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    Drew Dowdell

    .. Move from alliance to formal merger

    Financial Times is reporting that Renault wants to make the marriage to Nissan more official and formally merge.  Renault wants to start talks within the next 12 months and include a potential bid for automaker FCA .  The combined companies of Nissan, Renault, Fiat, and Chrysler would be a conglomerate that rivals the size of Toyota and Volkswagen.
    Carlos Ghosn tried to start merger talks prior to his arrest for financial wrongdoing, however, the French government stopped his proposals. Renault currently owns roughly 43% of Nissan.
    FCA has recently been in the news for potential talks with Peugeot to merge. Those reports were squashed when it came to light that the Agnelli family, who has a controlling stake in FCA, was not interested in a deal that was paid for with PSA stock.


    95% of Auto's sold in 2018 globally were ICE, what should we expect in 2030?

    Market forecasts of the future is a fragile thing, yet LMC Automotive has a strong reputation as a consulting firm looking at the global markets. The daily announcements of electric-car churn, major production investments, battery supply, etc. is cause for people to want to take a reality check of the projections by various OEM producers to individual government pronouncements.
    US projection is that fossil fuel light-duty autos will still be 69% or 7 out of 10 autos on the road in 2030. According to the LMC Automotive research report, 2018 saw that globally light vehicles running on fossil fuels were 95%. This is expected to drop to 92% by the end of 2019 yet a slowing of the change over from ICE to BEV is expected over the next decade. LMC is expecting a contraction of just 3 to 4 percent annually. This respected report is showing that more than half of the global vehicle demand will still have tailpipes and fuel tanks.
    So let’s take a look at some of the facts starting with the country India where in 2017 it stated that they would be fully electric by 2030. Yet LMC own research points to India being only 3% electric by 2030. On the other end of the spectrum, we have China where LMC expects the country to have a majority of light autos be electric. LMC expects fossil fuel light autos to make up only 48% of the market by 2030 in China, BEV's will be 52%.
    This is backed up by many other analysts that point to the massive growth of EV's in the next decade that eventually will taper off as costs stop falling for battery production and EV charging infrastructure. Electric cars are expected to be 55% of the global market by 2040 according to the Bloomberg New Energy Finance. One reason for slowing is the acknowledgment that not all markets will have the electrical infrastructure to support BEV auto's when many in countries like Africa do not even have electricity at their home.
    Looking at the three major automotive markets of China, India and the US, LMC points to the differences in how the change will happen. China will use the carrot and stick approach pushed by the political elite to ensure the New Energy Vehicles (NEV) come to market. Automakers are getting subsidies to manufacture these NEVs and receive strict penalties if they fail to meet the government goals. Here is where demand for ICE autos will fall off the fastest. 
    In the US, demand is expected to be gradual with growth being slowed by the oil industry that has every reason to keep the price of gas low. This is also being tempered by the popular rise of the pickup truck and SUV sales that will keep BEVs in check till these full-size autos are offered in pure electric mode.
    Then we have India, per the LMC report where government ministers made global headlines in 2017 with their ambitious target to electrify the whole country by 2030 retiring all ICE autos. Including all types of transportation, 2, 3- and 4-wheel vehicles, the India government has since set a target of 30% BEVs by 2030 which LMC believes is unachievable.
    Despite having adjusted goals, the India government has approved a 3-year $100 billion program to promote electric vehicle adoption. Even with this big push, LMC sees India with a 97% ICE market share in 2030.
    Based on LMC's own 3-4% ICE decline annually, where ICE made 95% of global sales in 2018, expected to be 92% in 2030 ICE globally is still expected to make up 62% of global market if the 3% a year drop stays constant, yet numerous external factors will also affect this globally.
    Yet to make this change happen, one critical area is needed to grow. Batteries are the new OIL of the 21st century. Bloomberg expects $548 billion in investments by 2050 in the battery production industry as costs fall, homes and businesses push for a more reliable clean energy source. Battery prices per kilowatt-hour are expected to be below $70, down 67% from today’s cost. Annual batteries to be commissioned by 2050 is expected to exceed 1,288 gigawatts of power.
    To quote the Bloomberg story: “It’s a matter of ‘when and how’ and not ‘if’ wind, solar and battery technologies will disrupt electricity delivery all over the world,” Seb Henbest, lead author the report, said in an interview.


    Do you want a 160 horsepower / 2,581 lb-ft of torque JEEP Renegade with torque vectoring? GKN thinks you do!

    Your probably thinking, did I read the teaser right? Did it really say 2,581 lb-ft of torque or 3,500 NM from a 160 horsepower or 120 kW motor with torque vectoring?
    Yes, Yes you did! 
    GKN Automotive is proud to unveil the world's first battery electric vehicle (BEV) with a two-speed transmission and torque vectoring. GTD19 demonstrator vehicle is built from a Jeep Renegade and is currently in Arjeplog, Sweden undergoing winter testing. To prove the industry-leading standards of efficiency, safety and driving dynamics in this BEV model, GKN choose to go with a FWD version where torque vectoring can provide noticeable benefits than in a rear wheel drive or all-wheel drive platform. To Quote GKN:
    Why a two-speed gearbox? The setup in the GTD19 is engineered to ensure the shifts are seamless, with minimal loss of power and torque while providing faster acceleration and higher top speed with improved efficiency. What is the top speed you ask? The eTwinsterX allows a top speed of 155 mph or 250 kph.
    To quote Hannes Prenn, COO of GKN ePowertrain:
    The all new eTwinster powertrain can be easily adapted and integrated into existing vehicle platform for FWD, RWD or AWD configurations. Twinster torque vectoring delivers swift and smooth acceleration while providing greater lateral control and optimized driving dynamics. GKN has stated their eTwinster system is smaller than many equivalent systems from competitors allowing it to be easily integrated into existing vehicle plate forms as they did with the GTD19 replacing it's ICE powertrain. The small size allowed GKN to install in place of the ICE, the complete solution of electric motor, inverter controls, eAxle along with all required cabling leading to a very thin battery pack underneath the GTD19.
    GKN system integration allows them to offer the eTwinster powertrain as a readily adaptable solution for all types of auto's from all-wheel drive hypercars to plug-in hybrid luxury SUVs to entry-level city cars.
    If you have ever been in a Range Rover Evoque Hybrid, then you have already experienced the Twinster system as it can be added to the Hybrid solution with the Twinster unit in the back helping to improve the dynamics and calibration of the auto. This GKN solution will also show up in the Opel Insignia. To quote GKN:

    Where else will you see this amazing system that was the number one hybrid / electric vehicle system shown at the Geneva Auto show this year is in the BMW M3 Concept, Volvo XC90 demonstrator which will be paired with the T8 Twin Engine Plug-in Hybrids as well as Mercedes-Benz AMB GLA45 prototype.

    Drew Dowdell

    A no-deal Brexit may kill automotive jobs in the UK.

    A few weeks after Honda announced the closure of its manufacturing plant in Swindon, Sky News is reporting that BMW and Nissan are both looking at moving operations out of the UK in the event of a no-deal Brexit.
    BMW currently produces the Mini-Cooper in Oxford.  BMW's Peter Schwarzenbauer has said that the company would "need to consider" moving production out of the UK. In addition to Mini production, some engine production would move to Austria from Birmingham.
    Likewise Nissan, which produces the Qashqai and Leaf in Sunderland would cut back production and potential plant reductions of about 400 jobs.  Nissan has already announced that due to Brexit uncertainty, the manufacturer would not be producing the Nissan X-Trail in Sunderland. Sunderland is the largest automotive manufacturing plant in the UK.


    Federal officials from the EPA have ended negotiations with California.

    The Trump Administration and the EPA officials have scrapped all further talks with California and canceled the $929 million in federal funds for a California high-speed rail project.
    California's Governor has responded that this is in response to California leading a 16 state coalition challenge to President Trump's national emergency to take funds from the defense department and apply it to building a wall from the Gulf of Mexico to the Pacific Ocean.
    California has already filed suit to block the Trump administration proposal to roll back federal fuel economy targets for 2022-2025.
    CARB Chair Mary Nichols is on record that they are willing to work with the auto industry in giving more flexibility to comply with the greenhouse gas limits. This came as the White house administration instructed the EPA to break off talks before Christmas and have not responded to any suggested areas of compromise by California and the 19 states they are representing nor the auto industry suggestions for compromise.
    While FCA declined to comment, GM and the Alliance for Automobile Manufacturers did not respond to a request for comment. Ford has stated they are very disappointed in the failure of continued talks. Joe Hinrichs, Ford's president of global operations said in a statement: "The auto industry needs regulatory certainty, not protracted litigation."
    The auto industry is on record as opposing freezing the emissions / fuel efficiency standards to 2020 levels but also want relief from the roughly 5 percent annual carbon reduction targets for all vehicle classes fuel efficiency.

    Drew Dowdell

    1B € combined investment

    BMW Group and Daimler AG are combining forces to take on rideshare and mobility services like Uber and Lyft.  They will invest a combined 1 billion euro to build a new company with a multiprong approach. 
    The new company will offer five services in a single portfolio. Eventually, they will offer an all-electric, self-driving fleet of vehicles that charge, park, and drive autonomously and interconnect with other forms of transport. 
    The five apps include:
    Reach Now: Offers a range of options for users to get where they're going including a combination of public transport, car-sharing, ride-sharing, and bike rentals.
    Charge Now: A locator and payment app for public charging stations that work with multiple charge point operators.
    Park Now: A parking reservation, time management, payment, and ticketing system.
    Free Now:  A ride-hailing service that also includes taxis, private chauffeurs, and eScooters.
    Share Now: A car-sharing app that allows customers to rent and pay for vehicles through the app. 
    The combined apps already have over 60 million active customers in Europe and the Americas.
    The new company will be based in Berlin, Germany.
    BMW press release on Page 2

    BMW Group and Daimler AG invest more than €1 billion in joint mobility services provider
    Berlin . The BMW Group and Daimler AG are pooling their mobility services to create a new global player providing sustainable urban mobility for customers. The two companies are investing more than €1 billion in total to develop and more closely intermesh their offerings for car-sharing, ride-hailing, parking, charging and multimodal transport. The cooperation comprises five joint ventures: REACH NOW for multimodal services, CHARGE NOW for charging, FREE NOW for taxi ride-hailing, PARK NOW for parking and SHARE NOW for car-sharing.
    “Our mobility services have developed a strong customer base and we are now taking the next strategic step. We are pooling the strength and expertise of 14 successful brands and investing more than €1 billion to establish a new player in the fast-growing market for urban mobility,” said Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars. “By creating an intelligent network of joint ventures, we will be able to shape current and future urban mobility and draw maximum benefit from the opportunities opened up by digitalization, shared services and the increasing mobility needs of our customers. Further cooperations with other providers, including stakes in startups and established players, are also a possible option.”
    “We are creating a leading global game changer. The 60 million customers we already have today will benefit from a seamlessly integrated, sustainable ecosystem of car-sharing, ride-hailing, parking, charging and multimodal transport services. We have a clear vision: these five services will merge ever more closely to form a single mobility service portfolio with an all-electric, self-driving fleet of vehicles that charge and park autonomously and interconnect with the other modes of transport,” said Harald Krüger, Management Board Chairman of BMW AG. “This service portfolio will be a key cornerstone in our strategy as a mobility provider. The cooperation is the perfect way for us to maximize our chances in a growing market, while sharing the investments.”
    The two companies’ mobility services have a wealth of experience and a strong customer base, with a combined total of over 60 million active customers to date. Building on their current, highly attractive product range and robust costumer base in the key regions of Europe and America, the companies will grow their global footprint as their existing mobility services combine to form five joint ventures:
    ·      REACH NOW offers more than 6.7 million users simple, direct access to a range of mobility services through a single multimodal platform. The REACH NOW apps will offer a range of options for getting from A to B, allowing users to book and pay directly for public transport and various other mobility options, such as car-sharing, ride-hailing and bike rentals. REACH NOW will be managed by Daniela Gerd tom Markotten as Chief Executive Officer (CEO), with Johannes Prantl as Chief Financial Officer (CFO).
    ·      CHARGE NOW is a service by Digital Charging Solutions GmbH (DCS), and its comprehensive charging network is a key contributor to zero-emissions driving. CHARGE NOW makes public charge points quick and easy to locate, use and pay for, both at home and abroad. Digital Charging Solutions GmbH develops simple, standardised access to public charge points for car manufacturers and fleet operators. With over 100,000 charge points across 25 countries, its white-label solutions are helping OEMs and fleet operators to realise their strategies for electric mobility. Customers benefit from cross-border access to one of the world’s largest and fastest-growing charging networks, with over 250 charge point operators (CPOs) to date.
    ·      PARK NOW makes parking easier, on-street or off. The innovative digital parking service offers users the best possible parking solutions at a glance, allows them to reserve parking slots and manage their parking times, and enables ticketless entry and exit in public garages as well as cashless payment of parking fees. In addition, with the search for parking currently accounting for about 30 percent of the traffic on urban roads, PARK NOW is helping towns and cities to reduce traffic volumes, thereby helping to make city centres cleaner, healthier and more liveable. In Europe and North America over 30 million customers are already using the service in more than 1,100 cities. CHARGE NOW and PARK NOW are headed by Jörg Reimann as CEO, with Thomas Menzel as CFO.
    ·      FREE NOW offers a variety of mobility services including taxis, private chauffeurs with rental vehicles, and state-of-the-art e-scooters, all at the tap of a finger. One of the largest ride-hailing services in Europe and Latin America, FREE NOW already serves more than 21 million customers and over 250,000 drivers, who make a valuable contribution to the reduction of traffic in city centres. FREE NOW is headed by Marc Berg as CEO, with Sebastian Hofelich as CFO.
    ·      SHARE NOW is a free-floating car-sharing service that allows customers to rent and pay for vehicles by smartphone — anytime, anywhere. Its fleet will now be extended to incorporate a wider range of models and increase market coverage. More than 4 million customers in total currently use the fleet’s 20,000 vehicles in 31 cities around the world. Car-sharing increases vehicle utilization rates, helping to cut the overall number of cars on the roads in urban areas. Olivier Reppert has been appointed CEO of SHARE NOW, with Stefan Glebke as CFO.
    REACH NOW, CHARGE NOW, FREE NOW, PARK NOW and SHARE NOW represent innovative solutions by the BMW Group and Daimler AG for cities and municipalities seeking to make their traffic more efficient and sustainable. Thanks to their established services, the joint venture group already commands significant resources to support and systematically enhance sustainable urban mobility.
    “We are steering very clearly towards growth, and together we will continue to invest consistently in our joint mobility services. As well as linking in additional transport options, we want to reach out to even more people in towns and cities across the world, thereby improving the quality of urban life,” Krüger explained.
    The new mobility portfolio will be easy to access, intuitive to use, and will cater to customers’ needs. Its seamlessly integrated, sustainable ecosystem will make mobility more convenient — because cities are where the future of mobility will be decided. This is confirmed by the choice of Berlin as the base for the organization’s headquarters. A hub of creativity and innovation, the German capital is an attractive location for employees and upcoming talents. The next few years will see up to 1,000 new jobs created worldwide – including in Berlin and Germany. After an initial phase of investment and growth, the new joint venture group will offer attractive profitability, which will be crucial to its success.
    “As premium manufacturers, we have long been setting standards in the automotive industry and for our customers. In the premium vehicle business, we will continue to compete for customers. But our new portfolio for individual urban mobility on demand represents a logical extension to the value chain. Ultimately, we want to offer our customers as many options as possible for getting from A to B. In short, this is about driving, riding or being driven," said Zetsche.
    With their joint mobility services, the BMW Group and Daimler AG are responding to mobility needs of today and the future with a focus on cities. Digitalization is a key enabler as it creates new opportunities for individual mobility. Over time, customers will be able to use and experience additional mobility options from all-electric autonomous fleets that are available on demand, charge and park themselves, and connect with other modes of transport beyond road and rail. In the competition for the best urban mobility solution, the promise of safety and comfort by the two leading German premium OEMs provides the basis for this to happen.

    Drew Dowdell

    Consumers think that with names like Co-Pilot 360, ProPilot, or Autopilot, the car should be able to drive itself.

    According to research issued by AAA, 40 percent of Americans expect driver assist systems with names like ProPilot, Co-Pilot 360, or Autopilot to give the vehicle the ability to drive itself.
    In a quote to Automotive News, Director of Automotive Engineering and Industry Relations at AAA says "Somewhere in there, you'd think a pilot is involved, but indeed no, human driving is still required."
    AAA examined 34 vehicle brands to identify the number of driver-assistance names used and found 40 different terms used to describe automated emergency braking, 20 terms for adaptive cruise control, and 19 different lane-keeping assist names. 
    At CES this year, a coalition of automakers, safety advocates, and others launched Partner for Automated Vehicle Education (PAVE). This organization is dedicated to the promotion of these technologies while simplifying the language used to describe them.

    William Maley

    The next-generation BMW and Mercedes-Benz compacts may be quite similar

    The number of automakers teaming up to share and develop new vehicles and technologies is growing in an effort to help reduce costs. A new report from German paper Handelsblatt says that BMW and Daimler are considering such a move.
    Speaking to sources at both companies, BMW and Daimler are looking into possibly jointly developing their next-generation compact cars (BMW 1-Series and Mercedes-Benz A-Class) - as part of a wider cooperation that includes sharing autonomous car tech. Working together on a new compact car platform would save the two companies billions in investments. If the two decide to move forward with this, the first cars aren't expected to arrive until 2025.
    But trying to sell this idea to BMW and Mercedes-Benz engineers may be the difficult part according to the report.
    Daimler and BMW have teamed up before,
    In 2015, the two along with Audi purchased Nokia's mapping software, Here. Last year, BMW and Daimler merged their short-term rental services to create a better presence in the mobility market. Source: Handelsblatt, Automotive News (Subscription Required)

    William Maley

    Even NADA's CEO is wondering where are the affordable vehicles

    Ask Peter Welch, the CEO of the National Automobile Dealers Association (NADA) what worries him the most, he'll admit that it is average consumers getting priced out of new cars.
    He admitted this yesterday at the Automotive News World Congress in Detroit. Welch said that the latest figures he has seen - through October of last year - reveal the average retail price of a new car climbing to a new high of $35,366. The average monthly payment is hovering at $538, and interest rates have climbed to an average of 5.76 percent (new) and 9 percent (used). Longer loan terms are becoming common, with the average length standing at 64.3 months.
    "You know, people buying $55,000 pickup trucks with $1,000-a-month payments — I've never seen it. A lot of people don't think that's sustainable," said Welch.
    "That is going to put a giant dent in the SAARs and it almost makes me wonder if at some point we're going to see another Henry Ford," offering new and more affordable vehicles.
    Aside from more people buying more expensive trucks and utility vehicles, Welch said other reasons for the increases in prices come down to new fuel economy standards and safety equipment. He sees new car prices rising towards $40,000 with $800 monthly payments.
    On a slightly positive note, NADA predicts that 16.8 million light vehicles will be sold in 2019. While down from 17.3 million in 2018, Welch notes there are some positive economic indicators "such as high employment rates, a solid GDP and a healthy economy overall."
    Source: Automotive News (Subscription Required) 

    William Maley

    Down the road, that may change

    The recently announced alliance between Ford and Volkswagen will not bring any benefits to North America at the beginning. Both companies said that the partnership will focus on Africa, Europe, and South America beginning with commercial vans and the next-generation Ranger/Amarok pickup. Down the road, both Ford and Volkswagen said there could be a potential product for the U.S.
    While Ford is keeping quiet on what that product could be, Volkswagen CEO Herbert Diess said that a commercial vehicle being jointly developed by the two could come over.
    "Some of those, yes, but it's not yet decided which vehicle comes to America," said Diess.
    Volkswagen's commercial vehicle lineup is extensive with vans ranging in size from the compact Caddy (Transit Connect-sized) to the large Crafter (about Transit-sized). We would guess something like the Caddy and possibly the Transporter coming to the U.S. in the next few years. Of course, there is talk about a pickup truck - something dealers have been asking for some time. While there is a very slim chance of the Amarok coming, the Atlas Tanoak concept shown at New York last year seems to have a better chance.
    Source: Automotive News (Subscription Required), 2

    William Maley

    The sales party is coming to a close

    2018 saw a continuation of near-record sales and large profits for automakers in the U.S., but that appears to be coming to an end. Bloomberg reports various factors are conspiring to end this trend such as increasing interest rates and the average price of a new vehicle hitting record highs. While some may point out that 2018 saw a 0.3 percent increase in vehicle deliveries (17.6 million according to AutoData), analysts point that this is due to the tax cuts brought by President Donald Trump last year and automakers selling more vehicles to fleets.
    Charlie Chesbrough, senior economist at Cox Automotive said that the big U.S. automakers saw deliveries fall at a faster rate "in the last three months of the year than for all of 2018."
    "For some automakers, the slowdown has already begun,” said Chesbrough.
    Look at General Motors as an example. For the fourth quarter, GM reported a 2.7 percent drop in sales - 785,229 vs. 806,739 for 2017.
    “We’ve had a gradually declining trend on retail even with the tax changes. That’s the kind of trajectory we would anticipate given continued headwinds on the economic side,” said Emily Kolinski Morris, Ford’s chief economist.
    What are we expecting in terms of sales for the coming year? It seems everyone agrees that it will be at or under 17 million vehicles, but estimates vary widely with one predicting 16.5 million due to reductions in fleet purchases. Executives are quick to caution that sales won't implode this year. Scott Keogh, president and chief executive officer of Volkswagen of America said on a conference call that unemployment is low and consumer confidence is high. But the issue uncertainty with Keogh saying consumers are watching "interest rates rise and are wary of what’s been a volatile stock market of late."
    “When the headlines say that the market has had the worst falloff since 2008, that will rattle consumer confidence,” he said.
    Source: Bloomberg (Subscription Required)

    William Maley

    Also opens the door for Faraday to find new financing 

    Towards the end of last year, the fate of Faraday Future looked to be bleak. Their main investor, Chinese company Evergrande Health Industry Group filed a complaint with the Hong Kong Stock Exchange that claimed Faraday tried to cancel a deal to sell a 45 percent stake to them. Evergrande claimed the company didn't meet various milestones to get the full $2 billion it had agreed to in the summer. But Faraday fought back, saying that Evergrade didn't cough up the cash.
    This would only signal the beginning of various issues. Throughout October, reports started to emerge that Faraday started implementing austerity measures that included a 20 percent cut in salaries and laying off a small group of workers. Later in the month, one of the co-founders of Faraday, Nick Sampson would step down.
    But there is some good news for Faraday. Earlier this week, Faraday Future announced that it and Evergrade have agreed to a new restructuring agreement. According to a statement, the new agreement will “terminate the previous investment contract, withdraw and waive all litigation and arbitration proceedings, and release all security including the asset preservation pledge and equity financing rights.” This agreement will see Evergrade's stake be reduced from 45 to 32 percent. 
    The agreement also opens the door for Faraday to look for new financing, something the company has badly needed for months.
    Source: Faraday Future on Twitter

    William Maley

    Walking somewhat back from the tariff cliff

    China has announced today that it would be reducing tariffs on U.S.-built cars and car parts from 40 to 15 percent beginning on January 1st. This reduction will last for three months as the U.S. and China begin hashing out a new trade deal. We first reported the reduction of the tariffs earlier this week.
    China's Ministry of Finance posted on their website said it hopes the talks between the two can go quickly and remove "all additional tariffs on each other’s goods" that were brought forth before the current trade-war.
    “China just announced that their economy is growing much slower than anticipated because of our Trade War with them. They have just suspended U.S. Tariff Hikes. U.S. is doing very well. China wants to make a big and very comprehensive deal. It could happen, and rather soon!” President Donald Trump wrote on Twitter in response to the announcement.
    China raised the tariffs on U.S.-built vehicles and parts back in July in response to the U.S. raised tariffs on Chinese-built vehicles and parts to 27.5 percent. The move caused a number of headaches for automakers which had to increase prices on models sold in China or change up various plans. Various automakers and groups welcomed the news.
    At the moment, the U.S. hasn't announced any plans to reduce the 27.5 percent tariff on Chinese-built vehicles and parts.
    Source: Associated Press, Reuters

    William Maley

    Could the trade-war be cooling down?

    The Chinese government is considering a proposal to reduce tariffs on U.S.-Built vehicles from the current 40 percent back down to the 15 percent before the trade war broke out between it and the U.S. Sources tell Bloomberg a proposal has been submitted to the cabinet to be reviewed in the coming days.
    This proposal stems from a trade summit in Buenos Aires where U.S. President Donald Trump and Chinese President Xi Jinping agreed to a 90-day truce on the trade war earlier this month. After the meeting, Trump tweeted out that "China agreed to “reduce and remove” tariffs on imported American-made cars, something China did not confirm at the time." Shares of various automakers including Diamler, Ford, and Tesla rose on the news.
    The trade war between the U.S. and China has taken a toll on automakers. Both BMW and Dimaler have warned of lower profits as tariffs have forced them to raise prices in China. Others such as Volvo and Ford have made changes to production and vehicle plans. 
    China's Finance Ministry didn't respond to Bloomberg's request for a comment.
    Source: Bloomberg

    William Maley

    This could be an interesting development

    Back in June, Ford and Volkswagen signed a Memorandum of Understanding for a new alliance that would focus on commercial vehicles. Since then, the two companies have been in discussions about it and there have been various rumors flying about. Yesterday, Volkswagen CEO Herbert Diess added some more fuel to the fire.
    Speaking to reporters outside of the White House, Diess revealed that the German automaker is interested in using Ford's plants in the U.S. to build vehicles.
    "We might use Ford capacity here in the U.S. to build cars for us," said Diess.

    “We need additional capacity here in the United States, we need an additional car plant for VW and Audi combined.”
    The company is in "quite advanced negotiations in Tennessee" about a new plant in the state - Volkswagen operates one in Chattanooga for the Passat and Atlas. But Diess did say "there might be other options as well," most likely talking about using some of Ford's plants in the U.S.
    For now, this is an idea being floating out there. The two are continuing their talks about what this alliance will look like. Diess said more details would come out in January.
    Source: Automotive News (Subscription Required)

    William Maley

    And why that may pose a problem

    It is already tough for a number of people to afford a new vehicle as the average transaction price keeps rising. According to Kelly Blue Book, the average transaction price for November rose 2.1 percent to $36,978. This isn't being helped by American automakers deciding to stop producing cars due to changing consumer tastes. This was brought to light last week when General Motors announced that it would be cutting a number of cars including the Chevrolet Cruze. Most automakers and dealers believe consumers will move towards utility vehicles, but some dealers believe that consumers may defect from American automakers because they don't offer the vehicle they are looking for.
    Chad Martin, a Bowling Green, Ky., dealer tells Automotive News that consumers feel the "affordability pinch" when automakers decide to drop cars to focus more on utility vehicles. For the most part, consumers "generally seem to be shopping for a particular type of vehicle, such as compact cars." Remove them out of your lineup and consumers are likely going to look elsewhere.
    "What this is going to mean is, you're going to see a somewhat higher defection rate because you don't have the product lineup that particular consumer wants," said Martin.
    Another big hurdle facing consumers who want to stick with the domestics is pricing. Martin explained that there is more than a $5,000 difference in pricing between compact crossovers and compact sedans. 
    Obviously, the consumer is going to have to absorb that $5,000 difference," said Martin.
    The numbers from Kelly Blue Book tell the story.
    Compact Car Average Transaction Price: $20,458 Subcompact Crossover/SUV Average Transaction Price: $24,210 Compact Crossover/SUV Average Transaction Price: $28,765 Jeremy Acevedo, Edmunds' manager of industry analysis agrees with the sentiment said by some dealers that consumers loyal to a segment may look elsewhere.
    "It's easy for shoppers to move from a Cavalier to a Cobalt to a Cruze. But it's a whole different ballgame moving from a car to an SUV."
    Source: Automotive News (Subscription Required)

    William Maley

    A light sprinkle could cause some major headaches for self-driving vehicles

    Developing autonomous vehicles in sunny, dry locales like Phoenix, Arizona has proven to be difficult due to numerous variables such as traffic and human behavior. But an upcoming study from Michigan State University reveals that autonomous technologies still have a number of hurdles as testing begins in areas with changing conditions.
    Automotive News had the chance to speak with Hayder Radha, an MSU professor of electrical and computer engineering who oversaw the upcoming study. The findings reveal that the algorithms that are used to distill the various bits of information coming from the cameras and radar/lidar sensors have issues when it lightly rains.
    "When we run these algorithms, we see very noticeable, tangible degradation in detection. Even low-intensity rain can really create some serious problems, and as you increase the intensity, the performance of what we consider state-of-the-art mechanisms can almost become paralyzed," said Radha.
    "Once you throw in a few drops of rain, they get confused. It's like putting eyedrops in your eye and expecting to see right away."
    Researchers looked at various parameters in their study, including the size of the raindrops and the effect of wind. Using a scale that ranged from a clear day to a major downpour, the study revealed that algorithms failed to detect as much "as 20 percent of objects when the rain intensity was 10 percent of the worst-case scenario." This increased to 40 percent when the intensity of the rain increased to 30 percent.
    Other weather-related issues that were revealed in MSU's study,
    The high-resolution maps that autonomous systems to determine their location may need to be updated due to the changing seasons. "You can imagine in environments where there are a lot of leaves on trees or on shrubs close to the road, they are an essential part of the map. So summer and winter are completely different. When they fall down in winter, you have nothing to work with. So that tells you that for this technology to be robust, it needs to be developed in different conditions than you see only in Arizona and Silicon Valley," explained Radha. Cold temperatures play havoc with lidar sensors. The study reveals that the amount of "poor-quality or irrelevant returns from lidar sensors" increased as if the temperature was at 10 degrees Fahrenheit or less. Some of these issues can be addressed by getting more information from radar and lidar as engineers develop various ways to use them to classify objects. But Radha explains the big improvements will come when self-driving tech is tested in other locations such as Michigan and Pittsburgh to name a couple.
    Source: Automotive News (Subscription Required)

    William Maley

    We'll give you a clue: What types of vehicles are flying off dealer lots?

    Most buyers don't tend to think of resale value until it comes time to sell their vehicle. But which models keep their value and which ones don't? iSeeCars.com recently published a study that looked into more than 4.3 million new and used car sales to determine which models lowest and highest loss in value after a five-year time frame.
    What vehicles had the lowest depreciation? According to iSeeCars, that would be SUVs and trucks. Taking the number one spot was the Jeep Wrangler Unlimited with an average depreciation rate of 27.3 percent. One only car, the Subaru Impreza would make the list - ninth place with a 42.3 percent average depreciation rate. On the opposite end, the Nissan Leaf has the highest depreciation at 71.7 percent. The rest of the list is made up mostly by luxury vehicles like the BMW 7-Series and Mercedes-Benz S-Class.
    "While the average new vehicle loses 50.2 percent of its value after five years, there are vehicles that retain more of their value and depreciate less than average. For consumers who buy new vehicles and sell them around the five-year mark, choosing a model that retains the most value is a smart economic decision,” said iSeeCars CEO Phong Ly.
    Some other findings from iSeeCars.com study,
    Toyota Prius c and Prius owners are sitting pretty as they are the lowest depreciating hybrid models in iSeeCars' analysis - 51.5 and 54.1 percent respectively.  The BMW X5 and X3 lose a fair amount of their value over the course of five years - 65.6 and 64 percent. For sports cars, the lowest depreciation models are the Subaru Impreza WRX (35.9 percent), Volkswagen Golf R (43.3 percent), and Chevrolet Corvette (44.6 percent). Source: iSeeCars.com

    William Maley

    The tariffs as high as 25% are on hold for the moment.

    Back i n May, the U.S. Commerce Department launched an investigation into car imports to determine the impact of car imports. The investigation falls under Section 232 of the Trade Expansion Act of 1962 which states "whether imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair the national security." This could allow the Trump administration to levy tariffs as high as 25 percent on foreign-built vehicles.
    Yesterday, the Commerce Department submitted their draft report into the investigation. The Trump administration has 90 days to determine whether or not to move forward on various measures such as implementing tariffs if the report concludes that imports are a security threat. But Bloomberg is reporting that the administration is holding off on imposing new tariffs. Two sources tell the publication that top officials are considering revising plans due to the report. The sources also said that the report "would be subject to further changes."
    President Trump has been using the threat of tariffs as leverage during negotiations with trade partners. Already, Trump has promised not to impose any auto tariffs on Europe while the two work on a new trade deal. But a number of foreign governments and companies have said the tariffs would cause more harm. The National Automobile Dealers Association estimates tariffs would add $2,270 to the cost of U.S.-built vehicles and $6,875 to the cost of imported vehicles.
    It doesn't help that many in Trump's senior economic team believe slapping tariffs on imported cars is a bad idea. According to a report from Axios yesterday, "about every member of his senior economic team besides Peter Navarro believes this is a terrible idea."

    Drew Dowdell

    Lining up dealers to sell a budget crossover in 2020.

    The battle to be the first Chinese automaker to make it in the U.S. is heating up. Ford's Chinese partner Zotye has been setting up agreements for about 20 dealerships in the US,  The goal is to bring the Zoyte T600 to the US in 2020. Previously Guangzhou Automotive had planned to bring their vehicles to the U.S. in 2019, but Trump's tariffs would delay their arrival. 
    The T600, which looks like a cross between an Audi Q5 and previous generation VW Tiguan, sells between approximately $12,000 and $20,000 in China. 

    Zotye plans to position themselves as a budget brand and is looking towards GM's Saturn dealership model as inspiration for its retailers.
    Currently, the only Chinese built vehicles sold in the US are sold by US (Buick Envision, Cadillac CT6 PHEV) or European brands (Volvo S60 Inscription previous generation)

    William Maley

    This could make a number of people happy

    Since Volkswagen and Ford announced a new partnership back in the summer, there have been rumors flying around if it could expand into other areas. The two said it would primarily focus commercial vehicles, but they were open to other opportunities. As we reported last week, the two are discussing the possibility of expanding into autonomous tech and electric vehicles.
    Recently, Volkswagen Group CEO Herbert Diess gave an interview to Automotive News. He reiterated that the focus of the partnership is for commercial vehicles, but could expand.
    “There’s nothing signed yet with Ford. We are in talks. Most of the talks have been centered around our light-duty vehicles — our small commercial vehicles business in Europe, where we found huge synergies. We are both relatively small in size against our peers, so what we’re talking about is sharing a few platforms and manufacturing sites there, which makes sense. And within the dialogue, we are also touching other options, but this will be the main focus if we come to a conclusion,” said Diess.
    One example Diess brought up is using the Ford Ranger as a replacement for the Volkswagen Amarok. The current truck has been on sale since 2010 with a range of diesel engines to compete against the likes of the Ranger, Toyota HiLux, and Nissan Navara. Developing a new model would cost a fair amount of cash that Volkswagen would like to use elsewhere. This is where Ford could in and allow Volkswagen to use the Ranger as a basis for a next-generation Amarok. This may allow Volkswagen to sell the Amarok in the U.S. Of course, there is also the Atlas Tanoak concept shown at the New York Auto Show earlier this year that Volkswagen is considering sending into production.
    “If the Ford relationship works out well, we would have an Amarok successor, which would be then appropriate for sales worldwide — potentially as well for the United States. The other option is a unibody pickup, which is something for America, which is probably still a bit risky,” said Diess.
    This is one of many decision that Volkswagen might make in the near future. Another is allowing Ford to use their MEB toolkit for electric vehicles.
    Source: Automotive News (Subscription Required)

    William Maley

    May include autonomous vehicles

    A new report from the German publication Handelsblatt says that Ford and Volkswagen are considering expanding their partnership "that stands to change the German industry.” The two are reportedly looking into working together on autonomous tech and electric vehicle development.
    There are a number of ideas under consideration between two. One example is for Volkswagem's Moia self-driving subsidiary to take a 50 percent stake into Ford’s Autonomous Vehicles LLC. In return, Volkswagen could share their MEB toolkit with Ford on electric vehicles. The expansion in the partnership could also see Volkswagen buying combustion engines from Ford in an effort to reduce investments into diesel engines.
    Why are the two considering this expansion? For one, it would allow the two companies to pool their efforts to catch up with various competitors such as Tesla and Waymo, while saving cash. It is also being seen as a survival tactic in certain markets. Ford is struggling in Europe and South America, while Volkswagen is having issues in North America.
    Volkswagen's supervisory board will be holding a meeting later this month to consider whether or not it will expand this partnership.
    Source: Handelsblatt Global

    William Maley

    The lights are dimming at Faraday Future

    The future of Faraday Future is becoming dimmer. The Verge reported yesterday that the automaker has decided to shut down some operations this week at their headquarters in Gardena, California, and at its factory in Hanford, California. Workers who started after May 1st of this year “must take a furlough,” according to an email sent by FF CEO Jia Yueting. Those working before "will have the option to remain on board with a reduced salary of $50,000 per year," employees told The Verge. Yueting said the furlough will last at least through December, and is dependent on finding new funding.
    “We are grateful to all of the hundreds of employees who are willing to stay with the minimum wage [sic] and continue to work on the FF91 core project. This was an extremely tough decision to make, and we recognize the emotional stress and financial strain this puts on people’s personal lives.”
    In addition, Nick Sampson, one of Faraday Future’s three co-founders resigned yesterday. This follows the departure of Peter Savagian, former chief engineer of GM's EV1 and Faraday Future's senior vice president of technology and product development.
    “The company is effectively insolvent in both its financial and personnel assets, it will at best will [sic] limp along for the foreseeable future. I feel that my role in Faraday Future is no long [sic] a path that I can follow, so I will leave the company, effective immediately. I cannot continue knowing the devestating [sic] impact we are having on the lives of our employees, their families and loved ones as we as the [sic] ripple effect this will have on lives throughout our suppliers and the industry as a whole,” Sampson wrote in an email obtained by The Verge.
     “I have tried as best as I know how to find solutions to the problems but have met insurmountable barriers that I have not been able to resolve. I am sorry and sad that this day has been reached but I must do what my heart tells me.”
    Sampson added in his email that “if circumstances should materially change, I certainly would consider returning to the company.”
    A Faraday Future spokesman confirmed the departures of Sampson and Savagian in an email.
    Last week, Faraday Future announced that it would staff salaries by 20 percent and layoff a number of workers in an effort to save some money. Good news would come later in the week as an independent arbitrator allowed Faraday Future to look for funding without getting approval from its main investor Evergrande Health.
    Source: The Verge
    Pic Credit: Faraday Future

    William Maley

    Not a pleasant showing for the domestics

    Consumer Reports' has unveiled the results of their 2018 Auto Reliability Survey and it was not a good showing for the domestics. Only two domestic brands finished in the top 20 - Ford which came in 18th and Buick who placed 19th. The latter dropping 11 spots in this year's survey. The rest of the domestic brands finished in the bottom half with Ram, Tesla, and Cadillac finishing 26th to 28th. Finishing last was Volvo with CR saying the brand's Sensus Connect infotainment system being the reason for the drop.
    What finished towards the top? For 2018, Lexus and Toyota take the top two spots. Mazda saw the biggest improvement, jumping nine spots to third place. Completing the top ten are Subaru, Kia, Infiniti, Audi, BMW, MINI, and Hyundai.
    CR's predicted new-vehicle reliability ratings are derived from an annual questionnaire sent to their subscribers asking about the vehicles they own. The group reports that it had gotten responses for over "500,000 vehicles in its latest survey."
    A key reason why a number of brands saw a drop in the rankings is due to implementing new and complex technologies. A key example is vehicles equipped with 9 and 10-speed transmissions.
    Source: Consumer Reports

    Consumer Reports Annual Reliability Survey: Tesla and Other Domestic Brands Take Big Steps Backwards in Rankings
    Asian automakers again top the list for most reliable; Volvo drops to last amid shift to new designs YONKERS, NY — It was a rough year for domestic brands, according to Consumer Reports’ (CR) latest Annual Auto Reliability Survey, which collected data from its members about their experiences with more than half a million vehicles. Buick, Chevrolet, Chrysler, and Tesla are among the brands that tumbled in the organization’s predicted new-car reliability rankings announced at a news conference before the Automotive Press Association in Detroit today.
    Every domestic automaker landed in the bottom-half of CR’s latest reliability rankings, which covers 29 brands this year - two more than 2017. Ford ranks the highest at 18, down three spots from the previous year. Right below Ford on the list is Buick, which had performed well in recent years and was in the top 10 last year. Cadillac is the worst-rated domestic manufacturer and ranks near the very bottom at 28.
    Asian brands, led by Lexus, Toyota, and Mazda, in that order, continue to be the best for new car reliability in CR’s survey, which is the largest of its kind. Seven of the top 10 brands in this year’s reliability rankings are from Japan and South Korea, including Subaru, Kia, Infiniti, and Hyundai.
    Three European brands, Audi, BMW, and Mini, round out the top 10. Audi and BMW both declined from last year. Three other brands, Porsche, Volkswagen, and Mercedes-Benz, finished midpack. Volvo finished last overall.
    Tesla fell six spots from last year and now ranks third-worst (27 out of 29). The Model S dropped to “Below Average” this year, and its Overall Score is no longer high enough to be “Recommended” by CR. Owners reported suspension problems and other issues that included the extending door handle.  (Please see chart below.) The Model X SUV remained “Much-Worse-Than-Average” for reliability, with ongoing problems including the falcon-wing doors and center display screen. On the flip side, the Model 3 sedan has “Average” predicted reliability based on owner feedback.
    “While the Tesla Model S appears very similar physically to the car that launched six years ago, Tesla has made many significant mechanical and software changes over the past few years. Just as we’ve seen with many other manufacturers, major changes and updates can cause reliability to slide. It can take a year or two for carmakers to work out the kinks with new technology,” said Jake Fisher, Director of Auto Testing at CR. “Making air suspension and AWD standard in the 2017 model has added more complexity and more things that could potentially falter.” 
    “Time and again, consumers tell us that reliability is what matters most when it comes to choosing a vehicle that will meet their families’ needs,” said Marta L. Tellado, President and CEO of Consumer Reports. “That’s why we conduct this exhaustive survey each year—to equip people with the trustworthy information they need to make confident choices, which in turn helps drive the market toward even greater reliability.”
    Consumer Reports’ survey also reveals that some automakers--striving for improved fuel economy--are clearly making more reliable turbocharged engines than others. When compared to the average non-turbo engine among 2016-2018 models, overall, Lexus makes the most reliable turbo powertrain, followed by Honda and Porsche. On the other end of the spectrum, Hyundai and Mini have the most problematic turbos. There hasn’t been a common thread to explain the problems, but new powertrains have the propensity to be problematic in their first few years.
    “Not only are auto manufacturers adding more and more turbocharged engines, but they’re increasingly pairing them to high-tech transmissions with eight, nine, even 10 gears,” Fisher added. “With this added complexity, it’s not surprising to see some brands struggling to get them right, particularly the ones that don’t have a long history of producing turbos.” 
    Newly “Recommended” models show some bright spots for Detroit:  Dodge, GMC edge up; Other domestics slide down
    Consumer Reports’ prediction of new-car reliability is a key element of CR’s Overall Score. The score also includes road-test performance, owner satisfaction survey results, whether a vehicle comes with key safety systems, and results from crash tests, if applicable. This year there are more than a dozen vehicles with reliability ratings that improved enough to lift their Overall Scores to enable them to be “CR Recommended.”
    Overall, there is a lot of reshuffling among the brands in CR’s latest predicted new-car reliability rankings, with most domestic brands moving down the list. But reliability for some key models from Detroit has risen over the past year, allowing CR to “Recommend” them. Those vehicles include the Cadillac XTS, Chevrolet Cruze, Chevrolet Suburban, Chrysler 300, Dodge Charger, and Lincoln Continental.
    Brands from Fiat Chrysler Automotive (FCA) continue to occupy the bottom third of CR’s rankings. Dodge edges up three spots to number 21 out of 29 brands thanks partly to the “Better-Than-Average” reliability rating of the Dodge Charger, which has steadily improved over the past few years. The Dodge Grand Caravan continues to have “Average” reliability, while the Challenger, Durango, and Journey all stay “Below-Average.” Jeep has mixed results, falling two spots to 22. The Grand Cherokee and Renegade improve to “Average,” while the Cherokee and Compass SUVs have “Below-Average” reliability. Chrysler drops seven spots to number 24. While the Chrysler 300 improves to “Average,” the Pacifica minivan falls to “Below-Average.” Ram was the worst-charting FCA brand at 26.
    GMC inches up one spot to number 25 due to average or above reliability for the Terrain, Yukon, and Yukon XL. The Acadia and all the pickup trucks rate “Below-Average.”
    Other GM brands saw their place in the rankings fall from last year. Buick, which had recently been a bright spot for reliability among all domestics, falls 11 spots to 19 – this year’s biggest decline. The redesigned Enclave SUV had a “Much-Worse-Than-Average” rating, with owners reporting problems related to the new nine-speed automatic transmission. Chevrolet is down five places to number 23, in part because the redesigned Traverse had “Much-Worse-Than-Average” reliability. Cadillac is again the worst-performing of the GM brands, dropping one spot to 28. Only the XTS sedan rates “Better-Than-Average” for reliability.
    Ford ranks number 18, down three spots from last year. The Taurus, the oldest model in Ford’s fleet, has “Much-Better-Than-Average” reliability. But the usually reliable Fusion drops to “Below-Average”, mainly because of problems with the Sync 3 infotainment system screen. The Mustang and Explorer are “Worse-Than- Average.” As for 20th ranked Lincoln, its bright spot is the Continental’s "Much-Better-Than-Average” reliability rating. The MKC, MKX, and the MKZ are “Below Average.”

    Volvo sinks to last in down year overall for Europe
    Volvo drops six spots from last year as it rapidly brings a number of new models to market. It’s now in last-place among the 29 brands in the survey due in large part to an infotainment system that’s common to a number of different models including the XC60 and XC90 and the S 90. For the XC60, owners also reported problems with the climate system and interior cabin rattles.
    Other European automakers also lost ground. Audi tumbles three spots to seven on the list. BMW falls three spots to eight, followed by Mini at number nine. Mercedes-Benz declines three spots to number 17. The C-Class coupe and sedan improves to “Average,” but the GLC and E-Class are “Below-Average.” Porsche bucks the trend in this group, rising two places to number 11.
    Lexus, Toyota trade places at the top as Asia dominance persists
    Lexus and Toyota take the top two spots, respectively, in CR’s predicted new-car reliability rankings, as they have for six years in a row. Mazda jumps nine spots in the rankings to third overall, making it the year’s biggest gainer, as the automaker worked out the problems that plagued the CX-9 and MX-5 Miata roadster. Subaru continues its recent march up the chart, rising two places to fourth overall.
    The Infiniti brand also rebounds slightly, with the Q50 getting an “Average” score and the QX60 improving to “Above Average.” Nissan similarly tumbles a few slots, even with both the Maxima and the redesigned Leaf rating above average.
    Honda turns in mixed results, landing at 15, which is six spots lower from the year prior. The brand’s reliability is bogged down by some of its new and redesigned models. The Odyssey and the Clarity have “Much-Worse-Than-Average” reliability, and the CR-V and new Accord drops to “Average.” However, Acura seems to have worked out recent trouble spots with its new transmissions and infotainment systems. Honda’s luxury brand gains six spots in this year’s rankings to number 13.
    Kia drops two spots but remained in the top-ten as its all-new Stinger hatchback rates “Average” for reliability, as was the Sportage. Hyundai comes in at number 10, and its luxury Genesis brand is close behind. The G80 has “Above Average” reliability, and the G90 is below average, with reported problems in the area of body hardware and power equipment.

    William Maley

    20 percent cut in salaries and an unknown number of people will be laid off

    The bad news keeps hitting Faraday Future. Earlier this month, we reported on the fight between the automaker and its latest backer, Evergrande Health Industry Group. Faraday claims that Evergrande failed to provide additional funds as part of an investment deal. Evergrande has denied this claim and has brought in lawyers to fight this charge. But this row has caused the electric car start-up to make some difficult decisions.
    The Verge obtained an email sent to Faraday Future staff on Sunday night, announcing that staff salaries would be cut by 20 percent, and laying off some workers. The email also states that FF CEO Jia Yueting has decreased his annual salary to $1.00. The austerity measures will begin next week.
    “The company is committed to monitoring its finances and will reevaluate this decision with the goal of restoring salaries once funding is available,” the email states.
    It's unclear how many people will be laid off. A representative for FF did not respond to The Verge when asked for a comment.
    Source: Bloomberg, The Verge

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