+++ Chinese electric vehicle giant BYD is looking at launching battery production in EUROPE , joining Asian rivals aiming to cash in on a green car revolution and threatening attempts by Brussels to nurture a home-grown industry. Keen to capture a European car battery value chain that will be worth an estimated 250 billion euros by 2025, the European Commission launched an alliance of local companies last year aiming to build 10-20 huge battery factories. But only Sweden’s Northvolt have plans for large lithium-ion battery factories in Europe so far and some leading European carmakers have already struck deals with Asian suppliers setting up in Hungary and Poland. “We are considering cell production outside of China and that includes Europe”, Julia Chen, Global Sales Director at BYD Batteries, told, speaking about the production of both automotive and home storage batteries. BYD, which also makes electric buses, cars and solar panels, said it was not clear where in Europe a battery site might be. “It would be possible wherever there’s a market”. The company, which is backed by Warren Buffett’s Berkshire Hathaway, joins South Korea’s SK Innovation, Japan’s GS Yuasa Corporation and China’s Contemporary Amperex Technology (CATL) in looking to locate battery plants in Europe. South Korea’s LG Chem, Samsung SDI both have European factories due to open soon while China’s GSR Capital already produces battery cells at a UK plant it bought from Nissan. While Asian electric vehicle (EV) cell battery factories in Europe would bring jobs, Brussels is concerned companies in the bloc are missing out on a growth industry and risk becoming dependent on foreign technology. “We have to move fast because here we are in a global race. We need to prevent technological dependence on competitors”, European Commission Vice President Maros Sefcovic said at the launch of the European Battery Alliance’s action plan in May. But some investors say they are wary of backing European EV battery suppliers after seeing local solar panel firms founder in the face of cheap Chinese imports over the past decade. European battery companies would need billions in EU support to rival Asian firms that have received similar state subsidies and Brussels may be better off promoting next-generation solid-state EV batteries instead, investors say. “I don’t believe anyone in Europe can be competitive with the Asians”, said Gerard Reid, founder of Alexa Capital, which advises firms in the energy, technology and power infrastructure sectors. Electric and hybrid vehicles are expected to account for 30 % of the global auto market by 2030, according to metal consultants CRU, up from 4 % of the 86 million vehicles sold last year. Global automakers plan to invest at least 90 billion dollar in electric cars and batteries, the most expensive component in the vehicles, to finance hundreds of new models over the next 5 years. For now, carmakers in Europe have been importing batteries from Asia, but as production ramps up that will become less viable. Setting up production in Europe would cut shipping costs by a quarter, consultancy P3 Group. But some carmakers are not waiting for a European industry, instead signing contracts with Asian firms coming to the region. German’s BMW said it was not involved in the European alliance while Europe’s biggest automaker, Volkswagen, said it plans to get batteries from LG Chem’s Polish factory due to open this year. Mercedes maker Daimler has awarded a contract to CATL. The European Commission’s plan calls for 110 million euros in battery related research, help for projects from a 2.7 billion euro EU innovation fund and the development of an EU ‘green battery’ trademark. Supporters of the initiative argue Europe can carve out a niche by selling green batteries produced with renewable energy and ethically sourced raw materials. Northvolt, which has held talks with European automakers, aims to launch its 5 billion dollar gigafactory in late 2020 and produce 32 gigawatt hours of battery capacity each year by 2023. But investors have been cautious about pouring money into new European battery ventures. Northvolt’s first financing round, intended to raise 80 million euros to 100 million euros to help set up a test factory, took slightly longer than expected, a spokesman said. In the end, the bulk of the financing was provided by the Swedish Energy Agency and the European Investment Bank, which provided a loan of up to 52.5 million euros. Much of the profit from the battery value chain is generated by producers of raw materials, such as cobalt and lithium, and those who assemble cells into complex systems, experts say. “There’s been a bit of imbalance in that value chain and that’s one of the reasons you see a limited amount of players in Europe”, said Northvolt founder and Chief Executive Peter Carlsson. “But we think that the model that we’re applying is changing this”. Carlsson, who used to work for U.S. electric car pioneer Tesla, says Northvolt can make a profit through economies of scale, by using cheap hydropower and controlling the processing of raw materials. But Northvolt and TerraE will probably need about 2 billion dollar each in government funding to build their gigafactories, given the state support provided for similar projects in Asia and the United States, said Asad Farid, an associate director at private bank Berenberg who specializes in battery technology. 4 months after the European alliance launch the world’s biggest automotive supplier, Germany’s Robert Bosch abandoned plans to make battery cells, saying it was too risky. Investors are wary because of their experience with solar panel manufacturers as well as rapid advances in technology that are slashing the price of battery packs, which consultants Arthur D puts at 190-250 dollar per kilowatt hour now. “In battery manufacturing it’s very much about scale. So the established producers in South Korea, China and Japan have clear advantages over new entrants”, said Simon Webber, lead portfolio manager on the global & international equities team at Schroders. Tim Crockford, who manages Hermes Investment Management’s Impact Opportunities Fund, said he was more interested in European firms researching cathode technology, areas with major barriers to entry in terms of research and development. “The attraction of the industry decreases as you move further down the value chain. Things like battery manufacturers and the battery pack assemblers, it’s much more fragmented market with lower barriers to entry”, said Crockford. While Hermes has avoided companies mass-producing EV cell batteries it has taken stakes in a lithium producer and a company that makes materials for battery cathodes, he said. The lithium-ion batteries used now are also likely to be overtaken in a matter of years by so-called solid-state technology that is expected to produce even cheaper batteries with higher energy density. “The development cycle and the speed of technology progress in batteries is so huge at the moment, there’s an opportunity for new and additional players to enter”, said Timo Moeller, head of the McKinsey Center for Future Mobility overview in Cologne. Developers in Europe believe that gives the region an opportunity to catch up. “Everybody is developing solid-state batteries so the gap with Asia will be narrower and narrower as we go along”, said Diego Pavia, CEO of InnoEnergy, a sustainable energy company that has invested in Northvolt. +++
+++ LAND ROVER has cut the 3-door Range Rover Evoque from its line-up amid slow sales. Since the introduction of the cabriolet variant (the third bodystyle of the huge-selling Evoque) the 3-door has been the slowest-selling, leading Land Rover to now axe this from sale. Sources suggested that as much as 95 % of sales were of the 5-door version. Less practicality-focused buyers now have only the more expensive cabriolet model as an alternative to the 5-door Evoque. A Land Rover spokesman said: “From the 2019 model year, Land Rover has rationalised its Range Rover Evoque bodystyle offering to concentrate on the 5-door model and convertible, which account for the majority of sales”. The move to axe the slower-selling variant of one of Jaguar Land Rover’s most popular cars likely aims to offset falling sales of volume models; in March alone, sales declined by 7.8 % compared with March 2017, with overall sales down 3.8 % across the year ended 31 March. It’s no surprise that the 3-door Evoque was discontinued, given the industry’s trend towards more practical 5-door cars. 3-door and coupé variants of the Audi A3 and Volkswagen Scirocco have been discontinued in the past 18 months, while several models have been converted to 5-door only for their new generation. No official word has been given on whether the second-generation Evoque will be available as a 3-door, but it’s now almost certain that it won’t be. Despite the dominance of the 5-door Evoque, a second generation Evoque Convertible will likely follow the 5-door’s introduction for a 2020 launch. +++
+++ The MINI Clubman is to get a mid-life refresh later this year, with its styling brought into line with the rest of the range. An unveiling at the Paris motor show is expected, although not confirmed. The Clubman is currently the oldest car in Mini’s range, having been introduced in 2016 in its current generation. The hatchback and convertible have just been updated, while the new Countryman was launched in 2017. The facelifted Clubman will not get the hatchback’s divisive Union Jack tail-lights, but it will ditch its eye-like lights in favour of flatter units with sweeping indicators; a first for the Mini brand. Under the bonnet, Mini’s new 3-cylinder 1.5-litre petrol engine is expected to be offered, with 102 hp in the base-spec car, as per the hatchback. A 2.0-litre petrol with 231 hp is expected to be rolled out for the John Cooper Works model, given that the other JCW models already share the engine. A 1.5-litre diesel engine is also likely to be carried over from the hatchback. A new dual-clutch gearbox will also be introduced in the Clubman, while the interior will benefit from an updated steering wheel, a 6.5 inch screen infotainment system and option of personalised, 3D-printed trim items. The Clubman isn’t expected to get the plug-in hybrid system that premiered on the Countryman S E All4 last year, given that the Clubman sits on the same platform as the hatchback, which isn’t available with the plug-in powertrain. The Mini Electric, which is due for release next year, will provide the only upcoming electrification for Mini’s non-SUV models for the foreseeable future. +++
+++ SKODA is applying the finishing touches to the Kodiaq vRSwhile testing at the Nurburgring. Faster variants of the SUV are in the pipeline, and that they will arrive in the second half of 2018; perhaps after a debut at October’s Paris Motor Show. Skoda’s head of research and development, Christian Strube, told last year: “I see more scope for vRS. It is extremely successful and I personally would like to extend that portfolio to other models in our range. The Octavia vRS is a good brand messenger for Skoda”, he explained. “So now we’re discussing about how to make a vRS version of the Superb, and I would also like to have a vRS on the Kodiaq. From the technical development team, we are fighting for this”. The only engine to be offered the Kodiaq vRS will be a 240 hp 2.0-litre twin-turbo diesel, insiders working on the project have hinted. And Strube admitted as long ago as last September that he had already driven a Kodiaq equipped with that engine, describing it as “fantastic”. The car will almost certainly be offered with 4-wheel drive only, along with a dual-clutch automatic transmission. The Volkswagen Tiguan 2.0 BiTDi 4Motion produces 240 hp and 500 Nm. This helps the Tiguan accelerate to 100 km/h in 6.5 seconds; or the same as a the Lotus Elise Sport. Top speed is 250 km/u. The Kodiaq vRS is likely to come close to these figures but, given its extra heft, probably won’t match them. By comparison, the Octavia vRS TDI 4WD, which has 184 hp and 370 Nm of torque, reaches 100 km/h in 7.6 seconds and also tops out at 250 km/u. The hot Kodiaq will get more dramatic styling, with revised front and rear bumpers, larger wheels and more design details around its front grille. The cabin should feature sports seats and vRS logos. It could push the Skoda brand north of the 65,000 euro barrier in the Netherlands. A flagship Superb vRS would have to go over and above the existing Superb range-topper, which is powered by a 280 hp 2.0-litre turbo with 4-wheel drive. It’s possible the 300 hp powertrain from the Volkswagen Golf R will be drafted in instead, possibly with a small power boost to help differentiate the 2 models. That could then be offered exclusively with 4-wheel drive in the forthcoming Kodiaq at a later date. However, the Czech brand is also focused on pushing plug-in hybrids to market as soon as possible. The first petrol-electric model to market will be the Superb in late 2018, with the Kodiaq to follow. Skoda CEO Bernhard Maier said earlier this year: “vRS has been successful for a number of years in some markets. That is why we are thinking about it for other models as well. We have our biggest campaign yet ahead of us by 2020. We have to filter out which ideas customers want most and which help the brand best”. The brand previously sold a Fabia vRS, before ending production in 2013 due to poor sales. However, Skoda is understood to be planning a return to the hot hatchback market with a Fabia vRS hybrid in 2020. +++
+++ TESLA has plans to build a rival to the Volkswagen Golf, Ford Focus and Opel Astra within 5 years. Responding to a question about compact (Golf size) and sub-compact (Polo size) cars, Musk told: “I think we’ll do a compact car in less than 5 years”. While no more details were offered, Musk used the meeting to announce a number of updates for Tesla’s current and future range. Addressing quality and production concerns surrounding Tesla’s BMW 3 Series-rivalling Model 3, Musk said he had experienced “The most excruciating, hellish several months I’ve maybe ever had”, but said the company had made “huge progress” and “the quality and reliability of the car has improved dramatically, by a factor of maybe 4 or 5 since it started production”. The Tesla chief also announced the Model 3 is outselling the BMW 3 Series, Audi A4, Mercedes C-Class and Lexus IS in America. Musk confirmed the 4-wheel drive version of the Model 3 is due in July, while a “shorter-range battery/lower-cost” Model 3 should arrive “around the end of this year”. Musk also said production lines for the Model 3 had improved their output, with the company expecting its factories to have a “5,000 car week by the end of this month”. Musk said the Model Y cross-over will be revealed in March, and would offer “something super special” once on sale in 2020. He also said the car would not have any leather in it, joking “even in the steering wheel – even if it does have a steering wheel”. Tesla’s forthcoming Roadster also came in for more announcements at the meeting, with Musk calling the prototype version (with its 2.1 seconds 0-100 km/h time) a “base model”. Musk also said the Roadster, due in 2020, will be offered with a “Space X option package”, a nod to the car being launched into space by a Tesla Space X rocket back in February. Tesla needs to show Musk added, “that an electric vehicle can outperform a gasoline car in every way”. The Tesla Semi lorry, also due in 2020, has, Musk said, undergone further developments, and will offer “a range which is way beyond what most people in the industry think is possible” when it launches. When asked about European preferences for cab-over HGV designs, rather than the Semi’s American-style cab-forward setup, Musk said the Tesla truck “works in Europe and North America and China and the rest of the world”. Other announcements made by Musk included news that a new, third-generation version of the Tesla Supercharger is due out “hopefully around the end of this year”. +++
+++ In the UNITED KINGDOM , new car registrations in May grew by 3.4 % year on year to 192.649 units, although the Society of Motor Manufacturers and Traders (SMMT) suggests that this is due to a particularly poor May 2017, so this may not be the recovery the industry has been waiting for. In May, 6.384 more cars were registered than in the same month of last year. New VED and falling buyer confidence amid the general election and Brexit uncertainty were blamed for the 8.5 % decline posted in May 2017. The new figure is still down on that in May 2016 (the best May since 2002), during which 203.585 cars were registered. However, 2 years ago, diesel held 50 % of the market, while petrol had 47.2 % and alternatively fuelled vehicles (AFVs) just 2.8 %. In May 2018, diesel made up less than a third of registrations, posting the 14th consecutive month of decline, while petrol had a strong majority of 61.8 % and AFVs’ market share almost doubled in two years to 5.8 %. Within car segments, specialist sports cars rose by 12.7 % in May, alongside an 11.7 % rise in convertible demand; an unusual trend for a market heavily focused on practical, 5-door cars. Superminis, up 6 %, and SUVs, up 19.2 %, were the biggest growers in the high-volume segments. In the year to date, new car registrations were down 6.8 % on last year, with around 80,000 fewer cars registered during January-May compared with the same period in 2017. The private market showed signs of life by posting a 10.1 % increase year on year in May, but a 5.7 % decline in the year to date. The business and fleet markets remained flaccid, declining 0.7 % and 9.6 % respectively in May, and falling 7.1% and 16.2% in January-May. SMMT chief executive Mike Hawes said: “May’s growth, albeit on the back of large declines last year, is encouraging and suggests the market is now starting to return to a more natural running rate. To ensure long-term stability, we need to avoid any further disruption to the market, and this will require sustainable policies that give consumers and businesses the confidence to invest in the new cars that best suit their needs. Fleet renewal is the fastest way to improve air quality and reduce CO2, and this applies to hybrid and plug-in technologies, as well as the latest low-emission petrol and diesels which, for many drivers, remain the right choice economically and environmentally”. Amid the media storm surrounding its new 5-year plan, Fiat Chrysler Automobiles had a mixed May in the UK, with the Fiat brand declining by 35 % year on year; registrations decreased to 2.623 cars from 4.075. Alfa Romeo increased by almost a third, with 355 units registered versus 269 in May 2017, while Jeep more than doubled May 2017’s sales with 652 cars last month. Maserati shrunk to 83 units from 107 in May 2017. MG posted growth of 105.3 % over May 2017, selling more cars last month than Jeep and just 40 units less than Lexus, while budget brand Dacia grew by almost 30 % to more than 2.500 units, with 120.000 cars sold since its UK introduction just over 5 years ago. Porsche surged by around 56 % to just shy of 2.000 cars in May. Nissan posted a 18 % decline from May 2017, equating to around 2.000 cars. It’s business as usual in the UK’s top 10 best-sellers in the year so far: 1. Ford Fiesta – 47.515 registrations, 2. Volkswagen Golf – 33.057 registrations, 3. Nissan Qashqai – 26.127 registrations, 4. Ford Focus – 25.917 registrations, 5. Vauxhall Corsa – 21.927 registrations, 6. Ford Kuga – 18.570 registrations, 7. Mini Hatch – 17.802 registrations, 8. Mercedes-Benz A-Class – 17.788 registrations, 9. Volkswagen Polo – 16. 533 registrations and 10. Mercedes-Benz C-Class – 16.414 registrations. +++
+++ VOLKSWAGEN plans to halt production on some of its models, starting in August, because authorities are taking longer than expected to certify cars under the new, more realistic Worldwide Harmonised Light Vehicle Test Procedure (WLTP) emissions tests. At a meeting with its works council in Wolfsburg, Volkswagen Group CEO and VW brand boss Herbert Diess announced that the Wolfsburg factory might be forced to temporarily cease production of unspecified model variants from August, a month before WLTP certification becomes a legal requirement within the European Union. Diess told the works council: “Within the Volkswagen brand alone, we need to test more than 200 model variants and have them type-approved within a very short space of time. To master this challenge, our test rigs have been and will be operated virtually round the clock”. A VW statement clarified that there is at least 3 times the amount of testing to be done compared with previous testing routines, meaning the company’s testing rigs are in constant demand and are now in operation 24 hours a day to catch up. “We must expect production interruptions in the third quarter”, said Diess. “After the works holidays in Wolfsburg, we will only be making vehicles that meet the new standards. Vehicles will be delivered step by step as soon as the type approvals required are available. Nevertheless, we will need to store a large number of vehicles on an interim basis. To ensure that this number does not become too large, we will need to plan closure days for production in Wolfsburg during the period between the works holidays and the end of September”. Chairman of the works council, Bernd Osterloh, protested at the proposed production halts, saying: “It is not the fault of our colleagues that the company has built too few test rigs over the years and can suddenly not handle the test volume required. We will not allow this burden to be borne by the workforce alone at the end of the day. Our colleagues in production are not responsible for this situation”. WLTP was introduced to replace the outdated and at times unreliable New European Driving Cycle (NEDC) tests in the aftermath of VW’s Dieselgate emissions scandal. Volkswagen R&D boss Frank Welsch told last month: “The problem is not having the technical solutions but what you have to have before certification. By 1 September, everything needs to be fixed, done and certified. That’s all of our portfolio, and our portfolio is big. We’re not prepared for new certification for all of our cars in one year, with access to test benches, equipment, wind tunnels and so on, and it’s the same for our suppliers. Now, it’s all in a couple of months. We need more time, more test benches, more people at the test authorities. Some engines will not be available for 2 months or so. We have solutions but not the tests available. So in some cars, we will not have all the engines”. Volkswagen will not be alone in having to suspend production due to delays over WLTP certification. Audi, Mini, Peugeot and Porsche have all been forced to halt sales of some models, while BMW ended production of the M3 rather than alter it to meet WLTP standards. +++
+++ VOLVO has expanded upon its mid-term ambitions by announcing that it’s aiming for 33 % of its sales to be of autonomous cars and 50 % to be from its subscription service by 2025. In addition, the Swedish brand has previously announced that it aims for half of its global sales to be of electric cars by 2025. “Our customers’ expectations are changing rapidly”, said Volvo boss Håkan Samuelsson. “This means that Volvo Cars is also changing rapidly. These initiatives will help transform Volvo from being purely a car company to being a direct consumer services provider”. Volvo plans a steep curve in the uptake of its subscription service, Care By Volvo; Samuelsson has said previously that 20 % of Volvo’s sales volume is expected to come from this scheme by 2022. The subscription service was launched on the XC40 and includes insurance, road tax, maintenance bills and roadside assistance. A Volvo spokesman said it’s too early to put a number on subscription service users but that a high level of interest in the service has been registered. The spokesman wouldn’t expand upon where the customers will come from to make up 50 % of sales via subscription, but the industry is moving towards the end of car ownership, so PCP deals and other finance options are likely to continue, while private purchasing will drop. Samuelsson continued: “This paves the way for Volvo Cars to continue growing fast into the middle of the next decade. The company has been transformed since 2010 into a global premium car company. Now it’s time for this transformation to be turned into a period of sustained profitability in line with other premium brands”. Volvo’s autonomous efforts, on the other hand, are mainly in the hands of Uber, which is operating a fleet of XC90s fitted with autonomous systems. A recent fatal collision with a pedestrian has brought bad press to the campaign, however. A total of 24,000 XC90s will be supplied to Uber between 2019 and 2021. All of Volvo’s current crop of new cars offer Level 2 autonomous systems in the form of the Pilot Assist system, either as standard or as an optional extra. However, Volvo will skip Level 3 autonomy and move straight to Level 4 ‘eyes-off’ systems with the option for the driver to take over when required. It will not offer Level 5 autonomy until the systems are proven to be completely safe. Volvo’s first standalone autonomous car is due on sale in 2021, although the brand hasn’t released any further details. +++