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    William Maley

    Might have some elements of the Goodwood Festival of Speed

    When we last reported on the date change of the Detroit Auto Show, organizers had made the final decision on what month it would be held beginning in 2020 - either October or June. A new report from The Detroit News says June will be month that will be announced at a press conference on July 24th.
    Sources tell the paper that back in January that the Detroit Auto Dealers Association (DADA), organizers of the show sat down and started discussions as to moving the show. Originally, DADA had October as the month as it would move the show from the harshness of winter and give some breathing room from the Consumer Electronics Show (CES).
    But plans changed after The Detroit News interviewed General Motors' senior vice president of global communications, Tony Cervone. He said a move to June had the potential to create a "massive festival of automotive" for consumers. The hope is that this event would draw people into visiting the various venues and concerts in Detroit. Organizers released a teaser video late last month showing outdoor test tracks and vehicle displays.
    This brings us to a new twist. Ford is urging DADA to pull elements from the Goodwood Festival of Speed for this reimagined show. The Festival of Speed, being held this weekend, features a hill climb with a variety of racing and production cars, and a moving auto show that allows the press and would-be buyer to experience new vehicles. It should be noted that Ford has been a sponsor of the Festival of Speed for 23 years.
    Source: The Detroit News

    William Maley

    Consumer tastes and tariffs are to blame

    Back in 2010, Renault-Nissan and Daimler announced a new partnership that would see the two share powertrains and work on various projects. Some of those have come to fruition such as the Infiniti QX30, which is a Mercedes-Benz GLA-Class in different clothing and the platform that underpins the Infiniti QX50. But other projects between the two have been halted.
    Late last week, the Nikkan Kogyo business daily reported that joint development of luxury compact car project has been suspended. The paper cites the change in consumer preference to crossovers and the uncertainties over tariffs. The second reason is important as the new compact sedan was expected to built at a plant in Aguascalientes, Mexico. The plant is 50/50 joint venture between Daimler and the Renault-Nissan-Mitsubishi alliance.
    Nissan spokesman Shiro Nagai declined to comment when asked by Automotive News. He did say that Nissan remains committed to the partnership.
    Source: Nikkan Kogyo via Automotive News (Subscription Required)

    William Maley

    But they would need to make some concessions

    The threat of a 20 percent tariff on vehicles exported from the European Union has a number of automakers panicking. But that tariff could be taken off the table if the EU removes their tariff on vehicles exported from the U.S.
    German paper Handelsblatt learned from sources that a meeting was held between the US ambassador to Germany, Richard Grenell and number of CEOs from German automakers. Grenell presented an offer directly from President Donald Trump - "elimination of all tariffs on automobile imports on both sides and removal of non-tariff barriers, such as regulations on the size of rear mirrors."
    Currently, the U.S. levies a 2.5 percent tariff on vehicles imported from EU. A 10 percent tariff is slapped on by EU members on vehicles imported from the U.S. 
    The hope is that German automakers can put some pressure on the government to possibly bring this up with other EU members.
    Diamler, Volkswagen, the German Economy Ministry, and the European Commission declined to comment when asked by Reuters.
    Source: Handelsblatt, Reuters

    William Maley

    The question is which month

    It is now official, the Detroit Auto Show will not be held in January beginning in 2020. Organizers of the show made the announcement yesterday afternoon and released a teaser video showing what the show may look like in its new date, complete with outdoor test tracks and vehicle displays.
    The Detroit Auto Dealers Association (DADA) will be holding a press conference on July 24th announcing the new date. As we have reported previously, DADA was considering moving the show to October not only for better weather (a complaint for a number of journalists who cover the show), but to also give it some breathing room from another show, the Consumer Electronics Show (CES) that takes place around the same time.
    There is also another month possibly up for consideration, June. This is being pushed by General Motors that sees the show being reworked as "massive festival of automotive" that would be aimed at consumers - not the media. The hope is that it will draw more people to Detroit to the various venues. It should be noted that June is when the Detroit Grand Prix on Belle Isle is held, and is sponsored by Chevrolet.
    Organizers are also considering a name change. A source tells The Detroit News there are twelve names under consideration, but will likely not be announced on the 24th.
    Source: Automotive News (Subscription Required), The Detroit News

    William Maley

    This is a terrible idea. -Automakers to Trump

    Automakers have been edge for a few months with talk of a trade war and possibly putting up to a 25 percent tariff on imported new vehicles. They only would be pushed further to the edge as President Donald Trump tweeted last week a 20 percent import tariff on all cars assembled in the European Union. Now, automakers are rebuking the President over this.
    Reuters reports today that two trade groups, representing nearly every major global automotive brands have issued comments saying the president shouldn't go forward with tariff. The two groups in question are the Association of Global Automakers (represents Honda, Hyundai, Kia, Nissan, Subaru, Toyota, and others) and Alliance of Automobile Manufacturers (represents General Motors, Ford, FCA, BMW, and others). 
    The primary concerned brought up by both groups? Jobs. 
    “Rather than creating jobs, these tariffs would result in the loss of hundreds of thousands of American jobs producing and selling cars, SUVs, trucks and auto parts,” said the Association of Global Automakers.
    Both groups cite a study done by the Peterson Institute for International Economics which estimates job losses between 195,000 to 624,000 depending if other countries retaliate with their own tariffs.
    Next up is the increased cost on a new vehicle. The Alliance of Automobile Manufacturers says a consumer could expect to pay an average of $5,800 more on a new car. This number is based on analysis of 2017 sales data and factoring in a 25 percent tariff. New cars are already expensive - Kelly Blue Book said the average transaction price for May stood at $35,635.
    The final concern brought up deals with a decrease in investments into new technologies such as electrification and autonomous vehicles.
    “We are already in the midst of an intense global race to lead on electrification and automation. The increased costs associated with the proposed tariffs may result in diminishing the U.S.’ competitiveness in developing these advanced technologies,” said the Alliance.
    The U.S. Commerce Department which is investigating new car imports on the national security has said that it hopes to wrap up their investigation either next month or August.
    Source: Reuters

    William Maley

    Tit for Tat on Tariffs

    With President Donald Trump tweeting last Friday threating a 20 percent tariff on all imports of European Union assembled cars, the EU has responded by saying it would raise their tariffs on imports of U.S.-built vehicles.
    “If they decide to raise their import tariffs, we’ll have no choice, again, but to react,” said EU Commission Vice President Jyrki Katainen.
    “We don’t want to fight (over trade) in public via Twitter. We should end the escalation.”
    This comes a month after the Trump administration announced an investigation into new car imports on the grounds of national security. U.S. Commerce Secretary Wilbur Ross said late last week the department is expected to wrap up their investigation by late July or August. A number of groups have condemned the investigation and threat of tariffs, one saying that it is “confident that vehicle imports do not pose a national security risk.” Diamler AG announced last week full-year earnings will be slightly lower than last year because of the threat of tariffs.
    Source: Reuters

    William Maley

    Might become tougher to sell some EVs

    Tesla and General Motors lead the pack when it comes to the sales of plug-in vehicles. Data from Automotive News says Tesla stands at 193,344 vehicles, followed by GM at 181,062, But there arises a problem; once they cross the 200,000 mark, the phaseout of the $7,500 tax credit begins. Tesla is expected to be first with some predicting it taking place next month (provided they don't run into more production troubles). GM will follow sometime next year.
    Barring some sort of extension of the program, it will put the two automakers in a bit of bind where they'll be playing on an uneven playing field due to increased costs. It should be noted that the tax credit won't disappear. The way the phaseout works is that the $7,500 credit sticks around for two more quarters after the 200,000 mark is reached. After that, the credit is cut to $3,750 for the next two quarters, then it drops to $1,875 for two more quarters before it is gone.
    "The groundbreakers, the people who forged ahead and got these products out there first, could be at a significant disadvantage now. I don't think it's fair to reward a company that hasn't been as innovative with an incentive that begins when someone else's ends," said Rebecca Lindland, executive analyst at Kelly Blue Book.
    Industry experts expect GM to take a bigger hit than Tesla due to the credit affecting decisions on "lower-priced vehicles such as the sub-$40,000 Chevrolet Volt more than a $75,000-plus Tesla Model S or X" according to research done by the Institute of Transportation Studies at the University of California-Davis.
    A study in 2016 bears this out. 40 percent of Chevrolet Volt buyers admit they wouldn't have purchased one without the tax credit. Only 14 percent of Tesla buyers say the same. 
    This likely explains why various GM executives have been pushing the White House for a possible extension of the credit.
    "At the end of the day, we think having the benefits is great for the customer, because obviously it makes the EV adoption easier and more attractive," GM North America President Alan Batey told Automotive News.
    Source: Automotive News (Subscription Required)

    William Maley

    One Predicts a Hit on Profits, While the Other Says it will threaten jobs

    The project of a trade war between the U.S. and China (along with the European Union) has many automakers on edge. Some are beginning to speak out about the possible dangers it may bring.
    Mercedes-Benz's parent company, Diamler AG announced yesterday that its full-year earnings will be slightly lower than last year. Their reasoning comes down to consumers in China buying fewer SUVs that are imported from the U.S. Most of Mercedes-Benz SUVs are built in Alabama.
    “Remember, for those following from a Trump/global free trade perspective, this is now a German car maker, warning on the profits coming from their Alabama-made SUVs, which are then sold/exported into China –- a complicated situation indeed!!” wrote Evercore ISI analyst Arndt Ellinghorst.
    According to Bloomberg, shares in Diamler dropped 4.4 percent on this announcement.
    Meanwhile, Volvo Cars CEO Hakan Samuelsson said the trade war could affect plans in the U.S. Speaking at the opening of the Swedish automaker's new assembly plant in South Carolina, Samuelsson told Bloomberg that Volvo would have to limit the number of models it sells due to threat of a 25 percent tariff on imported vehicles.
    “I would have less models to choose from and they would cost more -- that would be the consequence. Shorter menu and higher prices -- not a very good restaurant,” said Samuelsson.
    The factory in South Carolina will provide a small relief for Volvo if tariffs do go into place. Small is the key word as LMC Automotive estimates 87 percent of the vehicles Volvo sells in the U.S. next year will come from other places - Sweden and China.
    Samuelsson also warned that the trade dispute could mess up plans to create up to 4,000 new jobs at the new plant.
    "If you have trade barriers and restrictions, we cannot create as many jobs as we are planning to," explained Samuelsson.
    "We want to export and if suddenly China and Europe have very high barriers, it would be impossible. Then you have to build the cars there. And then all cars will be more expensive, you have to invest more tooling and have every model in every country. That's against all the logic of modern economies that trade with each other."
    Source: Bloomberg, (2), Reuters

    William Maley

    This was bound to happen sooner or later

    The National Highway Traffic Safety Administration has sent a cease-and-desist letter to Dolder, Falco and Reese Partners LLC, the company behind an aftermarket device called the Autopilot Buddy.
    Autopilot Buddy is a small, weighted device that clips onto either side of the wheel to place minor amounts of torque. This fools the Autopilot system into thinking that a driver has their hands on the wheel. The company markets the device as "nag reduction device", reducing the amount of warnings to tell driver to keep their hands on the wheel.
    The company has a disclaimer on Autopilot Buddy that states,
    This would be ok if a video demonstrating the product didn't appear to be on a public road of sorts. 
    “A product intended to circumvent motor vehicle safety and driver attentiveness is unacceptable. By preventing the safety system from warning the driver to return their hands to the wheel, this product disables an important safeguard, and could put customers and other road users at risk,” said NHTSA Deputy Administrator Heidi King in a statement.
    NHTSA has given Dolder, Falco and Reese Partners LLC till June 29th to respond and certify to NHTSA "that all U.S. marketing, sales, and distribution of the Autopilot Buddy has ended."
    Source: Roadshow, NHTSA

    William Maley

    Thank you high gas prices

    With more people trending towards trucks and utility vehicles, it would be expected that prices on cars would be falling. But not on used cars according to Edmunds.
    In their latest Used Car Report, Edmunds says the average price for a used subcompact rose 3 percent in the first quarter. Compacts saw their average price increase by 3.9 percent. The reason according to the report is due to the increasing cost for a gallon of gas. 
    "Used-car shoppers are typically more price-sensitive to changes in the market, but this is the first time in years that we're seeing renewed demand for smaller vehicles With rising fuel costs breathing fresh air into this segment, subcompact and compact cars are finally retaining value again," said Ivan Drury, senior manager of industry analysis at Edmunds.
    With rising gas prices, the expectation would be that prices on used trucks and utility vehicles would drop. But Edmunds says prices for these models are holding steady as buyers are willing to pay a bit more at the pump as they place "value on increased cargo capacity, ride height, and other SUV and truck features". 
    Source: Edmunds

    William Maley

    The possible 25 percent tariffs could do some serious damage to car sales

    If the Trump administration goes forward with placing a 25 percent tariff on new cars, it could cost automakers between one to two million sales.
    Analysis done by researcher LMC Automotive said if automakers pass on the full 25 percent tariff to customers, it could cut sales by about two million - about 10 percent of annual U.S. sales. If automakers absorb some some of tariff, the sales drop would reduce to just a million.
    Jeff Schuster, senior vice president of forecasting for LMC Automotive tells Bloomberg that consumers would react in one of three ways.
    Look at the used car market Move to domestically built products with cheaper pricetags Put off buying a new car with the hope this is only temporary While new car sales have been slipping from the record high of 17.6 million in 2016, LMC Automotive is predicting a still-strong 17.1 million deliveries by the end of the year.
    Source: Bloomberg

    William Maley

    Because automakers really want more uncertainty

    President Donald Trump is no fan of German automakers. Take for instance this quote from last January,
    He has also made comments about BMW in the past few months in light of possible tariffs (which appear to be going into effect today). Now, new comments have been brought to light where the president wants to try and ban German cars from the U.S.
    German magazine Wirtschaftswoche reports that during French President Emmanuel Macron's visit to the U.S. in April, Trump said that he will maintain his current trade policy "until no Mercedes models rolled on Fifth Avenue in New York." This information comes from several unnamed European and U.S. diplomats. At the time of this writing, Reuters hasn't able to verify this information.
    As we reported last week, the Trump administration has ordered a probe into new car imports on the basis of national security. It may result in imported vehicles being hit with a 25 percent tariff.
    Let's suppose that President Trump somehow presents a ban on German cars, trying to get it implemented may be quite problematic .For one, not all vehicles from German automakers will fall under the ban - an example is the Mercedes-Benz G-Class is built in Austria by Magna-Steyr. German automakers also have a sizable production presence in the U.S. Germany’s auto industry association VDA said German automakers built 804,000 vehicles in the U.S. last year.
    One thing is for sure; automakers will be dealing with more uncertainty for some time.
    Source: Wirtschaftswoche, Reuters

    William Maley

    May lead to tariffs and other issues

    Automakers already have enough of a headache with the current administration in the white house, but news that broke today is only going to make it even worse.
    Wilbur Ross, the U.S. Secretary of Commerce has announced that President Donald ordered an investigation under Section 232 of the Trade Expansion Act of 1962 to determine "whether imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair the national security."
    "There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry. The Department of Commerce will conduct a thorough, fair and transparent investigation into whether such imports are weakening our internal economy," said Ross in a statement.
    There's also this interesting bit in the statement,
    The Wall Street Journal reported yesterday that tariffs as high as 25 percent could be slapped on new cars. Currently, the tariff on imported vehicles is at 2.5 percent. Imported trucks are already hit with a 25 percent tariff via the chicken tax.
    There are a couple likely reasons for this investigation,
    Mid-term elections are coming up and this is seen as a way to court voters in the heartland with the promise of bringing back jobs to the U.S. Possibly being used as leverage in negotiations with Canada and Mexico over the North American Free Trade Agreement (NAFTA); the European Union, and China. This investigation could hurt Mexico the most as they are the largest source of U.S. auto imports - delivering just under $50 billion of imports last year. As for automakers, Bloomberg reports that Jaguar Land Rover, Mazda, and Mitsubishi would be the most affected as all of their vehicles are imported. The news sent the stock prices of foreign automakers downward. Shares in Mazda dropped 5.2 percent at the close of trade in Japan, while Daimler and BMW saw their stock price drop more than two percent.
    This announcement has gotten condemnation from various governments, trade groups, analysts, and automakers. Here are just a few.
    "China opposes the abuse of national security clauses, which will seriously damage multilateral trade systems and disrupt normal international trade order," said Gao Feng, spokesman at the Ministry of Commerce in China during a regular press briefing.
    "We will closely monitor the situation under the U.S. probe and fully evaluate the possible impact and resolutely defend our own legitimate interests."
    “We have to consider this as something of a provocation. I have the growing impression that the U.S. no longer believes in the competition of ideas, but only the law of power. It fills me with grave concern,” said Eric Schweitzer, president of the Association of German Chambers of Commerce and Industry.
    “The U.S. auto industry is thriving and growing. To our knowledge, no one is asking for this protection. This path leads inevitably to fewer choices and higher prices for cars and trucks in America,” said  John Bozzella, CEO of the Association of Global Automakers, a trade group that represents Hyundai, Nissan, Toyota, and others.
    Source: Automotive News (Subscription Required), Bloomberg, Reuters, Wall Street Journal (Subscription Required), U.S. Department of Commerce

    U.S. Department of Commerce Initiates Section 232 Investigation into Auto Imports
    Today, following a conversation with President Donald J. Trump,  U.S. Secretary of Commerce Wilbur Ross initiated an investigation under Section 232 of the Trade Expansion Act of 1962, as amended.  The investigation will determine whether imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair the national security as defined in Section 232.  Secretary Ross sent a letter to Secretary of Defense James Mattis informing him of the investigation.
    “There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” said Secretary Ross. “The Department of Commerce will conduct a thorough, fair, and transparent investigation into whether such imports are weakening our internal economy and may impair the national security.” 
    During the past 20 years, imports of passenger vehicles have grown from 32 percent of cars sold in the United States to 48 percent.   From 1990 to 2017, employment in motor vehicle production declined by 22 percent, even though Americans are continuing to purchase automobiles at record levels.  Now, American owned vehicle manufacturers in the United States account for only 20 percent of global research and development in the automobile sector, and American auto part manufacturers account for only 7 percent in that industry.  
    Automobile manufacturing has long been a significant source of American technological innovation. This investigation will consider whether the decline of domestic automobile and automotive parts production threatens to weaken the internal economy of the United States, including by potentially reducing research, development, and jobs for skilled workers in connected vehicle systems, autonomous vehicles, fuel cells, electric motors and storage, advanced manufacturing processes, and other cutting-edge technologies.  
    Following today’s announcement, the Department of Commerce will investigate these and other issues to determine whether imports of automobiles and automotive parts threaten to impair the national security.  A notice will be published shortly in the Federal Register announcing a hearing date and inviting comment from industry and the public to assist in the investigation.

    William Maley

    Both have some interesting results

    There has been a lot of talk about driverless cars with companies (both automotive and tech) promising a safe and grandiose future and a number of high-profile crashes that have resulted in fatalities. This got us wondering how the general public feels about them. Recently, two studies came asking this and their results are very interesting.
    First up is CarGurus which asked 1,873 vehicle owners in the U.S. between the ages of 18 to 65 about self-driving vehicles. 79 percent of participants said they were not excited about owning a self-driving car. 84 percent said they were unlikely to own a self-driving car in the next five years. This number drops to 59 percent when the window is extended to ten years.
    Here's where it gets interesting:
    In terms of geographical areas, owners on the West Coast are the most excited at 26 percent. The least, those in Central U.S. at 18 percent. When it comes to brands, BMW owners lead the pack when asked if they would consider a self-driving vehicle from their brand - 55 percent. Least likely? That would be Chrysler owners at 23 percent Safety is the key reasons that owners are excited and concerned about self-driving cars - 64 and 81 percent respectively. When asked what company is most trusted to develop self-driving cars, 27 percent of participants said none. Second and a bit of surprise was Tesla at 24 percent. (We're wondering if this survey was done before the fatal crash of a Tesla Model X on Autopilot in late March) The second study comes to us from AAA which asked people how trustful are you of self-driving cars. 73 percent said they would be too afraid to ride in an autonomous car, up from 63 percent in late 2017. Additionally, 63 percent of those asked said they would feel less safe either walking or on a bike if there is a self-driving vehicle. We have to assume that the fatal crash involving an Uber autonomous vehicle made this number rise.
    AAA's study also found a big surprise. Millenials, a group that is quick to accept new technologies, are not as trusting as they once were. In late 2007, 49 percent said they were afraid to ride in an autonomous vehicle. Now, that number rose to 64 percent.

    “Despite their potential to make our roads safer in the long run, consumers have high expectations for safety. Our results show that any incident involving an autonomous vehicle is likely to shake consumer trust, which is a critical component to the widespread acceptance of autonomous vehicles,” said Greg Brannon, AAA’s director of Automotive Engineering and Industry Relations.
    Source: Roadshow, AAA

    AAA: American Trust in Autonomous Vehicles Slips
    ORLANDO, Fla. (May 22, 2018) – Following high-profile incidents involving autonomous vehicle technologies, a new report from AAA’s multi-year tracking study indicates that consumer trust in these vehicles has quickly eroded. Today, three-quarters (73 percent) of American drivers report they would be too afraid to ride in a fully self-driving vehicle, up significantly from 63 percent in late 2017. Additionally, two-thirds (63 percent) of U.S. adults report they would actually feel less safe sharing the road with a self-driving vehicle while walking or riding a bicycle.
    “Despite their potential to make our roads safer in the long run, consumers have high expectations for safety,” said Greg Brannon, AAA’s director of Automotive Engineering and Industry Relations. “Our results show that any incident involving an autonomous vehicle is likely to shake consumer trust, which is a critical component to the widespread acceptance of autonomous vehicles.”
    Surprisingly, AAA’s latest survey found that Millennials – the group that has been the quickest to embrace automated vehicle technologies — were the most impacted by these incidents. The percentage of Millennial drivers too afraid to ride in a fully self-driving vehicle has jumped from 49 percent to 64 percent since late 2017, representing the largest increase of any generation surveyed.
    “While autonomous vehicles are being tested, there’s always a chance that they will fail or encounter a situation that challenges even the most advanced system,” said Megan Foster, AAA’s director of Federal Affairs. “To ease fears, there must be safeguards in place to protect vehicle occupants and the motorists, bicyclists, and pedestrians with whom they share the road.”
    AAA supports thorough testing of automated vehicle technologies as they continue to evolve, including testing under progressively complicated driving scenarios and under varying conditions, but not at the expense of safety. Additionally, to help prevent the accidental misuse of the systems, AAA advocates for a common sense, common nomenclature and classification system, and similar performance characteristics of future autonomous vehicle technologies.
    “There are sometimes dozens of different marketing names for today’s safety systems,” continued Brannon. “Learning how to operate a vehicle equipped with semi-autonomous technology is challenging enough without having to decipher the equipment list and corresponding level of autonomy.”
    To help educate consumers on the effectiveness of emerging vehicle technologies, AAA is committed to the ongoing, unbiased testing of automated vehicle technologies. Previous testing of automatic emergency braking, adaptive cruise control, self-parking technology and lane keeping systems has shown both great promise and great variation. Future AAA testing will look at how well systems work together to achieve higher levels of automation.

    William Maley

    More electric vehicles mean more cobalt supply problems

    One of the key materials used in electric car batteries is cobalt. But there are growing concerns that the supply of cobalt is getting scarce as more and more automakers begin building electric cars.
    A new report from Bloomberg New Energy Finance says cobalt shortages are expected to happen earlier than previously forecast. This issue possibly brings a big challenge to the rollout of electric vehicles over the next five to seven years.
    "The long lead time to bring on new mines and the concentration of cobalt reserves in the Democratic Republic of the Congo mean there is a real possibility of supply shocks in the early 2020s," analysts from BNEF wrote.
    "If capacity does not grow as planned, cobalt prices could continue to spike and there could be a major cobalt shortage. This would have serious implications on the electric vehicle market."
    The price of cobalt has tripled within the past two years as more automakers begin building electric vehicles. Peter Deneen, the managing director at consultancy EV-Metals Resources Group said in an email that the market price for cobalt has risen in the "prospect of supply constraints". But the price doesn't include the potential risk of political upheaval in the Democratic Republic of the Congo - accounts for more than two-thirds of mined cobalt.
    Concerns have automakers accelerating development of batteries that have smaller amounts of cobalt. Chinese automaker BYD is expected to introduce batteries that have a nickel-manganese-cobalt ratio of 8:1:1 by the end of this year. BMW is expected to follow in 2021 with a similar ratio. According to BNEF's report, this chemistry will account for 57 percent of EV batteries by 2030.
    There is also the idea of recycling batteries that could provide 100,000 metric tons of cobalt a year by 2030. But the amount would have to mean all batteries from consumer electronics are recycled. Currently, the recycling rates around between 25 to 50 percent according to the report.
    Source: Bloomberg via Automotive News (Subscription Required)

    William Maley

    There's a fair amount of tech involved

    PSA Group's decade-long plan of possibly returning to the U.S. continues forward and they are facing their next roadblock, setting up a dealer network. Trying to convince dealers to sell brands that haven't been sold since the early nineties. But the French automaker believes they have a solution, using a tech-centric approach that will be affordable.
    "We see the high cost of doing this business; we see the challenges that exist in profitability for dealers and OEMs. We believe with the new tools, the new technology, the new customer expectations, there are leaner, more agile ways to do this," said PSA North America chief Larry Dominique to Automotive News.
    "We need to find a way to reduce our fixed costs. We want people to make a profit selling a new car."
    A possible strategy could look similar to Hyundai's Shopper Assurance where a customer can do a number of tasks at home such as scheduling a test drive, apply for financing, and complete paperwork. There are things that will benefit from a physical presence such as service and vehicle delivery. Dominique said that he will not be asking those who decide to sell whatever brand PSA Group has in mind to go crazy with building a facility.
    The bit about making a profit with selling a new vehicle is important here. Data from the National Automobile Dealers Association reveals that new vehicle losses for dealers rose $22 per car in 2015 to $421 in 2017. Used cars got hit worse with dealers losing $2 per car in 2017, from making $132 only three years ago.
    Source: Automotive News (Subscription Required)

    William Maley

    Highest amount since 2009

    In 2009, the U.S. saw its lowest number of pedestrian deaths. But since then, that number has increased by 46 percent as pedestrian crashes have become more frequent and deadlier. Why is that?
    The Insurance Institute for Highway Safety released a study today investigating the possible reasons. One key indicator is the number of crashes involving SUVs. According to IIHS data, between 2009 and 2016, fatal single-vehicle crashes involving SUVs rose 81 percent - the largest increase of any vehicle segment. Aside from the growing popularity of SUVs and crossovers, the tall body height and larger footprint mean in a pedestrian crash, the vehicle is hitting a person's chest or head.
    SUVs weren't the only metric to see an increase. IIHS reports that urban environments, arterial roads, nighttime, and non-intersection crashes have seen large increases.
    Can anything be done to help reduce pedestrian fatalities? According to the IIHS, there is a lot that can be done.
    Softening the front ends of SUVs Improving pedestrian detection systems and headlights (The latter would be helped if NHTSA can get its act together on updating their headlight regulations) Lower the speed limits Adding more "pedestrian hybrid beacons" - Kind of a sudo-stop light where a pedestrian activates it before crossing. Begins flashing yellow, before transitioning to solid yellow, and then solid double red. "Understanding where, when and how these additional pedestrian crashes are happening can point the way to solutions. This analysis tells us that improvements in road design, vehicle design and lighting and speed limit enforcement all have a role to play in addressing the issue," said IIHS President David Harkey.
    Source: Insurance Institute for Highway Safety

    William Maley

    This isn't what we exactly wanted. -Automakers

    We all know someone who takes things a bit a too far. In the case of automakers, that someone is EPA Administrator Scott Pruitt. Back in April April, Pruitt announced a serious rollback of fuel economy regulations that were set in stone during the Obama administration. In a summary of the proposed draft, the EPA would rollback the fleetwide average from 46.8 mpg for the 2026 model year to around 37 mpg - the fleetwide average for the 2020 model year. The draft also mentions pre-empting "California's authority" on setting their own emission standards under the 1975 Energy Policy and Conservation Act. This move has caused California and a collation of other states to file suit over the proposed changes.
    According to Automotive News, the changes proposed by Pruitt go a bit too far for automakers. All they wanted was the emission targets for the 2022-2025 model years to "ratchet up more gradually and offer more compliance flexibility." Now, they have to worry about litigation and uncertainty.
    "I don't think anybody in industry, when asked for reopening of standards, asked to level out to zero," said an unnamed lobbyist for a major automaker.
    However, certain groups argue that automakers should have expected something far-reaching under this current administration.
    "You've got to know your audience. If you go to [EPA Administrator] Scott Pruitt and Donald Trump and say you want relief from the rules and they are going to cost jobs, this is what you end up with," said Andrew Linhardt, deputy director of the Sierra Club's clean energy campaign.
    Later this week, executives from the major automakers will be meeting with officials at the White House to see if they can get the federal government and California to agree to some sort of comprise.
    Source: Automotive News (Subscription Required)

    William Maley

    It is getting a bit messy

    The past month has been quite strenuous on the relationship between the Environmental Protection Agency and the State of California. Back in April, EPA chief Scott Pruitt announced they would be rolling back the fuel-efficiency regulations set towards the end of President Obama's tenure. The EPA also announced that it was considering revoking California's waiver to set their own emission standards. A few days later, we reported that the officials from the White House, California, and automakers were trying to work out a possible emissions deal to prevent a legal fight. It seems those talks went nowhere as California along with sixteen other states and the District of Columbia have filed suit challenging the rollback.
    On Tuesday, the collation led by California filed a suit in the U.S. Court of Appeals for the District of Columbia challenging the rollback. This group makes up 40 percent of the U.S. auto market.
    "The states joining today's lawsuit represent 140 million people who simply want cleaner and more efficient cars. This phalanx of states will defend the nation's clean car standards to boost gas mileage and curb toxic air pollution," said California Governor Jerry Brown in a statement.
    The suit alleges that the EPA decision to roll back the regulation lacked any scientific reason. The EPA is also accused of failing to follow its own regulations and violating the Clean Air Act.
    “This is California saying: You really want war? We’ll give you war. It’s a signal to the administration that they’re not going to get away with anything in this space,” said Dan Becker, director of the Safe Climate Campaign to the New York Times.
    According to Reuters, the Department of Transportation has a draft proposal of the changes that is expected to be released to the public later this month. The draft would freeze emission requirements for vehicles at 2020 levels through 2026. The draft also asserts that the Energy Policy and Conservation Act of 1975 bars California from imposing their own rules, even with the waiver. This proposal has already earned the ire of the public and various members of the U.S. Senate. One Senator, Tom Carper, D-Delaware obtained a copy of the proposal and sent a scathing letter to Transportation Secretary Elaine L. Chao and Pruitt. 
    “Such a proposal, if finalized, would harm U.S. national and economic security, undermine efforts to combat global warming pollution, create regulatory and manufacturing uncertainty for the automobile industry and unnecessary litigation, increase the amount of gasoline consumers would have to buy, and runs counter to statements that both of you have made to Members of Congress,” wrote Carper.
    There is a lot riding on this suit as it could possibly cause the U.S. to have two different emission regulations and automakers having to meet both of them.
    "Enough is enough. We're not looking to pick a fight with the Trump administration, but when the stakes are this high for our families' health and our economic prosperity, we have a responsibility to do what is necessary to defend them,"  said Xavier Becerra, California state attorney general. 
    Yesterday, the White House announced that it will be meeting with leaders of the major automakers next week. The meeting will be talking about the planned changes to the fuel efficiency rules. It is expected that automakers will be trying to push the Trump administration and California to agree to a national standard.
    Source: New York Times, Roadshow, Reuters, (2), U.S. Senate (Carper's Letter)

    William Maley

    The reasons as to why are somewhat easy to explain

    More and more automakers are launching subscription services as another option to get into new or used cars. But a new report shows the subscription services are still flying under the radar for most consumers.
    Autolist recently conducted a survey with 1,428 car shoppers in the second half of April. This is what they found out.
    70 percent of shoppers had no idea that such a thing existed Out of the 30 percent of shoppers who knew about subscription services, only half could actually name one 33 percent would consider a subscription service for their next vehicle. The number climbs to 45 percent when asked if they would consider it in the future The big draw to subscription services? 37 percent of shoppers said the ability to switch between different types of vehicles. This was followed by no long-term commitment (32 percent). The results aren't really that surprising. Only one subscription service, Care by Volvo is available nationwide. All of the other services are in limited to one or a few cities. Book by Cadillac is only available in New York, but there are plans to expand it to Dallas and LA in the coming year. Not helping is most of the services being offered come from luxury automakers which means high prices. 
    Source: Autolist

    William Maley

    But is it too late?

    The Volkswagen diesel emission scandal has given many a black eye. Robert Bosch GmbH, a supplier of diesel engine technology was one of those as it found itself under investigation by German authorities to see whether or not it aided and abetted in the scandal. The company also had to pay out $327.5 million as part of a settlement in the U.S. But the company isn't giving up on diesel just yet.
    This week at the Bosch’s annual press conference, CEO Dr. Volkmar Denner claimed they had found “decisive breakthrough in diesel technology.” The technology in question is said to reduce nitrogen (NOx) emission levels to just one-tenth of the European legal limits coming in 2020.
    "Combustion engines — whether powered by diesel or gasoline — will soon emit so little in the way of particulates and nitrogen oxides that they will have no significant impact on the air," said Denner.
    Details about the technology are somewhat thin. In the press release, Bosch said it is comprised of a “combination of advanced fuel-injection technology, a newly developed air management system and [an] intelligent temperature management [system].” The last item is interesting as it uses artificial intelligence to change the temperature. This new technology can be integrated into production without raising the costs. 
    "After this ecological rehabilitation, diesel can take off again. It is not combustion engines that are being made obsolete, but rather the debate about their imminent demise," said Denner.
    Yet we can't help but think this is too little too late. With bans on diesel vehicles being considered and automakers beginning to turn their focus on to other alternatives such as hydrogen and electric, this new technology for diesel may be left in the dust.
    Source: Bosch

    Breakthrough: new Bosch diesel technology provides solution to NOx problem
    Bosch CEO Denner also calls for transparency on fuel consumption and CO2 emissions Unprecedented emissions: NOx 10 times lower than limits set for 2020 New Bosch technology retains advantage with regard to fuel consumption and environmental impact Denner: “There’s a future for diesel. Soon, emissions will no longer be an issue.” Internal combustion engines equipped with artificial intelligence have almost zero impact on air quality Appeal to politicians: fuel consumption should be measured on the road and emissions analyzed from well to wheel Stuttgart and Renningen, Germany: “There’s a future for diesel. Today, we want to put a stop, once and for all, to the debate about the demise of diesel technology.” It was with these words that the Bosch CEO Dr. Volkmar Denner, speaking at the company’s annual press conference, announced a decisive breakthrough in diesel technology. New developments from Bosch could enable vehicle manufacturers to reduce emissions of nitrogen oxides (NOx) so drastically that they already comply with future limits. Even in RDE (real driving emissions) testing, emissions from vehicles equipped with the newly premiered Bosch diesel technology are not only significantly below current limits but also those scheduled to come into force from 2020. Bosch engineers achieved these results by refining existing technologies. There is no need for additional components, which would drive up costs. “Bosch is pushing the boundaries of what is technically feasible,” Denner said. “Equipped with the latest Bosch technology, diesel vehicles will be classed as low-emission vehicles and yet remain affordable.” The Bosch CEO also called for greater transparency with regard to the CO2 emissions caused by road traffic, and called for fuel consumption and thus CO2 emissions to be also measured under real conditions on the road in the future.
    Record readings under real driving conditions: 13 mg NOx per kilometer
    Since 2017, European legislation has required that new passenger car models tested according to an RDE-compliant mix of urban, extra-urban, and freeway cycles emit no more than 168 milligrams of NOx per kilometer. As of 2020, this limit will be cut to 120 milligrams. But even today, vehicles equipped with Bosch diesel technology can achieve as little as 13 milligrams of NOx in standard legally-compliant RDE cycles. That is approximately one-tenth of the prescribed limit that will apply after 2020. And even when driving in particularly challenging urban conditions, where test parameters are well in excess of legal requirements, the average emissions of the Bosch test vehicles are as low as 40 milligrams per kilometer. Bosch engineers have achieved this decisive breakthrough over the past few months. A combination of advanced fuel-injection technology, a newly developed air management system, and intelligent temperature management has made such low readings possible. NOx emissions can now remain below the legally permitted level in all driving situations, irrespective of whether the vehicle is driven dynamically or slowly, in freezing conditions or in summer temperatures, on the freeway or in congested city traffic. “Diesel will remain an option in urban traffic, whether drivers are tradespeople or commuters,” Denner said.
    Bosch delivered proof of this innovative advance at a major press event in Stuttgart. Dozens of journalists, from both Germany and abroad, had the opportunity to drive test vehicles equipped with mobile measuring equipment in heavy city traffic, under especially challenging conditions. The results recorded by the journalists, along with the route driven, can be viewed here. As the measures to reduce NOx emissions do not significantly impact consumption, the diesel retains its comparative advantage in terms of fuel economy, CO2 emissions, and therefore climate-friendliness.
    Artificial intelligence can further boost combustion engines’ performance
    Even with this technological advance, the diesel engine has not yet reached its full development potential. Bosch now aims to use artificial intelligence to build on these latest advances. This will mark another step toward a major landmark: the development of a combustion engine that – with the exception of CO2 – has virtually no impact on the ambient air. “We firmly believe that the diesel engine will continue to play an important role in the options for future mobility. Until electromobility breaks through to the mass market, we will still need these highly efficient combustion engines,” Denner said. His ambitious target for Bosch engineers is the development of a new generation of diesel and gasoline engines that produce no significant particulate or NOx emissions. Even at Stuttgart’s Neckartor, a notorious pollution black spot, he wants future combustion engines to be responsible for no more than one microgram of NOx per cubic meter of ambient air – the equivalent of one-fortieth, or 2.5 percent, of today’s limit of 40 micrograms per cubic meter.
    Bosch wants to go further: transparency and realistic testing for consumption and CO2
    Denner also called for a renewed focus on CO2 emissions, which are directly related to fuel consumption. He said that consumption tests should no longer be conducted in the lab but rather under real driving conditions. This would create a system comparable to the one used for measuring emissions. “That means greater transparency for the consumer and more focused climate action,” Denner said. Moreover, any assessment of CO2 emissions should extend significantly further than the fuel tank or the battery: “We need a transparent assessment of the overall CO2 emissions produced by road traffic, including not only the emissions of the vehicles themselves but also the emissions caused by the production of the fuel or electricity used to power them,” Denner said. He added that a more inclusive CO2 footprint would provide drivers of electric vehicles with a more realistic picture of the impact of this form of mobility on the climate. At the same time, the use of non-fossil fuels could further improve the CO2 footprint of combustion engines.
    Product development code: ethical technology design
    Denner, who also has corporate responsibility for research and advance engineering, presented Bosch’s product development code to the general public. This lays down the company’s principles for the development of Bosch products. First, the incorporation of functions that automatically detect test cycles is strictly forbidden. Second, Bosch products must not be optimized for test situations. Third, normal, everyday use of Bosch products should safeguard human life as well as conserve resources and protect the environment to the greatest possible extent. “In addition, the principle of legality and our ‘Invented for life’ ethos guide our actions. If in doubt, Bosch values take precedence over customers’ wishes,” Denner said. Since mid-2017, for example, Bosch has no longer been involved in customer projects in Europe for gasoline engines that do not involve the use of a particulate filter. A total of 70,000 associates, mainly from research and development, will receive training in the new principles by the end of 2018, as part of the most extensive training program in the company’s more than 130-year history.

    William Maley

    Trying to avoid legal trouble

    Earlier this week, the Environmental Protection Agency announced that it would be rolling back the fuel-efficiency regulations that were approved during the Obama administration. The agency also announced possibly revoking California's waiver that allows it to set tougher standards on vehicle emissions. The state vowed to fight this. But a new report from the New York Times says California and officials from the Trump administration are in talks about possibly reaching a deal to avoid a legal fight.
    Speaking to a half-dozen of sources briefed about the talks, the Times reports that the two parties, along with representatives of major automakers, "are searching for a compromise that could save a uniform set of standards for the entire country." 
    One of the proposals on the table is to keep the Obama fuel economy standards, but allow automakers to take advantage of more generous loopholes to meet them. In turn, the Trump administration would honor California's wavier through 2030. There could be other proposals in the cards as the EPA, National Highway Traffic Safety Administration, and the White House begin to coordinate their various strategies.
    There are a number of obstacles that could derail the talks. Various automakers "are in different positions” on how to proceed with the talks. According to a source, some are focused on rolling back the standards through 2025, while others want to have the discussion to reach a compromise to avoid having to build vehicles to different standards. The talks themselves seem to be spinning their wheels. Last week, William Wehrum, the EPA's senior clean air adviser met with Mary D. Nichols, chairwoman of the California Air Resources Board. Depending on who you ask, the meeting didn't amount to anything or was considered to be productive.
    Source: New York Times

    William Maley

    You can guess who likes and despises this

    In a move that was expected to happen soon, the EPA announced that it plans to revise the fuel-efficiency regulations that were approved during the President Obama administration. 
    “The Obama EPA’s determination was wrong. Obama’s EPA cut the midterm evaluation process short with politically charged expediency, made assumptions about the standards that didn’t comport with reality and set the standards too high,” said EPA chief Scott Pruitt in a statement today. 
    The statement goes on to say that the agency will begin working on new standards for cars for 2022-2025 with the National Highway Traffic Safety Administration.
    The regulations that were finalized during Obama's tenure would require automakers to have fuel economy fleet average of over 50 mpg by 2025. Automakers have been pushing for the standards to be rolled back as it would cause vehicles to become more expensive, and consumers aren't buying fuel-efficient vehicles.
    “This was the right decision. To ensure ongoing fuel economy improvement, the wisest course of action is to keep new vehicles affordable so more consumers can replace an older car with a new vehicle that uses much less fuel -- and offers more safety features," said Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers - a trade group that represents a dozen automakers including GM and Ford.
    Unsurprisingly, this move has brought forth criticism from both consumer and environmental groups.
    “EPA’s decision defies the robust record and years of review that show these targets are reasonable and appropriate,” said David Friedman, director of cars and products policy and analysis for Consumers Union, the advocacy division of Consumer Reports.
    “Undermining these consumer protections will cost consumers more at the pump while fulfilling the wishes of the auto industry.”
    The EPA also announced that it was considering revoking California's waiver that allows it to set its own emission rules that are tougher than the federal regulations. Aside from California, 12 other states have adopted these standards that together account for a third of car sales in the U.S.  Since President Donald Trump entered the white house, the relationship between the EPA and California has become very strained. California officials have vowed to fight back if the EPA goes forward.
    Source: Automotive News (Subscription Required)

    William Maley

    But is there such a thing as too many?

    It is no secret that buyers are gobbling up SUVs and crossovers, nor is it that automakers are introducing new and redesigned models. Take a look at the New York Auto Show this week where a number a new models (Toyota RAV4 and Subaru Forester) and concepts (Lincoln Aviator) made their debut.
    According to automotive consultancy firm LMC Automotive, there are currently 63 mainstream crossover and SUV models, and 53 luxury models. By 2023, LMC is projecting 90 models for both mainstream and luxury. But this prompts a question - how much is too much?
    “I think everyone has read the same tea leaves - right now there seems to be insatiable demand,” said Cadillac president Johan de Nysschen to Reuters.
    “Everyone is going into these segments with compelling new entries and that means there are going to be winners and there are going to be losers.”
    Already, there are signs this boom could be heading downward. LMC Automotive is forecasting a slow growth for SUVs and crossovers in 2018 and continuing through 2025.
    “There are still some legs left to grow in the SUV market, but growth is slowing and will eventually level off. This is a bright spot in the market, which is why everyone is flocking to it with new product,”  said Jeff Schuster, LMC’s senior vice president of forecasting.
    A key reason comes down to the large number of SUV and crossovers that will be going off-lease and entering the market, proving a less expensive option for buyers. Cox Automotive forecasts that 40 percent of the roughly 4 million nearly new vehicles expected to come off lease this year will be SUVs and crossovers. The number is expected to rise to 44 percent.
    “Now that you’re seeing more SUVs starting to come off lease, that will automatically put pressure on new SUV pricing,” said Karl Brauer, executive publisher forKelley Blue Book.
    There are those who don't buy this argument though. Sam Fiorani, vice president of global vehicle forecasting with AutoForecast Solutions says there is still room to grow if automakers dive into different niches such as sporty models and limited editions.
    “The market is not yet saturated and there are all kinds of niches that have yet to be filled. We’re five or 10 years from even thinking about market saturation.”
    Various automakers claim there is always more room for products, provided they can stand out.
    “There are clearly a lot of entrants, but we are going to differentiate ourselves with a completely different look to our brand," said Lincoln president Joy Falotico at the New York Auto Show.
    But Karl Brauer points out a simple fact: “Simple math suggests that you’ll have more models with lower volume.”
    “You can’t have that many SUVs on the market and have all of them grow volume. Some of them are going to have to give,” explained Brauer.
    Source: Reuters

    William Maley

    But they aren't saying which one.

    Ever since PSA Group announced that it would be making a return the U.S. as part of a 10-year plan, there has been a large amount of speculation as to which brand would be sold. Would it be Citroen, DS, Peugeot, or the recently acquired Opel/Vauxhall?
    “We’ve chosen a brand, but it’s too early to talk about it,” said Larry Dominique, president and CEO of PSA North America to Car and Driver.
    PSA Group is still in the first phase of its plan with the Free2Move mobility aggregation platform (shows various ways of getting around such as bikes and electric vehicles) in Seattle. Somewhat worrying is that the company has only “activated its marketing” in Seattle recently according to Dominique - Free2Move launched back in October.
    Out of all of the brands under PSA Group, Car and Driver says there is a good chance that Opel could be the brand coming to the U.S. They point out a comment made by PSA Group CEO Carlos Tavares saying after purchasing Opel/Vauxhall is that Opel engineers can “ensure the future products for this market will be fully U.S. compliant,” in terms of regulations and taste.
    But there is a possible complication to PSA's plans. Yesterday, President Donald Trump's tariffs on imported steel and aluminum went into effect. There is also talk about a possibly matching up the tariff on imported vehicles - currently, the U.S. imposes a 2.5 percent tariff on imported European vehicles. Earlier this month, Tavares told Automotive News that he is watching the situation closely and that if a new vehicle tariff does come, it will make the company rethink their plans.
    “If the overall framework of tariffs change, it may have an impact on our strategy. That’s clear, because if we don’t have a profitable business plan, then we don’t go,” said Tavares.
    Dominique is a little bit more hopeful. Speaking at the J.D. Power Automotive Summit this week, Dominique said he doesn't believe an increase in the tariff will happen and expressed confidence that the various trade issues could be worked out.
    Source: Car and Driver, Automotive News (Subscription Required), 2

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