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 28th September to 27th 4th 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
- Uber has been rumoured as a future owner of BMW and Daimler’s ride hailing joint venture. (Business Times)
- 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)
- 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)
- 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)
- 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)
- 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)
- Giving European electric vehicle customers membership of a pan-European charging card that uses BMW and Daimler’s Change Now service. (Hyundai)
- 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)
- 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)
- 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)
- 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)
- 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)
- 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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