Newsflash II

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+++ Tesla has announced a few new steering-assist features that work in the background even when the AUTOPILOT is turned off. Lane Departure Avoidance automatically provides corrective steering if a driver begins to drift out of a lane without their turn signal on. The system also checks if a driver’s hands are on the wheel. If not, audible and visual alerts provide a reminder and, when Traffic Aware Cruise Control is active, the car will gradually slow to less than 25 km/h below the speed limit and turn the hazard lights on. “It is an extension of Lane Departure Warning, which already warns drivers through a steering wheel vibration if they begin to drift out of their lane without their turn signal engaged”, Tesla says. Emergency Lane Departure Avoidance works in the same way, but only intervenes if the system detects that a collision is imminent or the vehicle is close to the edge of a road. The new features will begin rolling out today via over-the-air updates for the Model 3 and expanding to all cars that were built after October 2016. +++

+++ The new BMW M8 Performance coupe is nearing the end of its development programme, and looks set to be the most powerful road car the brand has ever produced. The German firm plans to launch its flagship M car at this year’s Frankfurt Motor Show, alongside its latest M3 and new M135i hot hatchback. The new M8 will be powered by the same 4.4 litre twin-turbocharged V8 engine as the BMW M5, mated to an 8-speed automatic gearbox and the firm’s xDrive all-wheeldrive system. 2 power outputs will be available, with the base model producing upwards of 600 hp, while a more potent Competition variant will offer around 630 hp. I’m told that xDrive system will be heavily rear-biased, as it is on the M5, and that a rear-wheeldrive mode will also be included. Later in its life-span, the M8 Coupe will be joined by an M8 Convertible and a 4-door M8 Gran Coupe, as previewed by the M8 Gran Coupe concept from the 2018 Geneva Motor Show. BMW’s M division recently released some official ‘spy shots’ of M8 test mules undergoing development at the Estoril circuit in Portugal, alongside an outline of its planned performance enhancements. Updates include increased body and chassis rigidity, a reduced kerb weight, a lower centre of gravity, a wider track and a revised steering and suspension setup. Although it’s keeping a tight lid on the 0-100 km/h and top speed performance figures of the M8 range, BMW has announced that the car’s CO2 emissions are pegged between 243 and 246 g/km. It’s unlikely that’s going to deter many prospective M8 buyers. BMW gave a first hint at the new M8’s proportions back in 2017, when its 2018 M8 GTE Le Mans racer appeared at the Frankfurt Motor Show. Frank van Meel, President of BMW’s M Division, said: “The conception and development of the standard BMW 8 Series and the M model run in parallel. The future BMW M8 will build on the genes of the 8 Series and augment its DNA with added track ability and generous extra portions of dynamic sharpness, precision and agility. It all flows into a driving experience that bears the familiar BMW M hallmarks and satisfies our customers’ most exacting requirements”. +++ 

+++ Citroën has ceased production of its 5-seat C4 SPACETOURER , citing the enhanced practicality offered by the new C5 Aircross and declining MPV sales. The Spacetourer, introduced in early 2018 as a renamed and updated version of the Picasso, will remain on sale until stocks have run out. The larger 7-seat Grand Spacetourer will remain on sale for the foreseeable future, with the brand’s MPV line-up now topped by the 9-seat van-based Spacetourer. A company spokesperson said the new C5 Aircross, launched last year as a rival to the Volkswagen Tiguan and Skoda Karoq, offers a level of modularity that renders the 5-seat Spacetourer redundant. The new C5 Aircross has 720 litres of boot space, up 80 litres from the outgoing Spacetourer, but is more expensive. The company says, however, that residual values for the new model are stronger, meaning it will be cheaper on a long term basis than the Spacetourer, despite its higher list price. Citroën’s decision to stop selling the C4 Spacetourer follows the recent announcement that Ford will cease production of its B-Max and (Grand) C-Max MPVs in pursuit of increased profitability in Europe. The MPV segment as a whole has become precarious, with demand for family SUVs increasing exponentially. Last year, the Toyota Verso was also axed, while Kia dropped the slow-selling Venga around the same time. Mercedes-Benz recently launched a new version of its B-Class, but that model’s chief rival, the BMW 2 Series Active Tourer, looks unlikely to be directly replaced at the end of its current life cycle. +++

+++ A U.S. senator plans to introduce legislation to streamline regulation and permitting requirements for the development of mines for lithium, graphite and other electric-vehicle supply chain minerals, part of a plan to offset CHINA ’s dominance in the space. While Tesla, Volkswagen and other electric-focused automakers and battery manufacturers are expanding in the United States, they are reliant on mineral imports without a major push to develop more domestic mines and processing facilities. U.S. Senator Lisa Murkowski, the Alaska Republican who is chair of the Senate’s Energy and Natural Resources Committee, told she will introduce the Minerals Security Act alongside Senator Joe Manchin, a West Virginia Democrat. “Our challenge is still a failure to understand the vulnerability we are in as a nation when it comes to reliance on others for our minerals”, Murkowski said. China already dominates the electric-vehicle supply chain. It produces nearly twothirds of the world’s lithium/ion batteries, compared with 5 % for the United States, and controls most of the world’s lithium processing facilities, according to data from Benchmark Minerals Intelligence, which tracks prices for lithium and other commodities and held a Washington event designed to bring together miners, regulators and lawmakers. The meeting, attended by more than 100 people, featured speakers from Tesla, the U.S. Department of State and Department of Energy, as well as Standard Lithium, Ioneer and other companies working to develop U.S. lithium mines. “The country should not go from dependence on oil from the Middle East for transportation, to dependence on China for electric vehicles and batteries”, said Robbie Diamond of Securing America’s Future Energy, a nonpartisan advocacy group for renewable energies. The United States is not the only country playing catch-up with China. France and Germany asked the European Commission earlier this week to support a €1.7 billion battery cell consortium to thwart Asian rivals’ growth in the space. “From a national security perspective, when you are vulnerable, as the United States is and many of our friends and allies are, on a resource that you need, that is a weakness”, Murkowski said. “We don’t want that weakness to be exposed”. Murkowksi said China’s lead in the EV supply-chain sector gives the country an edge in the ongoing U.S.-China trade dispute. “My greatest challenge right now is to educate other members of Congress as to why this needs to be a national priority”, she said. U.S. miners said they appreciated Murkowski’s push to get the federal government focused more on EV issues, especially China’s dominance. “We need to focus the United States on the fact that China is way ahead of us in the electric vehicle race”, said Tim McKenna of Piedmont Lithium, which is developing a lithium project in North Carolina. Tesla, for its part, underscored its concern on access to certain raw materials at the event. One of the company officials responsible for sourcing lithium and other electric vehicle minerals said Tesla is worried about supplies of nickel, copper and other electric-vehicle battery minerals. The Trump administration sent a State Department official to speak at the event. “We think it’s important for us to talk about these new technologies and how minerals play into this”, said Kent Logsdon, principal deputy assistant secretary at State. +++ 

+++ CITROEN is preparing an unconventional return to the D-segment market and will launch a new electrified halo model in “a couple of years”. That’s according to Citroen CEO Linda Jackson, who gave the latest update on the progress of the brand’s large flagship car project. “In order to be credible as a world brand, we have to have a range of vehicles that covers small cars, medium cars, SUVs and large cars”, said Jackson, speaking at the 2019 Shanghai Motor Show. “Citroen has as much credibility as any other manufacturer to have a large car. It’s just that we won’t do it in a very traditional way. We will have one. There is a market for it, and it will be coming out in a couple of years”, she added. The French brand could line up a 2021 Shanghai show debut for the new model given its potential importance in China, but the chief executive stressed that the new D-segment car would be a “valid” addition to operations in Europe, too. Citroen could break with tradition by offering the new flagship with the option of a fully electric powertrain, and it is understood that would be technically possible on the car’s planned platform. The D-segment model will use PSA’s EMP architecture for larger vehicles, which is used by models like the Opel Grandland X and Peugeot 508. For now, this has only been seen supporting plug-in hybrid power and not all-electric set-ups. But I have learned an evolution of the EMP architecture suitable to support full-battery powertrains is being prepared, and will be available in time for the launch of Citroen’s new halo car. In fact, it’ll be the same platform underpinning an electric version of the Opel Vivaro panel van, slated to be launched in 2021. That would leave a tight window of opportunity, though. The manufacturer has yet to launch a plug-in hybrid vehicle; the first will be the C5 Aircross PHEV later this year. If the new flagship arrives with a fully electrified version of the EMP platform, it would leave the C5 Aircross sticking out awkwardly as the only plug-in hybrid vehicle in the maker’s core line-up; everything else built on the smaller CMP platform will be a full EV or combustion-engined. The Cxperience concept from 2016 is still very much the inspiration for the D-segment car, Jackson confirmed. It’s a sleek 5-door fastback with a cab-rearward design. I expect the final car to carry this ethos through to production, but with some contemporary touches to link it to the rest of the Citroen line- up. Next year, Citroen will focus on launching a new rival for the Ford Focus in the hotly contested C-segment hatch class, with an all-new C4 using PSA’s CMP platform. That allows for all-electric cars to run down the same production line as petrol and diesel siblings. A full EV version of the C4, with more than 320 kilometres of range, is planned. +++

+++ FIAT CHRYSLER Automobiles (FCA) said that new U.S. pickup models will help the automaker achieve its 2019 profit targets and offset a weak performance in the first quarter. Nearly all (98 %) of the Italo-American automaker’s first-quarter profit was powered by its Ram pickup. FCA’s U.S. sales were down 3.1 % in the quarter, but Ram sales were up more than 20 % and outsold rival General Motors’ Chevrolet Silverado. “The whole quarter was powered by Ram pickups while the rest of the company was lagging”, said Michelle Krebs, an analyst at Cox Automotive, adding that FCA spent heavily on consumer discounts to outsell the Silverado. “The question is whether the strong performance by Ram is going to be enough to give FCA a push moving forward”, Krebs said. Analysts and investors have worried about FCA’s over-reliance on the U.S. market, given its loss-making operations in both Asia and Europe. FCA expects new models such as the Jeep Gladiator pickup and all-new Ram heavy-duty trucks to help it meet full-year targets. Chief Executive Mike Manley told analysts on a conference call most of the profit improvement would come in the second half of 2019. The automaker posted a higher profit for the quarter in Latin America and Manley said the region’s strong performance should continue. He said FCA’s European region, which lost money in the quarter, would return to a profit with margins of around 3 % by the end of 2019. The carmaker has pledged to spend €5 billion on new models and engines in Italy over the next 3 years to better use factories, plus boost jobs and margins in Europe. Asked about potential partnerships, Manley said he expected the next 2 to 3 years to yield “significant opportunities” and FCA to play an “active role” in that environment. FCA has been at the center of renewed merger speculation in recent months. Chairman John Elkann (a scion of Italy’s Agnelli family that is FCA’s biggest shareholder) reiterated last month the family was prepared to take “bold and creative decisions” to help build a solid and attractive future for the carmaker. FCA’s North American margin fell to 6.5 % from 7.4 % a year earlier, below the first-quarter margins posted by Detroit rivals GM and Ford. The company’s first-quarter operating profit fell 29 % to €1.07 billion, below analyst expectations of €1.31 billion. The operating profit at Maserati fell 87 %, hurt by weakness in the Chinese market. CEO Manley said the performance of the luxury brand should improve in the second half of 2019. FCA stuck to its full-year 2019 adjusted operating profit forecast of more than €6.7 billion. +++ 

+++ GENERAL MOTORS is considering a $1 billion investment at its Missouri assembly plant where it builds vans and trucks, state officials said. Missouri governor Mike Parson told that GM, in a closed-door meeting, had outlined a plan to invest in the plant and add jobs. Parson told that GM is seeking a package of state incentives that would need approval from the legislature before committing to the project to expand its Wentzville plant, which builds the midsize Chevrolet Colorado and GMC Canyon pickups, Chevrolet Express Cargo van and GMC Savana full-size van. State senator Bob Onder in a Twitter post praised the plan. “I am excited that GM is considering investing $1 billion dollars in our Wentzville Community! This would extend a decades long relationship between this great company and the great people of St. Charles County”, he wrote. GM declined to confirm the investment, but said in a statement it appreciated “the willingness of state officials in Missouri to work with us on potential opportunities within the state”. There has been speculation GM may build a new mid-size body-on-frame SUV based off the Canyon and Colorado chassis. Automotive News reported in 2016 that industry officials believed GM was considering the plan to complete with Fiat Chrysler’s Jeep brand. GM has come under criticism in Washington after it announced in November plans to idle 5 North American plants and cut up to 15,000 jobs. Since then, GM has announced some new U.S. investments. GM said in March it planned to invest $1.7 billion in its U.S. plants, adding 700 new jobs, including $300 million at its Orion assembly plant in suburban Detroit. It announced last week that it will add a second shift at its Bowling Green, Kentucky, assembly plant and add 400 jobs where it builds the Chevrolet Corvette. +++ 

+++ Tesla expects GLOBAL SHORTAGES of nickel, copper and other electric-vehicle battery minerals down the road due to underinvestment in the mining sector, the company’s global supply manager for battery metals told an industry conference, according to 2 sources. The company, a major minerals consumer, has rarely talked publicly about its views on the metals industry. Copper, nickel, lithium and related minerals are key components used to make electric-vehicle batteries and other parts. Sarah Maryssael, Tesla’s global supply manager for battery metals, told a closed-door Washington conference of miners, regulators and lawmakers that the automaker sees a shortage of key EV minerals coming, according to the sources. According to a Tesla spokesman, the comments were industry-specific and referring to the long-term supply challenges that may occur with regards to these metals. The copper industry has suffered from years of underinvestment, and it is now working feverishly to develop new mines and bring fresh supply online as the electrification trend envelops the global economy. Freeport-McMoRan, the world’s largest publicly traded copper producer, is expanding in the United States and Indonesia. Electric cars use twice as much copper as internal combustion engines. So-called smart-home systems (such as Alphabet’s Nest thermostat and Amazon.com’s Alexa personal assistant) will consume about 1.5 million tonnes of copper by 2030, up from 38,000 tonnes today, according to data from consultancy BSRIA. All that will make the red metal (and other minerals) scarcer commodities, which worries Tesla. Maryssael added, according to the sources, that Tesla will continue to focus more on nickel, part of a plan by Chief Executive Elon Musk to use less cobalt in battery cathodes. Cobalt is primarily mined in the Democratic Republic of the Congo, and some extraction techniques (especially those using child labor) have made its use deeply unpopular across the battery industry, especially with Musk. Maryssael told the conference, hosted by commodity pricing tracker Benchmark Minerals Intelligence, that there is “huge potential” to partner with mines in Australia or the United States, according to the sources. Australia late last year signed a preliminary deal with the United States to support joint research and development of minerals deemed critical to the U.S. economy. +++ 

+++ Registrations of new vehicles in ITALY rose 1.5 % in April to 174,412 units, according to the country’s Ministry of Infrastructure and Transport. The positive result, which comes after 3 consecutive monthly declines, happened because of there being one more selling day than a year ago and a recovery in long-term rentals and sales to short-term-rental companies. According to market researcher Dataforce, deliveries to short-term rental fleets jumped 33 % and those to long-term rentals increased 13 %, while sales to companies were up 1.5 %. Self-registrations by dealers fell 13 %, while automaker self-registrations plunged 89 %. Demand from private customers was back on a growth path with a 2.5 % increase after slipping 1.2 % in March. The 2019 Italian budget law introduced an additional purchase tax on vehicles emitting more than 160 grams of CO2 per kilometer while granting incentives to cars emitting less than 70 g/km of CO2. The incentives kicked in April 8, triggering a strong increase in sales of full-electric and plug-in hybrid vehicles. According to the importers association Unrae, full-electric vehicles posted a 355 % increase to 1,190 units in April, while their market share rose to 0.7 % from 0.3 % in March and 0.1 % in April 2018. Plug-in hybrid sales rose 155 % to 471 units and a 0.3 % share. Sales of diesel-powered cars fell 23 % to 70,788 and a new share low of 40.5 %, down from 52.8 % in April 2018. Gasoline car sales rose 33 % to 78,409 and a 44.8 % market share, up from 34.2 % the year before. The market share for cars powered by liquefied petroleum gas rose to 6.9 % from 6.2 %, while the share for vehicles powered by compressed natural gas slipped to 1.7 % from 2.4 %. Unrae chairman Michele Crisci said the stimulus from eco-incentives, weakened by taxes on high-emission vehicles, will only partially compensate the impact of the worsening economy. Unrae forecasts a 3.2 % decline of car sales in 2019 to 1.85 million units. At Fiat Chrysler Automobiles (the Italian market leader), registrations slipped 4.2 % in April. Sales of the flagship Fiat brand declined 0.4 % and Jeep’s were down 13 %. Alfa Romeo sales were halved, while Maserati declined 17 %. Lancia bucked the trend with a 31 % increase. At the Volkswagen Group, VW brand registrations rose 5.4 % and Seat increased 23 %; Skoda sales were down 5.1 %. The T-Roc more than doubled sales and was the most popular VW nameplate for the second consecutive month. Audi registrations were down 4.2 %, while Porsche jumped 149 %. At the PSA Group, all brands gained ground, with Opel sales rising 22 % and Citroen and Peugeot each gaining 6.8 %, respectivelty. PSA’s DS premium brand posted a 38 percent %. At the Renault Group, Renault brand registrations fell 24 %, while sales of sister brand Dacia nearly doubled (up 97 %) thanks to the success of the Duster. The Duster was the most popular vehicle sold by a foreign carmaker with 4,338 units in April, of which 2,135 were LPG-powered. At Ford, deliveries were down 8.1 %. Both South Korean brands saw sales declining: Hyundai by 17 % and Kia by 8.6 %. Nissan’s registrations declined 4.6 %, while Japanese rival Toyota gained 6.3 %. Sales of BMW and Mercedes-Benz both declined, by 7.9 and 8.3 % respectively. +++ 

+++ Few automakers better embody the “try something new” spirit of China’s mobility boom than NIO , the electric vehicle startup that boasts swappable batteries; a cutesy, animated, dash-mounted digital assistant; online-only sales; and stomach-clenching acceleration. It is often billed as China’s wannabe Tesla, although few Americans have heard of the company. Nio already has hundreds of mobile recharging vans on standby throughout China’s biggest cities and operates a network of battery-swapping stations and fast chargers dotting the nation’s highways and byways. The automaker also has built dozens of Apple Store-inspired customers-only Nio House cafes and has a smartphone app with more than 800,000 users. Moreover, its vehicles are churned out at a new assembly plant in this city west of Shanghai, whirring with modern robots and more than 2,000 workers. But Nio also has something that no Western company would covet: It is awash in red ink. The 5-year-old startup so far has sold just 15,000 vehicles and last year reported a net loss of $3.39 billion; triple what it was the year before. Nevertheless, this plucky upstart is turning heads at old-guard automakers. Legacy players from Detroit to Toyota City see Nio, and countless Chinese startups like it, as a potential model for new ways of creating and selling autos in an industry under siege by new technologies, electrification, autonomous driving and connectivity. The new challengers epitomize the ambition and creativity now bursting out of a culture of homegrown entrepreneurs in the world’s biggest auto market. “These startups have very innovative ideas”, acknowledged Dong Changzheng, executive vice president of Toyota’s China operation. “We are very serious about their products. We study them carefully”. Nio touts its innovation on several fronts: 1) All-electric vehicles are packed with high-tech digital goodies. 2) Its retail and marketing strategy leans heavily on social media and the “community” beyond cars. 3) It contracts vehicle production to an outside manufacturer, as Apple does with cellphones. 4) It has shortened product development lead time to under 3 years from the typical 5. “The auto industry needs fresh blood”, Nio CEO William Li said during this month’s Shanghai auto show, where he unveiled the ET Preview, a sedan concept that foreshadows a Nio nameplate possibly arriving as early as 2020. “Our mission is to build a community connected by cars”. It’s enough to make traditional metal-benders jealous. “The Chinese government says the future of the industry lies in electrification and startups are coming from nowhere and addressing that”, said Tim Slatter, Ford’s executive director for product development in China. “We absolutely need to address that, but do it while running the rest of the company. We can’t afford to be interested in only one thing”. Indeed, China is experiencing an EV gold rush, backed by government support. It has become the world’s biggest market for battery-driven vehicles and has more than 100 EV players fighting for a piece. Besides Nio, the contenders include Singulato Motors, WM Motor, Xpeng Motors and Byton. EV sales soared 51 % to 984,000 last year and first-quarter 2019 sales more than doubled to 227,000. But strong headwinds are building. Beijing is now winding down subsidies for EVs and plug-in hybrids by the end of 2020. It cut government incentives by more than half this year. Established Chinese automakers and overseas rivals are nonetheless piling into the segment. Volkswagen, the largest automotive brand in China, will offer 14 new-energy vehicles this year. The German group aims to produce 11.6 million battery-electric vehicles in China by 2028, more than half the group’s global objective of 22 million. Geely Automobile Holdings, the biggest domestic automaker, currently has just 2 electric models: a compact sedan and a compact crossover. But at the Shanghai auto show, Geely unveiled a new EV subbrand, with a sporty compact sedan as its first product. At the same time, Tesla is building its first assembly plant in China to duck pricey tariffs on imports and ramp up sales to China’s increasingly affluent masses. Many analysts predict that China’s industry is ripe for a shakeout of weaker EV players. But the best of the new entrants also pose some challenges to their bigger, bureaucratic competitors. “Old-guard automakers should be concerned about losing the younger demographic to EV startups, as their antiquated sales practices do not match up to EV startups’ focus on selling an experience”, said Zhou Lei, an auto analyst and partner at Monitor Deloitte. “Car consumers in China are very open to new brand and product”, Zhou said. “Consumers are willing to try their new services and consider EV startups as a fashion”. The homegrown EV startups fancy themselves as more than just automakers. They pitch themselves as auto-tech companies, purveyors of rolling digital devices that promise autonomous driving, seamless connectivity and a customer experience reaching far beyond the vehicle. “Companies like Nio and Byton and WM represent not your typical Chinese auto company but a new breed of competitor that features Chinese funding and fast-moving companies with a global, tech mindset”, said Michael Dunne, CEO of ZoZo Go, an investment advisory firm focused on China’s autonomous and electrified vehicle markets. “China offers an ideal arena for development because investors there can bank on sustained government support for EVs at the national and local levels and, of course, a massive potential market”. At Nio, the new startup spirit is captured by Nio House showrooms, Li’s vision for a community beyond cars. Nio has 35 of these woody, window-encased, Apple-inspired outlets across the country. The downstairs showroom is open for the public to peruse Nio’s vehicles. But owners and prospective buyers may go upstairs to a members-only space. There, they can escape the crush of China’s crowded cafes to catch up on email at the workspace or relax with a good book in the library. It offers a rental space for events, and even a day care area, called Joy Camp, where parents can drop off kids while they go shopping. There’s no need for cash. Visitors can buy Nio House’s signature fruit mocktails or logo-emblazoned apparel with Nio points. People earn the virtual currency by recommending others to the brand, engaging with its smartphone app or “liking” Nio content on social media. Nio’s app has more than 800,000 users, a following far beyond the carmaker’s meager customer base. In fact, the app is the only way to buy one of Nio’s vehicles because all purchases must be completed online. There are no traditional dealerships. The company’s salespeople are called ‘fellows’. “Our key strategy is to build a joyful lifestyle around the car to provide people a holistic experience”, Nio president Lihong Qin said. “We adopt a strategy in which we own the network by ourselves and we face and deal with our customers directly”. A trademark feature of Nio’s vehicles is Nomi, the digital assistant with emotive eyes that sits on the dashboard like a Magic 8 Ball. It responds to voice commands like a chirpy anime character. Li knows that branding is key in image-conscious China. He cut his teeth by founding Bitauto Holdings, a marketing, advertising and transaction provider to China’s mammoth auto sector. Li then decided to try selling his own cars and founded Nio in 2014 with partner Qin. Deliveries of Nio’s first vehicle, the ES8, began last June. The midsize crossover seats up to 7 people and, in sport mode, does 0 to 100 km/h in 4.4 seconds. Its 70 kWh battery powers a 2-motor, all-wheeldrive system that delivers a 350 kilometre range, based on NEDC. An 84 kWh battery arriving this year will boost range to 420 kilometres. But the ES8 is pricey: starting at just under $67,000 and topping out at $84,663. By the end of March, cumulative ES8 sales totaled just 15,337 vehicles. Deliveries of Nio’s second mass-produced nameplate, the smaller ES6 crossover, will begin in June. It starts at $53,362 and promises a range of up to 510 kilometres. Nio also created a boutique-built supercar, the EP9, which had an initial run of 6 cars. 2 years ago, Nio announced plans to build a second batch of 10, each made to order, with a sticker price of $1.48 million. Nio has ambitions to someday sell in the U.S. and Europe. It already has a staff of 520 working at a North American headquarters in Silicon Valley. But for now, it is focusing on China. Its vehicles are manufactured here in Heifei, west of Shanghai, by the Chinese state-owned automaker Jianghuai Automobile Group. Nio has stationed about 200 managers and quality engineers at the factory to oversee its 2,000 JAC workers. The plant has the capacity to produce 100,000 vehicles a year. By the end of 2019, it should be producing at a rate of 8,000 vehicles a month, covering both crossover models, Li said. Li considers contract assembly a modern-day evolution. But it’s not without its detractors. “JAC is very low-end and has a pretty poor reputation for quality”, said Yale Zhang, managing director of Automotive Foresight, a consultancy in Shanghai. “This was a mistake”. Serious automakers invest in their own plants because they want to control cost and quality. The traditional automakers now flooding into the EV market are able to offer better pricing, he said. “Nio is not at a mass-production price yet”, Zhang said. “If you are a Chinese startup with no history, how can you start at the premium segment? I don’t think that’s realistic”. Nio went public in September, and some investors also have issues with the company. A class-action lawsuit was filed this month against Nio in the U.S. on behalf of shareholders. It says Nio failed to disclose that the rollback in government subsidies would materially affect sales and that Nio would be relying on JAC to build its vehicles rather than a plant of its own. Li said the phaseout of subsidies won’t derail consumers’ march toward EVs. That’s because there are plenty of nonfinancial incentives that spur people to keep buying, such as being able to dodge China’s draconian license plate restrictions on gasoline-burning cars. Li also contends that tapping JAC has benefited the company and investors because Nio consumed much less capital. As for the mounting losses, Li also sees that in a different light. “We don’t think this is losing money. We think we are putting the money into the right places and right uses”, Li said. “We are focused on product R&D and improving user services. The Chinese car market and EV market are still the world’s largest. In the long run, we have confidence”. +++ 

+++ A SOUTH KOREA automakers’ group called for an end to generous state subsidies for sales of Chinese electric vehicles (EVs), citing a potential threat to local automakers and Beijing’s “discrimination” against EVs equipped with Korean batteries. Jeong Marn-ki, president of the Korea Automobile Manufacturers Association, said Chinese automakers could boost EV exports as domestic demand suffered from a phasing out of Beijing’s EV subsidies and a trade dispute with the United States. “Chinese automakers, which are undergoing difficulties at home, are expected to turn their eyes into the neighboring Korean market”, Jeong told. South Korea, home to Hyundai and Kia, offers one of the world’s highest subsidies for electric cars, industry officials say. Chinese carmakers, including BYD, accounted for nearly 40 % of the 19.3 billion won ($16.5 million) in Korean EV subsides provided to imported carmakers last year, according to industry data. However, while Chinese automakers are boosting EV sales in Korea, EVs equipped with Korean batteries are not eligible for state subsidies in China. “China has created an uneven playing field for foreign brands”, said Jeong, who heads the lobby group which represents Hyundai, Kia and other domestic automakers. “International relations should be based on reciprocal principles. If Beijing wields a knife, we should wield a knife too”. Chinese carmakers are narrowing the gap with Hyundai in the sale in South Korea of electric buses, which are eligible for subsides of 100 million won ($85,500) each, according to industry data. Chinese automakers like BAIC are now looking at expanding into the passenger electric car segment in Korea, Jeong said. “It is like South Korea is using taxpayers’ money to nurture China’s EV industry”. Jeong also said he was hopeful that the United States would exempt South Korea from potential vehicle tariffs, given that Seoul made concessions on autos in a revised trade deal with Washington. U.S. President Donald Trump has threatened to levy tariffs of some 25 % on imported vehicles and auto parts on national security grounds. “I am optimistic about the decision. But who knows? Trump is unpredictable”, Jeong said. +++

+++ SPAIN ended a 7-month streak of declining new-car sales in April as registrations rose 2.6 % to 119,417 units. Overall sales rose despite a 17 % drop in demand from private customers to 45,503 units. Sales to companies rose 13 % to 36,421, while registrations by car-rental companies jumped 27 % to 37,943. Diesel vehicles continued their slide, with sales down 24 % to 32,558. The diesel market share was down to 27.3 % in April from 36.7 % in April 2018, but up from 26.9 % in March. Sales of gasoline cars were up 15 % to 75,344 for a 63.1 % share; the same as the previous month and up from 57.4 % a year ago. Sales of all electrified vehicles (battery electric and hybrids) plus vehicles powered by liquefied petroleum gas and compressed natural gas jumped 36 % to 11,515 units and claimed a 9.6 % market share, up from 7.3 % in April 2018. Last month had 1 less selling day than April 2018. Raul Morales, director of communication for the dealer association Faconauto, said a decline in Spanish consumer confidence (minus 4.1 points in April, according to the EU) and political uncertainty before the April 28 general elections contributed to the 8th consecutive drop in demand from private customers. According to Faconauto, sales will drop 5 % to 1.2 million units in 2019. At the Volkswagen Group, the VW brand suffered an 8.5 % decline in April, while Spanish brand Seat grew by 10 % and Skoda posted a 23 % increase. Seat saw a 76 % jump in deliveries of its Leon to 5,008 units, which more than made up for  a 41 % drop in sales of the Ibiza. Audi deliveries were up 7.5 %, while Porsche registrations were down 0.4 %. At the PSA Group: Peugeot and Opel sales were down 1.9 % and 13 % respectively, while Citroen deliveries were up 1.8 %. At the Renault Group, Renault brand sales rose 20 %, while sister brand Dacia grew 11 % thanks to a 178 % increase in sales of the Duster. At Fiat Chrysler Automobiles, Fiat brand registrations were down 21 % while all other brands posted positive figures. Jeep deliveries were up 22 %, with a 67 % jump in sales of the Renegade more than compensating for a 20 % slide in registrations of the Compass. At Ford, sales were up 20 %. Both Toyota and Nissan lost ground. Toyota deliveries declined 8.9 %, with sales of the recently launched Corolla failing to compensate the 94 % falloff of the discontinued Auris. Nissan sales declined 14 %. Hyundai rose 31 %, while sister brand Kia slipped 19 %. Mercedes-Benz deliveries rose 16 %, while sales of rival BMW declined 11 %. +++

+++ TESLA is set to raise up to $2.7 billion in a record-setting capital raising for the electric carmaker, as investors scooped up a mix of new stock and convertible notes that will recharge the company’s cash-depleted balance sheet. The company said in a filing that it had increased its offer to 3.1 million shares, rising to 3.5 million including a tranche for underwriting banks, from an initially planned 2.7 million, priced at $243 per share. The filing also showed it would place convertible debt worth $1.6 billion, up from an initial planned $1.35 billion. That all pointed to buoyant interest in the offering and shares in the company rose 2.5 % in morning trading. The coupon for the debt offering, however, was set at 2.0 % (the top of the indicated range) suggesting the company had ceded ground to investors to borrow so much. The conversion premium at which the bonds can be exchanged for stock in the future, was also at the bottom of the initial range given by the company; another concession. “Seeing the offering amount raised does not surprise me at all”, Clement Thibault, senior analyst at global financial markets platform Investing.com. “As far as Tesla is concerned, the more money in the bank, the better”. Tesla’s launch of a capital raise was greeted with relief by Wall Street after a tumultuous year which has seen analysts and investors cast doubt on its ability to produce, sell and deliver enough cars to make a sustainable profit. The company faces expensive challenges, including launching production in China, overhauling its U.S. retail and service operations and developing new models, including the high-volume Model Y and the Semi commercial truck. Many analysts had calculated that without new cash Tesla (which burned through $1.5 billion in the first quarter and has seen demand for its cars soften) would not be able to carry out its plans. The company said that after all costs had been deducted it could now get up to $2.7 billion in new capital from the offer. That compared to the $2.2 billion in cash reserves the company held at the end of March. Billionaire Musk, whose fortune centers around a 20 % stake in the $42 billion company, also doubled his initial commitment for buying shares and will now buy stock worth up to $25 million, the company said. “The fact that Musk could increase its share from $10 million to $25 million is in line with the usual marketing scheme”, said Nord LB analyst Frank Schwope. “Musk always tries to surprise with promises that are often not kept”. Including the option for underwriters to buy 15 % in each offering, Tesla will sell about $860 million in new shares and $1.84 billion in debt. Tesla had said earlier it would raise up to $2.3 billion in new capital through shares and debt. That included an offering of 2.7 billion shares worth around $650 million and $1.35 billion in debt, before issues to underwriters. +++

+++ VOLKSWAGEN brand’s first-quarter profit rose 4.8 % as cost cutting and higher-margin SUVs boosted earnings despite an overall fall in vehicle sales for the period. Operating profit before special items rose to €921 million. Sales revenue was up 7.1 % to €21.5 billion, while registrations fell 4.5 % to 1.45 million. VWs first-quarter operating margin was 4.3 %, a figure that the brand expects will be between 4 % and 5 % for the whole of 2019. By 2022, VW wants the figure to rise to 6 %. Volkswagen said it is also working to improve the productivity of its core brand. By 2025, the marque will boost the productivity of its global plants by 30 %. VW said a significant financial impact as a result of the second stage of the changeover to the WLTP emissions testing regime is not expected this year. +++

+++ VOLVO has reduced the size of its management board for the second time in less than 2 months. Since mid-March the board has been trimmed to 12 members from 15. The latest cut came when Volvo decided that its new head of consumer and enterprise digital, Odgard Andersson, won’t join the executive management team. Andersson’s predecessor, former Volvo chief digital officer Atif Rafiq, was on the board until April 30. He left the company. In March, Volvo said it was restructuring its top executive board to put more emphasis on technological developments and digitalization. The shakeup gave additional duties to Volvo R&D boss Henrik Green and strategy and retail head Bjorn Annwall. Green, 46, was put in charge of Volvo’s Product Creation & Quality cluster, which was expanded to include design as well as consumer and enterprise digital, which was previously a board-level job held by Rafiq. As head of Volvo’s commercial operations cluster, Annwall, 43, was put in charge of developing Volvo’s core global business with a focus on growth and profitability. He added responsibility for customer service, the Europe, Middle East, Africa region and global marketing and communications. The latter role was previously a board-level position held by David Ibison, who left the company last month. The third board-level post that was eliminated was for design, which was held by Thomas Ingenlath. Unlike Ibison and Rafiq, Ingenlath, 55, remains with the automaker as CEO of subsidiary Polestar and as Volvo’s chief design officer. Andersson, 47, who starts immediately as head of consumer and enterprise digital, was formerly Volvo’s vice president of vehicle software and electronics. Before joining Volvo in 2016 she spent 20 years working in telecommunications in Sweden and Silicon Valley. Her focus was on transforming the telecom industry from hardware to software-oriented development. +++ 

+++ Chinese automaker ZOTYE has announced plans to launch in the United States market as soon as next year with a compact crossover known as the T600. Last year Zotye announced its intention to launch in the U.S. market, and I now know what vehicle will spearhead that initiative. Zotye will launch in the world’s second-largest auto market with a Honda CR-V-sized SUV. The T600 will be powered by a 1.6L turbocharged 4-cylinder engine mated to a 6-speed automatic transmission. “This T600 is a perfect vehicle for the U.S. market and I’m very excited to announce it will be the first Zotye product to go on sale here”, Duke Hale, CEO of Zotye USA, said in a statement. “The vehicle has excellent quality, outstanding safety features and will be very well equipped with a unique design that will make it popular with American buyers”. Specific details on the U.S.-bound T600 are scarce. The current-generation T600 launched in 2013 and would likely wouldn’t be competitive in the U.S. market. Presumably, Zotye will be bringing an updated version of the SUV stateside. Zotye’s U.S. plans are still somewhat fluid. The company says it will launch in the U.S. in either late 2020 or early 2021. Bob Pradzinski, VP of sales at Zotye USA, said in January that the company had more than 80 dealers signed in the U.S., with plans to boost that number to 300 by the time the T600 comes to market. +++

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