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+++ The family of a Tesla Model X driver killed in a 2018 accident has filed a lawsuit against the automaker and California’s Department of Motor Vehicles. Walter Huang was driving the Model X on a California highway with AUTOPILOT engaged when the car apparently misinterpreted the lane markings and maneuvered into a concrete barrier. Huang was killed in the accident, which involved a battery fire. “At all relevant times herein, Defendants were negligent and careless in their design, manufacture, testing, marketing, sale, and maintenance of the 2017 Tesla Model X, and Defendants were negligent and careless in failing and omitting to provide adequate instructions and warnings to protect against injuries occurring as a result of vehicle malfunction and the absence of an effective automatic emergency braking system, as occurred here”, the lawsuit argues. The crash attenuator that could have lessened the severity of the crash had been damaged in a previous accident. The lawsuit also lists the Department of Motor Vehicles as a defendant, arguing that the state failed to repair the attenuator. Following the crash and amid an NTSB investigation, Tesla defended the safety of its vehicles and pointed out that Huang ignored warnings to keep his hands on the wheel and remain in control of the vehicle while Autopilot was engaged. +++ 

+++ France and Germany have agreed to invest and work together on the development and production of European BATTERIES in part to remain competitive against the United States and China, Finance Minister Bruno Le Maire said. He said the Franco-German collaboration would open the way for up to €1.2 billion of public financing. “This is of strategic importance for Europe. The deal will ensure Europe can remain competitive against the United States and China”. Earlier this week, France and Germany asked the European Commission to approve state subsidies for a cross-border battery cell consortium including carmaker PSA, German subsidiary Opel and French battery maker Saft. +++

+++ BMW has confirmed it will launch its latest M3 in September at the Frankfurt Motor Show. The performance saloon will undergo a comprehensive mechanical overhaul for its 6th generation, making the shift from rear-wheel to 4-wheeldrive for the first time. The new BMW M3 will be powered by the M-division’s latest 3.0-litre twin-turbocharged straight-6 petrol engine, offered in 2 states of tune. Entry level models will develop 480 hp, while the more powerful Competition flagship will produce 510 hp. Like the firm’s recently-updated M5, BMW will fit the M3 with a selectable 4-wheeldrive system, allowing the driver to send all of the engine’s power to the rear wheels if the mood takes them. The set-up is offered to compete with rivals such as the Mercedes-AMG C 63 and the Alfa Romeo Giulia Quadrofoglio, both of which are exclusively rear-wheel drive. +++

+++ Germany’s 3 major automotive groups are adopting different strategies for controlling their local joint ventures in CHINA . The Volkswagen Group, for example, thinks the rapid market developments in a technologically progressive country such as China require the automaker to at least rethink its entire ownership structure. By comparison, Daimler sees no need to act, while the BMW Group already has seized the opportunity to secure a greater share of profits from its joint venture last October. The current dilemma stems from a new law that loosens the decades-old requirement permitting foreign automakers to operate in the world’s largest car market only through a joint venture with a local partner in which the foreign companies are allowed to own a maximum of 50 %. Manufacturers of electric vehicles can now operate independently to encourage further electrification of the fleet, while automakers focused on combustion-engine vehicles will have to give their JV partners time to prepare for the liberalization. BMW was the first to take advantage of the new rules, changed last year as part of a move to soothe trade tensions sparked by U.S. President Donald Trump. In October 2018, the company agreed with its local partner, Brilliance China Automotive, to increase its stake to 75 % from 50 % by no later than 2022, when the gradual phaseout ends. Shareholders of the privately owned Chinese automaker approved the deal at a January meeting. “The Chinese premium carmarket is growing faster than any other part of the world, and we want to have a larger share of the pie”, chief financial officer Nicolas Peter told. As part of the landmark deal, the joint venture partners will spend €3 billion to expand the production capacity at their 2 Shenyang plants to more than 650,000 units annually early in the next decade from 490,000 vehicles built last year. Describing the move as a “logical step”, Peter said BMW was satisfied with the new controlling majority but had no plans to expand the stake. “We believe it is sensible when doing business in such a big market to keep our partner in the boat”, said Peter, who is also responsible for China at a board level. “It will remain a very attractive proposition for them as well, since 25 % of a larger pie will still be a lot of money”. Meanwhile, VW Group boss Herbert Diess said automakers face a “turning point” in China. After decades of being a production base and key sales market for European models, the country now finds itself at the forefront of smart mobility technology, Diess told. “China is the only major economy in the world with a clear plan to establish electric mobility as the new standard”, he said. “This country sets the pace”. VW is responding by localizing research and engineering within the group, with half of its 20,000 R&D experts focusing on the country. The stakes are high: The VW Group is far more dependent on China than BMW. Across all badges, roughly 42 % of all VW cars delivered last year were destined for China, and the automaker controlled nearly 20 % of the overall car market. However, VW is in a more complicated position than BMW, sources at the company say. As the first automaker to enter China in 1985, VW helped transform the country’s automotive industry, and its VW core brand continues to dominate the volume segment. Any attempt to increase its 50 % stake in Shanghai Volkswagen Automotive or its 40 % holding in FAW Volkswagen could cost a small fortune. Large state-owned enterprises SAIC Motor and FAW Group have multiple joint ventures with foreign automakers. That makes them much stronger and more assertive than Brilliance, a privately owned company essentially dependent on BMW for its profits. Last month, Diess justified a decision to assume responsibility for China by explaining his plan to decide sometime this year on a complete overhaul of the group’s strategy for the market, including a potential change in its equity stakes. Reports have suggested that VW for the first time could also buy an economic interest directly in its third and latest partner: JAC; a move Diess confirmed in Shanghai. JAC would develop a new entry platform for small electric vehicles with VW’s Spanish subsidiary, Seat. Asked whether discussions over a potential increase in the stakes might already be proceeding, Diess chose to be vague: “We have new plans in mind for all 3 joint ventures; we will need each in the future, and our strategy will be of mutual benefit for all”. Daimler, by comparison, is taking a noncommittal view. While departing CEO Dieter Zetsche said the company has taken note of the new regulations, he expressed no desire to broach the subject with partner BAIC Motor. “If we were to consider any conclusion out of that, certainly our partners would be the first ones with whom we would discuss that and not the public”, Zetsche told reporters. Nonetheless, he challenged VW boss Diess’s underlying thesis that new competitors and technologies should prompt a new approach. “We don’t think the competitive landscape requires a different setup from the one we have today; these are 2 independent questions”, Zetsche said. “We strive hard to move forward in the different fields of transformation, but this is not related to the question of shareholding”. +++ 

+++ New-car registrations in FRANCE rose by 0.4 % in April to 188,197, led by double-digit gains at Seat, Citroën, Volvo and Mini. There were 21 selling days in the month, compared with 20 in April of last year. Adjusted for that difference, sales were down by 4.3 %. Sales are down by 0.4 % for the year, according to data from industry association CCFA, in line with expectations by analysts and automakers. Brands with the largest gains benefited from recently introduced small SUV and crossover models. Seat gained 39 % versus April 2019, as the Arona had buoyed sales. Citroën also benefited from 2 new SUVs, the C3 Aircross and C5 Aircross, as sales jumped by 29 %. Volvo, with the XC40, was up by 22 %. Among French brands, which hold 58 % of the market, PSA Group increased sales by 3.3 %, with gains at Citroën and Opel (+5 %) offsetting a 3.5 % decline at Peugeot and a 26 % drop at DS. Renault Group sales were down 7.5 %, as Renault brand fell by 6.5 % and Dacia, after a long string of gains but with no new models, fell by 11 %. The Alpine A110 sports car recorded registrations of 333 units for the month; almost the same number as all Porsche models (352 registrations in April), tripling volume over April 2018. Volkswagen Group sales were up by 7 %, with Skoda increasing 14 % and Volkswagen up 1.9 %. Audi sales rose by 2 %. Daimler edged out BMW in the premium segments, with a 14 % increase driven by a 15 % gain at Mercedes-Benz. BMW Group sales rose 13 % overall behind strong performances by Mini (+20 %) and BMW brand (+10 %). Fiat Chrysler sales fell by 14 %, with Fiat brand down 7 % and Jeep, Alfa Romeo and Maserati all falling off sharply. Ford sales fell by 13 %. Toyota recorded a modest gain of 2.9 %, but other Asian brands were in the red for the month. Kia was down 2.3 % and Hyundai fell 0.3 %. Nissan sales declined by 28 %. +++ 

+++ MERCEDES-BENZ could expand the GLE line-up towards the top with a little bit of help from its AMG division. The company will introduce a range-topping variant of the SUV powered by a detuned version of the V8 found in many AMG-badged cars, according to a recent report. A glimpse of a dealer orderform was caught that lists a model named GLE 580. It’s powered by the same twin-turbocharged, 4.0-liter V8 engine found under the hood of the second-generation GLS introduced at the 2019 New York auto show. The order form didn’t list the V8’s specifications, but the engine makes 512 hp and 950 Nm when bolted under the hood of Mercedes’ biggest SUV. Odds are it will make the same amount of power in the GLE. The V8 achieves those numbers thanks to 48 volt mild hybrid technology. The system keeps fuel economy in check while contributing 21 hp and 250 Nm. The GLE 580 will use the same technology. If the report is accurate, the 512 hp GLE will be the most powerful variant of the SUV sold under the Mercedes-Benz banner. We already know that Mercedes-AMG is preparing a GLE 63 with over 600 hp on tap. The 580 fill the void between the GLE 53, the current flagship, and the upcoming 63. Mercedes-Benz hasn’t commented. If a 580-badged model is in the pipeline, we’ll likely see it before the end of 2019, and it will arrive in showrooms during the 2020 model year. Pricing information hasn’t been released yet. +++ 

+++ The future of NISSAN ’s 370Z remains up in the air, but the fate of one of the sportcar’s versions has been sealed. Nissan spokesman Kyle Torrens confirmed that it is killing off the 370Z Roadster. In a statement, Torrens said Nissan “will not offer the Roadster variant for the current-generation Z beginning with modelyear 2020”. That leaves just the 370Z Coupe. However, the future of this version is not guaranteed beyond the 2020 modelyear either. Nissan’s 6th generation Z car launched a decade ago and hasn’t seen any significant updates since. The 370Z still sells in decent numbers, but the writing is clearly on the wall for the aging sports car. Nissan says the Z-car is “very important” to the brand, but the company has stopped short of confirming a next-generation of the sports car. +++

+++ General Motors is reportedly fighting a lawsuit filed by a South Dakota resident who claims the company misrepresented the Chevrolet Bolt’s (sold as the OPEL Ampera-e in Europe) range in cold weather. The lawsuit argues that the Bolt’s range is slashed by 160 kilometres from its stated EPA-estimated range of 380 kilometres when operating in the cold winter months. The effects of cold ambient temperature on lithium/ion battery performance are no secret, though automakers may not publish detailed information regarding the performance reductions. “At no time during his purchase did GM make him aware that the projected mileage was not accurate as I am a purchaser living in South Dakota, where the lower temperature average is below 30 degrees Fahrenheit for 6 out of the 12 calendar months”, the lawsuit claims. GM’s lawyers have pushed to have the lawsuit dismissed, arguing that its allegations are “nonsensical” and claiming that the automaker repeatedly discloses that the vehicles “actual range may vary based on several factors including temperature” in the Bolt’s literature. “For example, on the Chevrolet Bolt’s website, the language appears as a disclaimer that appears when a visitor clicks on any reference to charge or vehicle range,” the response adds. At one point, Tesla offered a calculator that indicated a range reduction of more than 160 kilometres for vehicles operating in the coldest weather with the cabin heater turned on. The estimator tool appears to have been removed from the company’s website, however. +++ 

+++ Facing a slumping Chinese market and new challenges from domestic automakers, the RENAULT Group is relying on light-commercial vehicles and electric cars to meet ambitious sales targets in China. Renault has set a goal of selling 550,000 vehicles in China, the world’s largest auto market, by 2022. That would represent an increase of more than 150 % over 2018, when it sold 216,000 vehicles, including 163,000 mostly LCVs produced by its joint venture partner, Jinbei Brilliance. First-quarter results show the challenge facing Renault in China, where overall passenger car sales have fallen for 9 consecutive months. Group sales were down 21 % to 42,687 units, but Renault brand sales fell by 64 % to 6,306 cars. Jinbei sales held steady at 36,381; a gain of 0.4 %. “We arrived very late in China”, said Guillaume Sicard, head of sales and marketing for Renault’s China region. “Organic growth isn’t possible, so our joint ventures will accelerate growth”. It wasn’t until 2013 that the company teamed up with its first joint-venture partner, Dongfeng Motor Group, in an entity known as DRAC. Renault started producing its own models, the Kadjar and Koleos, at a new plant in Wuhan in 2016. Last year, the factory ran at about one-third of its annual capacity of 150,000, but a new car will be added to production lines this year, DRAC officials said, without offering more details. Renault has used DRAC as a jumping-off point for 3 more initiatives: eGT, a joint venture to develop electric cars, with Dongfeng holding 50 % and Renault and Nissan each 25 %; Renault Brilliance Jinbei, a joint venture focusing on LCVs; and a deal expected to close by the end of this year for a “significant stake” in JMEV, the electric vehicle subsidiary of the manufacturing conglomerate JMCG. Renault has also just opened a global design center in Shanghai, joining other centers in Romania, Brazil and India. The aim is not necessarily to create clean-sheet designs for China, but to ensure that European and rest-of-world models meet the needs of Chinese buyers, who prefer, for example, extended-wheelbase vehicles with more rear-seat legroom. Renault sells 3 conventional SUVs in China, the small Captur, the compact Kadjar and the midsize Koleos, but sales have slumped, which Sicard attributed to a lack of new products. However, the market is poised for a profound shift to electrification and Renault expects to benefit from that. Electric vehicle sales rose 70 % last year in China to about 760,000 units, and the government forecasts that figure to grow to 2 million in 2020, to 7 million in 2025 and to 16 million in 2030. Renault’s key debut at the Shanghai auto show last month was the City K-ZE, an electric version of the Kwid small crossover sold in India and Brazil. Sales will start in the 4th quarter, under 5 different brands: Renault; Venucia (a Nissan-Dongfeng sister brand in China); and 3 brands under Dongfeng, Renault’s main joint venture partner in China. Renault officials said only that pricing would be competitive with similar electric minicar-sized vehicles that sell for about 70,000 yuan (€9,000). Renault would not say what sales expectations were, but the K-ZE will be produced as part of the new eGT joint venture in Dongfeng’s factory in Shiyan, China, which has a capacity of 120,000 units a year. Francois Provost, head of Renault Group operations in China, said the K-ZE’s competitive advantage is that it is the first minicar-sized EV for China market produced by a joint venture. “There’s no compromise on quality, reliability or development”, he said at the Shanghai show. The K-ZE’s 26.8 kWh battery delivers 45 hp and 125 NM. The car can be fully charged in 4 hours on an AC circuit. In fast-charging DC mode, it takes 50 minutes to get to an 80 % charge, Renault says. Range will be 250 km in real-world conditions, Renault officials said at a media test drive at Renault-Dongfeng’s factory in Wuhan, China. Officially range is listed at 271 km under the NEDC cycle. The K-ZE’s importance to Renault goes beyond sales volumes. Under rules announced by the Chinese government last autumn, automakers that produce more than 30,000 vehicles annually will have to achieve a level of 10 % New Energy Vehicle credits, as determined by a formula based on production of plug-in hybrids and electric vehicles. Credits can also be bought and sold among automakers. Renault officials say that the credits earned by the K-ZE, for all brands, will go to the main Renault-Dongfeng joint venture and then be distributed across brands to achieve the required level. The K-ZE is also crucial to comply with China’s electric vehicle subsidy rules for 2019. Subsidies are being sharply cut across the board (an average of about 65 %, according to a report from analyst firm Alliance Bernstein) but at a minimum, EVs will need a range of at least 250 km to qualify for any government help. Sicard said it was a “guessing game” as to how the cuts in subsidies and the credit system would affect the EV market. “The government is doing it to speed up EV development”, he said, adding that requirements on range and battery power were meant to ensure that only better-quality products remained on the market. The key question, he said, is whether automakers or consumers will absorb the reduction in subsidies, with an average cut of about €4,000 per vehicle. “There is a lot of uncertainty”, he said. Renault’s other main focus in China is its joint venture with Brilliance Auto, which sells buses, vans and MPVs under the Jinbei brand, and will soon add the Renault brand. Renault holds 49 % of the shares but manages operations. The joint venture aims to modernize money-losing Jinbei, which has about 100 different models of minibuses and MPVs. Under a turnaround plan, a new logo has been developed that combines elements of Renault’s “lozenge” and Jinbei’s shield; a network of dealers is being developed on Renault’s European template; and sales and marketing are focused on social media and China’s all-encompassing digital platforms such as Alibaba and JD.com. New and coming products include 3 EVs, a large Renault van based on the Master and a SUV for the Jinbei brand. Thierry Plantegenest, vice president for global LCV sales and marketing, said the van market was poised to expand in China, as online commerce grew in the country’s dozens of cities with populations of 1 million to 3 million people. Given the weakness in China’s auto market and the uncertainty surrounding EV sales, Renault officials are bracing for more bad news in 2019. “This year is going to be difficult for us”, Sicard said, “until September or October, when we start selling the K-ZE”. +++ 

+++ SUBARU is targeting an ambitious twofold increase in European sales by 2025 as part of a comeback plan to return the brand to health and match its record sales year of 2001. “Now we are extremely ambitious”, said development director Torbjörn Lillrud at the 2019 Geneva motor show, “but in the past, we’ve done a bad job. We didn’t have a plan. We focused too much on the WRC rallying and missed the boom in SUV sales. We forgot to tell the right story”. Last year, Subaru started seeing signs of recovery, increasing sales by more than 10 %, but that was still just one-third of its record sales in 2001. “We are now targeting real customers. Those who have active lifestyles. We want the dog walkers and the climbers and the outdoors enthusiasts. They are natural Subaru buyers”, said Lillrud. This year, Subaru will target extra sales built around its bestsellers, the XV and Forester. The XV receives a facelift and the Forester is due a new petrol hybrid powertrain, called e-Boxer, towards the end of the year. The engine is expected to boost sales further. +++ 

+++ Following a disappointing first quarter, TESLA has announced a new round of fundraising that it hopes will generate $2 billion in cash for the company. Tesla revealed in a filing that it intends to raise $1.35 billion through bond offerings, plus another $650 million through a stock offering. If the underwriting banks exercise their option to purchase additional securities, Tesla could come away with as much as $2.3 billion in new capital. Tesla’s cash balance dropped to $2.2 billion after a brutal first quarter. Tesla posted a $703 million loss during the period on slacking demand and debt payments. Following the announcement of its quarterly results, analysts predicted Tesla would need to raise about $2 billion to cover future costs, including the development of the Model Y. The latest round of fundraising is seen as somewhat of a black eye for Tesla boss Elon Musk. The 47-year-old executive stated several times last year that, after the launch of the mass-market Model 3, Tesla would no longer need to raise outside capital. However, Tesla is still experiencing growing pains in its ramp-up to becoming a full-line automaker, and further fundraising can’t be ruled out. +++

+++ TOYOTA is doubling down on its efforts to invest in early-stage startups in the artificial intelligence and mobility industries. The automaker said that Toyota AI Ventures, the venture-capital arm of the Toyota Research Institute, will open a second $100 million fund dedicated to pursuing these investments. After launching its first fund with $100 million in July 2017, the Silicon Valley-based firm now has $200 million in capital commitments. “We are just seeing a tremendous amount of opportunity, especially as the mobility landscape evolves”, Jim Adler, managing director of Toyota AI Ventures told. “We wanted to make sure we had the dry powder to find more great startups”. So far, the firm has crafted a diverse portfolio among its 19 investments in the first fund. Early-stage startups such as self-driving shuttle provider May Mobility, electric vertical-takeoff-and-landing company Joby Aviation and cognitive AI firm Intuition Robotics are among its initial investments. Adler sketched out his investing strategy earlier this year on Shift: The Mobiliy Podcast. Going forward with the second fund, that philosophy remains unchanged. He’s looking not only for novel advances in technology across the AI, automated and robotic realms, he’s further looking for founders with fleshed-out business plans grounded in reality. So far, Adler says he and his team vetted more than 1,500 companies while whittling the number which received investment to 19. What has changed, perhaps, over the past 2 years is the makeup of the entrepreneurs pitching Toyota AI Ventures. “We’re definitely seeing more mature founders”, he said. “We’re seeing the more grizzled entrepreneur that is a 2- or 3-time entrepreneur who has taken a disruptive technology and coupled it with an innovative business model and is seeing business traction. From an investor perspective, that is quite compelling”. The first fund still has money, Adler said, and no investments have yet been made from the second fund. Broadly, the pace of investment in automotive technology has remained high, though there are signals it could temper over the next year. Consulting firm CB Insights says investors poured a record $8 billion into the segment in 2018, though the number of deals fell from a high of 212 in 2017 to 203 last year. Those CB Insights numbers, however, do not include scooters, e-bikes and other micromobility modes. Those are areas that intrigue Adler. “We’re seeing more in micromobility as business models evolve and bifurcate, and we’re seeing hardware-as-a-service”, he said. “There’s a separating out of hardware components and costs into a service, and that’s really interesting to us. Pay by the trip or pay by the unit of consumption. I’m excited to see how this might evolve”. +++

+++ UBER ’s drivers in 6 U.S. cities are planning to shut their apps for 12 hours on May 8 to protest against low wages and working conditions, 2 days ahead of the company’s expected market debut. Drivers in San Francisco, Chicago, Los Angeles, San Diego, Philadelphia and Washington DC will shut their app on the day, when a separate protest will be carried out outside Uber’s head office in San Francisco, a spokeswoman for Gig Workers Rising, a campaign for gig workers, told. About “hundreds of drivers” are likely to join the protest, with Los Angeles and San Francisco expected to see a higher concentration of people, Clarkson said. The drivers’ demands also include employee benefit plans such as health care, holiday pay and representation in Uber’s management structure. Uber expects to price its IPO on May 9 and begin trading on the New York Stock Exchange the following day, people familiar with the matter have said. “Uber’s IPO will put millions in the pockets of executives, but the drivers who provide the service that is core to the company will get nothing”, Clarkson said. To improve relations with drivers, Uber had announced plans to offer cash bonuses to some of its most active drivers with the option to purchase shares in the company’s market debut. Uber did not respond to a request for comment. +++ 

+++ In the UNITED STATES , Fiat Chrysler Automobiles (FCA) sales slowed (-6 %). While Ram had yet another spectacular month (again on the strength of its pickup), every other brand in the company’s portfolio took a hit. Jeep’s 8 % drop (to 76,325 vehicles) is particularly noteworthy as the brand alone is responsible for more than 40 % of FCA’s total volume. It wasn’t a complete bloodbath however, as Compass and Grand Cherokee actually sold in greater volume than they did last April, but even Wrangler sales were down by 25 % compared to 2018. Dodge was also hit hard. Honda has also released their results. It managed to remain in the black (much like it did in March, but Acura dipped slightly in April). Nissan finally managed a good month in April after an extended period of stagnation many have attributed to decreased incentive spending. Nissan’s big swings for April were Altima and the aging Pathfinder. The news for smaller brands was similarly mixed. Volkswagen had its best April since 2013, while Mazda continued its slide. Every model Mazda sells was down by at least 6 % compared to last April. On the luxury front, it appears that Audi continues to struggle with inventory while Jaguar Land Rover seems to have found a head of steam. On the more mainstream side, BMW pulled out a narrow victory against both Mercedes-Benz and Lexus, and the gap between them year-to-date remains fairly slim as well. Toyota reported a 4.4 % fall in U.S. sales in April, hurt by slack demand for its sedans, as well as the Prius. The Japanese carmaker said it sold 162,506 vehicles in April, compared with 170,706 units a year earlier. Major automakers reported a weak U.S. new vehicle sales in the first quarter, citing a rough start to the year, but are bullish that a robust economy and strong labor market would encourage consumers to buy more vehicles rest of the year. “The industry may be shaking off the first quarter sluggishness, but shoppers are coming into showrooms and buying”, FCA’s American head of sales Reid Bigland said. The No. 4 automaker in the U.S. said it sold 172,900 vehicles in April, compared with 184,149 units a year earlier. Big winners in April were: Lamborghini (up 85.6 %), Land Rover (up 11.1 %), Nissan (up 10.7 %), Ram (up 25 %) and Tesla (up 200 %). Big losers in April were: Alfa Romeo (down 14 %), Audi (down 21.4 %), Chrysler (down 37 %), Dodge (down 24 %), Fiat (down 34 %), Mazda (down 14.5 %), Mercedes-Benz (down 15.7 %), Mini (down 29.8 %) and Mitsubishi (down 12.9 %). +++

+++ Sales of higher-margin SUVs and cost cuts helped VOLKSWAGEN shrug off a €1 billion legal charge to meet first-quarter operating profit forecasts. Earnings before interest and taxes fell to €3.9 billion from €4.2 billion a year earlier but were in line with the €3.92 billion euros expected by analysts despite the extra legal charges. Adjusted for one-off factors, earnings rose by a forecast-beating 14 %, or €0.6 billion, to €4.8 billion, at a time when other carmakers and suppliers were cutting their outlook. Luxury brands Porsche and Audi remain key profit contributors, making up around 40 % of group earnings. “VW is defying the odds and growing earnings while others decline”, Bernstein Research analyst Max Warburton said. By contrast, Daimler’s adjusted operating profit had fallen 30 p% in the first quarter, Metzler analyst Jürgen Pieper said. Ongoing supply bottlenecks caused by difficulties getting cars certified for stricter emissions tests, as well as economic weakness in China, South America and Russia, and legal issues pose risks to VW Group’s business, the carmaker said. As a result, the return on sales for passenger cars will likely be at the lower end of its 6.5 % to 7.5 % margin target for the year, the carmaker said. Volkswagen stuck to its forecast of higher unit sales, revenue growth of up to 5 % this year. It maintained its guidance for free cashflow to reach €10 billion by 2020, despite an inventory build-up due to difficulties getting vehicles cleared for sale in China and the United States. VW said in March it planned to launch almost 70 new electric models by 2028, aiming to put itself at the forefront of the industry’s shift to zero-emissions driving following the 2015 scandal over its cheating of U.S. diesel emissions tests. The company set aside €1 billion for additional risks for the scandal which has cost it €30 billion since it was caught using illegal engine control software to cheat U.S. pollution tests in 2015. VW said the provisions are not related to prosecutor charges filed last month against former VW CEO Martin Winterkorn and 4 other VW executives who are accused of fraud for failing to report systematic emissions cheating. Passenger car sales fell 3 % to 2.55 million vehicles during the quarter, with sales of the VW brand down 4.5 %, but improvements in pricing and higher sales of SUVs helped the multi-brand group post resilient earnings. Earnings at VW brand, Skoda, Audi, and commercial vehicles came in ahead of expectations, analysts at Citi said. And that’s despite falling demand at luxury brands Audi and Porsche which saw sales drop 3.6 % and 12.3 % respectively. VW’s Bentley brand also managed to reverse losses, the carmaker said. +++ 

+++ VOLVO is looking for out-of-the-box-thinking suppliers to help it achieve an ambitious sustainability goal. By 2025 the Swedish automaker wants at least 25 % of the plastics used in every newly launched Volvo to be made from recycled materials. The percentage now is about 5 %. To determine whether it could reach this target Volvo worked with its current Tier 1 suppliers to create a variant of the XC60 plug­-in hybrid in which 20 % of the plastic components were replaced with equivalents containing recycled materials. Volvo is now testing a number of those 170 components to determine which might make it into future models. “We are having a lot of discussions with our Tier 1 suppliers but we are not stopping there”, Volvo Board Member for Procurement Martina Buchhauser told. “To speed up this process we are also talking to the chemicals and raw materials suppliers. And, to be even faster, so that we can begin testing even earlier, we are inviting new partners to help us innovate together on recycled materials or materials from renewable resources”. To find these suppliers Volvo last October held a so-called “Sustainability Day” where it not only invited its Tier 1 suppliers but also opened the event to a new breed of component maker. In addition, it is working with non-government organizations to identify companies that have fresh ideas to increase the sustainability of the parts to enter future cars. “We at Volvo believe that collaborators win”, Buchhauser said. “Therefore we need people around us who can help us and co-create with us on this plastics ambition. That is why it is important to address this to a broader audience”. Volvo has already started asking for quotes on recycled plastics for vehicles that will be based on its SPA2 architecture. SPA2 will debut with the launch of the third-generation XC90 in 2021. “We have translated the ideas into our specifications and into our sourcing process”, she said. The increased use of recycled plastics is just one way Volvo aims to minimizing its global environmental footprint. By year-end the automaker has promised to eradicate single-­use plastics across all its premises and at all its events. In addition, in January Volvo’s engine plant in Skovde, Sweden, became its first climate-­neutral facility. By 2025 it wants all of its manufacturing operations to achieve the same goal. Buchhauser said Volvo is taking these steps not only because “the world needs this”, but also because it makes good business sense because “our customers want us to be there”. +++

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