land Cruiser debuts with a fresh face and lower starting price, Uber turns its first-ever operating profit in 14 years (seriously), and Lamborghini posts record sales with just a two-car lineup during a time of red-hot inflation.

Pain at the Pump

After soaring 16.5 cents at the end of July, the price of a gallon of gas just jumped another 7.8 cents in the last week. The national average is now at $3.79/gallon, according to GasBuddy data. Diesel’s increase has been even more dramatic, rising 14.9 cents in the last week to an average $4.14/gallon.

Saudi Arabia’s voluntary oil cuts are partly to blame, as the severe limits in production continue to starve the global market and drive up prices. Adding fuel to the fire (somewhat literally) were last month’s extreme temperatures.

The unprecedented heat wave – which marks the hottest month ever recorded in history – caused many refineries to curb production as a safety measure. (Refineries are typically designed to operate in temperatures between 32-95°F, according to AAA spokesperson Andrew Gross.)

While the break in hot weather should provide some short-term pricing relief, “the respite from gasoline rising may not last long,” said Patrick De Haan, head of petroleum analysis at GasBuddy. OPEC plans to extend its 1 million barrel per day production cut into September, keeping oil under pressure, he explained. “Plus, there remain unknowns about hurricane season that will likely become more active in the weeks ahead.”

Did you know…?

Ride-hail giant Uber just posted its first operating profit since its founding in 2009. The boost in profits is largely thanks to the company’s diversification efforts — specifically into food delivery, which helped sustain business during pandemic travel shutdowns. Uber also added several new profitable features and products to its app, such as the ability to set up group rides, supervise teen rides, and request rides for friends and family.

EV Prices In Flux

Over on the EV market, supply is outpacing limited demand. As automakers fight for the same small pool of customers, those who can afford it are slashing prices and boosting incentives to reel in buyers.

Tesla, which still dominates the EV scene, kicked off the price-cutting with aggressive action earlier this year. Since then, other manufacturers have followed suit.

A few weeks ago, Ford dropped prices across the full range of its F-150 Lightning electric pickup. Some versions, specifically lower trim levels, dropped as much as $10,000 in price. EV startup Lucid Motors is the most recent company to join the trend. It reduced prices significantly on its Air luxury sedans, knocking $5k off its base trim and introducing competitive new leasing terms.

However, overall prices still remain high, with some analysts encouraging shoppers to hold off on purchasing just yet.

“It’s not a consumer-friendly market right now,” said Joseph Yoon, a consumer insight analyst for Edmunds.

While smaller EVs, like sedans and subcompact crossovers ring in at a lower cost, most shoppers are looking for trucks and SUVs. “EVs of that size are still very expensive,” he added. “We’re not quite there yet in terms of having options across the board for everybody.”

Indeed, Chevy’s recent announcement that it will keep producing America’s most affordable EV (the Bolt) loses some punch amid the news that it’s canceling the entry-level Blazer EV.

By dropping the 1LT trim, Chevy pushes the electric midsize crossover’s starting price above the $45,000 mark it originally was targeting, explains Automotive News. A company spokesperson told the publication that higher trim levels on the upcoming Equinox EV should meet the needs of potential Blazer EV 1LT buyers, giving the brand “room to position and market the vehicles without overlap.”

In Case You Missed It…

Last week, Cadillac revealed the price tag of its new flagship model, the Celestiq EV. The ultra-luxury, hand-built sedans will start at a jaw-dropping $340,000. Designed to be a truly “bespoke” model, the Celestiq’s final cost will be determined by the number of add-ons a buyer makes – and we’re willing to bet customization won’t come cheap.

UAW Makes “Ambitious and Audacious” Demands

Also heating up last week were contract negotiations between union workers and Detroit’s Big 3 automakers. Analysts anticipated big demands, including increased wages and better benefits, but likely didn’t expect 40% pay raises through 2027, pension plans for all workers, shorter work weeks, and a robust layoff protection program – among other itemized goals.

Pointing out that Ford, General Motors and Stellantis made a combined $21 billion in profits in the first half of this year, UAW president Shawn Fain argued in a Facebook Live event that “if the companies want to brag about record profits, then it’s time for record contracts.”

He admitted the proposal is the union’s most “audacious and ambitious” in decades, but stated he was determined to prevail “come hell or high water.”

Tension in Detroit

Automakers received the economic proposals last week. While Stellantis responded with a PR-friendly statement saying it would review the demands “to understand how they align with our company proposals and where we can find common ground,” GM pushed back with more blunt language.

“The breadth and scope of the Presidential Demands, at face value, would threaten our ability to do what’s right for the long-term benefit of the team,” the automaker said. “A fair agreement rewards our employees and also enables GM to maintain our momentum now and into the future.”

The UAW did not immediately respond, but earlier in the week, Fain was adamant that these are the members’ demands — not the president’s — and that they are not a mere “wish list.”

Additionally, during the livestream, he presented a comparison of what UAW member benefits used to look like before making concessions in 2009 due to the Great Recession. Shown alongside evidence of the automakers’ record-breaking profits, Fain said the two images “paint a damning picture of what’s happening not just in our industry, but across the economy.”

He also directly called out GM CEO Mary Barra’s $29 million compensation in 2022 during the broadcast, and noted that new workers at GM’s Ultium Cells would have to work 16 years to earn what Barra makes in a single week.

Raring to Go

The current UAW contract expires September 14. If no deal is reached by then, the union has made its intention to strike very clear.

Automotive News reports that “automotive parts producers up and down the tiers” are already preparing for a potential work stoppage, one that could have “devastating” economic impact, depending on how long it lasts – and not just for individual businesses, but the entire supply chain.

Thanks to COVID, inflation, and a tight labor market, automakers and parts suppliers are not in as strong a position as they were during the 2019 strike. Additionally, the UAW has the support of nearly 30 Democratic Senators, as well as precedence on its side. Earlier this month, UPS workers inked their best contract in history, setting what the Teamsters Union called “a new standard in the labor movement.”

Did you know…?

Lamborghini is looking at record-breaking sales numbers this year, pushing 5,341 cars between January and June alone. That marks a 4.9% increase over last year, and translates to a cushy €1.5 billion bump in revenue. The Italian brand said selling 10,000 cars this year was a “feasible goal.”

New Toyota Land Cruiser Shows Off Retro Look and Lower Price

After three years away, Toyota’s longest-running nameplate returns to North America in a smaller, cheaper, and more eco-friendly package.

Built on the TNGA-F global truck platform, the new Land Cruiser is slightly shorter and narrower than the outgoing 200 Series model, making it nimbler on the trails — and no doubt easier to park than its predecessor.

Dramatic styling changes complement the smaller footprint, with a much more rugged and retro exterior on display. A squared body profile resembles that of Land Cruisers of old, and the pushed-back A pillar not only rounds out the look, but also provides better outward visibility. The front overhang is also decreased for greater approach, and Toyota reports the maximum breakover angle is up from 21 to 25 degrees over the 2021 model.

Further aiding off-road adventures is the newly-developed double-wishbone front suspension with twin-tube shocks and multi-link rear suspension with coil springs. A front sway bar disconnect is standard on trims above the base model.

Speaking of standard equipment, perhaps the most interesting change on the new Land Cruiser is its single powertrain offering: an i-FORCE MAX turbocharged 2.4-liter four-cylinder hybrid producing 326-hp and 465 lb.-ft. of torque. All Land Cruisers also come with full-time 4WD with a center locking diff and electronically controlled two-speed transfer case with high/low range. With a trailer hitch standard on all grades, Land Cruisers can tow up to 6,000 pounds, which is admittedly a significant drop from the previous model’s 8,100 pounds.

However, we’re willing to bet the “mid-$50,000” price tag will more than make up for any disappointment. For a refresher, the old Land Cruiser started just over $87k. No word yet on when exactly this affordable version will be available, but Toyota is aiming for Spring 2024.

Did you know…?

Toyota is reportedly considering a Corolla-based pickup truck that would slot below the Tacoma and take on the Ford Maverick. For now, the topic just remains “under discussion” and if brought to fruition, wouldn’t hit the market until at least 2027.

The Engine Block is your one-stop source for any and all auto industry news. Keep an eye on our weekly round-up of enthusiast coverage, product reviews, vehicle spotlights, auto show/expo features, and more. Check back Wednesday for a product spotlight on Westin’s all-new Mesa Roof Rack, and then return on Friday for a rundown on the top 5 pickup trucks most expected to hold their value in the coming years.