+++ CHINA is considering a further reduction in electric-vehicle subsidies next year. Beijing is scaling back subsidies to push automakers to focus more on technological improvements instead of relying on fiscal policy, the report said. +++ 

+++ FORD ’s China slump intensified, with vehicle sales tumbling 38 % in June and the automaker recording its worst-ever first half, as buyers shunned its aging models that are awaiting overhauls and flocked to rivals. The U.S. automaker announced it sold 62,057 vehicles in China in June, taking its sales for the first half of the year to 400,443, down 25 % compared with the year-ago period. According to consultancy LMC Automotive, it was Ford’s biggest first-half percentage decline since starting operations in China in 2001. Ford, which undertook a big expansion in China earlier this decade, is paying the price for a lack of new models in its lineup. Last year, its sales fell 6 % even as overall vehicle sales in China rose 3 %. “We always knew it would be a challenging year for us given our position in the product cycle”, Peter Fleet, head of Ford’s Asia-Pacific operations, which include China, said in a statement. Fleet has previously said Ford’s sales will not likely regain momentum in China, the world’s biggest auto market, until next year when the first of new vehicle models arrive in showrooms in large enough numbers. LMC Automotive senior market analyst Alan Kang said one reason Ford is struggling in China is “fiercer competition” in the car market there, where luxury brands are suffering amid the rise of local Chinese brands. “Weak global brands are squeezed like the meat in a sandwich, so this is why we can see not only Ford”, but Hyundai, Kia and Peugeot have “all suffered” in the last 2 years, Kang said. The dim sales numbers come as the United States and China slapped tit-for-tat duties on $34 billion worth of the other’s imports on Friday, with Beijing accusing Washington of triggering the “largest-scale trade war” ever in a sharp escalation of their months-long conflict. With automobiles subject to additional duties by China, Ford has much to lose. Last year, it shipped about 80,000 vehicles to China from North America, more than half of them its upper-end Lincolns. Ford said a day before it will not hike prices of imported Ford and Lincoln models in China, thus absorbing the additional cost of tariffs on U.S.-made vehicles. Ford’s troubles in China, which include the absence of a country head following the abrupt departure of the previous chief in January after only 5 months at the helm, contrast with General Motors’ steady performance there. Ford’s Fleet has been overseeing the company’s China operations, as it searches for a new country chief. GM sold 4.04 million vehicles in China last year, up 4.4 % from a year earlier. Ford, in comparison, sold 1.19 million cars last year, down 6 %. Toyota and Honda also outsold Ford last year in China. In an effort to reverse the slump, Ford has said it is overhauling its product lineup for China. Redesigned Focus and Escort cars are due to hit showrooms in China later this year, along with the new Lincoln MKC and Nautilus SUVs. In June, sales of Ford’s premium Lincoln brand rose 12 % to 4,350 vehicles, with sales volume for the first half totaling 24,314 vehicles, up 4 % from a year earlier. +++ 

+++ GENERAL MOTORS has announced plans to increase Chevrolet Bolt (Opel Ampera-e) production later this year. The company says global demand has been strong this year, with sales up more than 40 % in the first half of the year. Demand in the US hasn’t been quite as stellar, rising by less than 4 % during the same time period. Production volume will consequently be increased by more than 20 % in the 4th quarter. “Demand for the Chevrolet Bolt EV, especially in the United States, Canada and South Korea, has outstripped production”, says GM’s US sales VP, Kurt McNeil. “The extra production coming on line should be enough to help us keep growing global Bolt EV sales, rebuild our US dealer inventory and bring us another step closer to our vision of a world with zero emissions”. Despite the production increase, the Bolt remains a niche vehicle in the US with sales of less than 8,000 units in the first half of 2018. +++ 

+++ JAGUAR LAND ROVER (JLR) and its Chinese joint venture partner Chery are reportedly mulling plans for the establishment of a new brand. The move is a key part of a global sales strategy being developed by the British manufacturer in which it seeks to significantly raise its presence in China, the world’s largest car market. The proposed new brand (said to be conceived along similar lines to Lynk & Co, the fledgling brand launched by rival Volvo and its Chinese parent company Geely in 2016) is thought to be positioned in the mid-class, with a heavy emphasis on the electrification of drivetrains and in-car connectivity, according to media reports out of China. While details of JLR and Chery’s reported plans for a new sub-brand remain under wraps, Chinese automotive industry experts suggest that recent management changes at Chery could be seen as laying the foundation for a comprehensive shift in the joint venture operations between the 2 companies, which commenced in 2012. Suspicions as to the plan were raised in the past by JLR’s trademarking of the Rover name in numerous countries, as well as trademarking the Rover 55 name; the 55 being a stillborn saloon from the now-dead brand. Given saloons’ popularity in China, this would be a logical place to start for a revived Rover brand. An official at JLR wouldn’t be drawn on the reports that the company is actively seeking to establish a new brand with Chery. However, he did point out that, after a slow start to its joint venture agreement, JLR currently produces 4 models in China: the Range Rover Evoque, Land Rover Discovery, Jaguar XE-L and Jaguar XF-L. Additionally, plans have been announced for Chinese production of the Jaguar E-Pace. A JLR spokesman said: “Jaguar Land Rover owns the Rover trademark so regularly files trademark updates to protect the name, as is good practice. There is no foundation to the speculation that we are reviving the brand”. The spokesman clarified that no new brand, under any name, is planned. +++

+++ In JAPAN , sales of imported foreign-brand vehicles grew 0.5 % in January-June from a year before to 151,803 units, up for the 9th straight first-half period, industry data showed. The figure marked the highest first-half level since the January-June period of 1997 and the third-highest ever, according to the Japan Automobile Importers Association. The growth was driven by launches of new models and robust demand for popular SUV models. German brands dominated the top three slots on the best-selling list. Mercedes-Benz came first for the 4th straight first-half period, though its sales fell 0.6 % to 32,503 units. Volkswagen was ranked second, with 26,078 units, up 1.9 %, followed by BMW, with 23,458 units, down 7.8 %. Sales of U.S.-brand vehicles increased 8.9 % to 7,139 units, with Jeep hitting a record first-half high of 5,640 units. +++ 

+++ After hitting a critical MODEL 3 production milestone of 5,000 units in a week, Tesla has shed more light on its output forecast and reservation backlog. Model 3 production nearly tripled from Q1 to Q2, totaling 28,578 units from April through June. The company has now delivered 28,386 Model 3 vehicles to date, representing just 6 % of reservations. It would take more than 18 months to fulfill the backlog of 420,000 reservations at the current 5,000/wk rate. Tesla plans to continue ramping up Model 3 output volume, however, with a forecasted increase to 6,000/wk by late next month. “When we start to provide customers an opportunity to see and test drive the car at their local store, we expect that our orders will grow faster than our production rate”, the company wrote in a press release for investors. Despite reaching the 5,000-unit target, Tesla is still under pressure to demonstrate that the rate can be sustained and quickly increased through the rest of the year. +++

+++ PEUGEOT is lining up a pure-electric 208 GTi to sit alongside the regular petrol hot hatch in the range when the new generation of the supermini arrives next year. The brand is gearing up to introduce an all-new version of the car at next spring’s Geneva Motor Show. This will switch to a new CMP (Common Modular Platform) architecture that offers much-improved efficiency, cheaper build costs and, crucially, the scope for pure-electric variants. A pure-EV version of the next 208 has always been on the cards since PSA announced that its platform would come in two versions: CMP (also known as EMP1) and e-CMP. Now Peugeot boss Jean-Pierre Imparato has suggested that the electric 208 could also be offered as a GTi. Imparato said: “I’ll reveal this in full in March, but I don’t want the future to be boring. My message will be that each time I launch a new car, it will be electrified, but you will buy your Peugeot and you will choose your powertrain. When you buy a Peugeot you will find design, the latest version of i-Cockpit, the upmarket trim levels like GT-Line, GT and perhaps GTi, because I don’t want to generate any difference between EV and combustion-engined models, but the customer will choose the powertrain”. Imparato also said that Peugeot Sport is actively developing high-performance vehicles with electrified powertrains. A 300 hp hybrid version of the 3008 is on the way; the French firm has also developed concepts such as the 308 R Hybrid to demonstrate the technology. “I have the high-market mix (GT and GT-Line), including the high-performance versions”, Imparato said. “So at the moment we are working on that. I will not hide that it is not so easy because we are facing the 2021 threshold (the EU’s CO2 emissions targets for makers). “But my friends from motorsport are working on some projects to make our customers happy with something that is high-performance and at the same time compliant with the rules. As I said, I don’t want the future to be boring”. Asked if that was a direct reference to high-performance electrified vehicles, Imparato said: “Yes. In the coming 10 years the power will be easy to achieve with electric. It will not be a premium marker any more; premium brands will have to find something else if they want to be different, because electrification opens up, for us top mainstream guys, the opportunity to enter some new segments. I will be able to put on the market cars with 400kW (550 hp) of power. That changes everything”. He believes offering the 208 with a range of powertrains is more important than having standalone EVs, as rival Renault has done with its Zoé, which is sold alongside the conventional Clio. “The rhythm of the transition towards electrification will not be the same across the regions”, Imparato said. “The guys in Paris will be electric, the guys who do 160,000 kilometres per year will be diesel and the average guy will be in petrol. But they’ll be in the same 208. I want the same driving experience for anyone driving my cars. So I will not build a specific electric vehicle; it will not be like a Renault Zoé”. +++

+++ The POLESTAR 1 configurator goes live ahead of a Goodwood dynamic debut. The company boss says the electrified machine is true ‘driver’s car’; it’ll be displayed in motion for the first time in July. The online configurator for the Polestar 1 hybrid coupé has gone live the week before its dynamic debut at the Goodwood Festival of Speed. Following a first reveal as the Volvo Concept Coupé at the 2013 Frankfurt motor show, and its reinvention in Shanghai late last year as the Polestar 1, the car will be displayed in motion for the first time at Goodwood. The online configurator allows visitors to choose from a limited number of options, with exterior paint shades spanning metallic and matt shades of black and grey. Polestar has kept the customisation options for the 1 close to those shown on the first concept. The first model from the newly spun-off performance hybrid and EV brand will cost from 160,000 euro in The Netherlands when it goes on sale in the middle of 2019, although customers will purchase the car through a monthly subscription. Polestar said it has revealed the total price to illustrate where the car sits in the marketplace. The total figure makes it 10.000 euro more expensive than the Tesla Model S P100D. The car spent much of its testing and development time within the Arctic Circle, where its drivetrain, batteries and torque vectoring system were placed under pressure in temperatures that reached -28deg C. Polestar boss Thomas Ingenlath said the torque vectoring system enhanced the 1’s cornering responsiveness and accuracy, adding: “This is a driver’s car”. The 1 is already available to order for a deposit of 2.500 euro. It will initially be sold in 18 countries. Most of the markets fall in north, west and southern Europe, but China, the US and Canada are also included. Polestar chose to increase the availability of the model at launch from an original 12 countries due to strong popularity. The 1 made its European debut at the Geneva motor show in February and has been on a brand-building world tour before its public launch. Once production begins, 500 examples are due to be sold each year. Before the opening of order books, Polestar said more than 6.000 potential customers had expressed an interest in the car. The 1 has an all-carbonfibre body based on a shortened version of the Volvo S90’s platform. It will produce 600 hp from a front-mounted 2.0-litre turbo engine, plus 2 electric motors on the rear axle, and is very much a halo car for the new Volvo performance brand. It will make more European appearances before heading to the US and then China, where a special manufacturing facility capable of handling carbonfibre structures is already under construction near Volvo’s existing plant at Chengdu. According to Ingenlath, who remains Volvo’s design director, Polestar will become Volvo’s “technological spearhead” that, after the 1 hits the market, will make only electric performance cars. The company is preparing for an early 2020 launch of the 2 liftback, which bears a very close relationship to Ingenlath’s Concept 40.2 that has already been seen at motor shows. An SUV, the 3, will arrive after that. The Polestar 2, which will be all-steel and use Volvo’s smaller CMA platform, will go into production in late 2019 ahead of a 2020 launch. It will be offered with both left and right-hand drive. Ingenlath won’t say where the car will be built but is keen to point out its suitability as a rival to the Tesla Model 3. Polestar is understood to still be deciding on details of its powertrain design, although 2 electric motors (one front, one rear) are suggested. The 2 should cost “from 45,000 euro” in The Netherlands and have a practical driving range of about 320 kilometres. The 3, a radically styled, low-roof SUV that will use the next generation of Volvo’s SPA big-car platform and have a mixed aluminium and steel body construction, is understood to be heading for a 2022 launch and is likely to be made at Polestar’s Chengdu factory. When all 3 models are selling as anticipated, Polestar volume could reach 80,000-90,000 cars annually (with the 1 accounting for 500 and the 2 for around 50,000). Ingenlath says further models are being considered in segments that wouldn’t be mainstream enough to suit Volvo. As well as developing rule-breaking new models, Polestar is working on a bespoke marketing set-up aimed at increasing convenience for owners and moving beyond the traditionally adversarial customer-dealer relationship. Cars will be paid for by a monthly subscription that includes insurance, servicing and possibly customer hire days (in case they need a van or fancy a sports car for a few days, for instance). Cars will be picked up from customers’ homes or workplaces and delivered back after servicing. Polestar commercial director Jon Goodman expects to choose about 80 Polestar ‘spaces’ around the world to sell its cars. +++ 

+++ Development of the PORSCHE Cayenne Coupe is well underway. It’s almost ready to take the fight to the BMW X6 and the Mercedes-Benz GLE Coupe. Up front, the dashboard design should mirror that of the normal Cayenne. However, that roofline is certain to compromise practicality, so expect reduced rear headroom, and a drop to the regular Cayenne’s 770-litre boot. Beyond the prospect of hybridisation, engine and transmission choices will be mirrored from the current Cayenne model. With large and small SUVs covered with the regular Cayenne and the newer Macan, the next logical step is for Porsche to move into the more niche territory of coupe SUVs. These cars may seem unconventional, but the huge sales successes of the BMW X6 and more recently the Jaguar F-Pace have made the style-driven SUV market a lucrative space. Even competition from Land Rover is due to arrive. +++

+++ RENAULT and Nissan have given themselves 2 years to decide on a possible merger or find an alternative mechanism to enhance their partnership, people familiar with the matter said. A solution to cement ties would be found before Carlos Ghosn, the chairman of both automakers, is due to step down as the CEO of Renault in 2022, according to the people, who asked not to be named because the talks are private. Ghosn, currently serving a 4-year term at Renault, had previously said he may step down before his tenure ends. Renault shares rose as much as 3.1 %, the most in 7 weeks. The carmakers are in talks about options including setting up a holding company and putting Renault and Nissan under that umbrella, according to the people. It was reported in March that Renault and Nissan are in talks to merge under a single stock, a move that could help them better pool resources in the new age of electrified vehicles and autonomous driving. Ghosn has since pared down expectations of a quick deal to combine the companies, saying the specter of failed mergers in his industry loomed large. “The alliance is continually reviewing options for the evolution of our business”, Jonathan Adashek, a spokesman for the Renault-Nissan-Mitsubishi alliance, wrote in an email. “There are no changes to our operational or shareholding structure to announce, and no established timeline for this to occur”. Representatives at Nissan and Renault declined to comment. Ghosn, also chairman of Mitsubishi, said last month the 2 Japanese carmakers won’t be taken over by Renault. There are many possible ways of sustaining Nissan’s alliance with Renault and Mitsubishi, he also said. The French carmaker owns 43.4 % of Nissan while the Yokohama-based company owns 15 % of Renault. Nissan owns 34 % of Mitsubishi. One possibility would be to base the holding company in London or the Netherlands, where cross-Atlantic carmaker Fiat Chrysler Automobiles NV has its corporate charter. Fiat Chrysler maintains headquarters in both Italy and the U.S. The partnership has a complicated structure, with Renault holding a large voting stake in Nissan, which has no voting rights in its smaller and less valuable partner. In 2016, Ghosn added Mitsubishi to the mix after the company had been caught falsifying mileage estimates for several of its vehicles. In 2002, the 2 companies formed Renault-Nissan B.V., a joint company incorporated under Dutch law and equally owned by Renault and Nissan. The company is responsible for the strategic management of the alliance. +++

+++ TESLA has hiked prices on its Model X and S cars by about 20 % in China, the first automaker to do so in the world’s top automotive market in response to mounting trade tensions between the countries. The move is the earliest indication of how much higher Chinese tariffs on certain U.S. imports will flow through to buyers, with other automakers likely to follow suit or shift a greater portion of production to China. “It’s only chapter one of this story”, said James Chao, a Shanghai-based analyst at consultancy IHS Markit, who expects more companies worldwide to be hurt by the trade spat. China slapped retaliatory tariffs of 25 % on imports of several U.S. products, including cars, after U.S. President Donald Trump imposed tariffs on $34 billion worth of Chinese goods. China’s tariffs are expected to hurt automakers, firms that make industrial components in the United States, and producers of soybean, whisky and other agricultural items. For Tesla especially, rapidly burning cash and struggling to turn a profit, China is key. Sales in the country accounted for about 17 % of its revenue last year. In May, Tesla slashed up to $14,000 off its Model X in China after Beijing said it would cut import tariffs to 15 % from 25 % for most vehicles from July 1. But the latest retaliatory tariffs mean importers will have to fork out a total 40 % duty on all U.S.-made cars they sell in China. Its basic Model S in China now costs about 849,900 yuan ($128,779), versus 710,579 yuan in May, while a Model X costs about 927,200 yuan, versus 775,579 yuan, according to Tesla’s website. These prices are more than 70 % higher than in the United States where the basic Model S sedan sells for $74,500. “Raising the prices is going to hurt sales, but money-losing Tesla has to raise prices because they can’t afford to fully absorb the higher costs of the tariffs”, CFRA research analyst Efraim Levy said. “Considering they claim to be capacity-constrained, they should be able to shift sales elsewhere”. Tesla’s price increases come as it plans to build a factory in Shanghai to serve the Chinese market. The company ships more than 15,000 cars a year to China. CEO Elon Musk is expected to visit Shanghai later this month. Musk will also visit Beijing. Analysts were divided on whether the price hikes will bother affluent buyers in China where, in big cities like Shanghai and Shenze, it is considered a status symbol to own a Tesla. “Tesla consumers are a unique group of rich people. They want more of a brand image and product experience, price is less of a concern”, said Yale Zhang, head of Automotive Foresight. IHS Markit’s Chao, however, said many wealthy Chinese buyers were becoming more price conscious. Other foreign automakers that could announce price increases in China include German automakers BMW and Daimler. BMW recently said it was unable to “completely absorb” the new tariffs, while Daimler has flagged that it “aims to maintain a competitive position” in China. Both firms import U.S.-produced cars into the Asian nation. Ford has, however, said it would not hike prices on its imported cars for now, crimping its profit margins. +++

+++ VOLVO ’s next-generation XC90, due in showrooms in 2021, will drop diesel engines completely from its range, relying on fully electric and hybrid petrol versions only. Volvo’s decision to ditch diesel began with the new S60 in June as the Swedish brand begins its transition from internal combustion engines to hybrid and electric vehicles. By 2025 Volvo predicts 50 % of models sold will be fully electric. Speaking to at the unveil of the new S60 at the new Volvo plant in Charleston, South Carolina, Volvo CEO Håkan Samuelsson told: “We have to prioritise. We cannot do everything. So if we want to be faster in electrification we can’t say yes to everything. That’s why the S60 has no diesel alternative and we are not planning to have a diesel alternative in any new cars. The XC90 will follow this”. Asked if the third-generation SUV will have the range of today’s diesel models, Samuelsson added: “It has to have that; maybe not as long as a diesel, but the combination of properties has to be attractive so that car will be all-electric or hybrid”. Volvo is taking a different path on electrification, developing new platforms to cope with full electrification as well as a combination of internal combustion engines and hybridisation; rival manufacturers have a 2-platform strategy: 1 for electric vehicles and 1 for hybrids. Volvo’s senior vice president in charge of R&D, Henrik Green, confirmed that the new XC90 will sit on a new version of the brand’s Scalable Product Architecture, called SPA2, which has been developed for full electrification as well as petrol hybrid power. Following a facelift of the current car next year, the all-new XC90 is expected to make its debut in 2021. Expect an evolutionary approach to the styling; the fully electric model should feature unique design touches such as the blanked-off grille. Green also confirmed that Volvo had been looking at fuel cell tech, but that a hydrogen-powered model was unlikely. “We’re entertaining fuel cells on a research level and concepts, but it’s not part of the main planning”, he told. +++

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