+++ Luxury British carmaker ASTON MARTIN unveiled its new Vantage model, as it pursues a turnaround plan designed to return it to profitability and set up a possible stock market flotation. The central England-based firm, famed for making the sports car driven by fictional secret agent James Bond, is on course this year for its first pre-tax profit since 2010, spurred by sales of its new DB11 model. With the Vantage, Aston Martin hopes to reach full capacity of 7,000 sports cars at its Gaydon plant in 2019, which would be the most cars it has produced for a decade, underscoring how crucial success of the new model is. “It’s important fiscally because it is the car that really moves us into that positive free cash flow territory, but I think it was also important industrially because you are now talking about a plant that is full”, Chief Executive Andy Palmer told during an interview at the firm’s headquarters. The sleek 2-seater model, which the firm says will stand out from rivals partly due to its simplistic design, will cost just about 200,000 euro in The Netherlands. Aston Martin is also building a new factory in Wales, where its first SUV, known as the DBX, will roll off the production line from late 2019. But British carmakers are worried Brexit could introduce customs checks and barriers that would slow down production processes and add extra bureaucratic costs. Palmer, who said his biggest concern was the imposition of non-tariff barriers, said he was banking on a transitional agreement that would apply after March 2019, when Britain is due to formally exit the European Union. “I‘m working with that as a fundamental hypothesis so if there’s not, then I have a problem. My investment cycle is based on the fact that there is a transition”. As Aston Martin grows, Palmer has said its owners, mainly Kuwaiti and Italian private equity firms, could sell the company to a larger car group, other private equity firms or launch an initial public offering, but that the decision and timing were matters for the shareholders. He said it made sense for them to consider their options before the end of the firm’s current turnaround plan, which is due to complete in 2022. “You want to sell in a period where the plan is partially proven but still got lots of growth potential in front of us”, he said. “Another year of demonstrating what we are doing and then I think beyond that it’s going to depend on what the market’s doing”. +++
+++ A number of manufacturers anticipate offering highly automated vehicles in the early 2020s. But HYUNDAI will be slower to act in this area. And despite the trend toward battery-powered vehicles, Hyundai’s self-driving cars won’t be fully electric, at least initially. The company’s top autonomous vehicle executive, Woongjung Jang, said autonomous vehicles will only be suitable for operating on limited routes at first, and that they won’t be available for mass market consumers until 2025. A different executive reportedly said the company will wait until 2030 to offer autonomous vehicles that can handle urban driving. This is in step with sister brand Kia’s autonomous plans. Cost will remain an obstacle in rolling out these vehicles, but Hyundai also anticipates another problem. Thanks to their advanced data processing systems, these vehicles can drain batteries pretty quickly. “We are developing the fully autonomous technology, the driverless car Level 4 and Level 5, but as of now the power consumption is really huge, it can go up to 1 kW or 2 kW, so it could dramatically decrease the driving range of EVs”, Jang said. Jang notes that this problem is solvable, but not in the near future. So for now, the automaker is targeting hybrids, plug-ins, and fuel cell propulsion for autonomous cars. Until truly self-driving cars enter the picture, the automaker will start catching up on semi-autonomous technology. It plans to bring Highway Driving Assist to the U.S. market in 2019 after introducing it to Korea in 2015. Hyundai says it has been more difficult to bring the feature to the U.S. given the large size of the country and the need to ensure the accuracy of its mapping information across all highways. HDA, set to debut on the refreshed Genesis G90 and next-generation Hyundai Sonata, reaches Level 2 autonomy. Since it doesn’t offer self-steering, the system is more similar to Tesla’s Autopilot than Cadillac’s Super Cruise. +++
+++ KIA will mount its biggest charge on Europe next year when it launches a Cee’d crossover to enter the region’s burgeoning compact SUV market. A higher-set version of Kia’s next-generation Ford Focus and Volkswagen Golf rival, it will slot between the smaller Stonic and larger Sportage, capitalising on a segment that now accounts for more than a quarter of car sales. Borrowing design cues from its SUV siblings, it will face the likes of the Opel Mokka X and Volkswagen T-Roc and share a range of powertrains with the regular third-generation Cee’d when it is revealed towards the end of 2018. The current Cee’d engine range is bookended by a turbocharged 3-cylinder petrol and a 1.6-litre turbocharged diesel. The next-generation car is likely to retain these options, albeit in updated, more efficient forms that conform to the latest Euro 6 emissions regulations. Along with the Cee’d SUV, the third-generation model range will gain a new line-up-topping shooting brake variant. Previewed by the striking Procee’d concept of the Frankfurt motor show in September, this swept-back model has 5 doors, essentially making it an answer to the Mercedes-Benz CLA. However, the Korean car will cost significantly less than the Mercedes in order to increase its reach, and will open with the brand’s smallest 3-cylinder engine. The Cee’d range shake-up will also include changes for the regular hatchback. The car will be launched exclusively with 5 doors, with the 3-door entry-level model ditched in a move that reflects market demand. Kia has also given the car a higher-standard interior, with a spy photo of a test car’s cabin showing a simplified centre console design that features a touchscreen. The other model in the new range will be the SW (for sportswagon), retained as a bigger-boot version of the Cee’d hatchback that will continue the fight of its predecessor against Focus and Golf estate models. The SW will arrive alongside the hatchback in early 2018, most likely at the Geneva motor show, with the other 2 variants due before the end of 2018. A Procee’d GT is also due later, with Hyundai performance boss Albert Biermann previously revealing that it and other GT models will be introduced in more markets around the world. However, Biermann said that unlike hot versions of sister brand Hyundai’s cars, such as the recently launched i30 N, Kia GT products will retain a road focus and therefore be less hardcore. Kia’s SUV boost comes as part of a global push that has most recently focused on Europe. The brand added a new halo product called the Stinger this year to enhance its image. +++
+++ LAND ROVER design boss Gerry McGovern believes the forthcoming era of electrification will present even more opportunities for ‘white space’ vehicles like the Range Rover Evoque and Velar, which have been so successful for the brand. “We have to embrace electrification”, he told at the Frankfurt motor show, when asked if Land Rover was planning electric cars. “It’s embedded into the future cycle plan. You can use electrification in a way that creates even more desirability. It’s coming”. McGovern has since said that the Range Rover name has “elasticity” and “there is so much equity in the brand”, hinting at a wider application than the current range of 4 core models. He added: “We think of all possibilities and white space opportunities. What things can be done that we aren’t doing now?” The Velar has kick-started a model blitz for the Range Rover pillar of Land Rover’s business. Only on sale since late summer, the Velar has already been followed by heavily revised versions of the Range Rover and Range Rover Sport, including plug-in hybrid versions of both, which are Land Rover’s first PHEVs. Beating the Evoque to market will be an SVR performance version of the Velar. It is understood to be planned for launch next summer and is a sister car to the Jaguar F-Pace SVR, another performance SUV that JLR’s Special Vehicle Operations unit is working on. Further extensions of the Range Rover brand are understood to include the more car-like model. Known internally as the ‘Road Rover’ project, it will be a sister car to the next Jaguar XJ. Beyond that, a model closely related to the Range Rover but with a different body and name is planned as an alternative to the Bentley Bentayga and Rolls-Royce Cullinan. Currently there is no ceiling on the price of a Range Rover, with more luxurious models commanding ever higher prices. +++
+++ RENAULT has been mulling with the idea of launching a cheap electric car in China for a few years, and it’s finally happening. The Renault-Nissan-Mitsubishi Alliance CEO, Carlos Ghosn, confirmed an electric version of the Kwid, admitting that prototypes have already been built. “In China, we can’t sell the Leaf. Too expensive and too sophisticated. We can’t sell the Renault Fluence. Too expensive. What sells in China? Low-cost electric cars”, said Ghosn. “So we are putting engineers from the alliance to develop a low-cost Kwid EV for China. I just test drove the car in China. It will be a very well engineered car at a very low cost”. Renault’s head honcho didn’t give any insights into the launch date, power, range or pricing of the Kwid EV, but admitted that it will eventually make its way into emerging markets. “Once it works in China, there’s no reason you’re not going to export the car to India, to Brazil, to the Middle East”. Carlos Ghosn is looking at the Alliance as a whole when it comes to developing future products, especially electric vehicles, which will eventually help them achieve their objectives: mass marketing and profitability. “In the beginning, it was Renault going by itself, because they were prototypes, and we didn’t know exactly where we were going. The Nissan Leaf had its own technology. The Renault Zoe has its own technology. Mitsubishi started with its own technology. But now we’re saying: one platform, one set of batteries, one set of motors”, Ghosn added. Renault-Nissan-Mitsubishi isn’t the only automotive giant that sees China as a market with a huge potential when it comes to affordable EVs, as Volkswagen has a similar approach. However, the Germans won’t use their own brands to breach into this segment, as they have reportedly signed a memorandum of understanding with Jianghuai Automobile Co. (JAC) to develop a cheap EV. +++
+++ SEAT is readying the fourth-generation of the Leon, which is expected to arrive within the next 18 months, or approximately 7 years after the current iteration was introduced. Matthias Rabe, the brand’s board member for R&D, explained that the new compact car is part of Seat’s most extensive push in their history, which includes several new or heavily updated vehicles. “It’s our biggest push ever. We’ve had the Ateca, now Arona, the renewal of Ibiza, the facelifted Leon. But it’s only now that we really accelerate; over the next 3 years, we’ll see 6 or 7 new models, and most of them will be totally new”, Rabe said, referring to the new-generation Leon and upcoming 3-row SUV, among others. The 2020 Seat Leon will go down the evolutionary route in terms of styling, according to Rabe, who added that it will be instantly recognizable as a Leon,while sharing a few design elements with some of the latest vehicles currently made by the Spanish car manufacturer. While it will sport a redesigned bodywork, beneath the skin, the next-generation Leon is expected to maintain the MQB architecture, albeit with a slight improvement in the wheelbase, which is expected to gain a few mm for improved legroom on the rear seat. The engine lineup will probably include the 1.0 and 1.5-liter turbocharged petrol units along with a 1.6-liter diesel, while the 48V mild hybrid technology that will debut on the next-gen VW Golf could be part of the offerings as well along with a rumored PHEV. In other related news, Seat’s electrification push will eventually give birth to their first EV, likely based on the Mii. The eMii is believed to debut in 2019, followed by their second electric car, which will share its MEB architecture with the Volkswagen I.D. hatch and other zero-emission cars that are planned by the Group. Next spring, however, Seat are believed to expand their Cupra lineup, which, in Rabe’s own words, “is not just limited to the Leon”, so we could finally see a hot Ateca on the road. +++
+++ TESLA may be the new standard by which financial markets measure the rest of the car industry, but the stock market darling is suffering a major hiccup as it struggles to launch the $35,000 Model 3. Recently, Tesla announced that the production ramp-up of its much-awaited Model 3 had achieved only 260 cars built compared with its plan of 5000 per week. The setback cost Tesla 520 million euro in financial losses in 3 months of late summer trading. As Toni Sacconaghi, Tesla analyst at Bernstein Research, wrote in a research note last week: “Our key concern with Tesla is whether the company can profitably build the Model 3 and do so with sufficient quality. Q3 results reinforced our concerns”. At the same time, cash has been flowing out as Tesla throws resources at the Model 3 production line. In three months during this summer, Tesla has seen 1.1 billion euro in cash leave the company, with similar sums expected in future quarters. The dampening effect on Tesla’s share price has been marked, with Bernstein forecasting a target price of $265 per share compared with its recent $321; a 17 percent drop. It is worth noting that Mark Fields was ousted as Ford boss in May over the same percentage decrease in share price, albeit spread out over 3 years. So what has gone wrong at Tesla? “The situation is really very simple”, said Peter Wells, automotive industry expert and professor at Cardiff Business School. “Tesla has seriously underestimated the challenges of bringing a new model to market in major volumes of production”. The seeds of this misadventure were sewn in May last year, a month after Tesla triumphantly opened the order books for the Model 3 and reservations, each backed by a $1000 returnable deposit, hit 230,000 on the first day. Success must have come as a pleasant surprise. Before the launch, Tesla had talked about a 2017 launch date with limited production and a slow ramp-up to more than the 50,000 per year each of the Model S and Model X. Just a few weeks later, encouraged by the huge demand, Tesla owner Elon Musk boldly announced he would bring volume production forward by 24 months and, instead of making 500,000 units per year in 2020, pledged to hit that number in 2018. Left-hand-drive production is planned to increase to 10,000 a week by the end of 2018, when exports are scheduled to start. “It is fraught with danger to ramp up production so fast because of the pressure it puts on management, process control, purchasing and, of course, assembly”, said Wells. Details of Tesla’s struggles to put the Model 3 into production have leaked out on several news websites and paint the picture of a company besieged by its own expectations. Pictures of the Fremont factory in California appear to show parts stored chaotically line side, vulnerable to damage, and details have emerged of essential production processes very different from those of established car factories. “You have to remember that it’s a very different mindset in California and Silicon Valley”, Wells said. “But now Tesla is having to pull in experienced automotive people to help”. Sources suggest Tesla is recruiting significant numbers of car industry purchasing experts as pressure builds on the Model 3 ramp-up. Going mainstream with production methods will help Tesla solve its problems, but it goes against Musk’s passion for reinventing the factory, what he calls “the machine that makes the machine”. Experts question whether a vitally needed production car like the Model 3 provides the right opportunity to reinvent the factory. “Tesla is clearly struggling with production issues”, Bernstein said. One short cut understood to be causing trouble is the elimination of a whole stage of component development by going straight to production tooling without testing prototype parts first. Up to one year could be saved. Wells said: “You can do all sorts of computer simulations and planning, but how accurate is that modelling when production actually starts?” The highly automated body-framing station, where panels for the Model 3’s body-in-white are clamped together to very close tolerances before being welded together, is another area of production concern. Sources suggest the supplier of this vital equipment has shipped the line before it was fully proved in its own factory, another short cut to save time. As a result, the equipment is not functioning as it should and the Model 3 cars built so far are essentially hand-assembled. Tesla itself claims to have demonstrated only short bursts of body-shop production of up to 500 per week, a far cry from the 5.000 originally planned. Even that may be optimistic, as Bernstein Research has pointed out: “We are somewhat sceptical of the term ‘burst builds’, given that Tesla hasn’t yet built 500 units in a week”. The handful of Model 3s so far built have been delivered to employee customers and the cars are being used for validation to report faults to Tesla’s engineering team. Tesla has previously said it would cut out the validation prototype stage to save time. Time, of course, is vital for Tesla, because Musk knows he has limited opportunity to exploit the Model 3 (maybe 3 years) before established car makers hit the market around 2020/2021 with their own more affordable battery-electric vehicles with a usable range of 300 to 450 kilometers, rigorous manufacturing quality and established dealer networks offering attractive finance deals. So what of the future? Wells believes it holds three possible outcomes for Tesla: successful independence as a maker of a portfolio of technologies; or a merger with an existing car maker or industrial group; or, in his words, “to go horribly broke”. +++
+++ VOLKSWAGEN may expand cooperation with China’s Anhui Jianghuai Automobile (JAC) beyond electric cars to jointly develop and build commercial vehicles in the world’s largest autos market. The German group and JAC announced in June they were to set up a joint venture to develop and build zero-emission passenger cars as Volkswagen (VW) is pushing efforts to achieve the Beijing government’s production and sales quotas for new-energy vehicles. VW said it was looking along with its commercial vehicles division at deepening the cooperation with JAC to include the design, technology, product quality and development of multi-function vehicles. The venture would affect combustion engined and alternative-energy powered vehicles, would be owned equally by JAC and VW and would be based in JAC’s home town of Hefei, VW said. “VW Commercial Vehicles has a growing number of loyal customers in China”, executive Jörn Hasenfuss said. “But there are significantly more opportunities”, he said without elaborating. Under the tie-up, VW and JAC could jointly tap growing demand for light pick-up trucks in China while the German group would also save customs duties by building its multi-van and Caddy vehicles at JAC facilities, analysts said. It’s also the latest evidence of VW’s foreign expansion not being confined to its passenger car operations. In September VW’s commercial vehicles arm started building the Amarok pick-up truck in Ecuador with local partner FISUM after starting production of the box-type Caddy model at a new multi-brand facility in Algeria 2 months earlier. +++