+++ After launching the Stelvio, ALFA ROMEO is turning its attention to a bigger model that will fight in the same segment as the Audi Q7. The yet-unnamed family-hauler could arrive in 2020. The brand’s second modern SUV will ride on the same rear-wheel drive platform as the aforementioned Stelvio. It will come with 3 rows of seats, and insiders say it will be the biggest Alfa-badged car ever. Power will come from a mild-hybrid drivetrain tuned to deliver up to 400 horsepower. Non-hybrid models will be part of the line-up, too, and we could see a range-topping, performance-oriented model with the Quadrifoglio emblem. “We have to marry the new car with the right level of electrification. Plug-in hybrid could be a problem for the Alfa DNA point of view, but for instance a 48 volt mild hybrid solution is something that we can do without losing anything”, Roberto Fedeli, Alfa Romeo’s chief technical officer, revealed while breaking the company’s omertà-like silence on future products. The 48 volt system will help offset the SUV’s weight. Early estimates claim the model will be about 200 kilos heavier than the Stelvio, which tips the scale at approximately 1,735 kilos. At the other end of the spectrum, Alfa Romeo will finally replace the Giulietta right after it launches its second SUV. +++

+++ Electric vehicle startup FARADAY FUTURE has shared an insight into the development of the FF91, its upcoming competitor to the Tesla Model S and Lucid Air. The company want to highlight the collaboration between Faraday Future’s design and aerodynamics teams, as they work to keep the coefficient of drag below 0.26. The roof spoiler on the FF91 has been guided by the need to maximise interior space, as an example of form following function. It also highlights the way computational fluid dynamics is helping hone the shape, which is said to create 10 percent less drag than comparable cars at highway speeds, for a 5 percent range improvement. Obviously, Faraday Future isn’t the only company to pour huge amounts of time, money and effort into honing the shape of their cars, but it’s an interesting effort nonetheless. The shared insight comes at an interesting time for the company, as investor Jia Yueting is ordered back to China to deal with his mounting financial problems. Yueting has been ordered to return to China by December 31, after it was revealed LeEco (which he founded) was burning money in search of rapid expansion. He has strong ties to Faraday Future, and reportedly owes around 92 million dollar; although that figure varies, depending on who you ask. According to the China Securities Regulatory Commission, his unwillingness to tackle his mounting debt is a “serious infringement” of shareholder rights. The commission doesn’t know where he is, and has him listed on a blacklist designed to stop those in heavy debt from travelling. +++

+++ In JAPAN , domestic output by Nissan and Subaru Corp. fell in November from a year earlier due to production halts at domestic factories prompted by inspection violations, data showed Wednesday. Nissan, the nation’s second-largest automaker by volume, said its domestic output tumbled 42.9 percent to 59,227 vehicles while domestic sales dropped 27.4 percent to 34,682. Both figures declined for the second straight month following revelations that uncertified employees for years conducted inspections required of cars sold domestically. Subaru’s domestic output dropped 8.2 percent to 60,223 vehicles due in part to a brief halt in late November to production at its main plant in Gunma Prefecture. Like Nissan, uncertified employees were found to have been conducting vehicle inspections at Subaru. But a Subaru spokeswoman said the decline mainly reflected the weakening Chinese market and drop in production of the aging Forester. Subaru’s domestic sales declined 12.8 percent to 12,161 vehicles. The combined domestic production of all eight major Japanese automakers in November increased 0.5 percent from a year before to 803,627 vehicles, according to data released by the companies. Toyota said it produced 295,631 vehicles domestically, up 7.6 percent, while its domestic sales rose 1.3 percent to 132,737. Honda produced 78,879 vehicles in Japan, down 3.2 percent, as its domestic sales increased 4.4 percent to 60,715. Mazda produced 93,474 vehicles at home, down 0.2 percent from a year earlier, while its domestic sales tumbled 19.3 percent to 13,102 vehicles. Suzuki, Daihatsu and Mitsubishi all logged domestic production increases. Combined exports of the 8 automakers increased 2.7 percent to 413,380 vehicles, with Suzuki seeing a 68.6 percent surge from a year before on solid business performance in Europe. The combined overseas output of the eight automakers edged up 0.1 percent to 1.760.138 vehicles. +++

+++ The new MERCEDES A-Class, which will be revealed ahead of its public debut at Geneva motor show in March, will depart from today’s model by receiving 2 different suspension sets, according to Mercedes’ boss of compact vehicle testing Jochen Eck. Both sets will use the same MacPherson strut set-up at the front, although they differ radically at the rear, with lower-end models set to run a newly developed torsion beam arrangement while high-end models will sport a revised version of the multi-link suspension first seen on the outgoing third-generation A-class. Eck said: “We knew we had to improve the ride. The whole class has moved on since we launched the old model. We’ve spent a lot of time tuning the bushings and kinematic properties of both systems to get the result we were looking for. The added torsional rigidity of the body structure helps a lot, too”. That rigidity also helps improve noise, vibration and harshness in the A-Class, along with more sound deadening foam in the body structure, according to Eck. He said that while the predecessor’s NVH “wasn’t too bad at launch”, the competition has upped its game. The new A-Class’s electro-mechanical steering continues to offer a fixed ratio or variable ratio depending on the chosen model, but the car maker has made some changes, including a repositioning of the rack so it now sits further back in the chassis. Eck said: “It is still quite light in overall weighting and fairly direct in comparison to the competition, but there’s definitely more feedback and communication than before. I think enthusiast drivers will like it. There’s more on-centre precision, but it doesn’t come at the expense of off-centre sharpness”. Mercedes has also worked on improving visibility from the A-Class, with Eck recognising that it was “a problem” with the predecessor. “The pillars are now thinner and the rear side windows are also larger”, said Ek. “There is much better vision to the rear”. The redesigned A-Class has grown in length, including a 30 mm increase in the wheelbase, while the interior gets a similar widescreen cockpit to that found in the S-Class, with the most expensive option using two 10.3 inch displays. It will also feature touch operation for infotainment and navigation, a first for Mercedes. The new A-Class will adopt a number of driving aids seen on higher-end Mercedes, including an active blind spot assistant, called Exit Assist, and an improved version of the existing model’s Park Assist, with 360 degree camera. There will be 5 petrol variants plus 2 performance models, badged A35 and A45, and 4 diesel options. For my first stint in the new A-Class, I’m in the entry-level diesel variant, the 1.5-litre A 160d, on public roads near Arvidsjaur in the north of Sweden, where Mercedes has been busy cold-weather testing its entry-level model. Although I’ve only experienced the new Mercedes from the passenger seat, it certainly feels smoother and more controlled than its predecessor over rough roads, even with the torsion beam set-up and standard single rate dampers; the cheaper of the 2 suspension set-ups. There’s greater absorption of road shock and less vertical movement over bumps, particularly at the rear. As well as improvements in comfort, the noise, vibration and harshness levels are also better, and visibility appears superior, although I won’t know for sure until I am behind the wheel next year. Eck, as nominated driver, said: “The predecessor model was good, but I think we’ve managed to move the game along. It is more grown up, you could say it now meets the expectations of a Mercedes better than ever before”. By next April we should be able to verify this for ourselves, but for now, it appears the new A-Class is ready to replicate the sales success of its predecessor. +++

+++ Tesla shares slid about 2 percent, after KeyBanc analysts slashed their fourth-quarter estimates for MODEL 3 deliveries to about 5,000 from 15,000. Analysts Brad Erickson and Elliot Arnson said they expect the numbers for the mass-market sedan that was launched in July to be unveiled early next week. “While it is likely to be a few quarters before the company’s true Model 3 gross margin judgment day arrives, we remain sector weight as we think the Model 3 margin ramp will disappoint and investors will have to acknowledge no Model S and Model X growth at some point, which is not reflected in the shares”, they wrote in a note. The revised estimate is based on conversations with salespeople at 18 Tesla stores around the U.S., said the analysts. “We talked to stores in California doing as many as a dozen per week with around 10 being the average, and we estimate stores outside of California were doing something closer to half a dozen per week”, said the note. Tesla has promised shareholders it would ramp up Model 3 production to 5,000 vehicles a week in 2017 and then to 10,000 a week in 2018. But production bottlenecks disclosed in November led the company to push back its 2017 goal to late in the first quarter of 2018, putting pressure on the company’s cash position. The analysts also discussed the Model S and the Model X and concluded that deliveries for the quarter are tracking generally in line with management’s expectation that the second half would be ahead of the first half’s deliveries of about 47,000 cars. They acknowledged that the shortfall is unlikely to faze investors, who are more focused on the car being produced without defects and that the consumer response is favorable. “Given Model 3 gross margin won’t really ramp up until probably the middle of 2018 and given the production difficulties to date, we think it could take a few more quarters before the company is more harshly judged if gross margin proves disappointing,” they wrote. KeyBanc is expecting investors to eventually acknowledge that Model S and Model X sales are not growing, that gross margin will not expand in line with expectations and they are cautious on whether the Model 3 can spur demand at the price point the company needs to achieve its gross-margin target. They estimate fair value for the stock at 240 to 280 dollar, below its current trading level of about 314 dollar. Meanwhile, Tesla Chief Executive Elon Musk promised an electric pick-up in the coming years, saying it would challenge Ford in that category. Musk made the promise in a tweet. The Model Y compact SUV is expected to start production in 2019. Some Wall Street analysts have expressed concern that Musk is spreading himself too thin with his many projects, which include the established rocket company Space Exploration Technologies Corp., or SpaceX, and the Boring Company, a tunnel-boring venture he started out of his frustration with Los Angeles traffic. Tesla in November launched its commercial heavy-duty truck, the Tesla Semi, and surprised observers by also showing off a new version of its ultraluxury sports car, the Roadster. Tesla shares have gained 48 percent in 2017. +++

+++ TESLA investors will likely greet 2018 in much the same way that they greeted the last new year: fervently hoping that Model 3 production will finally get on track. Tesla’s stock-price performance in the year ahead will heavily depend on the Silicon Valley car maker ironing out production problems that have so far hampered the manufacturing of the Model 3 in meaningful quantities. “The year will be all about the rate of the ramp-up of the Model 3”, said David Whiston, an analyst with Morningstar. Tesla launched the Model 3, its first electric vehicle aimed at the masses, in July. In May, Tesla told shareholders it planned to ramp up Model 3 production to 5,000 vehicles a week at some point in 2017, and to 10,000 a week in 2018. Less than 6 months later, it disclosed “production bottlenecks”, and by November moved the goal of producing 5,000 Model 3 sedans a week to late in the first quarter of 2018, putting additional pressure on the company’s cash position. Achieving a rate of Model 3 production in the thousands a week is not the only challenge facing Tesla. Many on Wall Street worry that the company is spreading itself thin, to say nothing of Chief Executive Elon Musk’s other commitments from established rocket company Space Exploration Technologies Corp., or SpaceX, to The Boring Company, a tunnel-boring venture he started out of his frustration with Los Angeles traffic. Tesla in November launched its commercial heavy-duty truck, the Tesla Semi, and surprised observers by also showing off a new version of its ultra-luxury sports car, the Roadster. Those vehicles have been promised for 2019 and 2020, with Tesla already putting up reservation systems online. Companies including Wal-Mart Stores, J.B Hunt Transport Services, the U.S. unit of Anheuser-Busch InBev, Sysco Corp. and PepsiCo have placed orders for the big rig. Tesla has a lot on its plate, and might need another assembly plant soon, Whiston said. It just doesn’t seem possible to juggle its passenger and commercial vehicles all in one factory, he said. Tesla has said it would build a factory in China in the next few years, although Musk has said the company will not make significant investments there until 2019. The long-haul, commercial truck also brings a powering challenge, and Tesla is planning to build a solar-powered network of “megacharger” stations to accommodate that need, analysts at Goldman Sachs said in a note. That type of charging station is expected to cost four times as much as a regular “supercharging” station, the ones that Tesla has peppered on highways and major roads across the globe, which cost about 200,000 dollar a piece, they said. Other projects include the Tesla solar roof and the “Model Y”, a compact SUV, at some point in the future. In addition, Musk recently hinted at Tesla making its own hardware to power its driverless-car software, potentially severing a relationship with Nvidia. He has also talked about having a completely autonomous Model S sedan drive itself from Los Angeles to New York next year, a trip that had been promised for 2017. The delays with the Model 3 have weighed on Tesla’s shares and its first pure bonds, the 1.8 billion dollar of 5.3 percent notes that mature in August of 2025 that the company sold in August. The bonds, which had raised eyebrows during the company’s roadshow for offering fewer-than-usual protections for bondholders, including weaker covenants, fell below par shortly after issuance. The bonds recently traded at 94.697 cents on the dollar to yield 6.2 percent, according to trading platform MarketAxess, or at a yield spread of 379 basis points over Treasurys. The notes held above 97 cents on the dollar for most of October before turning lower. Their weak performance could signal that bond investors, at least, will start looking for higher premiums to take on what they perceive to be greater risk. Tesla’s shares, meanwhile, have notched monthly declines in September, October, and November. They have gained 9 percent in December. Rallies earlier in 2017 are ensuring the stock outperforms the S&P 500 index in 2017, up more than 50 percent in the year compared with gains around 20 percent for the benchmark and 25 percent for the Dow Jones Industrial Average. Wall Street has long speculated about when, not if, Tesla will tap the capital markets again, with most people betting on a capital raise in the first half of the year. A failure to straighten out the Model 3 production issues could hasten that timeline, said Efraim Levy, an analyst with CFRA. But time could be on Tesla’s side, Levy said. If Tesla shows its Model 3 production issues are a thing of the past, the stock would return to gains. “They are going to straighten it out, the question is when”, he said. The longer it takes, however, the stiffer the competition with other relatively low-price electric vehicles, Levy said. Some future buyers may be bent on owning a Model 3, but others could drift to competitors in the same price range, he said. A person placing a 1,000 reservation dollar on a Model 3 would wait 12 to 18 months for the car, according to the Tesla website. General Motors has delivered Chevrolet Bolt electric sedans by the thousands for months now, and Nissan earlier this year came out with a redesigned version of its Leaf. Both companies, alongside several major auto makers such as BMW, have also announced major pushes toward autonomy, either by partnering with technology companies or by venturing in-house. It all goes back to getting the Model 3 production going, Levy said. “Until then, it’s a waiting game”, he said. +++

+++ VOLVO will offer 2 battery sizes in pure-electric versions of the XC40 and upcoming V40 hatchback. The new hatchback will be built on the same Compact Modular Architecture (CMA) as the XC40, powered by a range of three- and four-cylinder engines, a plug-in hybrid powertrain and, for the first time, a pure-electric setup. “In purely physical terms, we have to fit the battery in the floor”, Henrik Green, Volvo R&D boss, told. “But CMA gives us pretty good bandwidth. Everything from the full SUV height down to fairly low cars is possible. We’ve designed CMA from the beginning to have plug-in capability. For each electric car, we will typically have at least 2 different battery sizes on offer”, he elaborated. “The base variant will be more cost-efficient, but with a slightly limited range, and then there will be a bigger option with a higher price, but more range and more power”. When it arrives, a V40 EV would put Volvo a step closer to delivering on its promise of delivering 5 electric cars between 2019 and 2021, the first of which has already arrived wearing a Polestar badge. The expanded electric range is part of the Swedish manufacturer’s plan to sell 1 million electric cars by 2025, described as “one of the most significant moves by any car maker to embrace electrification” when it was announced last year. Every Volvo sold from 2019 will feature some form of electrification, while the company wants to have its factories carbon neutral by the time 2025 rolls around. +++

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