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    William Maley

    Did we mention the fire that involved FF's only pre-production FF91?

    On the surface, Faraday Future appears to been having a run of good luck. It had gotten a major investment from healthcare division of Chinese real estate group Evergrande; testing is continuing on their first EV, the FF 91; and the company has started building pre-production vehicles at its US plant. But trouble always seems to be looming and it has struck once again for the start-up automaker.
    Yesterday, Reuters reported on a filing made by Evergrande Health for the Hong Kong stock exchange accusing Faraday Future of trying to cancel a deal to sell a 45 percent stake to Evergrande. Back in June, Evergrande Health agreed to buy the 45 percent stake into FF from previous owner Season Smart for $2 billion. It would begin with an $860 million initial payment, followed by installments of $600 million for 2019 and 2020. But Evergrande was notified a month later that FF had spent the $800 million it received from Season Smart back in December and was short on cash. It had agreed to pay $700 million ahead of schedule provided FF met certain undisclosed payment conditions.
    But FF and CEO Jia Yueting has opened arbitration to nullify the deal as it said Evergrande did not fulfill its end of the bargain - providing the cash. Evergrande sees it very differently, accusing Yueting of manipulating board members to move forward with arbitration. The company also claims that FF wants to revoke Evergrande's ability to approve plans to raise more money.
    That isn't the only money trouble FF is having. The Verge has learned from sources that a number of vendors and suppliers have not been paid in weeks. Emails that date back to August reveal Faraday Future representatives trying to explain the delay in payments is due to issues in payment processing. There are other excuses,
    Emphasis mine.
    One vendor told The Verge that an FF rep suggested they should hire a collection agency. Three other vendors have filed liens with the California Secretary of State - one of those totaling $400,000 for equipment sold to FF.
    If that wasn't enough trouble for the company, FF's sole preproduction version of the FF91 caught on fire last month. The fire took place a few hours after the vehicle debuted at a “Futurist Day” event for its employees and families. The extent of damage is not clear as FF "made employees sign non-disclosure agreements specifically related to the fire," according to former employees. This is a major setback to the company's plan to begin production later this year.
    Source: Reuters, The Verge

    William Maley

    All of those luxury touches are causing prices to climb

    Prices on new pickup trucks have been steadily increasing as more people are choosing them as their family vehicle and in turn are wanting more luxury features. But this rise in prices has been making it harder for the average buyer to afford one.
    Data from Edmunds shows through September, the average transaction price for a full-size pickup is $48,377; a 48 percent increase when compared to 10 years ago and 19 percent increased when compared to 2013.
    "A 48-percent increase in price is the highest price increase for that time period out of all vehicle categories. Even at $45,000, it prices a lot of people out," said Ivan Drury, senior analyst at Edmunds to the Detroit Free Press.
    "There are consumers who can afford the bare bones basic vehicles at $30,000, but once you're shown an option like a ventilated seat versus a cloth seat and it's 90 degrees outside, it becomes a very compelling argument to say yes. Ten years ago, comfort packages weren't offered on trucks. People are saying, 'I want those even if those vehicles are used to haul mulch.' "
    A very telling sign that truck prices are beginning to push people out is the massive difference between the expected and the actually average transactional price. Cox Automotive reports that buyers of a full-size pickup expected to pay an average of $38,529 through the month August. The actual average transaction price through August was $47,987 according to Cox.
    Also seeing a rise is the average income of truck buyers. Alexander Edwards, president of consultancy Strategic Vision tells the Free Press  that the median household income of a truck buyer has risen form $76,660 in 2009 to $100,305 in 2018. More telling is that the truck buyer has a higher income than a car buyer ($95,355).
    Some are beginning to worry that pickup trucks are becoming a bit too expensive.
    "In 1988, I sold my first pickup at $20,000 and I thought, 'Man, who could ever afford this?' Now, they're $60,000, $70,000, $80,000. ... I'm not sure everybody wants all that technology, but we're adding all of it. We're actually in the luxury business at those prices," said Charlie Gilchrist, owner of Gilchrist Automotive in the Dallas-Fort Worth area.
    A survey done by CarGurus correlates Gilchrist's view. Asking 203 current pickup owners from their user panel, CarGurus reports that owners would call paying $35,000 on a truck a good deal. But increase it to the average price of $45,200 and its too much. Respondents also said they would be willing to give up such features as a automatic open-close tailgate and Wi-Fi hotspot for a lower price.
    “This survey showed that pickup truck owners believe some of the new technology is nice to have, but not essential and not worth the price. We’re at an interesting time in the pickup truck category where many people are using their pickup trucks for more than just work. Those looking for a truck purely for work purposes don’t need all of the new luxury features, and those looking for a truck for commuting or leisure don’t need all of the new work features,” said Madison Gross, CarGurus' senior manager of customer insights.
    Source: Detroit Free Press

    William Maley

    WTLP Strikes Again (cue dramatic music)

    The Worldwide Harmonised Light Vehicle Test Procedure (WLTP) has been giving automakers in Europe various headaches. As we reported last week, Volkswagen has pushed back the U.S. launch of the Arteon to help boost inventory in Europe due to a delay in WLTP testing. Other automakers aren't so lucky.
    According to Automotive News Europe, a number German automakers including BMW, Mercedes-Benz, and Porsche have halted sales of some plug-in hybrids due to WLTP. In the new procedure, the way that PHEVs are tested reduces the effect of the fully-charged battery.
    "The vehicles are tested with a full battery, then the test is repeated until the battery is empty, when they are tested again," according to ANE.
    Germany's VDA on their website goes on to say that "the CO2 value is then calculated as the ratio of the electrical range to the total range."
    This in turn has pushed the "crucial CO2 emissions figure above 50 grams per kilometer". Why is it so crucial? Many European countries off tax benefits on vehicles that produce less than 50g/km of CO2.
     Matthias Schmidt, an analyst for Sweden's AID automotive research company tells ANE that in Germany, many PHEVs have lost their 3,000-euro (about $3,500) incentive. To qualify again, automakers will need to fit larger batteries to their vehicles to qualify for the incentives. Automakers now find themselves in a tough place deciding whether to bite the bullet and add the larger battery or pull PHEVs off the market for the time being.
    Here is the status of the various German automakers:
    BMW: Says its current lineup will meet WLTP, but ANE notes that certain models exceed the 50g/km of CO2 - example is the 225xe Active Tourer that produces 57 g/km. The 330e, the brand's second best-selling PHEV will not go back on sale until the next-generation model arrives next summer. Mercedes-Benz: Has no PHEVs on sale at the moment, but a spokesman said that the E-Class and S-Class PHEVs will go on sale within the next two months. Porsche: Has pulled sales of the Cayenne and Panamera PHEVs. "We will not start taking orders again until the cars are being built, the timing of which has not yet been confirmed," said a spokesman. Volkswagen: Stopped sales of the Golf and Passat GTE, both models appear in the top ten best selling PHEVs in Europe. A spokesman said both models would return next year with the introduction of updated models. Source: Automotive News Europe (Subscription Required) 

    William Maley

    Still is vowing to work with the national government to establish a national standard

    On Friday, California regulators voted to require that automakers stick with the Obama-era emission regulations for vehicles sold in the state, no matter the efforts of the Trump administration to weaken the standards. This basically means vehicles built for through 2025 model year comply with the state’s standards and can legally be sold there. Beginning with the 2026 model year, vehicles have to meet the stricter standards if automakers want to sell vehicles in the state, along with the 12 other states and Washington D.C. that follow these regulations.
    This is the latest salvo in the fight between California and Trump administration over emission standards. Back in August, the administration unveiled a new proposal that would freeze fuel efficiency requirements at 2020 levels through 2026. This proposal earned a large amount of criticism and a lawsuit filed by a group of states led by California.
    In a statement, California Air Resources Board's Chair Mary Nichols said the state would “continue to work to keep a single national program,” but that the vote “ensures that California and 12 other states will not fall victim to the Trump administration’s rollback of vehicle standards should its proposal be finalized.”
    Source: Reuters

    William Maley

    Its all about that perception

    Yesterday, President Donald Trump announced that he had reached an agreement with Japanese Prime Minister Shinzo Abe to open trade talks between the two nations. Previously, the president had threatened a 25 percent tariff on cars to reduce imports and encourage more production in the U.S. The two agree that the "sanctions on auto exports won’t be applied while the talks take place."
    A key topic of talks will likely be giving better access to U.S. cars to be sold in Japan, something President Trump has complained about before. Data from Japan’s auto industry associations said only 0.3 percent of the 3.2 million vehicles sold in the country this year when American brands. Contrast this to 40 percent of the U.S.' market share being made up by Japanese automakers according to Bloomberg.
    But there arises a problem with Trump's ambition, Japanese buyers aren't interested. Japan has argued time and time again that the reason American automakers don't do some well is the perception of that American cars are " bulky and inefficient". There is one American brand that bucks this trend, Jeep. According to Bloomberg, Jeep sold more than 7,000 vehicles in the first eight months of this year - beating all other U.S. brands combined.
    Source: Bloomberg (Subscription Required)

    William Maley

    Drivers rely too much on assist systems

    Many new cars are fitted with various driver assist systems; backup cameras, blind spot monitoring, adaptive cruise control, forward collision warning, and lane-keep assist to name a few. But this has introduced the problem of drivers becoming too reliant on these systems, causing them not realize the limitations and taking their own "preventative measures".
    The AAA Foundation for Traffic Safety published a report this month looking into drivers' experiences with the assistance technologies and seeing how they relate to their understanding of it. The group commissioned researchers from the University of Iowa to survey over 1,200 owners of 2016 and 2017 model year vehicles equipped with ADAS technologies.
    The study revealed that the majority of drivers have a favorable impression of ADAS tech, with at least "two in three owners of vehicles with each respective technology reported that they trusted it." Seven out ten respondents said they would want the respective ADAS tech on their current vehicle to be standard on their next one.
    But, the study revealed that many drivers overestimate the capability of ADAS systems. Here are some of the key findings,
    Over 80 percent of drivers surveyed don't fully understand the limitations or believed that blind-spot monitoring systems could detect a large number of  fast-approaching vehicles, bicycles and pedestrians. 25 percent of drivers surveyed said they don't look for oncoming vehicles when they change lanes because their vehicle has blind-spot monitoring. Nearly 40 percent of drivers don't understand the limitations of forward collision warning and automatic emergency braking systems. A number believed that the former would bring the vehicle to a stop, when in actuality only warns a driver of a possible collision. One in six drivers didn't know if their vehicle came equipped with an emergency braking system. About 29 percent of drivers admitted "feeling comfortable engaging in other tasks while driving" when using the adaptive cruise control system. “When properly utilized, ADAS technologies have the potential to prevent 40 percent of all vehicle crashes and nearly 30 percent of traffic deaths. However, driver understanding and proper use is crucial in reaping the full safety benefits of these systems,” said Dr. David Yang, executive director of the AAA Foundation for Traffic Safety in a statement.
    “Findings from this new research show that there is still a lot of work to be done in educating drivers about proper use of ADAS technologies and their limitations.”
    AAA says automakers, dealers, and rental agencies need to provide better education to drivers about ADAS tech and their limitations.
    Source: Automotive News (Subscription Required), AAA
    Drivers Rely Too Heavily on New Vehicle Safety Technologies In Spite of Limitations
    Misunderstanding and misuse of driver assistance technology could lead to a crash WASHINGTON, D.C. (Sept. 26, 2018) – More and more, drivers are recognizing the value in having vehicles with advanced driver assistance systems (ADAS) like blind spot monitoring systems, forward collision warning and lane keeping assist. However, while many of these technologies are rapidly being offered as standard, many drivers are unaware of the safety limitations of ADAS in their vehicles, according to new research from the AAA Foundation for Traffic Safety. For example, researchers found that nearly 80 percent of drivers with blind spot monitoring systems were unaware of limitations or incorrectly believed the system could accurately detect vehicles passing at very high speeds or bicycles and pedestrians. In reality, the technology can only detect when a vehicle is traveling in a driver’s blind spot and many systems do not reliably detect pedestrians or cyclists. Lack of understanding or confusion about the proper function of ADAS technologies can lead to misuse and overreliance on the systems, which could result in a deadly crash.
    “When properly utilized, ADAS technologies have the potential to prevent 40 percent of all vehicle crashes and nearly 30 percent of traffic deaths. However, driver understanding and proper use is crucial in reaping the full safety benefits of these systems,” said Dr. David Yang, executive director of the AAA Foundation for Traffic Safety. “Findings from this new research show that there is still a lot of work to be done in educating drivers about proper use of ADAS technologies and their limitations.”
    In 2016, more than 37,400 people were killed in traffic crashes- a five percent increase from 2015. “With ADAS technologies offering proven safety benefits when properly used, it is important that automakers and others play a greater role in educating motorists about the technology available in the vehicles they purchase,” said Jake Nelson, AAA director of traffic safety advocacy and research. “AAA also urges drivers to take charge of learning their vehicle technology’s functions and limitations in order to improve safety on the road.”
    The AAA Foundation for Traffic Safety commissioned researchers from the University of Iowa to survey drivers who recently purchased a 2016 or 2017 model-year vehicle with ADAS technologies. Researchers evaluated drivers’ opinions, awareness and understanding of these technologies and found that most did not know or understand the limitations of the systems:
    Blind spot monitoring: 80 percent of drivers did not know the technology’s limitations or incorrectly believed that the systems could monitor the roadway behind the vehicle or reliably detect bicycles, pedestrians and vehicles passing at high speeds. Forward collision warning and automatic emergency braking: nearly 40 percent of drivers did not know the system’s limitations, or confused the two technologies- incorrectly reporting that forward collision warning could apply the brakes in the case of an emergency when the technology is only designed to deliver a warning signal. Moreover, roughly one in six vehicle owners in the survey reported that they did not know whether or not their vehicle was equipped with automatic emergency braking. False expectations for ADAS systems can easily lead to misuse of the technology or an increase in driver distraction. In the survey:
    About 25 percent of drivers using blind spot monitoring or rear cross traffic alert systems report feeling comfortable relying solely on the systems and not performing visual checks or looking over their shoulder for oncoming traffic or pedestrians. About 25 percent of vehicle owners using forward collision warning or lane departure warning systems report feeling comfortable engaging in other tasks while driving. “New vehicle safety technology is designed to make driving safer, but it does not replace the important role each of us plays behind the wheel,” Yang continued. “The prospect of self-driving cars is exciting, but we aren’t there yet.  Automakers have an ethical and important responsibility to accurately market, and to carefully educate consumers about the technologies we purchase in the vehicles we drive off the lot.”
    As part of its ongoing traffic safety mission, new AAA Foundation research also evaluated the potential these popular advanced driver assistance technologies have in helping to reduce or prevent crashes. The findings show that if installed on all vehicles, ADAS technologies can potentially prevent more than 2.7 million crashes, 1.1 million injuries and nearly 9,500 deaths each year:
    ADAS Systems Crashes Injuries Deaths Forward Collision Warning/ Automatic Emergency Braking 1,994,000 884,000 4,738 Lane Departure Warning / Lane Keeping Assist 519,000 187,000 4,654 Blind Spot Warning 318,000 89,000 274 Total Potentially Preventable by all systems  2,748,000 1,128,000 9,496 Despite the findings that show confusion about some ADAS technologies, at least 70 percent of vehicle owners report that they would recommend the technology to other drivers. The greatest proportion of drivers reported trusting blind spot monitoring systems (84 percent), followed by rear-cross traffic alert (82 percent), lane departure warning (77 percent), lane keeping assist (73 percent), forward collision warning (69 percent) and automatic emergency braking (66 percent).
    These findings should prompt additional focus on the importance of educating new and used car buyers about how safety technologies work. “The training drivers need to properly use the safety technologies in their vehicles is not currently offered,” added Nelson. “If educating consumers about vehicle technology was as much a priority for the automakers and dealers as making the sale, we would all reap the benefits.”
    Only about half of the drivers who report purchasing their vehicle from a car dealership recalled being offered a training on the ADAS technology. However, for those who were, nearly 90 percent took advantage of the opportunity and completed the training.
    For now, drivers are their best safety advocate to ensure that they understand their technology’s features, functions and limitations before leaving the lot. In order to reduce misuse or overreliance on the systems, AAA encourages drivers to:
    Read up: Read your owner’s manual to learn what systems are installed in your vehicle. See it in action: Insist on an in-vehicle demonstration and test drive to better understand how the systems will engage on the roadway. Ask questions: Ask plenty of questions about the alerts, functions, capabilities and limitations of the vehicle’s safety technologies before leaving the dealership. For example, ask if there are scenarios when a technology will not function properly on the road.

    William Maley

    New cars are just too expensive

    New cars are getting more and more expensive. Kelly Blue Book reported earlier this month that the average transaction price of a new car was $35,541, up 1.8 percent compared to the same time last year. This has more consumers checking out the used car lot, causing demand to rise.
    “Customers forget a new car is now more than $30,000 and they expect it to be $20,000,” said Brian Allan, a senior director at Galpin Motors Inc., to the Wall Street Journal.
    “When people see the price has gone up, it is sticker shock, especially when people only buy a car every five to six years."
    Data from Edmunds reports that the gap between the price of a new and used car is now at one "of its largest points in more than a decade". Key reasons for this gap include consumers trending to trucks and SUVs, and automakers adding more expensive tech.
    This summer saw a strong demand for used cars and analysts are predicting this trend to continue throughout the rest of the year, partly due to dealers stocking more trucks and utility vehicles. Prices of used cars are also on the rise. Edmunds reports that buyers paid an average of $22,489 for a three-year old used car in the second-quarter - up $865 from the same time last year.
    This isn't good news for automakers as new car sales are starting to slow down and pressure could begin building to deepen discounts to lure consumers back. Lenders have been extending the length of loans and introducing 0 percent financing to make buying new more attractive.
    Source: Wall Street Journal (Subscription Required)

    William Maley

    BMW, Daimler, and Volkswagen are involved in the investigation

    About a year ago, European antitrust regulators became very suspicious that BMW, Daimler, and Volkswagen were involved in a longstanding automotive cartel that colluded on restricting certain emissions control devices for the market. Raids were carried out at various facilities, but nothing came out. That changed yesterday as the European Commission has opened a formal investigation.
    "The Commission is investigating whether BMW, Daimler and VW agreed not to compete against each other on the development and roll-out of important systems to reduce harmful emissions from petrol and diesel passenger cars," said Commissioner Margrethe Vestager, head of competition policy for the European Commission in a statement.
    "These technologies aim at making passenger cars less damaging to the environment. If proven, this collusion may have denied consumers the opportunity to buy less polluting cars, despite the technology being available to the manufacturers."
    The technologies in question include selective catalytic reduction systems that reduce the amount of nitrogen oxides from diesel cars, and "Otto" particulate filters that capture particulate emissions from gas vehicles.
    The commission also revealed the group discussed common requirements for car parts and testing procedures, though there isn't evidence to say if they were illegal or not. It is also mentioned that there was no evidence that the automakers coordinated in the use of defeat devices.
    Daimler and Volkswagen told Reuters they were cooperating with the commission. BMW said it would continue to support the authority of the commission.
    Source: Reuters, European Commission

    Antitrust: Commission opens formal investigation into possible collusion between BMW, Daimler and the VW group on clean emission technology
    Brussels, 18 September 2018
    The European Commission has opened an in-depth investigation to assess whether BMW, Daimler and VW (Volkswagen, Audi, Porsche) colluded, in breach of EU antitrust rules, to avoid competition on the development and roll-out of technology to clean the emissions of petrol and diesel passenger cars.
    Commissioner Margrethe Vestager, in charge of competition policy, said: "The Commission is investigating whether BMW, Daimler and VW agreed not to compete against each other on the development and roll-out of important systems to reduce harmful emissions from petrol and diesel passenger cars. These technologies aim at making passenger cars less damaging to the environment. If proven, this collusion may have denied consumers the opportunity to buy less polluting cars, despite the technology being available to the manufacturers."
    In October 2017, the Commission carried out inspections at the premises of BMW, Daimler, Volkswagen and Audi in Germany as part of its initial inquiries into possible collusion between car manufacturers on the technological development of passenger cars.
    The Commission's in-depth investigation focusses on information indicating that BMW, Daimler, Volkswagen, Audi and Porsche, also called the "circle of five", participated in meetings where they discussed inter alia the development and deployment of technologies to limit harmful car exhaust emissions.
    In particular, the Commission is assessing whether the companies colluded to limit the development and roll-out of certain emissions control systems for cars sold in the European Economic Area, namely:
    selective catalytic reduction ('SCR') systems to reduce harmful nitrogen oxides emissions from passenger cars with diesel engines; and 'Otto' particulate filters ('OPF') to reduce harmful particulate matter emissions from passenger cars with petrol engines. The in-depth investigation will aim to establish whether the conduct of BMW, Daimler and VW may have violated EU antitrust rules that prohibit cartels and restrictive business practices, including agreements to limit or control technical development (Article 101 of the Treaty on the Functioning of the European Union).
    At this stage, the Commission has no indications that the parties coordinated with each other in relation to the use of illegal defeat devices to cheat regulatory testing.
    The Commission will carry out its in-depth investigation as a matter of priority. The opening of a formal investigation does not prejudge its outcome.
    Other topics discussed by the companies
    The Commission's formal investigation concerns solely the emissions control systems identified above. These were only some of the issues discussed by the "circle of five". Numerous other technical topics were discussed, including common quality requirements for car parts, common quality testing procedures or exchanges concerning their own car models that were already on the market. The "circle of five" also had discussions on the maximum speed at which the roofs of convertible cars can open or close, and at which the cruise control will work. Cooperation also extended to the area of crash tests and crash test dummies where the car companies pooled technical expertise and development efforts to improve testing procedures for car safety.

    At this stage the Commission does not have sufficient indications that these discussions between the "circle of five" constituted anti-competitive conduct that would merit further investigation. EU antitrust rules leave room for technical cooperation aimed at improving product quality. The Commission's in-depth investigation in this case concerns specific cooperation that is suspected to have aimed at limiting the technical development or preventing the roll-out of technical devices.

    William Maley

    Increased tariffs on car parts are to blame

    Yesterday, President Donald Trump announced a new round of tariffs on about $200 billion in Chinese goods beginning next Monday. The tariffs are set at 10 percent and could rise to 25 percent in January if the Chinese government refuses to offer concessions. Today, the Chinese government announced that it would take retaliatory action by placing tariffs on $60 billion of U.S. goods.
    This is bad news for automakers as the Detroit Free Reports that more than 100 car parts - ranging from tires to batteries - will be hit by the tariffs.  Analysts told the paper the increased tariffs will raise prices and cause sales to fall, along with profits being cut for automakers.
    It's going to be felt by Americans and it's going to be a big deal. Tariffs are taxes on consumption. Eventually, costs will be passed down to the consumer. This will drive vehicle costs higher. It also includes a lot of body shop equipment," said Peter Nagle, senior analyst at IHS Markit.
    Analysts all agree that prices will go up, but aren't sure by how much.
    "Prices are going to go up, but they won't go up by 25 percent. It is most unfortunate that this is coming at a time when the auto cycle is in very late stage. Vehicle sales already are in slow decline. This will probably will be quite a gut punch when they are forced to raise prices," explained Jon Gabrielsen, a market economist who advises automakers and auto suppliers. 
    "It covers literally everything that goes into the construction of an automobile, from the smallest components and material inputs like the cords in tires and shafts and gears and bearings all the way up to completed engines and, in some cases, chassis with engines mounted. Thing is, it takes about three years to source each product. It takes many years and possibly a decade to make that full move."
    Automakers didn't comment as to how they plan to absorb and pass the cost onto consumers. They did reiterate pleas for both governments to sit down and work this out.
    Source: Detroit Free Press, Bloomberg via Automotive News (Subscription Required)

    William Maley

    Totaling over a billion dollars

    Last month, we reported on a rumor that that Saudi Arabia's Public Investment Fund (PIF) was in talks about possibly providing funding to electric car start-up Lucid Motors. The fund would provide an initial investment of $500 million, but would expand it to a billion if certain milestones were met.
    This morning, Lucid Motors announced that it signed an agreement with the PIF totaling over $1 billion, subject to necessary regulatory approvals. If given the go-ahead, Lucid will use the money to finish building their plant in Arizona, complete development on Air, and begin production by 2020.
    “By investing in the rapidly expanding electric vehicle market, PIF is gaining exposure to long-term growth opportunities, supporting innovation and technological development, and driving revenue and sectoral diversification for the Kingdom of Saudi Arabia,” said a spokesman for the PIF.
    The PIF made headlines last month when Tesla CEO Elon Musk revealed the fund as being the provider for the automaker to go private. This was based on discussions between the two, along with the fund purchasing a small stake. But as we reported later in the month, officials at the fund were not so keen on this idea.
    Source: Lucid Motors

    William Maley

    Deals with the Roxor Utility 

    Earlier this month, Fiat Chrysler Automobiles filed a complaint with the U.S. International Trade Commission over the Mahindra Roxor - a side-by-side off-road utility. FCA alleges that the certain design elements of the Roxor infringe on the " intellectual property rights of FCA's Jeep design," and is wanting to stop the sale of the model in the U.S.
    Mahindra is fighting back. Reuters reports that the company has filed a public interest statement with the U.S. ITC and started proceedings in a Michigan court for an injunction into FCA's complaint.
    We are asking the court to block Fiat from participating in the ITC [International Trade Commission] claim -- an injunction -- because of the fact that they agreed in 2009 to never bring such claims if we use a grille that they approved. The Roxor uses that grille," Mahindra said in a statement. (Emphasis mine).
    "We are also arguing that Fiat is using the ITC case to harm our ROXOR business by creating negative publicity, damaging our reputation and our stature in the marketplace.”
    FCA in its complaint said that Roxor imports will hurt them as the model are underselling the Jeep Wrangler. A lot of this comes down to the Roxor being manufactured in India, and then shipping the model as a knock-down kit to their Detroit-area assembly plant for final assembly. Mahindra disputes this, saying the Roxor doesn't compete with the Wrangler as it's a side-by-side off-road utility.
    " We also demonstrated that the ROXOR is a vehicle that was always intended only as an off-road vehicle, does not compete with Fiat vehicles, is manufactured and assembled in the first OEM plant to be built in Michigan, USA, in the last 25 years, was the result of more than three years of research and development, and categorically rejected the notion that the ROXOR was an imported low quality “knock-off” kit car," the company said.
    Source: Reuters via Automotive News (Subscription Required), Mahindra

    Mumbai, August 29, 2018 – “A complaint was filed by FCA US, LLC (“Fiat”) with the United States International Trade Commission (“ITC”) against Mahindra which we believe is without merit. In response, we have taken a number of actions both within the ITC and in Federal District Court that we would like to share with you. Mahindra filed a Public Interest Statement with the ITC on August 22, 2018. This Statement expresses our position on this matter and explains how it is in the public interest for the ITC to rule against Fiat and in favor of Mahindra.
    Our goals on the public interest statement were two-fold. One was to state our position on the merits and the other was to correct inaccuracies regarding Mahindra as a company and the ROXOR as a product. We set the record straight on the history of Mahindra, including its U.S. operations. We also demonstrated that the ROXOR is a vehicle that was always intended only as an off-road vehicle, does not compete with Fiat vehicles, is manufactured and assembled in the first OEM plant to be built in Michigan, USA, in the last 25 years, was the result of more than three years of research and development, and categorically rejected the notion that the ROXOR was an imported low quality “knock-off” kit car.
    On August 23, 2018, Mahindra filed a complaint in Federal Court in Michigan on the issue of the applicability and enforcement of our 2009 agreement with Fiat. We are asking the court to block Fiat from participating in the ITC claim – an injunction – because of the fact that they agreed in 2009 to never bring such claims if we use a grille that they approved. The ROXOR uses that grille. We are also arguing that Fiat is using the ITC case to harm our ROXOR business by creating negative publicity, damaging our reputation and our stature in the marketplace.”

    William Maley

    Yes, the maker of the AK-47 built an EV concept

    Kalashnikov, the Russian company best known for making the AK-47 assault rifle is planning to enter the growing electric-vehicle market. Last week at the Army 2018 International Military Technical Forum in Kubinka, Russia, Kalashnikov unveiled the CV-1 concept.
    The design is inspired by the Soviet Izh-Kombi hatchback built between 1973 and 1997. There are some modern touches such as LED headlights and a set of lightweight wheels. Technical details are scarce, with Kalashnikov saying the model has an electric motor producing 295 horsepower, a “revolutionary inverter”, and 90 kWh modular battery pack. 
    Kalashnikov clams that once development is completed, the vehicle will have a range of 220 miles on a single charge and boast a top speed several times higher than its current electric vehicles - the company builds off-road vehicles and motorcycles along with the AK-47.
    "This technology will let us stand in the ranks of global electric car products such as Tesla and be their competitors," a Kalashnikov spokesperson told Russian news agency RIA-Novosti.
    Source: Autocar, BBC News
    Pic Credit: Kalashnikov

    William Maley

    Another automaker may be in the sights of Saudi Arabia's Public Investment Fund

    Last week, Tesla CEO Elon Musk revealed that Saudi Arabia's Public Investment Fund (PIF) could help provide the necessary funding to make the company private. But a new report hints that the PIF could invest its money into a different electric automaker.
    Reuters has learned from sources that the PIF is in talks with Lucid Motors about a potential investment. The two have drawn up a term sheet where the PIF could invest more than $1 billion into Lucid Motors and become the majority stakeholder. One source adds that the first investment would only be for $500 million and that subsequent investments would only come if Lucid Motors is able to hit  certain production milestones
    The sources do caution that the talks may not result in a deal.
    Despite the PIF having $250 billion in assets, Reuters says the fund has already made a number of substantial investments into other things such as a $45 billion investment into a giant technology fund. This leaves them with limited funds, which makes the deal with Lucid more appealing. Banks have estimated that Tesla could need up to $72 billion if Tesla pays the $420 per share announced by Musk a few weeks ago. However, the price could drop if current shareholders keep their shares in the private company.
    Lucid Motors made a big splash in 2016 with the introduction of the Air. The model made some big promises such as having the interior space of a Mercedes-Benz S-Class and a max range of up to 400 miles on a charge. Lucid was planning to start production of the sedan this year in Arizona. But last year, the company pushed back production to 2019 as they needed to raise more funds. 
    Source: Reuters

    William Maley

    Blame the number of recent crashes involving self-driving cars

    Most people aren't so keen on letting an autonomous system take control of their vehicle according to a new survey done by Cox Automotive.
    Nearly 85 percent of the 1,250 people surveyed said they should have the option to drive themselves even in a self-driving vehicle. Only 16 percent said they would feel comfortable allowing a autonomous driving system take over. When asked if they would be a fully-autonomous vehicle (Level 5 under SAE's vehicle autonomy guidelines), almost half said no. Automotive News notes that is up from the 30 percent of people surveyed in 2016.
    Why the increases in overall apprehension? It mostly comes down to number of crashes that autonomous vehicles have been involve in, such as the Uber crash that killed a pedestrian.
    “People now have a deeper understanding of the complexities involved when creating a self-driving car, and that has them reconsidering their comfort level when it comes to handing over control,” said Karl Brauer, executive publisher of Autotrader and Kelley Blue Book.
    In the past two years, awareness into self-driving tech increased 24 percent. But the perception of the safety of self-driving vehicles dropped 20 percent.
    Despite the trepidation, Cox believes the adoption of self-driving vehicles will gain traction - bringing big implications for automakers and dealers.
    “Miles traveled will shift toward fleet-owned vehicles, causing what we believe to be a potential 40 percent reduction in consumer vehicle sales,” said Isabelle Helms, vice president of research and market intelligence at Cox Automotive.
    We should note that Cox Automotive does an interest in the self-driving marketplace. Automotive News says the company has created a new unit that will sell software and services for car-sharing, ride-hailing, subscription programs, and, eventually, self-driving taxi fleets.
    Source: Automotive News (Subscription Required)

    William Maley

    Ah, interagency fighting.

    When the EPA and NHTSA unveiled the proposal for revised fuel economy standards, there was a key part that brought up a lot of debate: The claim that the new regulations would reduce the number of fatalities and crashes. As we pointed out in our story, there were a number of holes in that argument. It seems we were not the only ones questioning this.
    Yesterday, the review of the proposal done by the White House's Information and Regulatory Affairs was made public. In it are hundred of pages of correspondence, analysis, and drafts. Bloomberg went through the documents and found that EPA officials were questioning the rationale put forth by NHTSA on reducing crashes.
    The “proposed standards are detrimental to safety, rather than beneficial,” wrote EPA staff in a memo dated June 18th.
    Their basis for this was analysis done by the agency after making a number of corrections to a Transportation Department model. It showed that freezing fuel economy standards "would lead to an increase in traffic fatalities and boost the overall fatality rate."
    The EPA questioned the validity of the Obama administration standards “coincided with an increase in highway fatalities” claim.
    “What data supports the implication that the standards to date have led to fatality increases?” said the EPA in feedback on June 29th.
    Also, the EPA questioned NHTSA's model that overestimates the number of old and unsafe vehicles on the road if the new regulations go into effect.
    How the EPA and NHTSA came to an agreement is unclear at the moment. What it does reveal is that the dispute between the two agencies could affect plans to try and create a comprise that would appease both automakers and California regulators.
    “These emails are but a fraction of the robust dialogue that occurred during interagency deliberations for the proposed rule. EPA is currently soliciting comments on eight different alternative standards and we look forward to reviewing any new data and information,” said EPA spokesman John Konkus.
    Irene Gutierrez, an attorney with the Natural Resources Defense Council sees it a bit differently.
    "...that even the EPA had deep reservations about the bogus safety arguments being pushed by the Department of Transportation. We know that automakers can make cars both more fuel efficient and safer; it’s heartening to find out EPA’s technical experts agree.”
    Source: Bloomberg

    William Maley

    And now for something completely contradictory 

    Under the current standards for vehicle emissions, automakers have a variety of ways to achieve compliance. These are known as "compliance flexibilities" which allows an automaker to sell electric vehicles to off-set gad-guzzlers like SUVs as an example. But the recent proposal by the Trump administration to ease emission standards, will remove these flexibilities.
    The proposal unveiled last week would freeze fuel-economy and emissions standards at their 2020 levels for several years beyond that. This would seem like a positive for automakers as trucks and SUVs/crossovers are selling like hotcakes. But the removal of this provision has automakers crying fowl, saying these help with global vehicle development. The heads of the Alliance of Automobile Manufacturers and the Association of Global Automakers wrote a letter to Trump stating that the “flexible compliance pathways that pave the way for research and deployment in advanced fuel-saving technologies”.
    “We are global manufacturers; to compete around the world, we must continue to invest in both more efficient internal combustion engine technologies, electric-drive technologies and fuel cells,” said Mitch Bainwol of the Alliance, and John Bozzella of the Global Automakers.
    But there is a reason the government is removing those compliance flexibilities as it "existing fuel-economy program easier to administer and more transparent". This makes it easier for regulators and consumers to verify an automaker's claim. The current system is somewhat confusing, as thirstier automakers can buy into compliance by trading emission credits from more efficient ones. The trades and prices can be shielded from public viewing.
    Source: Bloomberg

    William Maley

    A fair amount of their complaint deals with the design 

    Fiat Chrysler Automobiles is none too pleased with the Indian automaker Mahindra & Mahindra Ltd as they're planning to sell an off-road vehicle that looks very much like the original Willys Jeep.
    Bloomberg obtained a complaint filed by FCA to the U.S. International Trade Commission on August 1st. The document claims that Mahindra's Roxor infringes key characteristics of Jeep's signature design - namely the “boxy body shape with flat-appearing vertical sides and rear body ending at about the same height as the hood.”
    “They are a nearly identical copy of the iconic Jeep design. In fact, the accused product was ‘modeled after the original Willys Jeep."
    The Roxor is a small, two-seat off-road vehicle. There is a lot of resemblance to original Jeep design and there is a reason for that. Beginning in 1947, Mahindra got a license to build the Willys CJ3 for the Asian market. They would do so until 2010. At this point, Mahindra introduced an updated model known as the Thar that meets India's road going passenger vehicle standards and looks like a 1990's Wrangler.
    Now the Roxor isn't being sold as road-legal vehicle. Instead, Mahindra is selling this as a side-by-side off-road utility. That means its not road legal. Which brings us to the next key part of FCA's complaint. The company is arguing that Roxor imports "threaten it with substantial injury as they are underselling Jeeps." This is due to Mahindra manufacturing the parts and creating a knock-down kit, which is then shipped to a plant in the Detroit area for final assembly. We're not sure about this partly due to the arena the Roxor competes in, but also the price. The model begins at just under $15,500. Comparable models from Polaris and Honda begin at under $10,000.
    While Mahindra has had some success in the U.S. with tractors, they haven't had the same when it comes to automobiles. Previously, the company was planning to offer a diesel pickup through a distributor. But plans were scrapped and Mahindra would find itself in a lengthy court battle. The Roxor is the next attempt at possible entry for Mahindra to enter the automotive market. They have spent almost a quarter-billion dollars for a new assembly plant where they currently employ around 300 people. Last November, the company announced a $600 investment and plans to employ as many as 670 workers by 2020.
    Source: Bloomberg

    William Maley

    Prepare yourselves, there are some mental gymnastics involved 

    As expected, the Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) have unveiled a proposal that will suspend increases in fuel economy put forth by the Obama administration, and take away California's ability regulate vehicle emissions.
    The new proposal is called the "Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule." Under the new proposal, the Corporate Average Fuel Economy (CAFE) would be capped at the 2020 level of 37 mpg through 2025. Under the rules that were created during the Obama administration, automakers would need to have a fleet average of 54 mpg in 2026. The proposal would also remove Calfornia's ability to set their own emissions state based on a 1975 federal law that prohibits states from setting their own greenhouse gas limits. It needs to be noted that two federal judges have rejected this argument when it was brought to court. 
    "EPA is proposing to withdraw the waiver granted to California in 2013 for the GHG [Greenhouse Gas] and ZEV [Zero Emissions Vehicles] requirements of its Advanced Clean Cars program," the proposal states.
    "In short, the agencies propose to maintain one national standard -- a standard that is set exclusively by the Federal government."
    What are the benefits to this new proposal? The one that has been getting the most headlines is reduced fatalities and crashes. If you're scratching your head as to how this makes sense, here is what the proposal argues. 
    People who buy fuel-efficient vehicle will drive more, increasing the odds that they will get into a crash. Fuel-efficient vehicles will be more expensive, thus slowing down the rate people buy new cars with advanced safety features. Fuel-efficient vehicles tend to be lighter, thus are less capable of withstanding a crash. The proposal claims that this will prevent 12,700 fatalities and many more injuries on American roads.
    There has been a lot of disagreement on this part, especially on the weight part. While it is true that a heavier vehicle won't sustain as much damage as lighter vehicle, experts have realized that the size of vehicle is more important to overall safety. Plus, the New York Times points out this point only accounts for one percent of the estimated fatalities in the proposal.
    Other benefits include reduced costs for new vehicles - the proposal says the stricter emission rules add about an average of $2,430 to the price of new vehicles.
    “We think we can have a win-win, if we lock in at 2020 levels. We’re not imposing undue costs on manufacturers. We’re not imposing undue costs on consumers who want affordable vehicles. And therefore we think as a result of these standards we will be able to have our cake and eat it too,” said Bill Wehrum, the assistant administrator for EPA’s Office of Air and Radiation on a call today.
    Reactions to this are very mixed.
    “I applaud the Trump administration for proposing new standards for cars and trucks. Unless the Obama administration’s punishing standards are changed, consumer choice will be limited and the cost of vehicles will skyrocket,” said Senator John Barrasso (R-WY), chairman of the Senate Environment and Public Works Committee.
    "Automakers support continued improvements in fuel economy and flexibilities that incentivize advanced technologies while balancing priorities like affordability, safety, jobs, and the environment," said the Alliance of Automobile Manufacturers and and the Association of Global Automakers in a statement.
    "The administration's effort to roll back these standards is a denial of basic science and a denial of American automakers' engineering capabilities and ingenuity," said John M. DeCicco, research professor at the University of Michigan Energy Institute.
    "This was a predictable move, as the current administration has been working hard to dismantle Obama-era regulations across the board. And while there's little demand today for smaller, more-efficient or electrified vehicles in the U.S., as gas prices remain low, these lower fuel economy targets proposed by the administration will likely spark an unwanted war between Washington and the California Air Resources Board. While few stakeholders were happy with the tough targets in the current regulations, unraveling those standards will likely be even more painful," said Michelle Krebs, executive analyst at Autotrader.
    Unsurprisingly, California is not pleased by this new proposal. The state along with 18 others and the District of Columbia have announced they would challenge the proposal in court.
    “The Trump Administration has launched a brazen attack, no matter how it is cloaked, on our nation’s Clean Car Standards,” said Xavier Becerra, California’s attorney general.
    California “will use every legal tool at its disposal to defend today’s national standards and reaffirm the facts and science behind them.”
    California Governor Jerry Brown was more blunt in his reaction to this,
    "California will fight this stupidity in every conceivable way possible.”
    A legal fight could mean a lot of headaches for automakers as it might result in two different emission standards they would have to meet. 
    "With today's release of the Administration's proposals, it's time for substantive negotiations to begin. We urge California and the federal government to find a common sense solution that sets continued increases in vehicle efficiency standards while also meeting the needs of America's drivers," said the Alliance of Automobile Manufacturers and and the Association of Global Automakers.
    The next step is giving the public 60 days to comment on this proposal.
    Source: Bloomberg, New York Times, (2), Reuters, EPA
    U.S. EPA and DOT Propose Fuel Economy Standards for MY 2021-2026 Vehicles
    WASHINGTON  — Today, the U.S. Environmental Protection Agency (EPA) and U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) released a notice of proposed rulemaking, the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks (SAFE Vehicles Rule), to correct the national automobile fuel economy and greenhouse gas emissions standards to give the American people greater access to safer, more affordable vehicles that are cleaner for the environment.
    The SAFE Vehicles Rule is the next generation of the Congressionally mandated Corporate Average Fuel Economy (CAFE) and Light-Duty Vehicle Greenhouse Gas Emissions Standards. This Notice of Proposed Rulemaking (NPRM) is the first formal step in setting the 2021-2026 Model Year (MY) standards that must be achieved by each automaker for its car and light-duty truck fleet.
    In today’s proposal, EPA and NHTSA are seeking public comment on a wide range of regulatory options, including a preferred alternative that locks in MY 2020 standards through 2026, providing a much-needed time-out from further, costly increases. The agencies’ preferred alternative reflects a balance of safety, economics, technology, fuel conservation, and pollution reduction. It is anticipated to prevent thousands of on-road fatalities and injuries as compared to the standards set forth in the 2012 final rule. The joint proposal initiates a process to establish a new 50-state fuel economy and tailpipe carbon dioxide emissions standard for passenger cars and light trucks covering MY 2021 through 2026.
    “We are delivering on President Trump’s promise to the American public that his administration would address and fix the current fuel economy and greenhouse gas emissions standards,” said EPA Acting Administrator Andrew Wheeler. “Our proposal aims to strike the right regulatory balance based on the most recent information and create a 50-state solution that will enable more Americans to afford newer, safer vehicles that pollute less. More realistic standards can save lives while continuing to improve the environment. We value the public’s input as we engage in this process in an open, transparent manner.”
    “There are compelling reasons for a new rulemaking on fuel economy standards for 2021-2026,” said Secretary Elaine L. Chao. “More realistic standards will promote a healthy economy by bringing newer, safer, cleaner and more fuel-efficient vehicles to U.S. roads and we look forward to receiving input from the public.”
    The current standards have been a factor in the rising cost of new automobiles to an average of $35,000 or more—out of reach for many American families. Indeed, compared to the preferred alternative in the proposal, keeping in place the standards finalized in 2012 would add $2,340 to the cost of owning a new car, and impose more than $500 billion in societal costs on the U.S. economy over the next 50 years.
    Additionally, a 2018 government study by NHTSA shows new model year vehicles are safer, resulting in fewer deaths and injuries when involved in accidents, as compared to older models. Therefore, the Administration is focused on correcting the current standards that restrict the American people from being able to afford newer vehicles with more advanced safety features, better fuel economy, and associated environmental benefits.
    On April 2, 2018, EPA issued the Mid-Term Evaluation Final Determination which found that the MY 2022-2025 GHG standards are not appropriate and should be revised. For more than a year, the agencies worked together to extensively analyze current automotive and fuel technologies, reviewed economic conditions and projections, and consulted with other federal agency partners to ensure the most reliable and accurate analysis possible.
    EPA and NHTSA are seeking public feedback to ensure that all potential impacts concerning today’s proposal are fully considered and hope to issue a final rule this winter.
    The public will have 60 days to provide feedback once published at the Federal Register

    William Maley

    Surprising for an auto executive to say this

    The talk about whether any of the major auto shows still matter has been going on for few years as a number of automakers pulling out has been increasing. But what you haven't heard is a major head of automaker questioning them, until now.
    “Motor shows are dead,” said Herbert Diess, chairman of the Volkswagen Group.
    “They are a product of the 1960s and they are not as relevant anymore. They’re not delivering what we want and they’re not delivering what car buyers want.”
    The Detroit Auto show is a poster child of this as automakers in the past few years have been pulling out. Reasons are numerous: Automakers are holding their own events as they can control the message and not fight with others for attention in the spotlight. It's also quite expensive as an automaker needs to design the exhibit, bring in labor to build and tear down, getting the vehicles to the show, and much more.
    Diess believes the likes of the Goodwood Festival of Speed could be one way for the auto show to evolve.
    “People need to see more interaction with the product. They expect it. Those days of relying on tradition are gone. It’s events like the Goodwood Festival of Speed that are showing us the modern way to show cars to people.”
    Organizers of the Detroit Auto Show are taking note. Earlier this week, organizers announced the show would be moving to June in 2020 and feature such things as rides and drives of new vehicles.
    Source: Motoring

    William Maley

    Here we go once again

    Fuel efficiency guidelines and California's right to set its own vehicle emissions standards are in the crosshairs of the Trump administration again.
    Bloomberg has learned from sources that the administration will be introducing a proposal later this week that revises key parts of the Obama-era standards. This includes capping federal fuel economy requirements at 2020 level of 35 mpg fleet wide, instead of the 50 mpg requirement by 2025. There is also a provision that would revoke the Clean Air Act waiver given to California that allows it to set its own emission regulations.
    Sources go onto say that the proposal is in the final stages of a "broad interagency review" being done by the Office of Management and Budget.
    These changes were first introduced back in April and got massive pushback from various environmental groups, along with the state of California. A month later, a coalition made up of California, Washington D.C. and sixteen other states filed suit against the rollback. Automakers who pushed for the rollback began to panic as this could result in two different emission regulations they would have to meet. 
    Source: Bloomberg

    William Maley

    We don't have to deal with snow anymore?!

    After months of speculation and rumor, it is now official: The Detroit Auto Show will be moving from January to June in 2020.
    “Our show is undergoing its most significant transformation in the last three decades. Detroit will continue to be a global stage for some of the world’s most significant and iconic vehicle reveals and host an unparalleled international audience of media and key industry influencers,” said Rod Alberts, Executive Director of the Detroit Auto Show.
    The Detroit Auto Show has been taking a bit of beating over the past few years with various automakers pulling out to hold their own events or focus on other shows, along with the Consumer Electronics Show taking more of the spotlight. 
    Plans for the revamped show include rides and drives of new vehicles, having self-driving vehicles on public roads, experience dynamic vehicle debuts, and more. 
    "As we look to break out of the traditional auto show model, there is not a need to follow the normal show season. The new direction and focus of the show will disrupt the normal cadence of traditional shows and create a new event unparalleled in the industry," said Doug North, president of the Detroit Auto Dealers Association.
    Organizers point out the new date will drastically reduce the costs of participating in the show. Already, various automakers such as General Motors and Hyundai have praised the move. Whether it works or not remains to be seen.
    Source: North American International Auto Show

    Transformational Move Announced for the North American International Auto Show
    The North American International Auto Show (NAIAS) announced that starting in 2020 the show would make a transformational move to June and will start the week of June 8th. The ability for participating brands to deliver dynamic exhibits and experiential opportunities outside of the show’s four walls for attending journalists, industry members and consumers, will provide new avenues to showcase the products and technologies on display. Delivering greater ROI through reduced costs and dynamic opportunities will be a key aspect of the future show.
    “Our show is undergoing its most significant transformation in the last three decades,” said Rod Alberts, Executive Director, NAIAS. “Detroit will continue to be a global stage for some of the world’s most significant and iconic vehicle reveals and host an unparalleled international audience of media and key industry influencers.”
    NAIAS is one of the most influential global auto events, touching all facets of the industry and attracting the largest concentration of the world’s top industry leaders – from automakers and suppliers, to tech startups and venture capitalists, to universities and policymakers.
    “The North American International Auto Show is an amazing exhibition that showcases the most innovative and creative automotive companies around the world,” said Michigan Governor Rick Snyder. “Moving the show to the summer opens up new opportunities for companies as well as creating new experiences for attendees.”
    The show is run by the Detroit Auto Dealers Association and its Executive Board. As part of the DADA and Board’s due diligence in exploring new opportunities for the show, hundreds of meetings and conversations with key stakeholders – automakers, suppliers and sponsors, as well as industry and government leaders – were had around the world.
    “Our ultimate goal is to provide an experience and opportunity for participating companies and attendees, that only Detroit can offer,” said Doug North, DADA President. “June will allow us to better showcase the automotive leadership, development and heritage our great city and region holds.”
    Embracing the Industry’s Change
    Auto show dynamics are changing globally as the auto industry undergoes its biggest shift in more than a century. With this, automakers are seeking out increasingly creative ways to debut vehicles and engage with consumers. Plans have been underway for over a year as NAIAS stands ready to embrace this evolution with its move to June and provide a fresh international platform for hundreds of brands to highlight their innovations.
    “As we look to break out of the traditional auto show model, there is not a need to follow the normal show season,” added North. “The new direction and focus of the show will disrupt the normal cadence of traditional shows and create a new event unparalleled in the industry.”
    Endless Opportunities for Brand Activations
    The reimagined show will undergo an evolution that will take the show from inside Cobo Center to a canvas of unlimited brand activation and engagement opportunities – a canvas only limited by exhibitor creativity and imagination. While the successful foundation of the show inside Cobo Center will continue with vehicles and innovative mobility technologies being showcased, transformation plans call for growth in both branding and event opportunities at multiple venues throughout Detroit, and perhaps, beyond.
    “Detroit now has the opportunity to showcase our riverfront and our revitalized downtown during our beautiful summer months and creatively use the exterior of Cobo to launch new products that will transform Detroit into an exciting auto-centric environment,” said Larry Alexander, president and CEO of the Detroit Metro Convention & Visitors Bureau.
    Hosting the show in June sets the stage for exhibitors to conduct dynamic outdoor experiential brand activations, immersing and engaging the media and consumers in memorable product experiences. A sampling of outdoor experiential activities might include:
    Dynamic Vehicle Debuts Ride and Drives Autonomous/Automated Driving Off-Road Challenges It’s envisioned that activation sites will be located throughout downtown Detroit, including at some of the city’s jewels such as Hart Plaza, Detroit RiverWalk, Campus Martius, Woodward Avenue and Grand Circus Park. Activation spots might even extend beyond the downtown area to historic automotive locations or state parks such as Belle Isle.
    “The potential to create a month long automotive festival in Detroit starting with the Detroit Grand Prix, going through our show and concluding with the nationally-celebrated fireworks on the river, will provide an unmatched festival-like experience for all attendees,” added Alberts.
    Cost Benefits for Exhibitors
    The move to June will translate into substantial cost savings for exhibitors. By eliminating November, December and January holidays from the move-in equation, exhibitors will see reduced overtime labor costs for builds. Additionally, the show will have a shorter move-in schedule of three weeks, significantly reduced from the current 8 weeks on average it takes for move-in. With a reduced build time, exhibit builds will be simplified and less custom-built for Detroit, providing numerous cost savings as well.
    A Vibrant Downtown
    With ideal summer weather, a Cobo Center filled with new products and technologies, and engaging events positioned throughout the city, auto show attendees will be able to enjoy all that Detroit has to offer, will celebrating the Motor City’s love of the automobile.
    Cross-marketing events around the city will help drive excitement, energy and attendees to downtown.
    This past January, NAIAS attracted well over three-quarters of a million people to the city and generated an economic impact of $480M (according to David Sowerby, CFA, Managing Director, Portfolio Manager, Ancora) to the regional economy.
    “June provides us with exciting new opportunities that January just didn’t afford,” added Alberts. “We strongly believe we can continue to deliver a significant economic impact for our great city, and offer an event unlike anything anyone has ever experienced.”
    Comments from Automakers
    “Reinventing NAIAS as a summertime festival of design, speed and innovation is incredibly exciting. It will showcase the best of our industry and the best of Detroit, and should become a can’t miss event on the calendar for global automakers and media,” said Mark Truby, Vice President, Communications, Ford Motor Company. “The North American International Auto Show has provided GAC Motor with a tremendous platform – connecting us with key media and industry executives,” said Yu Jun, GAC Motor President. “As we look to enter the U.S. and increase our market share, Detroit will continue to serve as a critical part of our global marketing strategy and we look forward to the new exciting opportunities June will offer.” “We applaud the DADA for thinking big and really taking advantage of this opportunity to re-imagine the auto show and position Detroit in the best light. We’re excited to be a part of a festival-like series of events that showcase all the great things that are happening in both the auto industry and Detroit,” said Tony Cervone, Senior Vice President, Global Communications, General Motors Company “Hyundai is always excited to participate in the North American International Auto Show and display its products to the Motor City. We already are planning an exciting reveal in 2019. It certainly will be a new experience leaving the ski hats and Chap-Stick at home and packing our Tigers baseball caps and sunscreen. We look forward to the evolution of the show,” said Jim Trainor, Director, Hyundai Motor America. “Toyota is excited to see the North American International Auto Show move to June in 2020,” said Scott Vazin, Group Vice President and Chief Communications Officer, Toyota Motor North America. “With a new summer timeframe, industry leaders and international media will see Detroit in a new light, paving the way for exciting outdoor activities and more opportunities to explore this vibrant city.” Preparations Underway for Coming Year
    The January 2019 NAIAS looks to build off the significant buzz generated this past show where media metrics reports from PRIME Research indicate NAIAS remains the global leader among domestic
    shows in terms of influence as it garners the largest reach, number of articles and share of voice.
    “Coming off recent trips in Europe, Asia, and around the U.S., automakers, suppliers and tech companies have hinted at some important product news that is earmarked for Detroit this upcoming year,” said Bill Golling, 2019 NAIAS Chairman. “We look forward to providing a world-class platform for the over 200 brands that showcase their innovations at our show.”

    William Maley

    Doesn't put NHTSA in a positive light

    A new audit released by the U.S. Transportation Department’s Office of Inspector General rips the National Highway Traffic Safety Administration (NHTSA) over its handling of the Takata airbag recall.
    In the report, the Inspector General says NHTSA's recall monitoring process "does not ensure that remedies are reported completely and in a timely manner," nor does it "verify recall completion rates, although it has the authority to do so." Other issues the audit found included the long time it took the agency to determine the scope of the Takata recall and missing documents due to limited monitoring and inadequate procedures.
    "In June 2014, RMD [NHTSA's Recall Management Division] received a recall notification for Takata airbag inflators in over 140,000 vehicles. The notification stated that the manufacturer planned to tell owners to take their vehicles to dealerships for repairs in February 2015. However, as of February 2018, RMD had not received the manufacturer's remedy documents, and [the Office of Defects Investigation's] recall recordkeeping system does not indicate that RMD staff requested those documents," the report said.
    The Inspector General makes six recommendations including better training for staff, creating a system to handle missing documents and communications, and documenting various lessons from the Takata recall.
    NHTSA in a letter said it "did not endorse all of the report’s findings," but did agree to some of the recommendations.
    The agency has come under fire for a number of years due to its poor handling of various auto safety issues, including Toyota's unattended acceleration crisis and GM's ignition switch mess. This latest audit is fourth since 2011 by the inspector general. The last audit done in 2015 said NTHSA failed to investigate safety issues carefully, hold automakers accountable, and adequately train their staff which resulted in “significant safety concerns being overlooked.”
    Source: Reuters

    William Maley

    But what happens if the tariffs go into effect?

    PSA Group has been hard at work on its plan to return to the U.S. by 2026. They already have a brand chosen that will lead the launch (bur aren't saying if it will be Citroen, DS, Peugeot, or the recently acquired Opel/Vauxhall) and has open their U.S. headquarters in Georgia. The next step is figuring out where they'll begin selling vehicles.
    Larry Dominique, CEO of PSA Group North America told reporters that he has his eyes on 15 states to launch. Among the states mentioned include,
    Arizona California Florida Georgia Illinois Maryland Massachusetts New Hampshire New Jersey New York North Carolina Texas Virginia Washington "Those states are of the most interest to me at this point in time because they're high volume and import receptive," Dominique told Automotive News.
    But there is an elephant in the room concerning PSA's plan, tariffs. As we have been reporting for the past couple of months, the U.S. Commerce Department is conducting an investigation into imported cars and car parts as a matter of national security. This could result in vehicles being hit with a 25 percent tariff. 
    “Tariffs are on our minds. Tariffs impact how fast and at what price point we import vehicles into the U.S. I’m crossing my fingers," said Dominique.
    According to Bloomberg, PSA Group could look into entering the Canadian market first and play the waiting game for the U.S. if tariffs do go into effect. The company may also offer more expensive vehicles to balance out the hit made by tariffs.
    Source: Automotive News (Subscription Required), Bloomberg

    William Maley

    I've got a secret

    The U.S. Commerce Department is asking automakers to spill their secrets; product planning, financing, supply chains, and other bits that aren't in public filings.
    Bloomberg reports that the department’s Bureau of Industry and Security sent out a  34-page questionnaire asking for sensitive details to several automakers. Failure to do so could result "in a maximum fine of $10,000, imprisonment of up to one year, or both" as mentioned on the first page of the survey.
    “The breadth and depth of this request is invasive, requiring massive amounts of proprietary and confidential business data from global operations -- all under the pretense of national security,” said Gloria Bergquist, spokeswoman for the Alliance of Automobile Manufacturers - a group that represents a number of companies including General Motors, Toyota, and Volkswagen.
    “Frankly, it’s stunning from an administration committed to getting government out of the way of business.”
    This is part of the Commerce Department’s investigation into whether or not the imports of cars and car parts hurt U.S. national security opened in late May. It may result in imported vehicles being hit with tariffs as high as 25 percent.
    What is being asked in this survey?
    Other questions deal with the business plan from now until 2020 and whether or not imports hurt sales.
    Susan Helper, a former chief economist of the Commerce Department during the Obama administration said Bureau of Industry and Security has conducted dozen of these surveys in the past, mostly dealing with sectors closely linked to the defense industry.
    “This is a consequence of the Trump administration’s expanded definition of national security I hadn’t thought about. I can see both sides on this -- it is burdensome for companies, but on the other hand it’s important for policy makers to understand global supply chains as they have an increasing impact on the U.S. economy,” Helper told Bloomberg.
    Dave Sullivan, an analyst at AutoPacific told Bloomberg that the level of information that the government is asking is "disturbing'.
    “The only time I’ve seen something like that is when a supplier is not doing very well financially and the automaker is trying to understand their financial state and their future. They’re fully undressing automakers and how they do their business to a disturbing level.”
    The Commerce Department will be holding a hearing on the investigation on July 19th in Washington D.C. Around 45 people, representing various automakers, labor unions, and more will be testifying.
    Source: Bloomberg, Link to Questionnaire

    William Maley

    To spur innovation

    Like many countries, China offers various incentives to spur the sales of electric vehicles. But a report from Bloomberg says the Chinese government is considering reducing various subsidies beginning next year. 
    According to sources, the government is considering cutting the average incentive by more than a third from where they currently stand. Also up for consideration is incentives being eligible on models that can travel at least 200 kilometers (about 125 miles) on a single charge. Why? The government wants automakers to keep innovating by making EVs cheaper and go much further on a charge.
    “China is switching away from carrots. The government wants to ensure automakers will launch models that would be appealing to consumers hence setting subsidies contingent on minimum driving range requirements,” said Ali Izadi-Najafabadi, an analyst at Bloomberg NEF.
    In 2017, the Chinese government spent 6.64 billion yuan (about a billion dollars) on various subsidies for electric vehicles. But this year saw the government begin to cut various incentives. For example, cars that have a driving range of less than 300 kilometers (about 186 miles) saw their incentives reduced. 
    “Government policy has a huge impact over the new-energy vehicle sector and every adjustment made on the policy front over the next two years will result in tremendous changes in the industry,” Li Yixiu, sales chief for Beijing Electric Vehicle Company earlier this month.
    "We believe there isn’t a chance for carmakers to raise prices to make up for the reduction of government fundings. Instead, we have to come up with competitive new products and services to respond.”
    Source: Bloomberg

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