Facing up to reality in Europe; too little money to go around; and the benefits of getting the basics right. Please enjoy our auto industry and mobility briefing for 13th January to 19th January 2020. A PDF version can be found here.
Before you read the detail, what were my favourite stories of the past week…?
- I Have Seen — VW says that by 2030 at least 40% of the vehicles mass market producers sell in Europe will need substantial electrification (plug-in hybrid or full-electric) to comply with EU CO2 rules at that time. This shows companies clearly understand how their sales portfolio will need to evolve in the next ten years. Are they being honest about their financial outlook?
- Destiny — Mahindra and Mahindra’s Ssangyong brand needs more money, NIO needs more money, Aston Martin is talking to people about more money and Sono Motors just raised some money, but will soon need more. Rewind to 2018 and the stuff seemed to be growing on trees. Will everybody make it?
- Home — GM says the high-end AT4 trim level on GMC vehicles is going great guns, providing a useful foil to the sleek high-end Denali trim. It all sounds a bit boring in these days of electrification, connectivity and self-driving but good choices that drive revenue up are the mainstay of the business and worth big bucks when you get it right. How many companies will trip themselves up chasing the future and forgetting the basics?
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
- Selling its Colombian light vehicle parts and distribution arm to dealer Inchcape. (Daimler)
- In discussions with Foxconn / Hon Hai about developing and manufacturing all-electric vehicles in China. (FCA)
- Issued a press release to ensure it received proper credit for improving the sales experience around electric vehicles. FCA had added a button to their website that links to an Amazon page where you can buy wall chargers. (FCA)
- Investing €42 million in the Valencia, Spain, factory to produce battery packs for hybrids and update assembly lines for hybrid and 48V variants of the Kuga, S-MAX and Galaxy. (Ford)
- Investing $82 million to increase capacity in Vietnam. (Reuters)
- Will implement V2V communication in European vehicles so that drivers are warned of obstacles ahead that other cars have already had to avoid or crashed into. The service will be free for the first year. (Ford)
Geely (includes Volvo) (history)
- Fengshang (formerly known as Kandi) unveiled its first vehicle, an electric SUV called the Maple 30X. (Kandi)
- Volvo is working with China Unicom to develop 5G communications and V2X. (Volvo)
- GM executives say GMC’s AT4 trim level is outperforming expectations and achieving pricing within $2,000 – $3,000 of the Denali top of the line models with (GM says) minimal cannibalisation. GMC “doesn’t know where the ceiling is” for price or unit sales. (CNBC)
- Hourly workers at some US sites are complaining that since the strike they have been on mandatory seven day weeks to recover the shortfall. (Detroit Free Press)
- Engineers found themselves in hot water after police caught them racing prototype Corvettes on public roads. (CNN)
- Following the UAW agreement, GM has converted 1,350 temporary employees to permanent contracts. (GM)
- Confirmed the sale of the Talegaon, India, plant to Great Wall. (Great Wall)
- GM’s
Cruise division published a blog questioning the value of disengagements as a
metric for the competency of self-driving systems, accusing start-ups and media
of over-hyping the significance (but without reflecting on the benefit to
Cruise of its longstanding position as second only to Waymo on this basis). Cruise
argues that in busy environments, it is impossible to stop safety drivers
instinctively taking control. (GM)
- Significance: GM’s argument isn’t entirely satisfactory since the firm’s much-vaunted modelling could be compared to actual disengagements to determine how necessary they were and the company could (if it wished) report this extra detail as a memo to its California DMV report if it wished (the report format is largely left up to the issuing company).
- Announced a partnership with Isuzu to develop fuel cells for heavy vehicles. (Honda)
- Kia announced an updated cycle plan, dubbed Plan S, that calls for 11 battery electric vehicles by 2025, selling a collective 500,000 units per year. In total, Kia wants 25% of vehicle sales to come from fully electric and electrified models by 2025. (Kia)
- By implementing Plan S, Kia is targeting a 6% operating profit and 10.6% return on equity in return for $25 billion of investment spending between 2020 – 2025. (Kia)
- Hyundai and Kia made a €100 million investment in UK/Russian electric vehicle firm Arrival in a deal that values the start-up at €3 billion. The intention is for Hyundai and Kia to use Arrival’s platform for electric vehicles. (Hyundai)
Nissan and Mitsubishi (history)
- Revealed the 10,000 hours has been spent investigating compensation and other payments stemming from Carlos Ghosn’s ouster, with several others found to have benefitted (but kept anonymous). Amongst actions Nissan is taking to improve corporate governance, the practice of retaining former senior executives as consultants will be ended, meaning that outgoing CEO Saikawa will leave the company for good when he steps down. (Bloomberg)
- PSA sold 3.489 million units in 2019, a (6.6)% drop on a year-over-year basis. (PSA)
- Two of PSA’s senior executives — the leaders of the DS and Citroën brands — have gone on special assignments, one to look at how to improve synergies between brands and one to look at how to preserve brand integrity even as product is shared. They are both being replaced. (PSA)
- Opel announced an extension of the involuntary redundancy freeze until 2025 (from 2023) and confirmed rumours from April that the Rüsselsheim, Germany, plant will produce the Astra. In return, Opel is looking for 2,100 employees to take voluntary separation. (Opel)
- Expects to comply with EU CO2 rules for 2020 and avoid paying fines (PSA had previously expressed confidence that this would be the case). (PSA)
- Opel’s head of sales for the German market has been moved sideways after less than a year in the job. (Handelsblatt)
- Opel will sell electric vehicles in Russia — IF the state agrees to provide subsidies — and says that 5% market share is the minimum level for viability in the market. PSA believes that some level of exports will be required for sustainable profitability, but the changing regulations mean it hasn’t decided a firm plan. (TASS)
- Renault sold 3.75 million vehicles in 2019, down (3.4)% on a year-over-year basis, more than explained by declines in Iran, Argentina and Turkey. Renault said it was working on pricing more than chasing volume. (Renault)
Subaru
- Announced a series of longer term targets for the electrification of the portfolio: by 2030 at least 40% of sales will be BEVs or (P)HEVs; by the mid-2030s all Subaru vehicles will have an electrification option; by 2050 fleet average emissions will be 90% lower than 2010 levels. (Subaru)
- TomTom will provide all of Subaru’s mapping in the USA. (TomTom)
- Future high end JLR cars will have special seats that stimulate the bottom and thighs so drivers and passengers can stay in great shape even as they sit still. No word yet on whether there is a version that does six packs. (JLR)
- Suffered a dramatic drop in registrations in California during Q4 2019, prompting investor concern that the brand was going off the boil. Tesla has already released global Q4 figures. (Reuters)
- Recalling 696,000 cars to fix problems with fuel pumps. (Toyota)
- Will build a yet-to-be-revealed new small SUV for the European market at the Valenciennes, France, plant. (Toyota)
- Launching the Kinto brand in Europe. Car sharing and carpooling services will be offered, alongside all-inclusive leasing (in both multi-year and short term — often called subscription — variations). (Toyota)
- Invested $394 million in (existing investment) flying taxi developer Joby Aviation as part of a $590 million round. A Toyota executive will join Joby’s board and the company will lend manufacturing expertise. (Toyota)
- Reshuffling product allocation at some North American plants. Although the moves will see overall capacities remain the same, media seized on the news that the Tacoma pick-up will be made in Mexico instead of the USA (it is currently made in both countries). (Toyota)
- Across all brands, VW Group sold 10.974 million vehicles in 2019, up 1.3% on a year-over-year basis. (VW)
- Says a sales mix of 40% electric cars (which includes plug-in hybrids) is required to meet the 2030 EU targets for fleet average CO2. The company expects subsidies for electric cars to be phased out (the specific discussion was around Germany) and has written off hydrogen as a realistic fuel source until after 2030. (Handelsblatt)
- CEO Diess gave a speech saying he wants VW to transform from a car company to a tech firm. He thinks that in the future, people will spend more time in the car and foresees an average of two hours per day rather than about one now. He warned the Bentley brand that although he was pleased with sales of over 10,000 units, he would be more impressed with a return greater than zero and would prefer sales of 5,000 units with a return of 20% to the current state. (Handelsblatt)
- In talks with Chinese battery manufacturer Guoxuan about a strategic cooperation (something that was rumoured in August). (Handelsblatt)
- The next generation Golf can detect whether voice commands are being given by the driver or passenger and responds accordingly. (VW)
- SEAT is using trucks that tow two full size trailers to reduce logistics costs and reduce CO2. The trailers can only be used on highways, so aren’t suitable for all supply runs. (SEAT)
- Lamborghini says all future sports cars will have hybrid variants. The brand has now produced 350 track-only Huracán, an indication of the interest level for motorsport-focused variants (with the right supporting infrastructure and events). (Lamborghini)
- Audi is spending €100 million to install 4,500 charging points at its factories. Since most of the units will be relatively bog standard 22 kW chargers, it isn’t clear how they are costing an average of €22,000 each. (Audi)
- Audi has given Cromodora a ten-year supply agreement for alloy wheels, enough to justify the latter company building an entire plant at an undisclosed Eastern European location. (Audi)
- Apparently, the version of the VW ID3 with the biggest battery (77 kWh) will only be a four seater. (Inside EVs)
Other
- Lightyear hopes to bring a second, more affordable, solar powered car to market by 2023 and sees demand of more than 100,000 units per year for the model. (Inside EVs)
- Xpeng’s co-founder says the Chinese market for electric vehicles will bounce back in 2020, partly because of excitement created by Tesla’s locally manufactured cars. (Nikkei) The company published some statistics gathered by the cars it has sold: adaptive cruise control users on average enable the feature for 1.8 km at a time and one third of voice commands were for setting up a destination in the navigation function. The data appears to include XPeng’s own test vehicles (since one car was reported to have driven over 600,000km in a single year). (XPeng)
- W Motors started construction of a new factory in Dubai. (The National)
- Roadster Salon is selling an updated 1960s Fiat 124 with all electric drive. It’s not cheap. (Roadster Salon)
- Mahindra and Mahindra are reportedly contemplating asking the South Korean authorities to stump up some financial support for Ssangyong. (Yonhap)
- Nio confirmed it was in talks with Guangzhou (GAC) about financing and collaboration. (Nio)
- Sono Motors met its fund-raising goal of €50 million to
continue industrial development (the company has already said this will NOT be
enough to start mass production). The money still needs to be collected. (Sono)
- Significance: The crowdfunding model is used sure to be studied by others, although an extension to the originally planned deadline and existing investors stumping up extra cash to meet the target indicate it wasn’t plain sailing.
News about other companies and trends
Economic / Political News
- December passenger car registrations in Europe of 1.26 million rose 21.4% over prior year. Full year sales of 15.8 million cars was just 1.2% better. (ACEA)
Suppliers
- Meritor purchased electric drivetrain specialist TransPower. (Meritor)
- Magna announced its outlook for 2020 – 2022. The firm expects sales of $40.5 billion – $43.5 billion by 2022 and for EBIT margin in the range 7.6% – 8.0%. The firm is also breaking off its self-driving relationship with Lyft, saying the two will still collaborate a bit. (Magna)
- Mapping supplier HERE has a new CFO, a recruit from Daimler. (HERE)
- Lidar developer Quanergy’s CEO stepped down. (Quanergy)
- CK Birla acquired Kinex Bearings. (Deal Street Asia)
Ride-Hailing, Car Sharing & Rental (history)
- Ride hailing firm Bolt raised €50 million in debt. (TechCrunch)
- On demand bus app Shuttl raised $8 million. (Deal Street Asia)
- Chinese ride hailing firm Dida (not a typo), backed by Nio, reportedly hopes to raise $300 million. (Technode)
- Cargo, a company that provided in-car vending machines for ride hailing drivers, has pivoted into advertising instead. Participating drivers get a screen to put on their car roof. (Mashable)
Driverless / Autonomy (history)
- Comma.ai declared itself ready to develop self-driving software on an open source basis. New code will be subjected to an undefined test program. The opinion of regulators is unknown. (Comma.ai)
- Aurora says its cars can now navigate busy intersections “seamlessly”. (Aurora)
- Indoor mapping company NextNav raised $120 million. (TechCrunch)
- VW thinks that in the future, people will spend more time in the car and foresees an average of two hours per day rather than about one now. (Handelsblatt)
- GM’s Cruise division published a blog questioning the value of disengagements as a metric for the competency of self-driving systems, accusing start-ups and media of over-hyping the significance (but without reflecting on the benefit to Cruise of its longstanding position as second only to Waymo on this basis). Cruise argues that in busy environments, it is impossible to stop safety drivers instinctively taking control. (GM)
- Magna is breaking off its self-driving relationship with Lyft, saying the two will still collaborate a bit. (Magna)
- GKN is teaming up with Delta Electronics to offer integrated electric motors that also house the transmission and some power electronics). (GKN)
- The UK city of Nottingham is trialling taxi ranks with wireless charging. (Telegraph)
- Lightyear hopes to bring a second, more affordable, solar powered car to market by 2023 and sees demand of more than 100,000 units per year for the model. (Inside EVs)
- VW says a sales mix of 40% electric cars (which includes plug-in hybrids) is required to meet the 2030 EU targets for fleet average CO2. The company expects subsidies for electric cars to be phased out (the specific discussion was around Germany) and has written off hydrogen as a realistic fuel source until after 2030. (Handelsblatt)
- VW is in talks with Chinese battery manufacturer Guoxuan about a strategic cooperation (something that was rumoured in August). (Handelsblatt)
- FCA and Foxconn / Hon Hai are considering developing and manufacturing all-electric vehicles in China. (FCA)
- Apparently, the version of the VW ID3 with the biggest battery (77 kWh) will only be a four seater. (Inside EVs)
Connectivity
- LG and voice recognition expert Cerence (ex Nuance) will collaborate on infotainment. (LG)
- Ford will implement V2V communication in European vehicles so that drivers are warned of obstacles ahead that other cars have already had to avoid or crashed into. The service will be free for the first year. (Ford)
Other
- Flying taxi developer Joby Aviation raised $590 million in a round led by Toyota. (Toyota)
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