Cheap electric vehicles get more wheels; selling without a storefront; and how far can the Porsche brand stretch? Please enjoy our auto industry and mobility briefing for 25th February to 3rd March 2019.
Before you read the detail, what were my favourite stories of the past week…?
- Weight Of Living — Scooter rental firm Gotcha thinks that trikes are the way forward, probably because you can sit rather than stand. It can surely only be a matter of time before someone offers a four-wheeler, perhaps citing stability benefits. If so, will these vehicles look like two scooters lashed together or could someone hit upon a design for very low-cost, yet reliable, electric vehicles along the way?
- Thrift Shop — Tesla says physical dealerships are old news and the firm is moving to online sales. Only time will tell whether the move is genius or unmitigated disaster. It certainly flies in the face of all convention to aim for industry leading volumes (half a million units per year) without using all the available tools to attract as many buyers as possible. Using Model 3 numbers to justify the move (~80% of buyers used the online portal) could be dubious — the 2018 sales came from people who signed on as depositors before launch. Will buyers unable to kick the tyres in 2020 make the same purchase decision?
- Perfect To Me — Porsche says that the next generation Macan will be all-electric. The move makes sense in the context of helping the wider VW Group with emissions targets but can the brand position itself as the true home of electrification (Taycan / Cross Turismo / Macan) and petrol-headed driving pleasure (911 / 718)?
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
- Agreed to
pool self-driving technology efforts with Daimler, but only for SAE Level 3 and
4, aiming to release technology in the mid-2020s. The parties will continue
with individual efforts on SAE Level 5 technologies, but remain open to
discussion on sharing those too. (Daimler)
- Significance: It makes sense to collaborate but the exclusion of Level 5 seems arbitrary. Given that most specialists struggle to explain a practical difference between the sensor set and AI of Level 4 and Level 5 vehicles (although differences in capability are obvious), it remains unclear how BMW and Daimler will avoid crossover with the development of the higher ability systems — unless they believe that in coming years, geo-fenced autonomy will be possible with lower order sensors, something that at present only Elon Musk is openly saying.
- Fined €8.5 million by German prosecutors for installing the wrong engine management software in about 8,000 vehicles. (Reuters)
- Invested in ride hailing firm Zūm, which has a service aimed at ferrying children around. (TechCrunch)
- Created a blockchain-based prototype sourcing ledger that can track materials across multiple stages of product creation and certify their origin. (Daimler)
- Agreed to pool self-driving technology efforts with BMW, but only for SAE Level 3 and 4, aiming to release technology in the mid-2020s. The parties will continue with individual efforts on SAE Level 5 technologies, but remain open to discussion on sharing those too. (Daimler)
- Scheduling down days at the Vitoria plant due to reduced demand for diesel vehicles. (Europa Press)
- Daimler Buses acquired a 5.25% stake in fleet management software company IVU. (Daimler)
- Announced a $4.5 billion investment (some of which had been reported previously) to revamp five plants in Michigan, USA for Jeep and pick-up products. The largest single amount — $1.5 billion — will be spent to convert the Mack Avenue engine plant to one that makes vehicles. (FCA)
Ferrari
- Released photographs of the F8 Tributo, the replacement for the 488 GTB. (Ferrari)
- Suffered unscheduled downtime at two North Ameican plants because of a strike affecting the steering wheel supplier. Ford built (but didn’t gate release) thousands of cars with temporary parts whilst trying to overcome the shortages. (Detroit Free Press)
- Rumoured to be shedding 2,000 of workers in China by not renewing temporary contracts. (Nikkei)
- Although some claimed that VW and Ford were close to a deal to team up on self-driving equipment (WSJ), others said that a deal was months away and implied that leaks were almost all from VW and unreliable. (Detroit Free Press)
- May have found a buyer for the Brazilian car plant scheduled for closure. (Reuters)
Geely (includes Volvo) (history)
- Volvo invested in ride hailing firm Zūm, which has a service aimed at ferrying children around. (Volvo)
- Published pictures of the Polestar 2, the first all electric car from the brand. The starting price for the launch edition will be €59,000 but Polestar says that after that prices should drop to €39,000. (Polestar) The brand hopes to sell over 50,000 units annually according to the CEO. (Reuters)
- Proton unveiled the new Persona B sized saloon. (Proton)
- Volvo will impose a 180 kmh (just over 110mph) speed limit on all cars. Speed demons need to make their purchase before 2020 to pick up an unregulated model. (Volvo)
- Showed off the GE11, the first vehicle from the new Geely New Energy brand. (Geely)
- The UAW union launched a lawsuit against GM asking US courts to order plants scheduled for “unallocation” to remain open. (Reuters)
- Made a series of executive changes to replace the heads of North America (GM) and manufacturing. (GM)
- Released images of the production-ready all-electric city car to be unveiled at the Geneva show. (Honda)
- Commenced production at the Itirapina, Brazil, vehicle plant. (Honda)
- Hyundai issued a medium term profit objective of 7% return on sales by 2022. The brand believes that this can be achieved despite a 58% increase in average year product spending. (Hyundai)
- Announced an executive reshuffle. (Hyundai)
- Hyundai says that it needs 14 trillion KRW (about $12.5 billion) of net cash or equivalents for working capital and to provide a sufficient buffer for unforeseen one off events. (Hyundai) This appears to be the rationale for rejecting calls from an activist shareholder to return more cash. (Reuters)
- Hyundai CEO Lee reportedly told investors that the firm is considering capacity cuts in China. (Reuters)
PSA (includes Opel/Vauxhall) (history)
- Reported financial results for the 2018 full year. Automotive revenue of €61.3 billion was up 27% year-on-year but this included the full year impact of Opel / Vauxhall. Operating profit of €4.5 billion rose 61%. PSA said Opel / Vauxhall swung from a (2.5)% loss to a 4.7% profit. PSA raised profit guidance, but as with last time, it was to a number that it is already exceeding. (PSA)
- Will launch the Peugeot brand in North America, Citroën in India and Opel will return to Russia. (PSA)
- Reportedly looking into the potential for a capital tie-up with the likes of FCA, JLR or even General Motors, in a bid to obtain enough global scale. (Bloomberg)
- CEO Tavares said that stricter EU CO2 rules could destabilise society and bemoaned the pace of decision making at the firm’s Chinese joint ventures. (Reuters)
- Reportedly exploring a sale of a partial stake in JLR to raise cash. Tata spokespeople denied it. (Bloomberg)
- Sources told the BBC that JLR was about to make a major investment in UK manufacturing. The lack of any detail suggested it was the work of PR people or politicians rather than well-informed yet loose-lipped insiders. (BBC)
- Unveiled a facelifted XE saloon (the second such update). The main focus of the redesign was the front and the interior, which now features an array of digital displays. (JLR)
- JLR’s InMotion fund participated in a further investment round for usage-based insurer ByMiles. (JLR)
- Put a $35,000 version of the Model 3 on sale, accompanied by a new $37,000 derivative with slightly more equipment that Tesla hopes customers will buy instead. (Tesla)
- Anecdotal feedback from would-be Model 3 owners says that Tesla is taking many months to process deposit returns if they decide they no longer wish to order the vehicle and that multiple follow-ups are necessary to get the company to act. Tesla wouldn’t say how long it takes on average to process refund returns. (Detroit News)
- Rebalanced the features in driver assistance (“Autopilot”) options so that the base $3,000 system capability is similar to those of other brands. Navigating highway slip roads and interchanges and remote parking are now only available by subscribing to the more expensive “full self-driving” pack. (Business Insider) After the move, Tesla offered owners a cut price deal to upgrade. (Tesla)
- Paid a $920 million bond in cash (as Tesla said it probably would). (CNBC)
- Will only
sell cars through online and telephone channels (some high traffic locations
will remain open). Tesla says the move will save about 6% of revenue and allow
it to return the saving to customers. As an enabler to the change, Tesla is creating
a seven day, 1,000 mile no hassle return program and says it will improve
mobile servicing. (Tesla)
- Significance: It remains to be seen whether Tesla’s move is genius or foolhardy. The firm is betting that customers are ready for online-only sales, whilst making sales projections that other brands can only meet by offering omni-channel experiences. Although dealers are often judged by customers to do a poor job, sales of high value items indicate only a small minority are prepared to forego face-to-face contact with salespeople at this time. Analysts speculated that the firm’s retail solar business will suffer an even greater negative impact, having failed to build a meaningful following so far.
- CEO Musk said in an internal email that 78% of Model 3 orders were made online and 82% of customers did not have any test drive as part of the justification for the move to online sales. Since the car was initially only released online and production problems meant few demonstrator vehicles were initially available, these figures may be less compelling than they seem. It is unclear what the comparable figures for Model S and X are. (Clean Technica)
- Set a 14th March date for the unveiling of the Model Y SUV. (Elon Musk)
- The SEC asked a US judge to hold CEO Musk in contempt of the earlier deal that followed incorrect statements about funds to take Tesla private after he sent erroneous tweets about 2019 production figures. (Reuters)
- Working with Carmera to produce high definition maps from vehicle camera data. (Toyota)
- Creating a French hydrogen joint venture to create a fuelling network called Hyset, intended to encourage take-up of fuel cell vehicles. This mirrors Toyota’s approach in Japan, albeit with a scheme that is smaller in scale. (Toyota)
- Will use Jetta as a standalone brand in the Chinese market, in partnership with FAW. The portfolio draws heavily on SEAT models. (Autocar)
- Announced
that the next generation Macan will be all-electric. (Porsche)
- Significance: Porsche seems to be setting itself up as a brand that gives both ecowarriors and petrolheads what they want. More broadly, the move will be highly positive for the VW Group average CO2 emissions in Europe
- Reportedly considering a smaller IPO of truck division Traton than the previously mentioned 25% stake if economic conditions deteriorate. (Reuters)
- Although some claimed that VW and Ford were close to a deal to team up on self-driving equipment (WSJ), others said that a deal was months away and implied that leaks were almost all from VW and unreliable. (Detroit Free Press)
- Announced an executive reorganisation at the VW brand aimed at giving CEO Diess more time to run the wider group. The main changes are a broader remit for the COO and a more important digital services function. (VW)
- VW and Russian partner Gaz have apparently been working on a series of nearly finalised new projects, with the intent of being able to make a fast start if US sanctions against Gaz are lifted. (Handelsblatt)
- Announced that e.Go will licence the MEB platform. (VW)
Other
- Aston Martin announced full year 2018 results. Deliveries rose 26% year-over-year to 6,441 units and revenue was up 25% to £1.1 billion. There was a PBT loss of £(68) million but Aston Martin said this was IPO costs and without it, there had been a £73 million operating profit. (Aston Martin) CEO Palmer said there is a £30 million Brexit contingency budget; much of this appears to be for extra inventory. (Reuters)
- Subaru announced a reorganization aimed at improving risk management and planning. (Subaru). There will also be a series of senior executive changes. (Subaru) At the same time, the firm is recalling 2.3 million cars to fix a problem with the brake lights. (Reuters)
- Ginetta unveiled a £400,000 supercar, aiming to make between 30 – 50 per year. The firm says there are already 14 firm orders in the bag. (Autocar)
- Piëch say the platform on which the Mark Zero sports car is based will also have a four seater and an SUV. (Piëch)
- Koenigsegg revealed that the tie-up with NEVS was less ambitious than hoped. The new higher volume product will have a production volume in the hundreds and a price tag of the best part of one million euro. (Road&Track)
- Faraday Future extended enforced unpaid leave for employees, citing continued cash problems. (The Verge)
- VinFast will soon begin a safety testing program to certify that vehicles meet European standards. (Retail News Asia)
- Electra Meccanica, makers of an all-electric three-wheeler, said production started at their Chinese factory. (CNBC)
- A report on industrial robot usage in the USA concluded that the automotive industry installed (12)% fewer machines in 2018 than the prior year. (CNBC)
News about other companies and trends
Economic / Political News
- US Light Vehicle industry in February was 16.53 million, about (2.5)% worse than a year earlier. (Wards)
- France had 172, 438 passenger car registrations in February, 2.1% higher than prior year. (CCFA)
- Italian passenger car registrations for February were 177,825 units, a (2.4)% drop on a year earlier. (UNRAE)
- Spanish passenger car registrations of 100,701 units dropped (8.8)% versus prior year. (ANFAC)
Suppliers
- Hella opened a new $14 million electronics plant in India. (Autocar)
- CATL plans to increase annual battery cell capacity at its still-unfinished German factory from 14 GWh in 2021 to 60 GWh by 2026. (Nikkei). The firm has also reportedly created a 49% / 51% joint venture with Chinese automaker FAW for local battery production. (Inside EVs)
- SK Innovation will build a second battery factory in Hungary for $845 million. Although no capacity was provided, for the size of reported investment it is probably about 10 GWh annually. (Reuters)
- JBM acquired metal forming specialist Linde-Wiemann. (Autocar)
- Dana completed the acquisition of Oerlikon’s drive systems business. (Dana)
- BYD is building a new battery factory in Chongqing, China with a planned annual 20 GWh capacity. (Xinhua)
- ZF has been in talks with Wabco about a potential takeover. (Reuters)
- Bosch will invest another €200 million in start-ups. (Bosch)
- Techrules says it will release a 15 kW turbine at the end of 2019 that the firm
believes will have widespread application in cars and commercial vehicles as a
range extender. (Autocar)
- Significance: Whilst a 15 kW motor can probably provide sufficient steady-state generation to power a mid-size car, it remains to be seen whether OEMs will favour this technology over a traditional internal combustion engine that can do the same job.
Dealers
- Chinese online new and used car sales firm Chehaiduo raised $1.5 billion. (Deal Street Asia)
Ride-Hailing, Car Sharing & Rental (history)
- Lyft filed S-1 paperwork ahead of an IPO. The co-founders will hold a class B stock with 20 times the voting rights of ordinary shareholders. Financials can be found on page 17. (SEC)
- Uber is rumoured to be heading towards a $3 billion deal to buy Careem. (Reuters)
- Mahindra is launching a ride hailing service called Glyd. (Mahindra)
- French on-demand ambulance start-up Ambler raised €1.5 million. (EU Startups)
Driverless / Autonomy (history)
- Autonomous vehicle developer Horizon Robotics raised $600 million. (Deal Street Asia)
- FedEx is testing a prototype delivery pod. (ZDNet)
- Apple fired 190 people from its self-driving car program. (Reuters)
- BMW and Daimler agreed to pool self-driving technology efforts, but only for SAE Level 3 and 4, aiming to release technology in the mid-2020s. The parties will continue with individual efforts on SAE Level 5 technologies, but remain open to discussion on sharing those too. (Daimler)
- The Indian government passed legislation to encourage uptake of electrified vehicles (dubbed FAME II) and received positive reviews from vehicle makers. (Economic Times of India)
- Ola’s electric vehicle subsidiary raised $56 million. (Tech In Asia)
- CharIN published standards for 1MW charging stations. Sadly, it is aimed at heavy trucks and buses rather than passenger cars in search of eye watering charging speeds. (CharIN)
Connectivity
- AT&T and Vodafone launched a joint connected car initiative, aiming to offer a single service that can span most of the globe. (Telematics News)
- Gosuncn and Qualcomm will supply Geely with C-V2X equipment. (Geely)
- President Trump reportedly plans to pledge a state-owned 5G network
in his re-election manifesto. (Politico)
- Significance: If the US decides that the heavy hand of the state is the best way forward, this could call into question the winner takes all mentality that underpins the investment case for many emerging (and loss-making) business models.
Other
- Bicycle rental firm Gotcha is offering electric trikes with a 40-mile range. (Gotcha)
- Electric scooter rental firm Voi announced $30 million in funding. (Deal Street Asia)
- Lime said that some of the firm’s scooters have a firmware bug that might cause sudden braking and suggested riders pump the brakes a few times to check if their vehicle is affected. Apparently, it is now fixed. (Lime)
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