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+++ The AUTO INDUSTRY is facing seismic changes with the rise of electric vehicles, automated driving and car sharing set to eclipse even big mergers such as PSA’s purchase of Opel, executives at the Geneva auto show said. Peugeot maker PSA Group said it had agreed to buy loss-making Opel from General Motors, creating Europe’s second-biggest carmaker behind Volkswagen and sparking speculation of more consolidation. However, some auto executives gathering in Geneva said the deal was unlikely to alter the landscape on its own, with changing consumer habits and new rivals in Silicon Valley and China all likely to have a much bigger impact on carmakers. “My feeling is that the industry as a whole and brand positioning will change in the next 10 or 15 years, and that comes in addition to traditional consolidation”, said Herbert Diess, head of Volkswagen’s passenger car division. “We are really in a transitionary phase for the industry. There are new competitors on the horizon like Tesla or Chinese ventures”, Diess told reporters, adding that he did not expect a wave of Opel-style mergers. Volkswagen is investing billions of euros in electric vehicles, automated driving and new mobility services, in part as it tries to recover from a costly emissions test cheating scandal that has hit demand for diesel vehicles. The company, which is also cutting costs, is unveiling a fully self-driving concept car at the Geneva show. Karl Schlicht, head of European sales at Japan’s Toyota, also played down the impact of the PSA-Opel deal, which brings together carmakers with a heavy focus on diesel and low-margin fleet vehicles. “We ran a counter strategy in Europe which may not look as successful for some past years because our volumes were a bit lower, but in terms of where we want to end up, it’s turning out to be a good strategy”, he said, referring to Toyota’s investment in hybrid vehicles. Toyota forecasts its European sales will rise 5 percent this year while the market is expected to grow just 1 percent amid uncertainty over German and French elections and Britain’s departure from the European Union. BMW boss Harald Krüger, however, said the cost of investments in new technologies could spur deals among smaller carmakers. Some industry analysts also say an enlarged PSA could actually ease the pressure on rivals if CEO Carlos Tavares uses similar methods to turn a profit at Opel that worked at PSA. In the 3 years since Tavares took the helm at PSA, its existing brands (Peugeot, Citroen and DS) have significantly increased pricing relative to benchmarked rivals, sometimes at the expense of sales. A similar approach at Opel, which has been among the region’s most aggressive discounters, could give the entire European mass-market car industry some breathing space. “The deal could then ease price pressures, lead to a stabilization, or even a recovery”, said Michele Pedroni, fund manager at SYZ Asset Management in Geneva. GM and PSA have shared production of commercial vans and developed common vehicle platforms for years, and the Opel Crossland X and the Citroen C-Aircross concept SUV on show in Geneva are a sign of the new projects and synergies they hope to achieve as one company. Stefan Bratzel of the Center of Automotive Management in Germany said the potential improvement in profitability at PSA-Opel posed a bigger challenge to rivals than its sheer size. “There is no survival of the fattest”, he said. “Just because you’re big, you do not win the game”. Some analysts say Fiat Chrysler Automobiles (FCA), which has less than 7 percent of the European market compared with PSA-Opel’s more than 16 percent, could be among the most pressured, with its high debts and costly plants in Italy. “Being a mid-sized player in Europe and not particularly profitable in the region leaves them quite vulnerable”, said Felipe Munoz, an automotive analyst at JATO. “They are too expensive to be bought by one of the big guys, and they are not in a position to grow unless they find a partner”. FCA boss Sergio Marchionne has long advocated mergers to share the cost of cleaner and more technologically advanced cars, but his attempt to woo GM was rebuffed and with the U.S. firm now leaving Europe that option seems even less likely. Marchionne said that FCA did not need a merger, but he wouldn’t rule one out and said he could approach GM again if it was the right thing to do. He also said the PSA-Opel deal might over time encourage VW to consider a tie-up with his own company, although one industry investment banker told that was unlikely as VW focuses on its transformation following the dieselgate scandal. Ford, another mid-sized player in Europe, highlighted the importance of keeping costs down. European boss Jim Farley told Reuters it was “really, really important” for the future of its more than 14,000 workers in Britain that the country strikes a tariff-free trade deal when it leaves the European Union. +++

+++ AUDI boss Rupert Stadler has confirmed that his firm’s e-tron electric SUV concept will make its debut as a production ready car in early 2018, with a fully-electric powertrain and 500 kilometer range, but hinted that it is unlikely to carry the much-predicted Q6 badge. The new model will look almost identical to the car previewed at the Frankfurt Motor Show – and it will use e-tron, the Audi designation for a pure-electric car. The electric SUV will be the first of three pure-EV Audis due by 2020. “The first of the three models is an SUV”, said Stadler. “We decided to go the SUV way because, even though the architecture is a little more difficult because you don’t have the perfect aerodynamics, people love to sit in an SUV and we have to respect the growing trend of SUV segments. I think this was 2 or 3 years ago absolutely the right decision”. However, Stadler also suggested that the market positioning of the new model may mean that it changes its name from Q6 – despite the fact that it had been expected to slot in between the Q5 and the Q7 in Audi’s line-up. “E-tron is a very strong brand and you will judge that in 5 years time”, said Stadler. “In that respect we are the most consistent brand ever. We first communicated e-tron about 4 or 5 years ago and we stuck to the concept of e-tron. However, I would not like to limit the nomenclature for the first car, because Q6 fixes the price as well as Q8 is fixing a price, and I would like to feel free”. That’s a hint that the cost of the battery tech required to deliver the 500 kilometers of range is going to push the price of the car closer to – or even beyond – that of the Q7. Audi could get around this conundrum by giving the first e-tron a name that sits outside of its normal structure, albeit with the ‘e-tron’ suffix. While the name hasn’t been confirmed, the sleek profile and chiselled styling of the concept car show the electric SUV’s positioning as a rival for the Tesla Model X, as well as conventionally-fuelled rivals such as the BMW X6 and Mercedes GLE Coupe. Audi claims that the sporty appearance and sealed underbody offer a class-leading drag coefficient of 0.25cd. Audi bosses claim the production version will be “sexy”, “packed with utility” and “sporty”. They also confirmed its debut will coincide with big developments in the charging infrastructure. +++

+++ FERRARI boss Sergio Marchionne has been openly critical of the company’s entry-level California coupe-convertible, suggesting that the model “has a hard time seeing itself as a full-blown Ferrari” and that it needs to be reconsidered. “This is the biggest topic of conversation at Ferrari right now”, Marchionne added. The California was originally conceived as a Maserati project from the era when Ferrari directly owned that company. However, the car’s complexity meant that it was not viable at a Maserati price, which had to sit below the Ferrari range. Development of the car was well advanced, however, and it instead emerged bearing a prancing horse badge and carrying a higher price but with capabilities that fell somewhat short of Ferrari’s high standards. The revised California T addressed some of the issues and the upgraded car earned more critical praise than the original version. However, while not suggesting that the model be dropped, Marchionne appears to be suggesting that a major reappraisal of the California’s role and character are under way. +++

+++ Good news for fans of the JEEP Wrangler: the new model, due in 2018, will be built in sufficient volume for plentiful supply to dealers. “I have lifted the free demand on the Wrangler – the volume of cars that we can supply when a distributor asks for them”, said Jeep CEO Michael Manly. The new ‘JL’ Wrangler will arrive in the UK market at least a year ahead of the new Land Rover Defender. Jeep is boosting output at its Toledo Jeep factory with a $700 million investment to move to 350,000 units a year, a rise of about 50%. Part of the increase is because of a new crew-cab pick-up version of the Wrangler. “The crew-cab could be a much bigger success than we think and I’ve protected for that in our production plans”, he said. Jeep will also introduce a hybrid version of many of its models but avoid pure-electric variants. “A full battery-electric-vehicle Wrangler is not relevant. We can’t strand one of our vehicles on a remote mountain side”, Manly said. The first hybrid Jeep is set to be a version of the new Wrangler, with electric and battery componentry most likely hooked up to a new four-cylinder soft-turbo petrol engine. But Manly also reiterated that diesel power remains “absolutely necessary” for Europe, although he cautioned that small diesels were on the verge of becoming too expensive to manufacture because of the high cost of exhaust after-treatment to comply with legal requirements. There is also a possibility that Jeep will add two large SUVs at the top of its range. One of them, the Grand Wagoneer (GW), has been in Jeep’s future product plan since 2014 but is now pushed back to 2019. Manly refused to rule out a Wagoneer version between the Grand Cherokee and the GW. “I just don’t want to comment on that”, he said. +++

+++ The PORSCHE Mission E luxury saloon car will hit showrooms by the end of the decade, and will spawn various all-electric models with greatly differing power outputs, CEO Oliver Blume told. Porsche’s Mission E electric car was the star of the 2015 Frankfurt Motor Show, and the brand is now well on its way to delivering a production model within the next 2 to 3 years. Prototypes have been built and will commence testing this summer, before being submitted to a gruelling cold weather programme to ensure the battery technology can cope with extremely low temperatures. Speaking from the 2017 Geneva Motor Show, CEO Blume told: “The Mission E will sit in the segment below the Panamera. It will offer a 500 km range, with a 15-minute charge time”. Porsche plans to sell 20,000 Mission E models a year and is looking at supplementing the range with a high-performance GT-E variant, as well as other versions with varying power outputs. “We will think of different options”, Blume said. “There will be more than one. With different levels of power”. The boss also stated that the Mission E will be capable of updating its software via Wi-Fi, and that Tesla-style power upgrades could also feature. “It will be possible to work with over-the-air options”, he said. “It isn’t decided yet, but it could be possible to charge up with more power. For example when you have 400 hp, it could be possible to upgrade to 450 hp”. In a previous interview, Blume told to expect various autonomous features, though a fully robotic version of the Mission E is not planned. He also said the ability for owners to enjoy driving their car is essential, but gave examples where a driver may read a newspaper while stuck in a traffic jam or the car being able to park itself remotely as occasions where autonomous technology could be used. The Porsche Mission E will offer exceptional performance, but will also deliver a range of 500 kilometers and will be capable of being charged to 80% battery capacity in just 15 minutes. Blume regards that time as an acceptable wait on a long journey. A fast charging network would need to be rated at 150kW or more. As the brand leading the VW Group’s fast charging project, he said Porsche is working with a number of other organisations, both within and outside the Volkswagen Group, to build the network. News from Geneva suggests that Bentley will make use of the Mission E platform for its upcoming all-electric sports car. The charging technology may also be compatible with Tesla’s Supercharger networks, although adaptors may need to be used. Blume said there’s no reason why Tesla owners couldn’t use the Porsche-led infrastructure. It’s not currently clear whether Tesla would open its network to owners of non-Tesla models. The Mission E is slated for launch at the end of the decade, and Blume confirmed the fast charging infrastructure will be available for owners to use when the car goes on sale. The brand’s first EV will herald a new era in battery-powered Porsches, and brings a massive investment into the new plant that will produce it. The Mission E will be built in Stuttgart, Germany, alongside more conventionally powered models. As a measure of full commitment to electric vehicle production, around 700 million euro will be invested in Porsche’s main site to accommodate an extra assembly plant and paint shop. The existing engine factory will also expand for electric motor production, while over 1,400 extra jobs will be created there alone. Around another 300 million euro will boost other areas of the company. In terms of performance, Porsche has looked to its Le Mans-winning 919 Hybrid racer for assistance. The 800-volt drive system will be carried over from concept to production, consisting of two electric motors and a powerful battery, which Porsche claims is twice as powerful as any other EV system available today. The Mission E will launch initially as a 600 hp four-door, four-wheel-drive saloon, before other models are added later. Porsche claims 0-100 km/h in 3.5 seconds. The concept also features four-wheel steering, with Porsche Torque Vectoring automatically distributing power to individual wheels to maximise grip. Other technological highlights include batteries that can be replenished wirelessly via inductive charging, while a panel behind the front wheel of the concept hides the conventional charge port, while inside Porsche has installed eye-tracking and gesture control technology for the operation of the car’s major functions. The dash has also been separated into 2 distinctive sections, with a traditional instrument cluster making way for a floating, 3D digital display. The panel reacts to the driver’s movements so the display is always visible and in the driver’s line of sight. A second holographic display extends the length of the dash – showing selectable 3D apps, which can be used to control primary functions such as the navigation, media and climate control. They can be accessed via swiping and pulling hand gestures, while the screen housed in the centre console is used for more detailed information menus. +++

+++ SEAT ’s SUV range could soon grow beyond the new Ateca mid-size SUV and soon-to-be-launched Arona small SUV with the Spanish brand’s own version of the large Skoda Kodiaq. 2 years ago at the Geneva Motor Show, Seat showed its 20V20 large SUV concept, and its then-boss Jurgen Stackmann promised that it would reach production if the company’s first SUV, the Ateca, proved a sales success. Now the current chief Luca de Meo has admitted that the bigger car is on track to reach dealerships before the end of the decade. Asked if he would like to do a Seat version of the Kodiaq, de Meo replied: “I can’t say today, but we are working on it. We see opportunities; we’re looking at the business case and the vision of the product”. He added: “20V20 was not just something we did for fun; there was some thinking behind that. The whole thing about SUVs is it’s where the money is today”, said de Meo. “The next big thing will be interpretation of the SUV and possible themes – variations on the theme. The SUV is not a fashion thing, it’s a strength – in spite of everything: higher cost, higher CO2. It’s the new interpretation of a sports car”. The 7-seat SUV could sit on the same MQB-based platform as the Kodiaq. That car uses the A2 variation of the architecture in its longer wheelbase, sharing many components with VW’s recently launched Tiguan Allspace. Seat’s offering is likely to replace the Alhambra MPV in its line-up; the firm currently has no plans for a direct successor to the traditional 7-seat people-carrier, which has been performing well but in an ever-decreasing segment of the market. When quizzed recently on what would eventually replace the Alhambra, Seat design boss Alejandro Mesonero said: “We do not want to do that body style any more. We will replace it, but not with the one-box design we have now”. The current Alhambra, built alongside its Volkswagen Sharan sister car, has been on sale for 6 years, with only a minor facelift in 2015. When quizzed about what would eventually replace the Ford Galaxy rival, Mesonero said: “We do not want to do that bodystyle any more”. De Meo also confirmed that he’d be happy selling bigger, more expensive Seat models. “We could go bigger; you have to do it in the right way with the right timing and sometimes not in an obvious way”, he said. “In terms of transaction price, between the old Leon and the new Leon there was a huge jump, so we don’t have a problem being at the same level as other competitors – like, for example, the French. We have to do that step by step, we already did it with the Leon, the Ateca was another step so slowly we can find a way to build our presence. However, di Meo did sound a warning about Seat pushing too far upmarket. “If everyone goes up in the group, then we all end up doing exactly the same thing; then you don’t need 12 brands”, he said. “It’s very important for Seat to reinforce its small-car business and be successful with cars like Ibiza and Arona. We need to profile the role of Seat in the group”. In spite of the arrival of new SUVs, de Meo confirmed that the brand’s successful Cupra models would continue. “I see additional possibilities of leveraging the whole story of Cupra”, he said. “I don’t want to be more precise than this, but you have to remember that I was the guy who resurrected Abarth when I was at Fiat, so I know that this kind of thing can work, but you have to do it right”. When asked if it could apply to SUVs, he said: “Why not?” A Cupra version of the Ateca is on the cards with power from the Leon’s 300 hp 2.0-litre turbo petrol engine. That model could still be seen later this year. +++

+++ The first SKODA electric car concept will be unveiled at the Shanghai motor show in April and is targeted to go on sale around the end of the decade. Although few details have been revealed, Skoda research and development boss Christian Strube confirmed that the brand’s first all-electric car was imminent. “It’s in the design studio and will be ready for Shanghai in April”, he said. “It is our interpretation of a car on the Volkswagen Group’s MEB platform and it will be packed with technology and really emotional”. Skoda’s first electrified car is set to be a Superb plug-in hybrid, which is due to go on sale in 2019. However, Strube confirmed that the first all-electric car wouldn’t be far behind, suggesting an on-sale date of 2020 or 2021. “We won’t be the first brand in the group to have an MEB car on sale, but we will be fast followers and at the forefront when compared to our competition”. The VW Group’s electric car plans have accelerated significantly in the wake of the Dieselgate scandal, leading to last year’s unveiling of the ID, which has the dimensions of a Golf and the interior space of a Passat. The group has targeted a million electric car sales by 2020. Strube didn’t elaborate on what size or style of car the concept would be, but previous reports have suggested that it will have an SUV bodystyle. +++

+++ TESLA is losing key personnel as it races to bring the Model 3, its most critical electric sedan yet, to market later this year. Chief Financial Officer Jason Wheeler’s impending departure, announced just 15 months after he joined Tesla from Google, will be the latest in a raft of largely under-the-radar exits. Former executives, who spoke on the condition they not be identified, cited a range of reasons for their exits over the past year, including long hours in the rush to high-volume production, mission creep, and a tense culture that reflects their visionary but indefatigable chief executive officer, Elon Musk. “Tesla looks like a company that is getting stretched to the limit”, said Dave Sullivan, an analyst at industry researcher AutoPacific. “The pressure of getting out the Model 3 is getting to everybody, from the people on the factory floor to the people at the top”. A Tesla spokesman in an emailed statement called attracting and retaining talent “one of our biggest assets” and said the company’s attrition rate was below average among technology companies. Long hours and job-hopping are routine at tech companies in California’s Silicon Valley, and Palo Alto-based Tesla continues to make high-profile hires. Even so, analysts have flagged the departures as a risk to what will be Tesla’s most challenging execution year in its short history. Musk plans to introduce the Model 3, is starting battery production at the Gigafactory and will integrate SolarCity, the recent acquisition that pushed Tesla’s global workforce to roughly 30,000 people. Like many companies, Tesla noted among risk factors in its just-filed annual report that it needs to attract and retain skilled workers. This year, however, it added a new phrase to the boilerplate, saying the efforts are needed “especially to support our expansion plans and ramp to high-volume manufacture of vehicles”. “Any time you’re going through a big change it’s important to have consistent management”, Colin Langan, a UBS analyst who has a sell rating on the stock, said in an interview. “Jason Wheeler was a big hire and he’s leaving, and there have been many other departures. If you’re putting out aggressive targets and the people aren’t there to meet them, it’s a problem”. Wheeler, whose departure was first announced on last week’s quarterly earnings call, said he wants to pursue work in public policy and praised what he called the “A-team” at Tesla. Deepak Ahuja, the CFO who led Tesla from the brink of bankruptcy through its 2010 initial public offering and retired in 2015, will return in April for a second tour of duty. Bloomberg News compiled a list of more than 2 dozen management departures over the past year that include vice presidents of finance, communications, regulatory affairs, production, manufacturing, products and programs. Recently, Tesla lost Mark Lipscomb, VP of human resources, and Satish Jeyachandran, its director of hardware engineering. Tesla is generally opaque about its leadership beyond Musk and Chief Technical Officer J.B. Straubel, with no list of executives or vice presidents on its website, its investor relations page or in the annual report the company filed this week with the Securities and Exchange Commission. Among Tesla’s senior leadership team, threequarters have more than 3 years of tenure, 60 percent have been with the company at least six years and 20 percent have worked there a decade, according to the spokesman. Almost 60 percent of those who’ve had a leadership position at Tesla over its 14-year existence are still with the company, Tesla said. None of the former managers Bloomberg News reached agreed to speak on the record. Goldman Sachs Group this week downgraded Tesla to sell from neutral, with analyst David Tamberrino casting doubt on its ability to deliver the Model 3 on time. The Feb. 27 report contributed to the shares dropping about 11 percent from their 19-month closing high of 280.98 dollar on Feb. 14. Of 23 analysts tracked by Bloomberg, 8 have buy ratings on the shares, 9 are neutral and 6 recommend selling. Tesla’s shares have jumped about 29 percent over the past year. Revenue surged 73 percent to more than $7 billion in 2016. When Tesla announced in January it hired Chris Lattner from Apple as vice president of Autopilot software, it didn’t mention that Sterling Anderson, the executive who ran the entire Autopilot program and reported directly to Musk, departed in late December. Tesla then sued Anderson, alleging he broke his confidentiality agreement with the company. Aurora Innovation LLC, the company Anderson started with the former head of Google’s self-driving project, said it would fight the “meritless” lawsuit. Several former Tesla employees have landed at other auto companies, including Future Mobility, Nio and Waymo, the self-driving car business spun off by Google parent Alphabet. To be sure, Tesla’s clean-energy mission and compelling products has attracted high-caliber people, regardless of its hard-driving reputation. The 45-year-old Musk has described himself as a “nano manager,” has kept a sleeping bag at the company’s car factory and works a second job running a rocket company. About half of Musk’s roughly $11.6 billion in estimated wealth comes from Tesla, where he takes no salary but is the largest shareholder with a 21 percent stake. As of Dec. 31, Tesla had about 17,800 employees, not counting another 12,200 added with the $2 billion acquisition of SolarCity last year. Despite the growing headcount, more than 2,000 job postings at Tesla are listed on the recruiting website Taleo. Tesla produced almost 84,000 vehicles in 2016 and plans to make half a million in 2018, then 1 million in 2020. It expects to pick locations for more gigafactories by the end of this year, and to introduce a semi truck and bus. Earlier this week it was named the highest-ranked domestic car brand by Consumer Reports magazine. One worker at Tesla’s Fremont, California, auto plant touched off a unionization effort last month, publishing a Medium post describing 60- to 70-hour work weeks, safety-related issues and mandatory overtime. The unionization talk has drawn pushback from Musk. He promised employees free frozen yogurt stands, an electric pod-car roller coaster connecting parking lots to the factory and a “really amazing party once Model 3 reaches volume production later this year,” according to an internal email Buzzfeed obtained last month. Musk’s moves to lighten the environment show the union threat has registered, AutoPacific’s Sullivan said. “If Tesla has more than 2,000 job openings, does that mean that people are overloaded, or doubling up? You can’t constantly ask for the impossible”. +++

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