+++ AUDI will give Geneva auto show visitors a glimpse of a future battery-powered car destined to become the automaker’s smallest electric vehicle. The compact car will be Audi’s first model underpinned by parent Volkswagen Group’s MEB electric-car architecture. It will be a sister model to the Golf-sized I.D. Neo electric hatchback that the VW brand will start selling in Europe next year. Audi confirmed motoring press reports by that it will debut a “premium compact SUV concept” at the Geneva show on March 5. It will have an electric drivetrain that uses VW Group’s MEB architecture for battery-powered vehicles, a spokesman told. The concept is likely to be very close to the series production model that could be revealed towards the end of 2020, with the first deliveries potentially scheduled for the start of the following year. The car will be built alongside the I.D. Neo and a compact electric vehicle for the Seat brand at VW’s factory in Zwickau factory in Germany, where VW is investing 1.2 billion euros so it can produce as many as 330,000 electric vehicles a year for the VW, Audi and Seat brands. Audi gave no further details on the Geneva concept. Sources told in January that the car will be about the size of its Q3 and will help Audi to fill out its lineup of electric vehicles in a bid to take on Tesla. Audi will also be showing four plug-in hybrids at Geneva that would all go on sale this year, including a plug-in version of the Q5. The spokesman declined to comment on the other plug-in debuts, but Audi has said it aims to offer the fuel-saving technology across its core high-end models such as the A7 and Q8 in addition to the Q7 and A8 plug-ins that it had offered in the past. Audi’s MEB model is intended as an affordable, entry-level electric vehicle and is expected to become the automaker’s best-selling battery-powered car. It will join the e-Tron, whose first deliveries start next month in Europe. This electric cross-over has a mixed modular platform based on Audi’s MLB Evo architecture for combustion engine cars. The launch was delayed by over 2 months to fix problems with its software system. At the end of this year the sportier e-Tron Sportback will arrive in European showrooms. Future Audi battery-powered cars will use purpose-built EV platforms, including MEB and Porsche’s J1 that will underpin the upcoming flagship e-Tron GT. This model was shown as a concept study at the Los Angeles auto show in November and is due to go on sale in 2020 as a rival to the Tesla Model S. A fifth electric model will be sold in China called the Q2 L e-Tron. By 2025, Audi plans to sell 12 full-electric cars. It aims to sell about 800,000 full-electric or plug-in hybrid models a year by that date, a third of its volume. +++ 

+++ In-car DISTRACTIONS are causing hundreds of deaths and serious injuries every year, according to official British government figures. An analysis of Department for Transport stats shows there were 88 deaths and 614 serious injuries caused by in-car distractions; an 11 % increase over the course of the last decade. Road safety campaigners have ascribed this worrying increase to the rise of in-car technology systems and drivers being distracted by mobile phones. A research paper by IAM Roadsmart (formerly the Institute of Advanced Motorists) highlights that “with the steady rise of new, potentially-distracting in-car technology being added to vehicles on an almost daily basis by manufacturers. It seems intuitive that the situation is indeed worsening”. The number of deaths related to mobile phone use behind the wheel rose from 27 in 2007 to 43 in 2017 (a 59 % increase) while serious injuries went up 39 % over the course of the decade, from 97 to 135. According to IAM Roadsmart, 29 % of in-car distractions are caused by children, 27 % by changing the radio channel, 26 % by backseat drivers, 24 % by mobile phone calls and 15 % by sat-nav systems. Distracted drivers are a worldwide problem, too, with figures from the European Commission suggesting that between 10 and 30 % of collisions in Europe are caused by road user distraction, while US Department for Transportation statistics from 2015 showed 3,477 people died that year in the country due to a driver being distracted by a mobile phone. Back in 2017, a joint investigation by IAM Roadsmart and Auto Express found programming a sat-nav was the worst distraction for drivers. This was followed by the head of Highways England last year questioning the safety of in-car infotainment screens. Tony Greenidge, business development director at IAM RoadSmart, commented: “Our white paper shows that with increasing the sophistication of in car technology there is an unintended consequence that requires drivers, typically in real time, to decide how to best process and utilise the information provided”. +++ 

+++ FIAT CHRYSLER Automobiles told on Thursday it paid $77 million in U.S. civil penalties late last year for failing to meet 2016 model year fuel economy requirements, the first significant sign the industry is facing hurdles meeting rising emissions rules. The Italian-American automaker has been lobbying the Trump administration to revise fuel economy requirements and last year regulators proposed freezing requirements at 2020 model-year levels through 2026. Shane Karr, head of external affairs for Fiat Chrysler in North America, said in a statement the fuel economy program should be reformed rather than “requiring companies to make large compliance payments because assumptions made in 2011 turned out to be wrong”. Karr added that the automaker is “committed to improving the fuel efficiency of our fleet and expanding our U.S. manufacturing footprint”. The National Highway Traffic Safety Administration (NHTSA) said in a report dated Dec. 21 that the industry faced $77 million in fines in 2016 and that one unnamed manufacturer “is expected to pay significant civil penalties”. The civil penalty payment is much higher than in prior model years. The industry paid $2.3 million in civil penalties in 2014 and $40 million in 2011. Under federal rules, automakers can accrue credits for overcomplying in some years. In 2012, the Obama administration finalized rules requiring automakers to nearly double the fleet-wide fuel efficiency of vehicles to more than 50 miles per gallon by 2025, but the Trump administration has proposed rolling back those requirements starting in the 2021 model year. NHTSA also noted that the number of automakers’ fleets with credit shortfalls had risen to 26 in 2016, up from 18 in 2011, and the number of surpluses fell from 26 in 2011 to 15. Steve Bartoli, a Fiat Chrysler vice president who oversees fuel economy issues, said in September at a public hearing on the fuel rules that starting in 2016 the auto industry had been unable to meet current requirements without using credits earned from prior model years. Bartoli called the gap “a wake-up call that assumptions made 7 years ago about the U.S. auto market need to be revisited”. The NHTSA report also said automakers collectively face projected shortfalls of about $1.2 billion for both the 2017 and 2018 model years, but it was unclear how much in credits can be used to offset the deficits. Fiat Chrysler said the payment was anticipated and the costs were included in the company’s 4th-quarter financial results. The company has previously purchased emissions credits from Tesla, Toyota and Honda. Fiat Chrysler paid penalties for its domestically produced car fleet that did not meet efficiency requirements. It noted rules governing domestically produced cars restrict the use of credits. The company explained the shortfall in part by noting that starting in the 2011 model year some front-wheel-drive utility vehicles previously classified as trucks were moved to the car fleet, which have much tougher fuel-efficiency requirements. Fiat Chrysler noted those vehicles are taller and require more energy than sedans. In 2016, the company produced 4 such vehicles: the 2-row Dodge Journey, Jeep Cherokee, Jeep Compass and Jeep Patriot. By contrast, Fiat Chrysler said its average light-truck fuel economy in 2016 was higher than Toyota, Ford Motor and General Motors, while its car numbers were significantly lower. The Trump administration said last year the fuel economy freeze would save the automakers more than $300 billion in regulatory costs. Trump’s proposed freeze would result in 500,000 barrels per day more oil consumption by the year 2030. California says the proposal “would worsen air quality for the most vulnerable (and) waste billions of gallons of gasoline”. +++ 

+++ GENERAL MOTORS has apparently admitted that it is selling the Chevrolet Bolt (Opel Ampera-e) at a loss, helping explain why the company has been reluctant to ramp up production volume. Speaking to analysts after the company’s recent quarterly financial disclosures, CEO Mary Barra estimated that GM won’t begin to make a profit from its fully electric vehicles until “early next decade” or later. “We’ve talked about the fact that with our next generation of development, we want to make sure we have obtainable, profitable, desirable, and with the appropriate range”, she added. GM recently teased its next-gen BEV3 platform architecture via an as-yet-unnamed Cadillac concept. The luxury EV is said to be slated for production by 2021, giving the struggling luxury marque a second chance at electrification after the ELR was quickly pulled from the market after enticing only a few buyers to purchase a Volt-based hybrid with a Tesla Model S-level price tag. Barra’s latest comments cast doubt on the company’s previous plan to repurpose the Chevrolet Bolt platform for several additional models in the coming years. +++ 

+++ JAGUAR LAND ROVER (JLR) bosses are facing a decision on how to replace the Jaguar XE and XF models, which are currently selling in very small numbers and were outsold by the electric I-Pace in November last year. It is understood the company is focusing on how it should regroup and steady itself after a tumultuous 2018, with a review of Jaguar’s future product plans at the top of the list. While facelift versions of the cars are just months from the showroom, it is believed that company planners are now working on a strategy for the launch of new replacements for early 2023. Sources say that JLR is starting with a blank sheet of paper for the project. The options include the XE and XF being merged into a single model, and any new vehicle could be either an electric model or a plug-in hybrid. Meanwhile, the all-new XJ due next year is expected to be fully electric, which Jaguar hopes will appeal for luxury chauffeur-driven motoring in China and beyond. JLR boss Ralf Speth recently told the press that low sales of today’s XE, XF and XJ models would not force the company to leave the saloon market because ‘low-profile’ vehicles will be needed to adhere to the planned European CO2 regulations in 2030 and beyond. The European Commission recently announced that average CO2 emissions of new cars registered in the EU will have to be 15 % lower in 2025 and 37.5 % lower in 2030, compared with the emission limits valid in 2021, showing the challenge ahead for a firm selling big and heavy SUVs. The timeline also highlights a key difficulty facing JLR: would a 2023 plug-in hybrid XE/XF and the XJ be enough to help meet the 2025 targets? Another dilemma is the likely future take-up rate for premium electric models, which remain a minority choice and dependent on government incentives. Last year, JLR’s executive director of corporate and strategy, Hanno Kirner, held a private seminar explaining the company’s future electrification strategy. He revealed the new MLA aluminium platform, which can be used to build international combustion-engined, mild-hybrid, plug-in hybrid or fully electric vehicles. By 2025, all mainstream JLR products will be based on MLA architecture. Kirner’s presentation also highlighted a further dilemma faced by JLR around the state of electric vehicle infrastructure. He pointed out a survey that showed 43 % of potential buyers expect electric vehicles to be as easy to recharge as it is to fill up a fossil-fuel car and noted that it takes 2 minutes to refuel a Discovery, resulting in a “800-plus kilometre range”. JLR expects the big global cities to lead the way in electric vehicle adoption, but that customer take-up could differ greatly between Europe, the US and Asia, making it difficult to plan for global vehicles that are still 5 years from the showroom. Kirner also revealed that JLR is planning to launch a number of mid-height cars in the future (possibly the rumoured Road Rover series) but also more vehicles with a small frontal area, as aerodynamic efficiency for range becomes more crucial. The presentation hinted at a platform for the future I-Pace that will be shared with a sports model, claiming an eventual replacement for the F-Type and possibly badged I-Type. Although big decisions on the future of Jaguar will be made in 2019, there is a great deal of more pressing work facing JLR management. As well as negotiating with employees and unions on the planned 4.500 redundancies, JLR bosses have to deal more immediately with the huge collapse in sales in China, alongside the underperformance of crucial models including all 3 Jaguar saloons, the F-Pace and the Land Rover Discovery and Discovery Sport. However, there is much for Speth and his team to be enthusiastic about this year. As well as the new Evoque’s arrival, there will be facelifted versions of the XE and XF and a major re-engineering of the Discovery Sport, which has been hit particularly hard by declining sales. The new Defender will also be unveiled. In the light of continually falling diesel sales, a potential fillip for JLR is that the 2 Jaguar saloons and the 2 smallest Land Rovers will be offered with various configurations of the firm’s long-awaited hybrid drivetrain in 2019. There will be 2 versions for the Evoque (which is based on a different platform to the aluminium Jaguar saloons). A mild hybrid with a 48V belt-drive electric motor assisting the engine will be joined by a plug-in hybrid with a 3-cylinder engine, a battery pack under the floor and an electric motor driving the rear axle. The latter gives the potential for EV-only town driving and should boost off-road ability. The mild-hybrid front-drive petrol Evoque is expected to offer a CO2 rating of well below 140g/km. JLR has already announced that the battery packs for the new models will be assembled in Hams Hall, outside Birmingham. The electric drive units will be made at Jaguar’s Wolverhampton engine plant. This technology will be mirrored on the facelifted Discovery Sport and should give the model and the Evoque a significant boost on the market. Between January and November 2018, sales of the Evoque fell by 33%. The Discovery Sport was down by 23%. So while it is hoped that Evoque sales will return to full strength and the Discovery Sport will start to recover from its own slump towards the end of 2019, Land Rover’s biggest issue is the dwindling sales of the Discovery flagship. Indeed, between August and November 2018, sales of the 7-seater fell by 30 %. In the first 11 months of the year, Land Rover sold 39,844 Discoverys. That was well behind the Range Rover Sport (70,243), Velar (61,036) and Range Rover flagship (48,811). There may have been a backlash against production of the model being moved to a new factory in Slovakia, but the vehicle’s styling has also consistently divided opinion. The upshot is that not only will Land Rover get a huge image boost when the new Defender appears (albeit at a premium price and probably sourced from Slovakia), 2 of its 3 biggest showroom problems could be resolved in 12 months’ time. Jaguar also has potential solutions to its 2018 woes in the form of the facelifted XE and XF models, which will be offered with hybrid drivetrains. At least one of the versions uses a 1.5-litre 3-cylinder engine. Petrol mild-hybrid drivetrains will certainly make the XE and XF ranges more attractive to European buyers. Longer term, though, falling F-Pace sales are concerning. In the 4 months to November 2018, they fell 31 % year on year. +++

+++ MAZDA ‘s 30th Anniversary Edition MX-5, revealed at the Chicago Auto Show earlier this week, has been completely sold out. In fact, the entire US allocation sold out just after 4 hours from the car’s announcement. Though 3,000 serial-numbered units will be produced worldwide, only 500 were destined for the US market. The 30th Anniversary Edition MX-5 features an exclusive Racing Orange paint job, with orange piping on Alcantara Recaro seats, orange vent bezels, and orange stitching on leather items such as the handbrake lever and shift boot. Performance-wise, the car comes with 17-inch gunmetal Rays wheels as opposed to the Club Racer’s BBS units, each engraved with a “30th Annivesary” etching on the rim’s edge. Both manual and automatic are available, and both soft-top and retractable targa hardtop versions were offered. Sports cars are generally low-volume sellers. Mazda averages anywhere from around 750 to 950 MX-5s a month in the United States, typically, so 500 sales in 4 hours is quite good. +++ 

+++ RENAULT and Nissan appear to be heading for a showdown over who will be Nissan’s next chairman, replacing Carlos Ghosn, who remains in Japanese custody accused of financial improprieties. Immediately after Ghosn’s Nov. 19 arrest, Nissan CEO Hiroto Saikawa said Ghosn would be removed as chairman. Ghosn and Greg Kelly, an American Nissan board member accused of aiding Ghosn, are expected to be removed as directors at an extraordinary shareholders meeting April 8. Renault, as the controlling partner in the alliance with Nissan and Mitsubishi, says it has the right to name the next Nissan chairman under the alliance’s master agreement. That decision has the support of the French government, which is Renault’s largest shareholder. New Renault Chairman Jean-Dominique Senard would be a likely candidate, but Nissan is resisting such a move, citing concerns that a dual chairman would hold too much power; a charge that Saikawa leveled against Ghosn in a rancorous news conference after Ghosn’s arrest. Before handing over Nissan’s CEO job to Saikawa in 2017, Ghosn was CEO and chairman at Nissan and Renault for almost a decade. Senard will be named a Nissan director at the April meeting. The friction could stymie the expressed wishes of the Japanese and French governments (as well as Saikawa and Senard) to not only continue the alliance but to strengthen it. Under the Alliance 2022 strategic plan devised under Ghosn, the companies would increase cost savings from shared operations and economies of scale to $11.3 billion annually. In 2017 those synergies, which the alliance tallies itself, were nearly $6.5 billion. Nissan, Renault and Mitsubishi combined sold 10.76 million passenger vehicles last year, by some measures making the alliance the world’s largest automaker. Letters between Renault and Nissan point to a deep mistrust between the partners. Lawyers for Renault accused Nissan of acting on behalf of Japanese prosecutors to get information from Renault employees. They said Nissan’s actions were “inconsistent with the spirit” of the alliance agreement, and they expressed “concerns about Nissan’s commitment” to the agreement. Renault acquired a controlling stake in a troubled Nissan in 1999 and now holds 43 % of the Japanese automaker, while Nissan holds 15 % of Renault shares. However, the French government is the majority stakeholder in Renault, with just over 15 %, and enjoys double voting rights at shareholders meetings. Nissan (and the Japanese government) has long expressed concern about the French state’s potential influence over a domestic company. “Nissan’s position is negative” about having Senard, a former CEO of Michelin, as chairman of both companies, a person familiar with the matter said. “Having one single chairman may result in governance issues, especially when there are conflicts of interest”. In the wake of the Ghosn affair, in which the alleged improprieties occurred over nearly a decade, Nissan has pledged to review its governance, including a possible overhaul of the board’s composition. Renault plans a similar study under Senard. Another investigation is underway into the Dutch holding company, Renault-Nissan BV, that oversees combined operations. Renault and Nissan have reportedly hired Mazars, the French auditing company, to scour the company for possible financial misconduct. A possible compromise will allow Senard to be named chairman, in return for Renault reducing its stake in Nissan, and possibly the French government cutting its holding in Renault. The French Finance Ministry denied that it was considering such a move. +++ 

+++ SUBARU has confirmed plans to debut its next-generation Outback later this year. The company unveiled the redesigned Legacy this week at the Chicago Auto Show. The new Legacy is the latest model to be underpinned by the Subaru Global Platform architecture, significantly increasing chassis rigidity for an improved ride and reduced road noise. The sedan’s higher-riding platform mate will presumably benefit from the same upgrades, including a 2.4-liter turbocharged engine with 260 hp and 360 Nm. Inside, the Outback will likely get Subaru’s tablet-style 11.6-inch multimedia display. The new Legacy will land in American showrooms this fall, paving the way for a likely arrival of the Outback closer to the end of the year. +++ 

+++ TAKATA’S AIRBAG inflator debacle is far from over. 6 automakers from the United States and abroad have added 1.7 million cars to the roster of vehicles that need to be recalled to fix a potentially deadly defect. Subaru, Tesla, BMW, the Volkswagen Group, Mercedes-Benz, and Ferrari have announced separate recalls to replace defective airbag inflators. Subaru’s recall includes 826,144 examples of the Forester, Outback, and Legacy models manufactured between 2010 and 2014. Mercedes is calling back 288,779 cars from model years 2010 to 2017. Volkswagen contributed 119,394 cars to the recall, including some Audi-badged models, while BMW noted 266,044 cars made between from 2000 to 2004 and 2007 to 2015 are part of the latest campaign. Daimler’s van division, Tesla, and Ferrari recalled 159,689, 68,763, and 11,176 cars, respectively. Daimler wrote the vans affected by the recall were made from 2015 to 2017. Tesla singled out examples of the Model S manufactured from 2014 to 2016. Finally, Ferrari listed various 2014 to 2018 models. Automakers have recalled 50.36 million inflators as of December 2018. Only 27.2 million of those had been replaced by the end of 2018, meaning millions of motorists are still driving a car equipped with an airbag inflator that’s directly linked to over 20 deaths worldwide. Owners who want to check whether their car is part of the campaign need to call their nearest dealer, or check the National Highway Traffic Safety Administration (NHTSA)’s official website. +++ 

+++ When TESLA announced last month a second round of job cuts to rein in costs, one crucial department was particularly badly hit. The automaker more than halved the division that delivers its electric vehicles to North American customers, 2 of the laid-off workers said. Some 150 employees out of a team of about 230 were let go in January at the Las Vegas facility that gets tens of thousands of Model 3s into the hands of U.S. and Canadian buyers, they said, in a sign the company expected the pace of deliveries to significantly slow in the near term. The cuts, which have not been previously reported, could fuel investor worries that demand for the Model 3 in the United States has tailed off after a large tax break for consumers expired last year and the car remains too expensive for most consumers. Tesla has said its focus this quarter is on supplying cars to customers waiting in China and Europe. “There are not enough deliveries”, one of the former employees told. “You don’t need a team because there are not that many cars coming through”. Delivery of the Model 3 was the company’s key priority in the latter half of 2018, as Tesla tried to supply all buyers wanting the full benefit of the $7,500 U.S. tax credit before it was cut in half at year’s end. The Model 3 is crucial to Tesla’s plans for long-term profitability. The company aims to post a profit in each quarter this year, based on the expectation that it will sell more Model 3s and continue to cut costs. Tesla declined to comment on the job reductions in the delivery team. The company still has an undisclosed number of delivery personnel attached to other locations. Even before the paring back of the delivery team, investors questioned the level of demand for the Model 3 remaining after Tesla’s all-out push to supply buyers ahead of the tax credit cut. “Given the need for revenue to cover costs and generate cash, the financial community should be focused on the level of demand for Tesla vehicles, in particular the Model 3”, wrote Barclays analyst Brian Johnson in January. The 2 former delivery workers said the 2018 sales push has left Tesla’s reservations list plucked clean of North American buyers willing to pay current prices of over $40,000 to get their hands on a Model 3. Chief Executive Elon Musk initially said in 2016 the car would start at $35,000 (which sparked a rush of reservations) but Tesla has yet to actually sell any cars at that price, despite 2 price cuts already this year. “We sold through just about every car we had on the ground and we called almost every being on the planet who had ever expressed desire to own a Tesla to let them know the tax credit was expiring”, said the other ex-employee. Tesla workers around the company were reassigned to pitch in, that source said. “They said, ‘Your job is off the table now, we have to get these cars delivered. Because if we don’t get these cars delivered, you don’t have a job tomorrow’ ”, the former employee said. At the Model 3 launch in July 2017, Musk said over half a million buyers had put down deposits on the new car. That helped send Tesla shares up almost 15 % over the following 6 weeks. The company delivered 145,610 Model 3s in 2018, but all of them at prices far above $35,000. Musk said last week a $35,000 version that could be sold profitably was perhaps 6 months away. Even with 2 price cuts this year, the lowest price tag on a Model 3 is now $42,900. Musk maintains that Model 3 demand is “insanely high,” but his company has not released any figures to demonstrate that. Asked about the reservations list last week by analysts, outgoing Chief Financial Officer Deepak Ahuja declined to disclose how many people remained, calling it “not relevant”. Musk has said Tesla has multiple ways of stoking demand, if it chose to, such as offering leases or boosting marketing efforts. The Model 3s now rolling out of Tesla’s Fremont, California, factory are going to Chinese and European buyers, Tesla says. The 2 laid-off employees said delivery targets for North America (made up of mostly U.S. buyers) this quarter would be 55 % to 60 % of what they were in the last quarter of 2018. If Tesla does not cut prices soon, it risks losing potential customers (and ones already on its reservation list) to a slew of German and Asian competitors whose electric vehicles will hit the U.S. market this year. Each of the new entrant’s first 200,000 buyers will be eligible for a full federal subsidy. Having met that number already, the U.S. tax credit for Tesla buyers drops in half to $3,750 for the first 6 months of 2019, then falls by half again in the second 6 months. Musk said last month his “rough guess” was that Tesla would begin building the $35,000 Model 3 in mid-2019. One of the sources said that could recharge U.S. demand: “If there was a Model 3 for $35,000 that was still a really good car, that blows away the competition, I could see demand going through the roof”. +++ 

+++ Prosecutors in the German city of Stuttgart are looking into a possible fine for auto supplier Robert Bosch for providing VOLKSWAGEN with engine management software that the carmaker used to cheat vehicle emissions tests in 2015. Volkswagen has paid out more than €27 billion in penalties for using illegal software to disguise excessive levels of pollution from its diesel cars, triggering a global regulatory clampdown that has now reached Bosch. “It is correct that the Public Prosecutor’s Office of Stuttgart has opened monetary fine proceedings against Robert Bosch GmbH”, a spokesman for the company said in a statement. “The proceedings relate to the investigations against employees of Bosch in connection with the use of allegedly manipulated software in control units of diesel vehicles”, the company itself added. German prosecutors last year fined Volkswagen €1 billion and its sister brand Audi €800 million for management oversight lapses which allowed polluting cars to hit the road. Volkswagen is reviewing whether to seek damages of up to €1 billion from Bosch. Bosch said: “Relationships with customers are kept confidential. The automaker-supplier relationship between Bosch and Volkswagen goes back over decades. We cannot imagine such an action against Bosch”. +++

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