+++ After paying out billions of dollars in subsidies to promote greener cars – and creating a gold-rush among unknown start-ups – CHINA is tightening its grip on the world’s biggest electric vehicle (EV) market to weed out weaker domestic firms. But some leading local EV makers are, for now, ignoring calls to apply for costly manufacturing licenses, preferring to invest in design and technology innovation. That, analysts warn, could prove costly down the road if they fail to secure permits to make and sell their new cars. China has rapidly built the world’s largest EV market, throwing money – subsidies of 4.5 billion dollar last year alone – at a sector it hopes will lower fuel imports, improve big city air quality and create technological champions. Subsidies, paid to the manufacturer for each car sold, can be worth more than a third of the sticker price of a model like BYD’s e6. Subsidies are due to be phased out over the next few years. Automakers have responded with a slew of electric cars, with more models to come from SAIC Motor and Chongqing Changan Automobile at the Guangzhou auto show, which opens on Friday, while General Motors is set to unveil a concept car previewing its new-energy plans at the event. Beyond the traditional automakers, Beijing opened the sector to investment by technology firms and others. EV start-ups such as LeEco, Future Mobility and WM Motors have raised hundreds of millions of dollars to develop green car technology. Sales of new-energy vehicles (NEVs) in China – including all-electric and plug-in hybrid models – totaled 337,000 in January-October, up sharply from last year, but still some way short of China’s target to have 5 million NEVs on its roads by 2020. In recent months, authorities have cracked down on firms making substandard products and gaming the subsidy schemes through phantom car sales. State support has been tightened and there are new rules for companies applying for a license to make all-electric cars. These include intellectual property rights; research and development; sales and after-sales support plans; trial production of at least 15 cars; and more. Separately, new safety rules for NEVs, such as battery testing, will make life tougher for weaker firms. Since March, just a handful of companies, all auto industry veterans including those with ties to BAIC Motor and Chery, have been granted licenses – around a quarter of the total applications, auto executives say. The National Development and Reform Commission (NDRC), which approves the licenses, could not be reached for comment. The Ministry of Industry and Information Technology did not respond to requests for comment. Some of the leading tech and start-up companies, including those backed by Tencent and Foxconn, are holding off from applying, saying they are either still some way from actually making cars or expect the rules to change. Jack Cheng, head of manufacturing at NextEV, which is backed by Tencent and Hillhouse Capital, said the company would apply for a license – but only after it makes its first car, delaying investing directly in manufacturing and instead teaming up with traditional automaker Anhui Jianghuai Automobile (JAC). “We don’t really want to spend too much money on manufacturing, to be honest, and the government policy might change”, Cheng told. Wang Chao, chairman of EV start-up Kaiyun Motors, said that instead of pitching directly for a license, he preferred to buy a struggling petrol car maker whose license can also be used to make electric vehicles. That ‘grandfathering’ process allows firms to produce cars in existing factories, though they would need permission for any new plant. “You can spend tens of millions and get a license, but all you get is a license. If you buy a company, you also get a factory”, Wang said. Start-ups are taking a gamble by not getting a license now, says Yale Zhang, Shanghai-based managing director of consultancy Automotive Foresight. An NDRC license will be a likely prerequisite for selling an electric car, and the public security bureau, which issues car license plates, is unlikely to give out plates for cars made by companies with no central approval. “The best thing for them is to secure a license, otherwise there might be some problems”, Zhang said. The state-backed China Association of Automobile Manufacturers (CAAM) has said the new rules should lead to a more sustainable EV sector. “It will affect the market’s short-term development, but in the long-term will lead to better quality and more cost effective development”, Shi Jianhua, a CAAM deputy secretary, said last month. Zhang at Automotive Foresight estimates companies need to have least 3 billion yuan (438 million dollar) to meet the new R&D, sales and plant standards. While several start-ups have the funding, they are reluctant to fork out on license applications now, though several said it was inevitable. For example, Cheng at NextEV – which aims to have raised 20 billion yuan (2.9 billion dollar) at home and abroad by the year-end – said he’d rather spend on developing technology. NextEV will pay contract manufacturer JAC for each car produced, though Cheng foresees the relationship going deeper in future. As China windows down the number of firms racing to produce clean, smart, internet-connected cars, auto executives are calling an end to the recent boom. “This is the golden era. In 2 or 3 years, you won’t be able to start a new company”, said Wang of Kaiyun Motors. “There are over 20 electric passenger car companies. Most will put out one model, maybe not even that, and disappear”, he said, predicting only a handful will survive in the long run. +++

+++ Half of all JAGUAR LAND ROVER (JLR) vehicles will be offered with hybrid or electric powertrains within five years, company CEO Ralf Speth has pledged. In the wake of the launch of the Jaguar I-Pace battery electric vehicle – a car described by Jaguar design boss Ian Callum as being as significant as the E-Type – the British manufacturer has committed to an ambitious programme of electrification. In addition to fully electric cars and a range of diesels and petrols, JLR is developing plug-in hybrid (PHEV) and mild hybrid powertrain options. JLR showcased plug-in and mild hybrid versions of the Range Rover Evoque last year. However, one fuel type that is unlikely to feature in JLR’s future plans is hydrogen, with technical design chief Wolfgang Ziebart branding it “a complete nonsense”. Speth anticipated that electric and hybrid vehicles could account for as much as 40% of JLR’s overall sales by 2020. “We are shaping the future, developing our own approach to autonomy, connectivity and electrification to offer our customers more choice,” he said. JLR has already begun laying the groundwork for its future powertrain plans. In 2015, it revealed plans to double the size of its advanced engineering and design centre at Whitley, near Coventry. This expansion will house highly skilled product development engineers and support the company’s creation of high-tech, ultra-low emissions vehicles for customers around the world. The all-new, all-electric Jaguar I-Pace Concept is one of the real highlights at this year’s Los Angeles Auto Show. Importantly, and unlike most other electric vehicles, and you won’t ever need to replace the I-Pace’s battery pack. At least, that’s the view of Wolfgang Ziebart, Technical Design Director Product Development at Jaguar. “We expect the battery will last the entire lifetime of the car. If you look at the specification of the cells – 1.000 cycles of full-span zero-to-100 per cent – that’s what the battery pack can do. In our case, as we have a range of 500 km, 1.000 cycles would mean the battery has a life of 500.000 km, which should exceed the life of the vehicle. “But what we must also consider is that people don’t bother with maximum range charging, rather it’s more like 90 per cent. And on the other end of the scale, the driver is more likely to run the vehicle down to 20 per cent of remaining charge, rather than a complete depletion of battery power”, Ziebart added. “So the battery doesn’t actually cycle between 0 and 100, rather, it’s more like between 20 and 90, which adds quite a lot to the battery life”. Ziebart believes it’s even better than that, given the fact that standard 1.000 cycles are based on a fast-charge using a high-powered 100 kW charge in 1 hour continuously. “Of course, that’s not the norm when it comes to electric charging behaviour. They will only use the high-power system occasionally when they need to drive a longer distance. The standard charging practice is to plug-in at home and charge overnight for around 10 hours, which puts a lot less stress on the battery”, he added. +++

+++ JEEP ’s comprehensive SUV range includes cars from small all the way through to large, but is yet to enter the super compact segment, which is something the brand is looking to change. Speaking at the Los Angeles motor show, Mike Manley, head of Jeep, RAM and COO of the Asia Pacific region, spoke to journalists about the brand’s ambitions for the coming years, detailing what he thinks is missing from the range. “The Grand Cherokee doesn’t suit every market, but there are 2 key markets around the world. The final area for me, for Jeep, is something we’re looking at now: in some markets we’re seeing strong emergence of an ‘A’ or a super compact SUV. Europe is one with all of the German and French manufacturers piling into it”, Manley said. The popularity of small SUVs in Europe has exploded and Jeep wants a slice of the pie. Small and compact SUVs in Europe are up by 28 per cent with over 150,000 additional sales during the first half of 2016. Sales are split at the top between the Renault Captur, Opel Mokka and Peugeot 2008, meaning that Jeep could potentially swoop in with a compact SUV that also offers tangible off-road capability. While Manley wouldn’t commit to any targets or figures, Jeep now has manufacturing facilities in Brazil, Mexico, China and India, meaning that access to cheap production facilities with access to the European market is available. On the larger side of SUVs, Manley also confirmed that the decision on a diesel version of the Grand Wagoneer, which is due for release at the end of 2019, is imminent. Manley also expressed interest in a three-row version of the Grand Cherokee. +++

+++ MAZDA has confirmed that it will introduce an electric vehicle by 2019, as it sees the sales of electric cars comprising around 10 per cent of the global car sales by 2020. Speaking to media at today’s Los Angeles motor show, the company’s head of research and development, Kiyoshi Fujiwara, said that as the cost of battery technology comes down, the potential for EVs grows. The Japanese brand is likely teaming up with Toyota for a low-volume electric vehicle, with an option for a range-extender variant using a small rotary engine. “Probably by 2020 globally, 5 to 10 per cent of vehicle sales will be pure EV, while the other 95-90 will still use ICE (internal combustion engine). Therefore ICE is still the most important technology all over the world,” Fujiwara said. “Of course we need EVs. As you know, in Norway, the complete energy source is water… this means that EV is much better for CO2 in Norway. But not in United States or China… Therefore we are focusing on ICE, but some regions we need EV, so therefore in 2019 or in that time frame we will introduce EV where it is needed in the world”. As for what type of car Mazda’s first EV will be, this remains to be seen. Fujiwara said the process of the car’s development has only just started, and that it will likely see a partnership with Toyota for scale and cost efficiencies. “We are developing the Mazda system by ourselves, but in terms of commercialisation, whether some of the portions should be shared or not, that’s the discussion point,” he said. “Volume is not so big, so in terms of the business, what kind of the part or unit should be shared, it’s better for both companies, we haven’t decided yet, we are still discussing”. It’s also more than likely that the EV will use an existing ICE compatible platform, rather than be a pure EV platform designed from scratch. The reason, Fujiwara says, is because Mazda’s EV will not need to fit huge amounts of battery packs and therefore does not need to be substantially modified from existing designs. “If huge battery volumes is required then yes, we need a new platform, if not then a unique platform is not required. As you remember we have a range-extender unit provided by rotary engine, that system can help with some distance. We will be able to have two systems”. Mazda previously showcased a range-extender vehicle with a rotary engine in a Mazda2. Development of this technology appears to be leading the way for Mazda’s future EV dreams. The Mazda 2 EV development car could run on electric power alone, until lithium-ion battery power starts to become depleted and the rotary engine kicks in, where it’s designed to run at a constant 2.000 rpm. +++

+++ The fifth and final model in the all-new MINI line-up will be an all-electric version of an existing model when it launches in 2019. Mini boss Peter Schwarzenbauer has previously spoken of his desire to trim the Mini range to 5 models, which he describes as “superheroes”. The three and five-door hatches are considered one superhero, the Convertible, Clubman and Countryman being three more. There has been mystery around the fifth, with speculation suggesting that it could be a production version of either the well received Rocketman or Superleggera concepts, but Schwarzenbauer has now confirmed that the fifth ‘superhero’ will be an electric car, throwing further doubt on the prospects of either of those models ever making production. Schwarzenbauer wouldn’t confirm what sort of model the electric car would be, but he did say it would be a version of an existing Mini rather than an all-new car. The 2019 launch date is significant, because Schwarzenbauer said there would have been a breakthrough in battery technology by then to allow the model to be far more usable than existing electric cars. “It’s completely new technology”, said Schwarzenbauer. “It’s the next step in battery tech. We chose to launch in 2019 as this is when we will see the technology”. He added he believes electric technology is the perfect fit for the Mini brand because of its urban roots. Schwarzenbauer admitted that the decision to make the electric car the fifth Mini ‘superhero’ model made the “likelihood of doing the Rocketman and Superleggera a little bit less now”. He added: “The focus is on the all-electric Mini”, but did not formally rule them out of ever making production. Before the 2019 launch of the electric Mini, the firm will launch its first plug-in hybrid (PHEV) next year in the form of a Countryman variant. Mini has previously experimented with an electric car with the 2009 Mini E research vehicle that was leased for trials, the feedback from which went towards the development of the BMW i3. +++

+++ The car isn’t even on sale yet, and already a new trim level has been confirmed for the 2017 SKODA Kodiaq SUV. Speaking with executives at the Kodiaq’s international launch in Mallorca, I learned that the current four-trim lineup (Active, Ambition, Style and L&K) will be joined by a SportLine grade at the 2017 Geneva Motor Show. Skoda has recently released a SportLine trim (think Audi S-Line or Mercedes-Benz AMG Sport) on the Superb in European markets, that sees black trim, larger wheels and dynamic interior lighting added to an already high specification model. Details on the Kodiaq SportLine are not available at this time, but it is expected to follow the same form as the Superb. +++

+++ TOYOTA has set up a new company specifically to develop electric vehicles (EVs) in a bid to fast-track electrified models to market. The Japanese car-maker made the announcement this week, confirming that the as-yet unnamed “in-house venture company” would be a virtual organisation made up of just 4 people, one each from Toyota Industries Corporation, components manufacturers Aisin Seiki and Denso Corporation and Toyota Motor Corporation. Toyota said in a release that in developing EVs for production, the new outfit will use the know-how of the Toyota Group and implement “unconventional work processes” to ensure that projects are completed, and vehicles are brought market, faster. It also said that tightening global emissions regulations and different energy and infrastructure issues, depending on the market, had pushed the company to fast-track development of battery electric vehicles. While the car-maker has not provided a timeline for the introduction of a mass market full electric vehicle, Japanese publication Nikkei last week said that Toyota would launch an EV by 2020. Previously Toyota had put its eggs in a number of different eco-friendly baskets, offering internal combustion engines, mild and plug-in hybrid and hydrogen fuel-cell vehicles, with a special focus on the latter. Toyota believes that the cruising range, refuelling times and other convenience elements of fuel-cell vehicles makes them the “ultimate eco-car”. In terms of current offerings, Toyota sells the Mirai FCV in Japan, some Eropean markets and parts of the Unites States, and the recently launched Prius Prime is the company’s sole plug-in hybrid model. The Prime is not being offered in Australia, but a trio of Mirai FCVs are here for assessment and promotional purposes to highlight the technology. Toyota and its Lexus luxury sister brand offer a number of mild hybrid variants, ranging from small hatches to large SUVs. TMC president Akio Toyoda said he hoped the new work practices of the EV venture company would have a wider impact on the automotive giant. “Over these past few years, which we have positioned as years for strengthening our planting of seeds for the future, we have taken such measures as establishing the Toyota Research Institute, made Daihatsu a fully owned subsidiary and have begun work to establish an internal company responsible for compact vehicles for emerging markets”, he said. “The new organisational structure for EVs is a part of this effort. As a venture company that will specialise in its field and embrace speed in its approach to work, it is my hope that it will serve as a pulling force for innovation in the work practices of Toyota and the Toyota Group”. +++

+++ VOLKSWAGEN and its labor unions agreed to cut 30,000 jobs at the core Volkswagen brand in exchange for a commitment to avoid forced redundancies in Germany until 2025, a compromise which leaves the carmaker’s profitability still lagging rivals. The turnaround plan will lead to 3.7 billion euros in annual savings by 2020 and lift the Volkswagen brand’s operating margin to 4 percent that year, from an expected 2 percent in 2016. That target still remains below rival European carmakers such as Renault and PSA (Peugeot, Citroen, DS), which is targeting an operating margin of 6 percent in 2021. Volkswagen, Europe’s largest carmaker, is seeking to move beyond an emissions-cheating scandal that has tarnished its image and left it facing billions of euros in fines and settlements. The cuts came with a management pledge to create 9,000 new jobs in the area of battery production and mobility services at factories in Germany as part of efforts to shift toward electric and self-driving cars. “We have to invest billions of euros in new cars and services while new rivals will attack us – the transformation will surely be more radical than everything we have experienced to date,” Volkswagen brand CEO Herbert Diess said at a press conference. Some experts argued the cost cuts were not deep enough. Spending on R&D and staff across Volkswagen’s automotive operations has been growing for years with the need to overhaul the cost base dating back to before the diesel emissions scandal broke 14 months ago.” The deal may be the best the company could negotiate with labor but it’s not a victory for either side”, said Erik Gordon, a University of Michigan business professor. “The cuts are too small to make Volkswagen cost competitive with Toyota and other global rivals”. With 610,000 workers globally, Volkswagen last year built slightly fewer vehicles than Toyota which has 350,000 staff. The German company has also been slow to cease production of unprofitable vehicles in its 340-model range. Volkswagen’s labor leaders said management had agreed to avoid forced redundancies in Germany until 2025, a step which clears the way to cutting 23,000 jobs via the more palatable methods of buyouts, early retirements and reducing part-time staff. Jobs will also be cut in North America, Brazil and Argentina, Volkswagen said, without being more specific. Around 120,000 employees work for Volkswagen brand in Germany including 6,000 temporary staff. Activist hedge fund TCI, which has been critical of Volkswagen management, said it looked like a good deal all round provided it could be made to stick. “As long as they are net savings – the savings are not given back by increased costs elsewhere in the organization”, said TCI partner Ben Walker. “They’ve just to deliver now. It’s easy to talk. They now have to deliver and execute”, he added. Labor leaders were pleased with the outcome. “The most important message is the jobs of the core workforce is secure”, Volkswagen’s works council chief Bernd Osterloh said at the news conference in Wolfsburg, where the company has its headquarters. Management and labor agreed to outsource production of plastic parts from the German Braunschweig plant but will compensate workers by assigning more orders for chassis and steering assembly needed with rising investment in self-drive cars. In a further sign of its shifting focus, Volkswagen said it will build electric cars at its German factories in Zwickau and Wolfsburg. Electric motors will be built in Kassel, and VW will start battery cell production and development in Salzgitter. Volkswagen will also build battery packs for electric and hybrid cars in Braunschweig, it said. +++

+++ VOLVO has kicked off a pilot in San Francisco that allows S90 and XC90 owners to hand over menial car-ownership errands to a Volvo service member with the click of its new Concierge application. While drivers typically have to take time out of their day to perform a number of basic maintenance tasks such as refuelling, car washing and delivering to a service centre, the new US trial uses a smartphone application to request a Concierge operator to do the jobs for you. The pilot is a result of extensive customer research which revealed 70 percent of those interviewed would like more convenient refuelling options, 56 percent would like their car collected for scheduled servicing, while 49 percent would value a service that allowed the car to be moved to another location. The Swedish car-maker realised that the most requested services could be rolled into one phone application and is testing the water with the trial that goes live this month. Volvo consumer connectivity services vice-president Anders Tylman-Mikiewicz said the initial pilot will evolve and refine the technology into an even more flexible and useful service. “We aim to make life easier by employing the latest connected technology in an easy-to-use smartphone app”, he said. “We are taking an open and agile approach to this, and welcome collaboration with partners with new and innovative service offers. This is just the beginning”. Concierge users are shown the available services in their area and the customer can then place a request via the application. The system then sends the order to the closest participating Volvo service centre along with the vehicle location after which, an operator is despatched. When the operator arrives at the car’s location, a single-use digital key is used to gain access to the vehicle which has the added security feature of time and location specific authorisation. If the car is not parked where the customer indicated or access is attempted outside an allocated time, the digital key will not work. Once inside, the operator takes the car to the Volvo service centre and returns the vehicle to the customer’s requested location which can be a different place to where it was collected. When the car is locked in the predetermined location, the digital key expires. The system is integrated into the vehicle’s central information system and can also prompt customers with options. If the car is soon due for a service or running low on fuel, the customer is contacted via the application and offered service options. Volvo does not say whether the customer is charged a fee for the service or if it is included in the cost of servicing. Up to 300 XC90 and S90 owners will be initially involved in the San Fran trial as part of the company’s Volvo On Call platform and its scaleable nature will allow more services to be added as the technology is developed and expanded. +++

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