Interesting news from the European union today that Ford will use Volvo’s fleet CO2 performance to offset overruns, caused primarily by problems with the Kuga plugin hybrid (PHEV).

They’ve formed a collective CO2 emissions pool to do so. A few weeks ago, Ford announced that it was looking for partners to work in this way.

The bureaucratic term for it is “Declarations of intent to form Open Pools pursuant to Article 6(5)of Regulation (EU) 2019/631(passenger cars)”

The move begs three questions:

1. Is this all the help Ford needs?
2. How much are they paying?
3. Have Renault missed an opportunity to capitalise on their over-achievement in CO2 reductions?

You can find the source document here:

https://circabc.europa.eu/ui/group/4cf23472-88e0-4a52-9dfb-544e8c4c7631/library/c37a5306-28b9-4753-88aa-b7f3f42c1878/details

The internet marches on; Musk banishes the skateboard to oblivion; and questions over price parity. Please enjoy our auto industry and mobility briefing for 19^th October to 25^th October 2020. A PDF version can be found here.

Before you read the detail, what were my favourite stories of the past week…?

• I’ll Be Right Here Waiting For You — FCA says online shopping for cars has taken off like a rocket. In 2019, FCA says 25% of sales started on the internet. Twelve months later, the equivalent figure is reckoned to be 45%. Many brands have advanced visions of internet sales but failed to deliver them in practice. How much longer can they afford to wait?
• Skater Girl — Elon Musk says skateboard chassis for battery electric vehicles will be “obsolete long term” because the benefits of optimising the battery for the specific vehicle body are too great to ignore. Tesla walked away from the skateboard some time ago (although repeated pictures of the same Model S chassis in a Tesla showroom mislabelled as a later vehicle have fooled many). But hearing Mr Musk say it out loud somehow matters more. What now for companies that have raised billions on the back of the skateboard technology?
• Don’t Worry Be Happy — VW CEO Diess says that by 2026, battery electric vehicles will be more economically effective than conventionally powered alternatives. Great news, but is that because they will become so cheap, or because internal combustion engines are getting more expensive? If the latter, then how can increasing car prices be consistent with ever growing industry volumes — unless price elasticity doesn’t exist anymore, or car makers plan to lower their margins?

News is arranged by company and topic. Stories that apply to more than one company or topic are duplicated.

Find our archive here.

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News about the major automakers

BMW ^(history)

• Released interim financial results for Q3 2020, saying that automotive free cashflow of €3 billion had vastly outstripped market expectations, but staying quiet on everything else. (BMW)
• BMW and Daimler’s mobility joint venture sold the Moovel multimodal app (they get a stake in the Deutsche Bahn subsidiary that took it over) (Daimler) and is reportedly considering a €1 billion offer from Uber for the FreeNow ride hailing division. Daimler is apparently more keen to sell than Daimler. (Manager Magazin)

Daimler ^(history)

• Reported Q3 2020 financial results. Revenue of €40.3 billion fell (7)% year-over-year whilst EBIT of €3.1 billion rose 14% versus prior year. Daimler said that cost cuts had more than offset volume and pricing losses. (Daimler)
• Daimler’s CFO dropped hints about a forthcoming all-electric Mercedes sports car. (Bloomberg)
• BMW and Daimler’s mobility joint venture sold the Moovel multimodal app (they get a stake in the Deutsche Bahn subsidiary that took it over) (Daimler) and is reportedly considering a €1 billion offer from Uber for the FreeNow ride hailing division. Daimler is apparently more keen to sell than Daimler. (Manager Magazin)

FCA ^(history)

• FCA says that the importance of online shopping for cars is growing rapidly. The company reckons that in 2019 about 25% of monthly sales came from a lead generated through browsing the internet. This year it is 45%. The company reckons that improving its website, and the variety of services that could be booked on it, increased internet traffic by 65%. (FCA)
• CEO Manley said European politicians needed to stump up more cash to help the automotive industry transition to electric vehicles. (Detroit News)

Ford ^(history)

• Ford’s launch autonomous vehicle will be a variant of the Escape hybrid (the Kuga in Europe). The company showed photographs of what it calls a “launch intent” model, but admitted that since self-driving doesn’t yet work, they can’t be sure. The car has two types of lidar sensor: a long range 128 line model and a series of shorter range units, augmented with “high resolution” (actual resolution not stated) cameras. Ford said it has added battery capacity over the retail product to better power the vehicle’s computing system but implied that it is not a plug-in version (although one is available) and no charging port is visible in the promotional video. (Ford)

Geely (includes Volvo) ^(history)

• Geely’s Emgrand brand (sold only in China) has reached 3 million unit sales. (Geely)

General Motors ^(history)

• Announced a $2 billion investment in the Spring Hill, USA, plant — plus smaller amounts in some other locations — to convert the facility over to make electric cars including the Cadillac Lyriq. (GM)
  • Significance: The sums involved, for an existing plant with around 250,000 units per annum capacity, show that manufacturers are currently spending far more on electric vehicle programs than for conventionally powered models, despite promises that all-electric vehicles would lead to simplification and reductions in investment. Since the Cadillac Lyriq is a 2^nd generation BEV, it seems we will be waiting until at least the third generation for GM’s spending to reduce.
• Says that 1 million US customers are paying for in-vehicle wi-fi, six years after the service launched. Unsurprisingly, vehicles that commonly carry passengers (i.e. big SUVs full of children) are the biggest source of demand. (GM)
• GM’s Cruise self-driving unit has been assessing the impact of coronavirus on the design of its Origin robotaxi. Eschewing the latest technologies for virus control, in particular UV light and cabin heating, the bran’s engineers reckon the way forward is a giant Perspex screen to separate passengers. (GM)
• Unveiled the long-awaited Hummer all-electric SUV. The car will boast extreme off-road capabilities and a massive price tag. Initial vehicles will be over $110,000 and although a version retailing at a mere $80,000 is planned, it won’t be available until two years after launch. (GM) The company quickly sold out of the launch version. (Reuters)
• GM’s president Reuss said negotiations with Nikola were “going forward”. (Detroit News)

Hyundai / Kia ^(history)

• Hyundai and Kia said that profits would be hit by a $(2.9) billion provision for engine quality issues. (Reuters)

PSA ^(history)

•  Faurecia reported Q3 2020 revenues of €3.874 billion, down (7.4)% versus prior year. (Faurecia)

Renault ^(history)

• Renault reported Q3 2020 revenues of €10.374 billion, down (8.2)% versus prior year. The company blamed exchange and sales to partners for most of the drop and said September figures showed that a recovery was underway. (Renault)
• Reporting healthy sales mixes for plugin hybrid vehicles in Europe. For September in France, Captur was 18% PHEV and Megane was 31%. (Renault presentation p. 8)

Tata (includes JLR) ^(history)

• Highlighting the level of testing required to confirm that technologies conform to automotive grade expectations, JLR announced that it is taking two years to assess a new range of composites and metals that are in consideration as materials for bodies in future range of vehicles. (JLR)

Tesla ^(history)

• Reported Q3 2020 financial results. Automotive revenue of $7.6 billion rose 42% versus prior year. Net income of $331 million rose 131%. For the second consecutive quarter, Tesla’s customer deposits number dropped. (Tesla)
• Regulators in China told Tesla to recall around 30,000 Model S and Model X cars because their suspension can fracture if it runs over large objects. (Bloomberg)
• Purchased a small manufacturing engineering company in Germany. (Manager Magazin)
• Released an updated self-driving software program to a limited set of drivers. Those trialling the system thought it was fantastic that their vehicles drove the entire route by itself. Tesla’s perilous warnings that the cars could make sudden dangerous manoeuvres at any time suggested a complete version could be some way away. (Electrek)
• Tesla’s earnings release included a summary page of the improvements targeted during the battery day presentation (for those who weren’t dedicated enough to take repeated screenshots of the YouTube video. (Tesla p. 12)
• CEO Musk said that even if lidar were free he wouldn’t use it in driver assistance. He also believes that Tesla is an “order of magnitude more vertically integrated than other car companies” (it isn’t). Musk also said that “skateboard”  battery electric vehicle chassis will be “obsolete long term”. (Seeking Alpha)

Toyota ^(history)

• Invested in robot kitchen start-up YPC Technologies. (Toyota)

VW Group ^(history)

• Porsche’s announcement about some new Panamera plugin hybrid offerings highlighted an interesting new trend: manufacturers have started talking about electric only ranges under the WLTP city cycle, rather than the full combined cycle (where range is worse, primarily due to higher speeds and less regenerative braking). (Porsche)
• Reportedly considering a restructuring of the reporting responsibility for Bentley which would see it fall under Audi’s purview. (Handelsblatt)
• CEO Diess says that electric cars will be cheaper than internal combustion engine ones by 2026. (Handelsblatt)
• Reportedly shopping the Ducati brand around to gauge interest. (Reuters)
• Bentley’s boss says a no-deal Brexit will reduce profits by (25)%. (Reuters)

Other

• Arrival published a blog post detailing the company’s approach to building low cost vehicle bodies (using moulded panels that have the finished colour and surface treatment built-in). Arrival believes that by developing some of the raw materials itself, and taking a rapid prototyping approach to tooling development, it will be able to optimise the panels better than peers (who typically struggle with surface finish and weight issues). (Arrival)
• Despite recent financial problems, Sono Motors is still up and running and hope to launch their solar power augmented car in 2022. (Sono Motors)
• Laureti revealed plans for a mobility ecosystem that will deploy the firm’s own brand vehicles, combined with software, to offer mobility as a service. (Laureti) Full disclosure: Ad Punctum has been involved in Laureti’s strategy and product development on a secondment basis.
• Byton’s CEO left the troubled company abruptly. (Manager Magazin)
• GM’s president Reuss said negotiations with Nikola were “going forward”. (Detroit News)

News about other companies and trends

Suppliers

• Magna announced a new CEO. Current CTO Kotagiri will take over on 1^st January 2021. (Magna)
• Autoliv reported Q3 revenues of $2.0 billion and operating income of $175 million. (Autoliv)
• Troubled supplier Arlington sold UK arm Magal Cables to Remsons Industries. (Economic Times of India)
• LG Chem said battery sales were on the up and it plans to triple capacity. (Reuters)
• Michelin announced Q3 2020 revenues of €5.5 billion, down (10)% year-over-year. (Michelin)
• Mahle is buying Keihin’s air conditioning unit. (Mahle)
• Continental reported initial Q3 2020 earnings. Revenues were €10.3 billion, free cash was €1.8 billion. (Continental)
• Veoneer reported Q3 2020 sales of $371 million and a $(103) million operating loss. (Veoneer)
• Faurecia reported Q3 2020 revenues of €3.874 billion, down (7.4)% versus prior year. (Faurecia)

Dealers

• Cloud-based retail software provider Tekion raised $150 million with investment from Exor. BMW, GM and the Renault-Nissan-Mitsubishi alliance are existing investors. (FINSMES)

Ride-Hailing, Car Sharing & Rental ^(history)

• Ride hailing firm Shouqi Yueche raised a nine figure sum in a series C round. (Deal Street Asia)
• BMW and Daimler’s mobility joint venture sold the Moovel multimodal app and is reportedly considering a €1 billion offer from Uber for its ride hailing division, with Daimler more keen to sell than BMW. (Manager Magazin)

Driverless / Autonomy ^(history)

• Thermal imaging camera developer Adasky raised $15 million. (Adasky)
• Nvidia claims that its latest AI chips have made step changes in performance over rivals. (Nvidia)
• Velodyne attacked the performance of emergency braking systems that rely on cameras in low light conditions and called for additional tests to be added that would show lidar’s superior performance. (Velodyne)
• Ford’s launch autonomous vehicle will be a variant of the Escape hybrid (the Kuga in Europe). The company showed photographs of what it calls a “launch intent” model, but admitted that since self-driving doesn’t yet work, they can’t be sure. The car has two types of lidar sensor: a long range 128 line model and a series of shorter range units, augmented with “high resolution” (actual resolution not stated) cameras. Ford said it has added battery capacity over the retail product to better power the vehicle’s computing system but implied that it is not a plug-in version (although one is available) and no charging port is visible in the promotional video. (Ford)
• GM’s Cruise self-driving unit has been assessing the impact of coronavirus on the design of its Origin robotaxi. Eschewing the latest technologies for virus control, in particular UV light and cabin heating, the bran’s engineers reckon the way forward is a giant Perspex screen to separate passengers. (GM)
• Tesla released an updated self-driving software program to a limited set of drivers. Those trialling the system thought it was fantastic that their vehicles drove the entire route by itself. Tesla’s perilous warnings that the cars could make sudden dangerous manoeuvres at any time suggested a complete version could be some way away. (Electrek)
• Tesla CEO Musk said that even if lidar were free he wouldn’t use it in driver assistance. (Seeking Alpha)

Electrification ^(history)

• Charging network EV Charge raised $15 million. (EV Charge)
• Romeo Power says it has a 1 MWh heavy vehicle battery pack available to serve the commercial vehicle market. Even at the most bullish end of price forecasts, such a unit would cost more than $80,000. (Romeo Power)
• Electronic components firm VisIC Technologies raised an unspecified amount in a series E round. (VisIC)
• VW CEO Diess says that electric cars will be cheaper than internal combustion engine ones by 2026. (Handelsblatt)
• Tesla CEO Musk said “skateboard”  battery electric vehicle chassis will be “obsolete long term”. (Seeking Alpha)

Other

• A new race series for production-based electric cars hope to launch in 2022. Seemingly inspired by the 1990’s video game Super Off Road (familiar to many Sega and Nintendo owners), the short course races will sprint over a few laps and include jumps, obstacles and water splashes. (SuperCharge)
• E-bike rental subscription service Dance raised $18 million. (TechCrunch)

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Fisker’s new groove; Foxconn’s bid for greatness; and Ford’s CO₂ miss. Please enjoy our auto industry and mobility briefing for 12^th October to 18^th October 2020. A PDF version can be found here.

Before you read the detail, what were my favourite stories of the past week…?

• We Belong Together — Fisker switched horses for the Ocean SUV’s platform, jumping from VW’s technology to Magna’s. Both companies say that the timing for production is unchanged and new cars will be on the road in two years, which seems a bit curious. How can you change the technology set and not change timing unless: (a) the vehicle hasn’t actually been engineered yet, so changing assumptions doesn’t matter, or (b) the contribution of the donor architecture is minimal, so switching it out is easy, in which case why refer to it in so many investor presentations?
• Open Arms — Foxconn showed off its new architecture for electric vehicles. The company hopes that various car makers will use it rather than creating their own underpinnings. But are Foxconn the right people to do this? And how can they convince others of the engineering merits if they aren’t making their own complete vehicle?
• Anytime You Need A Friend —Ford said that it will fail to meet its 2020 target for European CO₂ emissions. To avoid fines, the company plans to agree a deal with an unnamed rival to offset the underperformance. How did Ford get here? Unfortunately, the company pursued a strategy focused on compliance rather than an optimistic view of how quickly customers would adopt to zero emission travel. There are only two plugin hybrids in the European range (and only one in some markets) and a yet-to-arrive all-electric SUV. Doing the bare minimum seemed okay until the company had to recall plugin Kugas and stop sale of new units. Is that an unforced error or a consequence of being too clever?

News is arranged by company and topic. Stories that apply to more than one company or topic are duplicated.

Find our archive here.

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News about the major automakers

BMW ^(history)

• Created a scheme for owners of plug-in hybrid vehicles to encourage charging: for each kilometre driven in all-electric mode, drivers will get a credit towards free charging. In certain areas, the award doubles. The program will initially be available in Germany, Belgium and the Netherlands. (BMW)
• Will not use VDL’s Nedcar plant, which builds Mini and BMW X1 on a contract basis, after 2023. (Dutch News)
• Published a series of principles for the application of artificial intelligence within BMW. Viewers of the Terminator films will be familiar with the background to many of them. (BMW)
• Daimler and BMWs mobility joint venture is reportedly looking to offload its parking unit. (Bloomberg)

Daimler ^(history)

• Reported preliminary financial results (because they were better than the market was expecting). Group EBIT was €3.071 billion and cars and vans EBIT was €1.782 billion. On an adjusted basis, cars and vans EBIT of €2.1 billion represented a 9.4% margin on sales. Industrial free cash flow was €5.139 billion. (Daimler)
• Launched an insurance joint venture with Swiss Re, called Movinx. (Daimler)
• Daimler and BMWs mobility joint venture is reportedly looking to offload its parking unit. (Bloomberg)

FCA ^(history)

• Reached a tentative contract agreement with Canadian unions, but declined to reveal the terms. (FCA) Unions said FCA had agreed to invest up to $1.5 billion in its primary Canadian factory to build electric cars. (Reuters)

Ford ^(history)

• Admitted that because of problems with the Kuga PHEV, it will have to pool emissions with a rival group to meet 2020 EU CO₂ targets and avoid fines. It isn’t clear how much the pooling agreement will cost, or who Ford will pool with although Renault remains a possibility. (FT)
• Reckons that moving to an electronic manual for the F-150, stored within the infotainment system, saves 290 tons of paper each year (not to mention hundreds of thousands of dollars). (Ford)
• Sold 164,532 vehicles in China during Q3 2020, up 25.4% on a year-over-year basis. (Ford)
• Sold 299,632 vehicles in Europe during Q3 2020, a drop of (4.2)% versus prior year. (Ford)
• Recalling over 5,000 vehicles to replace faulty engine and vehicle computers that affect engine cooling, tyre pressure monitoring and control of the daytime running lights. (Ford)
• Because of continued problems with the Kuga PHEV in Europe, Ford is delaying the launch of the Escape PHEV (the same vehicle) in North America. (Europa Press)

Geely (includes Volvo) ^(history)

• Volvo’s self-driving unit, formed through the dissolution of the Zenuity joint venture previously owned with Veoneer, will be called Zenseact. (Volvo)

General Motors ^(history)

• Taking a leaf out of Tesla’s PR playbook, GM announced that the Detroit-Hamtramck, USA, factory will need a new name to signify that the future is now and everyone needs to forget about everything they ever though they knew about car building. From now on, the plant will be called Factory ZERO. (GM)
• GM’s Chinese sales of 771,440 vehicles in Q3 2020 rose 12% on a year-over-year basis. (GM)
• GM’s Cruise self-driving unit will soon start testing in San Francisco without safety drivers. (Cruise)

Honda ^(history)

• Successfully completed the tender offer of portfolio companies Keihin, Nissin Kogyo and Showa, enabling a merger of the three units with Hitachi Automotive. (Honda)

Hyundai / Kia ^(history)

• Hyundai family scion Euisun Chung became the firm’s new chairman. (Hyundai)
• Hyundai’s new Singapore plant will have a Fiat Lingotto-esque test track on the roof. (ET)

Nissan and Mitsubishi ^(history)

• Mitsubishi unveiled a facelift for the Eclipse Cross. (Mitsubishi)
• Nissan’s US finance company will pay $4 million in fines for improperly repossessing vehicles. (Reuters)

PSA ^(history)

• Sold 588,576 vehicles in Q3 2020, down (13)% on a year-over-year basis. (PSA)

Renault ^(history)

• Sold 806,700 vehicles in Q3 2020, down (6)% on a year-over-year basis. (Renault)
• Held an electric vehicle event called Renault EWays. The firm said that by 2050 all vehicles sold in Europe will be zero emission. If recent political promises are followed through, Renault may find the aspiration has to be brought forward. A “concept” battery electric Mégane was also on display. Renault says a production version will go on sale in 2021. (Renault)
• Unveiled a minor refresh of the Twingo city car, and an all-electric version. (Renault)
• Lost a legal case against Borgward. A judge ruled that Borgward’s logo was sufficiently different from Renault’s tha there was no trademark infringement. (Borgward)
• Drew some of the state backed €5 billion loan because it was due to expire at the end of the year and the CFO felt it would have been a shame not to use it. (Reuters)
• Sold off the Marcel ride hailing business. (Les Echos)

Subaru

• The head of Subaru’s US unit reckons industry volumes will take three years to return to 17 million units. (Reuters)

Tesla ^(history)

• Construction at the Berlin factory was halted because Tesla hasn’t paid its water bills and the utility gladly explained that it would get the same treatment as everyone else who falls into arrears. (Manager Magazin)
• CEO Musk said that there would be a “beta” release of full self-driving next week. (Twitter)

Toyota ^(history)

• Toyota Tsusho invested in Data Integrated (DIL) a Kenyan firm that aggregates informal bus operators. (Toyota)
• Recalling around 3,100 Highlander vehicles in the USA because incorrectly fitted seat fabric could stop airbags from working properly. (Toyota)
• Local Motors raised $15 million from the VC fund that includes Toyota as one of its main backers. (Local Motors)

VW Group ^(history)

• Porsche has upped its sustainability game, participating in a responsible sourcing initiative for mica, a raw materials used in some car paints. (Porsche)
• Navistar and Traton reached a tentative agreement for Traton to take over the US firm, in which it already owns a minority stake. (VW)
• VW unveiled the Tarek small crossover (to be called Taos in some markets). (VW)

Other

• Arrival received $118 million in funding (Reuters) and celebrated by announcing announced a new factory, initially for buses, in South Carolina, USA. (Autocar)
• Electric bus maker Proterra announced a $200 million investment round. (TechCrunch)
• Workhorse raised $200 million in debt. (Workhorse)
• Fisker will no long use VW’s MEB platform for the forthcoming Ocean SUV, instead it will sit on Magna’s electric vehicle architecture. The car will be built in Magna’s plant (as already announced). (Magna)
• Lucid opened its order book for the all-electric Air. (Lucid). Karma did likewise for the GSe-6. (Karma)
• Local Motors raised $15 million from the VC fund that includes Toyota as one of its main backers. (Local Motors)
• Nikola’s CEO said that if the company didn’t agree a technology sharing and manufacturing agreement with GM then it could go it alone to build the Badger pickup, or drop it altogether. (Bloomberg)
• Bollinger’s founder says lots of special purpose vehicles have been offering him deals but he hopes to wait until his company has risen in value before considering a public listing. (Bloomberg)
• Foxconn unveiled the MIH Open Platform, hoping that the technology set can underpin cars from a variety of different brands. (CNBC)

News about other companies and trends

Economic / Political News

• European passenger car registrations in September of 1,300,048 units rose 1.1% on a year-over-year basis. (ACEA)

Suppliers

• Liberty House bid for ThyssenKrupp’s steelmaking unit. (Industry Europe)
• Valmet sold off its German vehicle engineering business. (Valmet)
• Honda successfully completed the tender offer of portfolio companies Keihin, Nissin Kogyo and Showa, enabling a merger of the three units with Hitachi Automotive. (Honda)
• Magna will supply the electric vehicle architecture for Fisker to use for the forthcoming Ocean SUV, replacing VW’s MEB component set. (Magna)
• VDL’s Nedcar plant, lost the contract to build the Mini and BMW X1 after 2023. (Dutch News)
• TomTom reported Q3 revenues of $148 million and a net loss of $(67) million. (TomTom)

Ride-Hailing, Car Sharing & Rental ^(history)

• Car sharing firm Getaround raised $140 million. (Auto Rental News)
• Uber is investing $150 million in a South Korean ride hailing joint venture with SK Telecom. (Reuters) The firm is rumoured to be looking to offload part of its flying taxi business. (Reuters)
• Hertz raised $1.65 billion in debt to help it survive bankruptcy proceedings. (Auto Rental News)
• Toyota Tsusho invested in Data Integrated (DIL) a Kenyan firm that aggregates informal bus operators. (Toyota)

Driverless / Autonomy ^(history)

• Innoviz says that its next lidar sensor will cost less than $500. (Reuters)
• GM’s Cruise self-driving unit will soon start testing in San Francisco without safety drivers. (Cruise)
• Tesla CEO Musk said that there would be a “beta” release of full self-driving next week. (Twitter)

Electrification ^(history)

• Battery maker LG says it is in talks with several OEMs about creating joint ventures. (Reuters)
• The Indonesian government is championing a plan to create a battery champion and says that, together with foreign partners, it will invest $12 billion in new factories. (Reuters)

Connectivity

• TomTom and Uber signed a new agreement for maps, which will give Uber the ability to edit. (TomTom)

Other

• Electric motorcycle maker Ultraviolette hopes to raise $75 million. (Deal Street Asia)
• Singaporean electric motorcycle developer Ion Mobility raised $3.3 million. (Deal Street Asia)

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Marvellous electric skateboards; Renault’s late CO₂ credit gambit; and timid Tesla. Please enjoy our auto industry and mobility briefing for 5^th October to 11^th October 2020. A PDF version can be found here.

Before you read the detail, what were my favourite stories of the past week…?

• Wannabe — Electric axle maker REE showed off three new skateboards for different all-electric vehicles. If you think that sounds unremarkable, I agree. Many companies have recently revealed similar designs, often raising hundreds of million based on these displays of engineering prowess. But if a small, obviously talented but small, team with relatively little funding can produce such products then either: they aren’t as complete as they seem (my vote) or this is all actually very easy and there is no massive competitive advantage. How many of these electric skateboards have made it into production underpinning a variety of vehicles again? If you were going to say Tesla, then one further question… why don’t Tesla display rolling chassis of the Model 3 in their showrooms like they used to with the Model S?
• Independent Women Part 1 — Renault volunteered to share European CO₂ compliance with interested competitors, not for free of course (the link takes you to the document filed to declare this). It’s a bit late in 2020 to be organising such a deal, but perhaps that is because everyone they’ve asked informally (e.g. Nissan, Mitsubishi and Daimler) is comfortable with where they will end up. Will anyone take Renault up on their offer?
• Push It — Tesla will put its new, larger, batteries into production in the Berlin plant first and won’t install them in models in Shanghai and California until they’ve proved there are no quality problems. This doesn’t sound like the Tesla I know. Should we expect to see a similarly cautious rollout of all new technologies from now on? Whatever happened to just trying it out and seeing what happened? Are Tesla getting boring in their old age?

News is arranged by company and topic. Stories that apply to more than one company or topic are duplicated.

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News about the major automakers

BMW ^(history)

• Sold 675,680 cars in Q3 2020, up 8.6% on a year-over-year basis. (BMW)
• BMW’s CFO says the transition to electric powertrain is accelerating and indicated that the company is interested in deeper collaboration in developing and building internal combustion engines. (Handelsblatt)

Daimler ^(history)

• Sold 721,608 light vehicles in Q3 2020, up 2.4% on a year-over-year basis. (Daimler)
• Presented details on an updated strategy. The core of the plan is cutting unprofitable models, regaining pricing power for the Mercedes-Benz brand and growing volume through sub-brands AMG, G (class) and Maybach. Smart (in future a joint venture with Geely) was not mentioned at all during the presentation. The Maybach brand aims to double sales, partly through growth in electric offerings. There was a subtle difference in nomenclature between AMG “high performance electrification” (probably code for powerful plug in hybrids) and G-Class and Maybach “go(ing) electric”. (Daimler)
• Alongside new portfolio priorities, the Mercedes brand expects to increase profits from aftersales, both through improved loyalty to the official dealer network (who use official spare parts), something that normally drops significantly at the end of the warranty period; and sales of digital products (which are increasingly becoming a service that customers must pay for every few years). The hope is that service and parts revenues will grow 80% by 2025 and digital services will bring €1 billion of EBIT by 2025, although Daimler was light on the specific actions that will lead to such spectacular growth. (Daimler)
• On electric vehicles, Daimler says that the downward trend in battery costs has made the company realise that the transition to zero emissions powertrain will be quicker than expected (although strangely the mid-2025 cost data point is the same as Daimler presented at Paris in 2016). Daimler says the initial products will be solidly profitable, which from 2025, new products will have “strong contribution margins” (a slightly odd emphasis since contribution margin is not the same as bottom line profitability). The number of all-electric vehicles promised by 2025, more than 10, seems like a slight retrograde step from an earlier level of 10 by 2022, but it seems the new aspiration does not include Smart. In plugin hybrids, the company hopes to outpace competitors by offering substantially higher battery capacities, and longer range, than rivals who are clustering at the level need for just over 50km of zero emissions driving. After launch of the initial range of electric cars, Daimler will start building vehicles on the MMA platform, designed around an “Electric First” philosophy which will offer a range of all-electric and hybrid powertrains. Daimler also made GM-like claims about leadership in electric motor design and the value of in-house battery expertise. (Daimler)
• Daimler says that it will have a proprietary OS, MB.OS, but presented a narrower view of the scope than some rivals. The vision is to serve primarily as an integrator of third party work, with very little of the basic program being the sole preserve of Daimler’s in-house engineering teams. Instead Daimler will set standards for both software and hardware that ensure interoperability, and concentrate on programming customer-facing features. (Daimler)
• Without revealing much on specifics, Daimler committed to shrinking fixed costs by 20% compared to 2019 through reduced spending and headcount. Capital spending and R&D are forecast to fall by 20%, with Daimler expecting portfolio reduction, and their approach to electrification, to help trim costs. Variable costs are also set to reduce by 1% each year, but since this figure excludes the product cost impact of transitioning to electric vehicles, the number might actually rise. Daimler is now planning for three 2025 scenarios. In the worst case, implied margin targets are the classic 5% – 7.5% industry promise. In the best case they are “double digit” (implying 10% – 12%). (Daimler)
• CEO Källenius flatly denied suggestions that he was interested in buying Aston Martin. (Autocar)
• Settled a legal action brought by Sharp over use of its patent portfolio. (Reuters)

Ford ^(history)

• Told US office employees to expect to work from home until June 2021. (Detroit News)

Geely (includes Volvo) ^(history)

• Geely and Lynk&Co sold 345,026 cars in Q3 2020, up 13% on a year over year basis. The Lynk&Co brand alone rose 54% from the prior year. (Geely)

General Motors ^(history)

• Invested in holographic head-up display specialist Envisics. (TechCrunch)
• The forthcoming all-electric Hummer will use Epic’s Unreal Engine — hitherto a piece of software used in dynamic computer games — in the infotainment system. (Unreal)
• Reportedly struggling to build enough Corvette’s to fulfil demand. GM has apparently increased output at the factory but is now finding that suppliers can’t keep up. (Auto Evolution)

Honda ^(history)

• Unveiled a facelift for the Ridgeline pickup truck. (Honda)

Hyundai / Kia ^(history)

• Hyundai sold 1.01 million vehicles in Q3 2020, down (8)% on prior year. (Hyundai)
• Hyundai Mobis invested in holographic head-up display specialist Envisics. (Hyundai Mobis)
• Recalling around 25,500 all-electric Kona cars because defective batteries could catch fire. (Reuters)

Nissan and Mitsubishi ^(history)

• Nissan’s CEO says he is open to the idea of supplying competitors with electric vehicle technology and believes that the transition to electric powertrain will lead to an industry restructuring. (Nikkei)

PSA ^(history)

• Vauxhall’s boss says the area of the UK market with the greatest unstimulated demand for fully electric vehicles is in the 1T – 2T van segment. (Autocar)
• Unveiled a facelift for the Opel / Vauxhall Crossland. (Opel)

Renault ^(history)

• Registered an interest in forming a pool for European CO₂ sharing in 2020. The move indicates that Renault has beaten its 2020 targets and is in a position to offer relief to other car makers — for a price. As yet, no one seems to have taken LEVC up on their similar (although likely smaller) offer so demand is unclear. (EU)
  • Significance: Since Renault has gone public with an offer to form a pool at this late stage (a few weeks before the end of the year), it suggests that private conversations with the most likely partners — Nissan, Mitsubishi and Daimler — have revealed that they are on an independent path to compliance.

Tata (includes JLR) ^(history)

• Sold 202,873 vehicles in Q3 2020 (of which JLR was 91,367), down (16)% on a year-over-year basis. (Tata)

Tesla ^(history)

• According to a leaked internal email, Tesla fired an employee who sabotaged production lines, causing several hours of downtime. (Bloomberg)
• Media was abuzz with the story of a Model Y’s roof flying off the car shortly after the owner had taken delivery. Thus far it appears to be an isolated incident. (The Verge)
• CEO Musk said that the new larger, battery cell design will first be used in the new Berlin, Germany, plant with US and Chinese factories switching once quality has been demonstrated. (Reuters)
• Indonesian officials said that they held talks with Tesla about investment. The focus was seemingly more on raw materials rather than car making. (Reuters)
• Launched a charging station in partnership with European charging network operators Fastned, enabling owners of other vehicles to charge alongside Teslas (but not using exactly the same chargers). It isn’t clear whether the initative will be replicated on a larger scale. (Clean Technica)

Toyota ^(history)

• Announced a series of partnerships to put fuel cells into heavy trucks and trains. (Toyota)

VW Group ^(history)

• Bugatti has shelved plans for a second model. (Fox)
• Škoda workshop technicians have been issued with an acoustic conditioning monitoring app that compares recordings of the noises a car with problems is making to a library of known issues. (Škoda)
• VW’s local importer thinks that 90% of the cars the brand sell in Norway during 2021 will be electric. (Reuters)
• Audi’s plant in Puebla, Mexico faced accusations from local officials that utility bills and property taxes were in arrears — and threats to close it until payments were made. Audi said it was a fuss about nothing. (Reuters)

Other

• Nio sold 12,190 cars in Q3 2020, up 154% versus prior year, mainly due to full production of the ES6 and increased demand for the refreshed ES8. (Nio)
• Faraday Future is working on a plan to list via a merger with a special purpose vehicle. (Reuters)
• A third party converter is offering a LEVC hybrid taxi with an overhauled interior that features more expensive materials, hoping to capture the interest of upmarket private hire operators. With a price tag of £100,000 before taxes, there may not be many takers. (Autocar)
• Rivian has delivered its first delivery van tailored to Amazon’s requirements. (TechCrunch)

News about other companies and trends

Economic / Political News

• US light vehicle SAAR in September of 16.34 million units fell (5)% versus prior year. (Wards)
• UK passenger car registrations in September of 328,041 units, fell (4.4)% on a year-over-year basis. The industry’s trade body had been hoping sales would bounce back, and sounded glum. (SMMT)
• German passenger car registrations rose 8.4% versus prior year in September, to 265,227 units. (KBA)
• September Spanish sales of 70,729 passenger cars fell (13.5)% versus prior year. (ANFAC)
• Italian passenger car sales rose 9.5% on a year-over-year basis in September to 156,132 units. (UNRAE)
• French registrations of 168,290 passenger cars in September fell (3.0)% versus prior year, even with extra selling days. (CCFA)

Suppliers

• Grammer’s preliminary Q3 2020 revenue was €458 million, with EBIT of €6 million. (Grammer)
• Romeo Power — 20% owned by BorgWarner — is listing through a merger with a special purpose entity. The firm’s claimed special sauce is in using proprietary measurement techniques to choose best of the best battery cells and then using its own pack designs and power electronics to make the most of them. (Romeo Power)
• German government officials gave a lukewarm response to union calls for a bailout of Thyssenkrupp’s steel making unit, but didn’t rule it out. (Reuters)
  • Significance: If the German government does eventually offer support, expect domestic suppliers to be queuing around the corner, demanding similar treatment.
• Holographic head-up display developer Envisics raised $50 million from investors including Hyundai Mobis, GM and SAIC. (TechCrunch)

Driverless / Autonomy ^(history)

• Waymo is almost ready to let anyone ride in its driverless vehicles, without safety drivers. (Reuters)
• Velodyne and rival lidar developer Robosense announced a collaboration that will share them market each other’s technologies and settle a court case between the two. (Velodyne)
• Autonomous truck developer Einride unveiled a concept for a driverless vehicle it hopes to put into production in 2021. (The Verge)

Electrification ^(history)

• Inobat claims to have developed a new battery that boasts world-class energy density in “only a year”. (Inobat)
  • Significance: The challenge for battery makers is not to create huge energy density — McLaren already claim levels of 5.2 kW/kg, about twenty times the level seen in the latest batteries today — they need to be affordable enough to put in mainstream cars.
• Electric motor maker REE showed off three platforms for different sizes of vehicle, all of which use hub mounted electric motors. (REE)
  • Significance: The fact that REE can show off three different all-electric rolling chassis should give many observers pause for thought. Although each company marketing an electric “skateboard” touts their engineering prowess, the reality is that bolting four wheels onto a series of electric motors, some power electronics and a floor stuffed with batteries is a far cry from resolving the technical challenges needed to mount a variety of vehicle body styles on top of it.
• Powertrain engineering firm FEV is touting internal combustion engines as an entry level route to hydrogen as a power source. (Autocar)
  • Significance: Although hydrogen burning internal combustion engines are inefficient compared to fuel cells and still emit nitrogen oxide, their lower cost and simpler technology, plus the capability of diesel-derived after treatment, mean that they may be an attractive entry level product in countries with poor infrastructure.
• The boss of PSA’s Vauxhall brand says the area of the UK market with the greatest unstimulated demand for fully electric vehicles is in the 1T – 2T van segment. (Autocar)
• Tesla launched a charging station in partnership with European charging network operators Fastned, enabling owners of other vehicles to charge alongside Teslas (but not using exactly the same chargers). It isn’t clear whether the initative will be replicated on a larger scale. (Clean Technica)

Connectivity

• Otonomo published the results of a consumer study about future trends. Pages 28 and 29 include statistics on what the respondents think connected car data it for, and receptiveness to certain service types. (Otonomo)
• GM’s forthcoming all-electric Hummer will use Epic’s Unreal Engine — hitherto a piece of software used in dynamic computer games — in the infotainment system. (Unreal)

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Audi’s post-purchase upgrades; Ford’s inauspicious price drop; and Tesla’s lack of clarity. Please enjoy our auto industry and mobility briefing for 28^th September to 27^th 4^th October 2020. A PDF version can be found here.

Before you read the detail, what were my favourite stories of the past week…?

• Beneath The Surface — Audi took a leaf out of Tesla’s book and began standardising more expensive equipment, even if the customer didn’t order it. Owners can pay a fee to enable new features, or just stick with the more basic performance. Audi will enable the new kit for a few weeks so that drivers can feel the difference, and hopefully pay up to keep it activated. Unlike Tesla which focused on batteries and driver assistance, Audi have pumped for better lights. When will we see other brands jump on the bandwagon?
• On The Run — Ford cut the price of the all-electric Mustang Mach E even though it hasn’t yet been released. The company says it has plenty of orders but wants to stay competitive. Ford won’t be the first to incorrectly appraise pricing power: the product was conceived when there were few all-electric SUVs around, so product planners decided to shoot for the upper end of the market. Imagine their surprise when, a few years later, they discover that lots of competitors have designed similar products and Tesla and VW are planning to sell theirs more cheaply. Why is forecasting the future competitor set such a consistent weakness?
• The Mask — Tesla released quarterly production and delivery numbers. Although it is the largest car maker by market capitalisation, and thrives on an image of giving in-depth technical presentations, Tesla lacks transparency. It only has two car factories and makes two models, yet sales are reported without a regional breakdown, factory output is hidden and model line sales are aggregated — far more vague than competitor reporting. Since Tesla loves to trumpet its growth, why make the detail of how it is happening so opaque?

News is arranged by company and topic. Stories that apply to more than one company or topic are duplicated.

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News about the major automakers

BMW ^(history)

• Uber has been rumoured as a future owner of BMW and Daimler’s ride hailing joint venture. (Business Times)

Daimler ^(history)

• Uber has been rumoured as a future owner of BMW and Daimler’s ride hailing joint venture. (Business Times)
• The head of Daimler’s trucks division is retiring, to be replaced by a recruit from Scania. (Daimler)

FCA ^(history)

• Sold 507,351 vehicles in the USA during Q3, down (10)% versus a year earlier. (FCA)
• Agreed to pay a $9.5 million fine to settle an investigation by the US SEC into how FCA reported emissions compliance at the beginning of 2016. (FCA)
• PSA and FCA announced the intended membership of Stellantis, the company they will form by merging. The board will be made up of 11 members, with five nominated by each company, plus CEO-designate Tavares. (PSA)

Ferrari

• Unveiled a minor refresh to the Portofino convertible. (Ferrari)

Ford ^(history)

• Sold 551,796 vehicles in the USA during Q3 2020, down (5)% on a year-over-year basis. (Ford)
• Announced a series of executive changes, one of which sees still relatively recent CFO Stone leave the company to be replaced by long time finance insider John Lawler. CEO Farley promised that Ford will have a much more disciplined approach to capital allocation saying the firm would act “like a challenger”. He will announce a new CIO and CMO, plus backfill for Lawler as head of new businesses in due course. (Ford)
• Cut the prices of the all-electric Mustang Mach E, even though the model hasn’t yet launched. Ford said it was to remain “fully competitive”, observers were confused as to why there would be price reductions when Ford claims massive retail interest. (Detroit Free Press)
• Recalling over 700,000 vehicles in North America because the rear-view cameras sometimes blank out and about 10,600 trucks to fix steering problems. (Ford)
• Introducing mobile servicing in certain Indian cities. (Autocar)

Geely (includes Volvo) ^(history)

• Polestar is recalling 2,200 cars to fix software problems that have led to vehicles unexpectedly losing power, even when in motion. The software has to be updated manually, rather than over the air. (Reuters)
• Volvo sold 181,163 cars during Q3 2020, up 9% versus prior year. (Volvo)

General Motors ^(history)

• GM and Nikola has reportedly returned to the negotiating table to hammer out the finer points of their technology sharing and contract manufacturing deal, especially since the present value of GM’s stake in Nikola has dropped since the initial agreement was announced. (Detroit Free Press)
• Sold 665,192 vehicles in the US during Q3 2020, down about (10)% on a year-over-year basis. The firms said that dealers were doing “exceptionally well”. (GM) Sales in Canada were down (10)% YoY too. (GM)
• Investing $71 million in a transmission and casting plant. (GM)
• Buick unveiled the Electra concept car, an all-electric low-riding crossover, (GM)

Honda ^(history)

• Will withdraw from supplying F1 engines at the end of 2021. Honda says it wants to redeploy the team currently charged with building the high power motors to develop zero emission technologies instead. The firm will continue to provide engines for IndyCar. (Honda)

Hyundai / Kia ^(history)

• Giving European electric vehicle customers membership of a pan-European charging card that uses BMW and Daimler’s Change Now service. (Hyundai)

PSA ^(history)

• PSA and FCA announced the intended membership of Stellantis, the company they will form by merging. The board will be made up of 11 members, with five nominated by each company, plus CEO-designate Tavares. (PSA)

Renault ^(history)

• French unions said that, whilst they understood why Renault says it needs to cut costs, they don’t agree with the process the company is using. (Reuters)

Tesla ^(history)

• Reported Q3 2020 deliveries of 139,300 cars, up 44% on a year-over-year basis. Observers were slightly disappointed by the performance of Model 3 and Model Y because deliveries of 124,100 units were only around 35%  higher than Q4 2019’s figure of 92,500, despite the addition of a much vaunted new factory in China and the availability of the Model Y. (Tesla)
  • Significance: Tesla’s overall volume growth seems slightly lacklustre given the additions. The analysis is made problematic by Tesla’s lack of transparency. Despite being the largest car maker by market capitalisation, the company blends model line sales rather than reporting them separately, and doesn’t talk about production levels at its various sites.
• Reportedly plans to acquire battery manufacturing line expert ATW Automation. (Reuters)
• Tesla’s Autopilot received an underwhelming performance score compared with rivals in a test organised by the NCAP program – although it was rated best for avoiding accidents. (Reuters)
• Rumoured to be interested in taking a minority stake in LG’s battery unit. (Reuters)

Toyota ^(history)

• An executive said at a conference that Toyota might meet its existing target of selling 5.5 million electrified vehicles each year in 2025, five years ahead of schedule. Toyota said it wasn’t a formal target restatement. (Reuters)

VW Group ^(history)

• Scania made a further investment in battery producer Northvolt. (VW)
• Audi launched a new brand campaign, supplementing “Vorsprung durch Technik” with “future is an attitude”. (Audi)
• Agreed a deal to acquire Hella’s forward facing machine vision unit. (VW)
• Experimenting with a Tesla-like approach of building all cars (of selected model lines) in Germany and Norway with high series lighting and infotainment, and then downgrading the performance through software unless the customer pays a fee (which they can do via a mobile phone app of website). Customers can even try out the functionality for a month before committing to the purchase. (Audi)
  • Significance: Audi is betting that the additional cost to install the package on all cars, even if customers don’t activate the features, is likely outweighed by: production simplification, economies of scale, better residual values and higher take rates.
• Despite restrictions on work due to coronavirus, 317 VW Group employees got themselves fired in the first six months of 2020. It isn’t easy to do so — a group of employees who stopped production by having a barbeque in the middle of the factory got away with a warning and a fine. (VW p. 4)
• Reportedly making Lamborghini operate on an more arms-length basis with a view to a public listing. (Reuters)
• CEO Diess says the firm will make a series of important decisions about the future during 2020. (Manager Magazin)

Other

• GM and Nikola has reportedly returned to the negotiating table to hammer out the finer points of their technology sharing and contract manufacturing deal, especially since the present value of GM’s stake in Nikola has dropped since the initial agreement was announced. (Detroit Free Press) Nikola’s recently departed founder is now mired in sexual assault allegations (unrelated to his time at the firm), which he denies. (Economic Times of India) The company tried to battle the doubters by publishing a set of milestones that will see battery electric and fuel cell powered heavy trucks in production by 2023. The Badger pickup wasn’t mentioned, indicating perhaps that delivery is dependent on support from GM. (Nikola)
• Piëch recruited former Porsche boss Matthias Müller to be chairman. (Handelsblatt)
• HAAH’s bid for Ssangyong might attract support from a South Korean state bank. (Korea Times)
• Evergrande’s parent agreed a restructuring deal that avoids a massive share repurchase which was threatening its property development business. (Reuters)
• FAW has reportedly cooled its interested in truck maker Iveco. (Reuters)
• Karma will contract manufacture electric vehicles for AYRO. The plan is to build over 20,000 vehicles with a reported contract value of $300 million, suggesting that parts supply is involved too. (Karma)

News about other companies and trends

Economic / Political News

• Several premium manufacturers including BMW, Daimler and JLR found themselves unable to refute allegations that their cars use leather from cattle ranches in Paraguay that are accused of destroying the local environment, because their could only trace their supply chain back to the tannery. (Economic Times of India)
• The UK auto makers’ trade body expressed disappointment at the direction of post-Brexit trade talks with the EU saying that the industry should be “prioritised in negotiations, not traded off against other industries”. (SMMT)

Suppliers

• Mahle and Ballard will collaborate on fuel cell systems for commercial vehicles. (Mahle)
• Bodybuilder Shyft acquired smaller rival F3 MFg. (Shyft)
• Adient completed the sale of its fabrics business to an Asahi Kasei subsidiary. (Adient)
• BorgWarner completed the acquisition of Delphi. (BorgWarner)
• Grammer and Samsung’s Harman are collaborating on seat headrests that incorporate speakers. (Grammer)
• Continental’s board approved a restructuring program that will see two German plants close. (Continental)
• Electronics supplier Pateo is hoping to raise almost $150 million ahead of a public listing. (Reuters)
• VW agreed terms for the acquisition of Hella’s forward facing machine vision unit. (VW)

Dealers

• UK online used car seller Cazoo raised £240 million. (TechCrunch)
• Indian online car marketplace Droom acquired augmented reality firm Visiolab Ideas. (Autocar)

Ride-Hailing, Car Sharing & Rental ^(history)

• Via acquired fleet management software developer Fleetonomy. (Via)
• Uber is rumoured to be a future owner of BMW and Daimler’s ride hailing joint venture. (Business Times)
• Uber was allowed to renew its licence in London after a court ruled against a decision by the city’s transport regulator. It was then rival service Ola’s turn, as the regulator identified the company an operating licence for similar, safety, reasons. Ola is likely to appeal. (BBC)
• A private equity firm invested $500 million in Uber’s freight division. (Reuters)
• Ride hailing firm Bykea raised $13 million. (Deal Street Asia)
• South Korean firm Humax is launching a white label fleet mobility service incorporating fleet management, servicing and charging. (Humax)

Driverless / Autonomy ^(history)

• Autonomous delivery vehicle developer Einride raised €8.5 million. (EU Startups)

Electrification ^(history)

• In-wheel motor developer Elaphe Propulsion Technologies raised €4 million. (Elaphe)
• Total is buying Bollore’s charging network in London. (Reuters)
• Battery maker SVOLT, a spin-off from Great Wall, is hoping to raise up to $440 million. (Reuters)
• Mahle and Ballard will collaborate on fuel cell systems for commercial vehicles. (Mahle)
• Northvolt raised $600 million. (PV Magazine)

Other

• Electric scooter rental firm Neuron Mobility raised $12 million. (Deal Street Asia)

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