Newsflash

+++ Cars are going to undergo a lot of CHANGES in the coming years. One of the biggest: You probably won’t own one. Thanks to ride sharing and the looming introduction of self-driving vehicles, the entire model of car ownership is being upended, and very soon may not look anything like it has for the past century. Drivers, for instance, may no longer be drivers, relying instead on hailing a driverless car on demand, and if they do decide to buy, they will likely share the vehicle, by renting it out to other people when it isn’t in use. Auto makers, meanwhile, already are looking for ways to sustain their business as fewer people make a long-term commitment to a car. And startups will spring up to develop services that this new ownership model demands, perhaps even create whole new industries around self-driving cars and ride sharing. Here’s a look at the changes to come, and what they mean. Car ownership, for a long time, has symbolized freedom and independence. But in the future, it may be akin to owning a horse today; a rare luxury. Ride sharing as we know it will grow in popularity as people get even more comfortable with the sharing economy, and more people migrate to dense cities where owning a car is a burden. One-quarter of miles driven in the U.S. may be through shared, self-driving vehicles by 2030, according to an estimate by Boston Consulting Group. And the business of ride sharing may take on some new forms. Startups such as Los Angeles-based Faraday Future envision selling subscriptions to a vehicle, for instance, allowing people to use it for a certain number of hours a day, on a regular schedule for a fixed price. So, people who need a vehicle for a few hours daily to attend meetings or make deliveries could subscribe and avoid having to summon on-demand rides every day (and potentially paying a lot more). Other companies are experimenting with the idea of allowing drivers to access more than just one kind of vehicle through a subscription, so a driver might choose a compact model one day but a minivan another day if she needed more passenger space. “By 2022, 2023, the majority of transportation in urban cities with temperate weather will be on demand, shared and likely autonomous”, says Aarjav Trivedi, chief executive of Ridecell, a San Francisco company that provides the back-end software for car sharing. Even people who do end up buying a car may come to see it as a short-term arrangement, And a source of income. Chief Executive Elon Musk has hinted that he’s preparing to create a network of Tesla owners that could rent out their self-driving cars to make money. Already, some drivers are testing this idea using other services that let them market their cars, something like Airbnb rentals on wheels. Take Jeff Cohen, who works for an electric-vehicle-charging company. His wife balked at his desire to buy the Model S sedan, which Tesla typically sells for about $100,000. He persuaded her to allow him to buy a Tesla if he would in turn rent it out on a site called Turo. Doing so (at $189 a day) almost covered the cost of the entire monthly loan payment while giving him the ability to drive the electric car around Atlanta when not in service, he says. “It allowed me to get the car”, says Cohen, 58 years old. “We weren’t in agreement that we could get a car like this without some way to fund it”. Turo, which had more than 3 million people sign up for the service through the end of May, says Teslas, along with BMW and Mercedes-Benz cars are among the more popular searched vehicles on the site. “A lot of people are realizing that the car is no longer just a cost: it’s an asset,” says Andre Haddad, Turo’s chief executive. Of course, the biggest obstacle to many of the changes may be the most simple: People have to be willing to give up the idea of owning their car, something that has been culturally ingrained over many decades. What’s more, under this vision, car buyers won’t just give up the idea of sole ownership. They may also give up the idea of sitting behind the wheel by using autonomous vehicles. They will have a powerful incentive to do so. A study by Deloitte Consulting, for example, estimates that the cost of personal car ownership is on average 97 cents a mile today but could drop by two-thirds in a world of shared, self-driving vehicles; a tipping point that could usher the technology into daily life for many people. In cities, the idea will be even more appealing, because it takes away the unpleasant sides of ownership, such as parking and negotiating traffic jams. Companies are already looking at how to market vehicles to overcome some of the possible psychological resistance to nonownership. Waymo, the self-driving tech unit of Google parent Alphabet has begun public trials of self-driving minivans in Phoenix for select users, with the eventual goal of testing them with hundreds of families. The goal is a better understanding how to make such a service appealing enough to take the place of a family car. “We’re really experimenting here with how far our users can go in terms of using a service like this one to replace their own personal transportation”, says John Krafcik, head of Waymo and a former automotive-industry executive. For auto giants, the new ownership models, whether for traditional cars or self-driving ones, constitute a major threat. As a result of both driverless cars and fleets of robot taxis, sales of conventionally purchased automobiles may likely drop. What’s more, because autonomous cars will likely be designed to be on the road longer with easily upgradable or replaceable parts, the results could be devastating to auto makers that have built businesses around two-car households buying new vehicles regularly. Currently, cars get replaced every 60 months on average, according to Experian. “It may become more like the airline business where we see jets that have been in service for 50 years”, says Chris Ballinger, chief financial officer and head of mobility services at the Toyota Research Institute. “Now I don’t think a car will be in service for 50 years but I’m saying it may move in that direction, with tens of millions of miles and decades of service”. In response, some car companies are trying to meet that threat head-on, by experimenting with different ownership models. One plan to get drivers to buy a vehicle of their own is to help owners rent out their vehicles, as they would in Musk’s planned network of Tesla owners. Toyota’s Lexus brand is testing payment plans that let people subsidize the purchase of pricey cars by renting them through a service called Getaround. The hope is that young buyers, who have been eschewing traditional ownership but are still attracted to luxury nameplates, will grab the chance to afford fancy cars on Corolla budgets. BMW meanwhile is experimenting with shared rides through its Reachnow service. Members can get access to a fleet of BMW vehicles (and Minis, in some areas) that they pick up as needed and can drop off anywhere when they’re done. General Motors, the largest U.S. auto maker by sales, seems to be hedging all bets. The company acquired an autonomous-car tech startup called Cruise Automation last year in a deal with a potential value of more than $1 billion. It also invested $500 million in ride-share company Lyft, as well as starting a car-sharing service of its own called Maven. Meanwhile, it’s offering Cadillac customers the ability to subscribe to ownership, letting them use a vehicle for a month at a flat fee. The advent of self-driving cars will give people more free time while in the vehicle. And that will create new opportunities for car makers and others to make money. Autonomous vehicles could ultimately free up more than 250 million hours of consumers’ commuting time a year, unlocking a new so-called passenger economy, according to Intel, which is trying to provide the computing power behind self-driving software. The chip maker released a study in June that estimates as much as $800 billion could be generated by 2035 by this passenger economy, while as much as $7 trillion could be in play by 2050. All of which might explain why new entrants to transportation, such as Apple, Amazon and Samsung Electronics are exploring the field. Apple in April, for example, became licensed to test-drive autonomous vehicles on California roadways. This could lead to a turn away from using the exterior of the vehicle as a selling point and focusing on making the interior as comfortable and loaded with features as possible. In some cases, that means turning cars into living rooms on wheels: Harman International Industries, the auto-parts supplier acquired by Samsung for $8 billion, demonstrated in Las Vegas earlier this year a vision of a car that replaces a vehicle’s windows with video screens that create a wraparound movie theater inside the cabin. Design firms will also cook up features designed to ease people into the practice of sharing rides regularly. IDEO, the design firm that came up with Apple’s first computer mouse, has released a vision of autonomous vehicles designed to accommodate strangers who end up riding together. One central feature is ‘pods’: seats that can be adjusted to block a passenger from the view of the others, and there are areas in the vehicle that allow them to lock items while other people use the car. Other companies are working on ways to make cars recognize passengers’ digital profiles and become more responsive to their needs. That might involve things such as reminding someone that a calendar appointment is coming up, and nudging them to leave earlier that day, or giving advice on places to eat along their route or ways to shop online while in traffic. Zoox, a startup valued at more than $1.5 billion, is working on designing a robot taxi that takes the entire riding experience into consideration, co-founder Timothy Kentley-Klay said last year. Although he didn’t go into details on the so-called mobility service’s features, Kentley-Klay said that such a vehicle would be “smart enough to understand its environment, but importantly, it’s also smart enough to understand you, where you need to be, what you want to do in the vehicle and how you want to move around the city”. Existing industries may change to support an autonomous, shared future. For instance, the alcohol industry might see a rise in drinks consumed weekly with customers not having to worry about driving home, says a Morgan Stanley report by analyst Adam Jonas. He estimates the $1.5 trillion annual market might expand by $250 billion due to autonomous vehicles. One industry that knows cars very well (dealerships) may also adjust to fit the changing times: Managing autonomous car fleets may be a new line of business. Toyota’s Ballinger noted that auto makers’ finance arms largely finance local franchise dealers’ inventories, called floor plans. “It may be a variation of that model where we continue to finance the floor plan, only the floor plan now isn’t an inventory of cars ready for sale but an inventory of cars going around providing services, maintained and managed by the dealer or somebody like the dealer,” Ballinger says. For all the speculation about big changes on the way, and plans to meet those changes, it’s important to remember that drivers may want to hang onto some form of ownership even if others are more convenient and cost-effective. Cohen, after spending about 2 years renting out his Model S on Turo, has begun to wind down that effort. “At almost exactly the second anniversary of that note, I paid off my Tesla”, he says. He’s keeping an eye on Tesla’s ambitions for renting out autonomous vehicles, though he is dubious about giving up the thrill of driving. “For me, autonomous driving is not something I am looking forward to”, he said, “but I can tell you that my 25-year-old son and recent UVA Law School graduate certainly is”. +++

+++ More and more people are making the switch away from conventionally powered vehicles to an ELECTRIC car. March this year was the third-best month for electrified car sales in Europe, behind only December 2015 and 2016, when financial inducements peaked. The new Renault Zoe and the Nissan Leaf were the standard-bearers, chased by the plug-in hybrid Mitsubishi Outlander. Electrified car sales average around 1% of total sales across the region. In the US, the mindset is anchored harder in big-bore petrol engines, but the signs of a shift towards EVs are still encouraging. In the first 3 months of this year, led by Tesla but boosted by ongoing sales of the Leaf and the new Chevrolet Bolt, fully electric cars accounted for more than 1% of sales for the first time, a year-on-year rise of 74%. Sales of hybrids are growing at a similar rate. Little wonder, then, that EV plans of the established global car makers is jampacked. Despite a veil of secrecy over future products, at least 100 new EVs and hybrids are known to be due to be launched in the next 8 years as the shift to electrified powertrains takes hold. Using published sources and industry contacts, the multi-billion pound investment plans of the car industry to launch large numbers of battery electric and hybrid models is laid bare. And yet in Europe and the US this growth is more of a creep than an avalanche, and even the most ambitious projections can’t account for the levels of money being invested to develop these cars. For comparison, fewer than 4.000 Renault Zoes were sold in Europe in March, compared to just under 48.000 Ford Fiestas. Furthermore, profit margins, even on big-ticket Teslas, are said to be waferthin, to the point of making any hope of a return on investment unlikely for years to come. So what’s driving this trend? Firstly, and most publicly, the much-heralded emissions targets, led in Europe by the EU’s fleet-average CO2 target of 95 g/km in 2021 and then the next target, possibly as low as 70 g/km, by 2025. The regulations are broadly echoed around all global markets, albeit to varying degrees, and underline that legislators and public health officials are determined to reduce carbased emissions come what may. Whether or not there is public demand for the cars they make, manufacturers cannot afford to flout the rules. Even so, that doesn’t explain why many are jumping into the technology wholesale. However, the real driver behind the development is what’s happening in China, and the huge potential there for sales of electrified hybrids and pure-electric cars. It’s not just about good business, either; established car makers that ignore China’s drive towards EVs also fear they could be left behind in a technology battle that, should they lose, could  leave their grip on other markets vulnerable to attack. Why is China pushing so hard for EVs? Apparently motivated by a need to reduce its heavy industry-driven pollution, Chinese officials are in fact determined to break out of the dependence on imported oil, a natural resource the country is famously short of. At the same time, the aim is to take advantage of a once-in-100-year powertrain shift in order to leapfrog established car makers. By encouraging its home car makers, such as SAIC, Geely and Trumpchi, to focus on electric powertrain technology, China sees an opportunity to build a thriving domestic car industry with the ability to sell credible Chinesemade cars internationally. It is a plan that was born more than a decade ago but which is only now coming to fruition. This was confirmed last month when China’s Ministry of Industry and Information Technology (MIIT) released a road map for future transport. Last year over 28 million cars were sold in China, marking another year of double-digit growth and leaving the US’s sales of 17.5 million in its wake. By 2025 MIIT is predicting that China’s sales will hit 35 million, and crucially it has suggested that it wants 20% of that total to be made up of so-called New Energy Vehicles (NEVs). That equates to sales of around 7 million electric cars, which represents quite a shift given that fewer than 2 million are estimated to have been sold globally last year (the vagaries of reporting between markets make exact figures hard to determine). That 20% figure also suggests that MITT wants most of China’s new car sales growth until 2025 to be in EVs, and history has shown that Chinese government ministries tend to get what they want. Such a shift would be pivotal for the take-up of EVs and underlines why so many established car makers have been content to let disruptors such as Tesla lead up until this point, before launching a raft of their own products as opportunity knocks. In parallel, China has been getting the health of its domestic car makers in order, amalgamating some of the weaker firms with larger ones, pushing improved product offerings and driving knowledge-sharing by forcing joint ventures with Western brands. Chinese makers have a healthy 45% share of the vast home market today, albeit focused on the lower end of the price scale. Even so, in a country so vast, that’s enough to generate the profits needed to invest in R&D and consider the global expansion that has long eluded its car makers despite a number of launches in the US and Europe. The impact of these policies for established global brands is double-edged. There’s an opportunity to sell vast numbers of EVs in China, but the country’s rules on joint ventures mean any success is tempered by the threat of the profits generated and the expertise gained by a Chinese partner in the process. This could in turn give the country’s car makers an opportunity to develop better EVs, be it with a longer range or for lower prices, for a global market. How seriously this threat is being taken is highlighted by Toyota and Honda’s announcement that they will, after all, make pure-electric cars. As recently as 2013 Toyota spoke openly about the limits of electric cars, reasoning that hybrid technology was the only practical and cost-effective bridge to the adoption of hydrogen powertrains. At Honda, it was a similar story. Yet fast-forward 4 years and both manufacturers have EVs in the pipeline, with Toyota’s division led by CEO Akio Toyoda. The reason is China’s anticipated plan to declassify hybrids as NEVs, which would leave both Japanese brands lagging in the world’s biggest car market; and that’s a risk simply too great to contemplate. How this plays out will be fascinating to watch and should inform our understanding of why the established car makers are moving so fast towards electrification. Never before has it been so important to view the machinations of the car industry from a global rather than regional perspective. In this context, Volkswagen’s post-Dieselgate goal of selling 1 million electric cars a year by 2025 doesn’t sound so crazy, and neither does Jaguar’s decision to launch the I-Pace despite insiders admitting that sales targets could initially be limited to just a few tens of thousands. Whether it is forced or natural, the demand from consumers in China will drive the market, and the incentive is there for a battle royale between the established car manufacturers and China’s home-grown brands. +++

+++ The FORD Mustang’s EuroNCAP safety rating has been upped to 3 stars, an improvement of 1 star after the addition of more standard safety equipment. Ford was criticised earlier this year when its muscle car scored poorly in frontal offset and full-width frontal tests. The Mustang’s airbags also failed to inflate fully and seatbelt pre-tensioners and load-limiters didn’t work effectively enough. Ford has responded by giving the Mustang standard pedestrian detection, forward collision warning, automatic emergency braking (AEB) and lane-keeping assist. It has also addressed the airbag issue. Matthew Avery, director of research at Thatcham Research, said: “Our advice to buyers is to always opt for a EuroNCAP 5-star car, so a 3-star rating is never a cause for celebration. However, Ford’s rapid addition of a suite of standard safety tech and its prompt updates to improve the performance of the airbags and restraints is to be applauded and underlines the power of the EuroNCAP consumer testing programme as a force for positive action”. Also in the latest round of EuroNCAP tests, the new Seat Ibiza recorded the highest 5-star rating in its class. It comes as standard with pedestrian-detecting AEB. 5 stars were also awarded to the Alfa Romeo Stelvio, Hyundai i30 and Volkswagen Arteon, while the Honda Civic received 4 stars. +++

+++ The new HONDA Civic Type R hatch will be offered solely with a 6-speed manual transmission because an auto would have mucked up the weight balance of the car. That’s according to Yuji Matsumochi, assistant large project leader for the 10th-generation Civic powertrain at Honda Japan. Matsumochi admitted that the brand looked into a solution to appeal to a broader range of buyers (either with a conventional automatic, or a dual-clutch transmission) but the impact would have been too great on the car’s dynamism. “We produce just the 6-speed manual transmission only for the Type R, because our powertrain has achieved 400 Nm and 320 hp, so big performance”, Matsumochi said. “The Type R needs a lightweight powertrain because it is front-wheel-drive, and needs lightweight powertrain systems. The engine is a little bit heavy, so the transmission side needs to be more lightweight”, he said. “If we applied an automatic transmission, or dual-clutch transmission, for a 400 Nm engine, it would be very heavy weight, and very big. The front weight would be very heavy”. As it stands, the new generation Civic isn’t perfectly balanced: it is front-wheel drive, after all, and has a distribution of 62.5 per cent of the body weight at the front axle and 37.5 per cent at the rear; which is still an improvement over the old car, which had 65:35 weight distribution. The numbers would have been skewed further if an automatic were to be offered, and that’s the reason Honda went solely with a 6-speed manual. However, Matsumochi said he knows that while manual gearboxes can be fun, they can also be daunting to drive on a racetrack. But the company’s new rev-matching system on the Type R is designed to offset those concerns. “Then we decided just on the 6-speed manual, and the gearbox is very fun to drive. Easy to drive, however sometimes it’s difficult to control shift timing for sporty performance, so then we applied the rev-match system”, he said of the mechanism that senses when you’re slowing down and preparing to downshift, blipping the throttle to maintain engine speed. “It’s so easy and so smooth, so everyone has a special experience to drive the car”. +++

+++ The year 2016 was a successful year for MCLAREN in terms of sales, but it has been on a streak and has actually broken sales records every year for the past 4 years. Since 2012, the company has been celebrating one milestone after another. To be more precise, the company sold a total of 3,286 cars last year, that is about double the number of what they sold in 2015 – or a 70 percent increase. These result to a sales revenue of £649.8 million ($844 million), an increase of 44 percent. This success may be the result of the Sport Series family that was first sold to the market in 2016. In fact, the Sports Series alone delivered a total of 2,031 units, which seem to make up most of their sales. Within that range, the 570GT and 570S were the top sellers. Besides that, the Super Series was also quite a success, selling 1,255 units in 2016. Most sales have been accounted for by the North American market, with a total of 1,139 deliveries, it significantly increased by 106 percent over 2015. As for the European market, McLaren was able to move 996 units in total, again a huge increase of 153 percent. Lastly, they sold a total of 228 cars in the Chinese market. There is a 90 percent increase for McLaren in the Asia Pacific. A total profit of £9.2 million has been earned by the British automaker before tax in 2016, making it the 4th consecutive year of profitability for McLaren in the 6 years that they have been in the market. That number is very impressive compared to 2015’s profit of £5.4 million. But all in all, McLaren’s highest record was back in 2014 with a profit of £14.9 million. Mike Flewitt, McLaren Automotive Chief Executive Officer, said in an interview that 2016’s positive performance was supported by a 44% hike in sales revenue. He referred to these figures as additional proof that the brand’s growth strategies are “both achievable and sustainable”. So far, 2017 is looking good for the British automaker with the introduction of the 720S. The company says that they have already taken 1,500 orders of the new model after it has been introduced. Another model that should help with McLaren’s sales would be the new 570S Spider; the first convertible in its Sports Series range of cars, which will make its debut at the Goodwood Festival of Speed. The company hopes that they will continue to break their sales record in the next coming years. Back in February, the company announced that it will bring back production to the UK by opening a £50 million plant in Sheffield. +++

+++ MERCEDES director of exterior design Robert Lesnik has revealed that the new E-Class Cabriolet as well as the recently released E-Class Coupe are the first of the company’s “no lines” production models that will inform all future vehicle styling from the German marque for the foreseeable future. Speaking at the launch of the Cabriolet in Italy last week, Lesnik said that a clean, ‘less is more’ philosophy will broaden the general appeal as well as unify the look of the entire model range, while going against the grain of current trends. “The design focus was to make all of our cars more recognisably Mercedes-Benz”, he said. “The design of the coupe and convertible, for example, is very clean, with no lines on the side at all. We are taking lines out of cars while others are adding them”. The Concept A sedan from the Shanghai show in April takes the new design language one step further, previewing the look of the next-generation Mercedes A-Class small car to be launched in 2018. 3 years in design gestation (out of the 4 overall for the entire W213-based E-Class range), both the cabriolet and its coupe companion were developed concurrently, with each displaying what Lesnik describes as “sensual purity”, for a dynamic beauty that should not date for a long time. “If you look at the rear shoulders of the cars you’ll find it is very organic yet sexy, so much so that it encourages people to run a hand over it and touch it”, he said. Lesnik added that the E-Class Cabriolet possesses a more ‘elegant’ 4-seater grand tourer appearance compared to the smaller and sportier C-Class convertible as a vital point of visual differentiation between 2 fairly similar vehicles (size apart). After all, it is worth remembering that Mercedes has never had this many 4-seater drop-tops available all at once. “We’ve never had a C, E and S-Class convertible available all the same time”, he said. “And it is something customers do see and notice. And the same goes for the inside. From the driver and front passenger seat, buyers will notice the 2 power domes on the bonnet. It is a subtle detail that connects today’s E-Class Cabriolet with the 1950s SL and 1990s SLK. And the one-bar grille is unique to the cabrio, too”. Influences from other recent Mercedes models are evident throughout the newcomer, with the current AMG GT Coupe, as well as the four-door AMG GT Concept unveiled at the Geneva motor show in March, providing inspiration. “In 2014, the AMG GT brought a clean rear end, with its thin horizontal tail-light treatment”, Lesnik explained. “Along with the move of the numberplate down into the bumper, it provides maximum differentiation from the Mercedes sedans. And if you look at the AMG GT Concept from earlier this year you might see some of it in the next-generation CLS”. The latter, which is expected to appear at the Los Angeles auto show in November, is said to have a more fastback silhouette to replace the slow-selling CLS Shooting Brake wagon. Lesnik is also is grateful of the extra length afforded to the latest E-Class model compared to its smaller, shorter and narrower Coupe/Cabriolet predecessor, which was based on the C-Class platform from the segment below, bringing all sorts of compromises to the styling that had to connect with its corresponding full-sized sedan’s namesake. As a result, some visual connections with the last properly sized E-Class cabrio from 1992 could be made in terms of proportions. “We could finally get back to the (1985-1996) E-Class with this one”, he revealed. “So we went for the proportionally classic ‘cab-backward’ silhouette. ‘The W124 sedan’s simplicity carries through too, though not in any styling elements. You might notice something in the way the rear end tapers, as it also did in the original C-Class (190E of 1982). That’s why we periodically borrow cars from the Mercedes-Benz Museum for a few weeks at a time for inspiration”. +++

+++ Spy shots of the next generation PORSCHE 911 with the production-ready design are slowly coming to surface across the Internet, a good occasion to also catch the latest rumors about the iconic German sports car. Apparently the most important detail swirling across the rumor mill is the next generation 911 is going to be the first one to come with a form of electrification when it will be introduced before the end of next year. The make’s prototypes have been caught lately undergoing testing on the public streets and at the famed Nurburgring track, so there were plenty of occasions for spy photographers to do their work. As far as the interior shots are concerned, the biggest reveal comes in the form of a new, all-digital instrument cluster; most likely the same technology as seen on the Audi Virtual Cockpit but adapted for the group companion. The development cars all sport a wider track, which is considered another hint towards the first apparition inside a 911 of an electrically assisted powertrain. Porsche engineers have already hinted in the past the company is looking at ways to fit the 911 body with a hybrid powertrain. “There are discussions”, commented 911 product line director Erhard Mössle some time ago. “It’s clear that we have to do something. We have to meet the CO2 regulations in 2020. The technology available is not far away from meeting our goals for such a car in terms of range and charging speed”. +++