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+++ AUDI will likely introduce the redesigned A3 at the Frankfurt Motor Show next month, and it appears the company is gearing up for the changeover as the A3 Cabriolet is getting axed for 2020. The news comes at a bad time, during peak convertible season, but fans of the brand’s entry-level drop top shouldn’t panic yet. A quick search shows there are a lot of cars available at dealers. The A3 Cabriolet wasn’t a huge seller. With the death of this model, drop top Audi fans will have to settle for either the A5 Cabriolet or the TT. Unfortunately, both those models are significantly more expensive. Of course, the TT won’t be an option for much longer as Audi has already announced the car will be phased out. It will eventually be replaced by an electric vehicle which is billed as an “emotive model in the same price range”. +++ 

+++ In CHINA , local car brands continue to lose market share and the biggest domestic automaker (Geely) is not immune, with sales tumbling 24 % for the 4th straight month in July. Domestic automakers are reeling from a combination of bad luck and factors partly of their own making. Chinese brands are struggling especially because their target customers have been hit harder than those of global brands by the slowing economy. China’s economic growth slowed to 6.2 % in the second quarter, down from 6.6 % for all of 2018. Domestic brands mainly produce compact and subcompact sedans and crossovers for low-income consumers who typically live in rural and inland China. And they market the vehicles at prices ranging from 50,000 yuan ($7,100) to 100,000 yuan, which are affordable options. But facing dim economic prospects, low-income consumers are more likely than affluent households to cut discretionary spending on big-ticket items such as cars. That is the harsh reality Geely has run into. Geely has made substantial progress in expanding its product portfolio. This year it launched sales of 3 new products: the brand’s first MPV, a compact crossover that shares a platform with the Volvo XC40 and a compact sedan under the newly created electric vehicle brand, Geometry. But none of the new models has generated meaningful volume. Geely sales fell to 91,375 units in July. Most domestic Chinese automakers, spurred by generous government subsidies, have invested heavily to launch electrified vehicles in the past few years. It has turned out to be an ill-conceived strategy. On June 25, Beijing finished slashing subsidies by more than 50 % for EVs and plug-in hybrids. The move instantly chilled demand for those vehicles. In July, sales of EVs and plug-in hybrids at BYD, China’s largest electrified vehicle maker, dropped for the first time this year, declining 12 % from a year earlier. Another major domestic EV maker, Jianghuai, had its EV sales plunge 66 % last month. The sobering truth is that consumers have little interest in electrified vehicles without sufficient government subsidies. In the first half, aggregate light-vehicle sales at Chinese brands tumbled 22 % to below 4 million. As a result, their domestic market share dipped 3.9 percentage points from the year-earlier period to below 40 %. But that is not the end of their woes. Economic growth will remain subdued, dampening new-vehicle demand, as long as China’s trade dispute with the United States plays out. And with Beijing set to phase out remaining subsidies for EVs and plug-in hybrids by year end, Chinese brands will find it even tougher to navigate at home. +++ 

+++ Prosecutors in Stuttgart are set to fine Mercedes-Benz parent DAIMLER between €800 million and €1 billion for diesel-related violations. The German motor vehicle authority (KBA) had discovered cheating software fitted to Mercedes-Benz C-class and E-class vehicles and ordered the automaker to recall 280,000 vehicles. A fine of up to €5,000 per vehicle is being considered by the Stuttgart prosecutor. A spokesman for the prosecutor’s office said the investigation was ongoing and would not be concluded before year-end. Daimler declined to comment while the investigation was under way. In May 2017, German prosecutors searched Daimler offices as part of a fraud inquiry related to possible manipulation of exhaust gas after-treatment in diesel cars. Daimler also faces regulatory scrutiny by U.S authorities. In February 2016 the U.S. Environmental Protection Agency asked Mercedes-Benz to explain emissions levels in some of its diesel cars. Prosecutors in Germany have used administrative orders to impose fines on Volkswagen, Audi and Porsche, blaming senior management for oversight lapses that allowed emissions cheating to take place. In May, Stuttgart prosecutors fined Porsche €535 million and supplier Bosch €90 million, while prosecutors in Brunswick fined Volkswagen €1 billion and Munich prosecutors imposed an €800 million fine against Audi. +++ 

+++ Automakers are finding the pursuit of fully autonomous LEVEL 5 SELF DRIVING VEHICLES to be more expensive and technically complex than expected, Farid Khairallah, portfolio director of safety domain control units for ZF, said. Khairallah told: “The perception in the industry was, a couple of years ago, that it is paved with gold. But now the industry is looking at it from a more sober, practical point of view. It’s not that easy to go there. “The whole industry is rethinking their strategies and what they want to do with this”, Khairallah said. Level 5 vehicles are fully autonomous with no pedals or steering wheel. He said Level 2 self-driving technology, in which the vehicle can steer and stop itself but requires a driver to be seated behind the steering wheel, is more achievable for most automakers. For a Level 5 vehicle to be 100 % safe 100 % of the time, it will need 1 million times more computer processing power than today’s vehicles, to be able to recognize and react to every traffic situation. Installing that much computer capability could make a vehicle prohibitively expensive and technically unwieldy. Khairallah said the associated electronics would need their own cooling systems, for example. “The challenge is how do you validate and assimilate the system when you have 11 cameras and 8 radars and 5 lidars?”, he asked. “How do you collect and manage that data?” Even getting to Level 2 has incurred high development costs and is forcing competing automakers to partner, he said. “A lot of players can’t do it alone”, he said. “Homologation is very expensive. Collecting and storing data is very expensive. They are joining forces to share the investment to launch these technologies”. +++ 

+++ Indian automaker MAHINDRA said it plans to open a plant in Michigan to make vehicles including mail delivery trucks for the U.S. market; a move that could create up to 2,000 jobs. Mahindra already produces its off-road Roxor vehicle at its manufacturing facility in Auburn Hills, which is at full capacity. “A significant facility expansion is envisioned to support manufacturing and assembly of new products for the U.S. market”, Mahindra said in a statement. Production of the company’s mail delivery trucks is dependent on Mahindra winning the United States Postal Service’s ‘next generation delivery vehicle’ contract, which will be announced later this year and has four other contenders, the company said. Mahindra said it is also in talks with several other states that have suitable sites, and its decision could be influenced in part by the financial incentives that Michigan will provide. “While we’re keeping our options open, we think the former Buick City site in Flint would be a great fit for us”, said Rick Haas, chief executive officer of Mahindra Automotive North America. “It’s close to our current facility, which improves overall enterprise efficiency”. +++ 

+++ MALAYSIA has launched a new mass market car project as it looks to boost development and adoption of high technology in a renewed industrial push by Prime Minister Mahathir Mohamad. Southeast Asia’s third-largest economy is spurring industry to embrace technology so as to increase productivity and counter growing external risks from an escalating trade war between the United States and China. The new project, spearheaded by Malaysian firm DreamEdge, will be developed with technical assistance from Daihatsu, said Darell Leiking, Malaysia’s trade and industry minister. “It’s privately funded with no government help at all”, Darell told. “We will support anything that is Malaysian made as long as no government money is expended or used”. Daihatsu, a subsidiary of Toyota, owns a stake in Perodua, Malaysia’s second homegrown automaker and its bestselling brand. The domestic car industry has long been a sore point for Malaysians, who saw billions of ringgit in taxpayers’ funds spent to bail out Mahathir’s pet project, Proton, before it was bought by Chinese automaker Geely in 2017. Darell said the new marque, which has yet to be named, would offer affordable vehicles loaded with advanced technology. The first model, which is likely to be a C-segment sedan powered by either an advanced internal combustion engine or hybrid system, is expected to hit the road by March 2021, said Khairil Adri Adnan, the chief executive of DreamEdge. The company is still considering its fundraising options, but expects that it will need “a few hundred million” ringgit to meet its production goal, said Khairil, the firm’s founder. Domestically produced cars formed a key part of Mahathir’s strategy to turn Southeast Asia’s third-largest economy from an agricultural backwater to an industrialized nation during his first tenure as premier from 1981 to 2003. Mahathir championed the new car project last year, on his return to power following an unprecedented election win by his opposition coalition in May. +++ 

+++ The Frankfurt Motor Show is little more than a month away and MERCEDES-BENZ will use the event to introduce a brand new concept. The company was tight-lipped on specifics, but said the vehicle “embodies the flexible, customer-oriented and sustainable vision of the Mercedes-Benz product and technology brand EQ”. That’s a lot of hyperbole, but it sounds like we can expect a new EQ concept. Besides the mysterious concept, Mercedes will stage “numerous world premieres”. These will include new plug-in hybrids and the “all-electric high-capacity sedan EQ V”. The latter statement is a bit strange as the EQ V concept was an electric van based on the V-Class. Furthermore, the GLB will make its auto show debut and be joined by a new AMG variant. It will presumably be the GLB 35 which is slated to have a turbocharged 2.0-liter 4-cylinder engine that produces 306 hp and 400 Nm. The engine should be connected to a 7-speed dual-clutch transmission that sends power to a performance-oriented all-wheel drive system. Besides the aforementioned models, Smart will showcase upgraded versions of their electric city cars. The ForTwo and ForFour will receive a facelift that includes new lighting units and a modestly revised front end. The cars could also receive an upgraded powertrain, but nothing is official as of yet. Last but not least, Daimler chairman Ola Källenius will “give an outlook on the future of Mercedes-Benz”. His speech will apparently focus on the “sustainable future” and how this strategy meets universal human needs. +++ 

+++ NISSAN ‘s China deliveries rose 1.4 % to 108,343 in July after a flat first-half performance. Deliveries were shored up by the automaker’s passenger car joint venture with Dongfeng. July sales at Dongfeng-Nissan rose 3.2 % to 91,108. The rest of the Nissan brand’s China volume was generated by Nissan’s light truck partnership with Dongfeng, which builds the Terra SUV, the NV 200 van and the Navara pickup. The truck joint venture delivered 912 Navaras last month, the office said, without specifying sales of the venture’s other 2 Nissan-badged products. Through July, the Nissan brand’s China sales totaled 826,611, virtually unchanged from the same period last year. The Nissan brand has been outsold by Honda in China so far this year. In July, the Honda brand’s local sales rose 9.4 % to 115,950. Honda’s year-to-date deliveries in China jumped 22 % to 861,359 through July. +++ 

+++ The PSA Group and partner Dongfeng have agreed to cut thousands of jobs in China and drop 2 of their 4 shared assembly plants, in a last-ditch bid to curb mounting losses as the world’s largest auto market loses steam. Dongfeng Peugeot Citroen Automobiles (DPCA), the carmakers’ joint venture based in Wuhan, central China, will halve its workforce to 4,000 as it closes one plant and sells another under plans agreed last month between PSA boss Carlos Tavares and Dongfeng chairman Zhu Yanfeng. Both carmakers declined to comment on details of their restructuring plans. “We are working with our partners to improve the overall performance of our business in China in all its dimensions”, a PSA spokesman said. The agreement may avert a threatened withdrawal by PSA, according to 2 sources at the French carmaker who said their CEO had signaled that PSA might otherwise exit the 27-year-old partnership with its 12.2 percent %, Dongfeng, or even leave China altogether. “We’re just a whisker away from having to withdraw from China”, said one person close to the PSA board. “It really is that serious”. PSA is attempting a reboot in adverse conditions. Once an auto industry cash cow, the Chinese market contracted last year for the first time since the 1990s and is expected to decline another 5 % in 2019, squeezed by a worsening U.S.-China trade war. Many Western carmakers were already struggling before the downturn, as Chinese consumers abandoned their mid-market brands for increasingly assertive domestic rivals including the global manufacturers’ own local partners. PSA’s deep China problems go back even further, spanning 4 years of plunging sales and €400 million written off its DPCA stake, which is now valued at €500 million. Its sales in the country shrunk almost 3-fold to 251,700 vehicles last year from a 2014 peak of 731,000. “We’re not giving up”, a PSA spokesman said. “We are still pursuing our action plan to cut fixed costs”. DPCA will now close its original assembly plant, Wuhan 1, and redevelop the site in a commercial partnership with the local government, according to the plans. The factory’s tooling and production will be transferred to the Wuhan 3 facility. Headcount across DPCA will fall to 5,000 from 8,000 by the end of 2019 and to 4,000 within another 3 years, as it also sells off its idling Wuhan 2 facility. Underperforming vehicles will be dropped as the Peugeot and Citroen lineups are streamlined around more profitable models, mirroring the European turnaround strategy now powering record margins in PSA’s home markets. The carmakers’ dealings have often been fraught, and PSA executives including Tavares have voiced frustration with DPCA’s management. Questioned by analysts about China operations, Tavares pledged during PSA’s July 24 earnings call to “accelerate variable cost reduction, reduce fixed cost” and boost pricing. “Our partner is in the same mindset”, he said of Dongfeng. “They also want to accelerate”. The restructuring faces hurdles, not least the challenge of finding a buyer for the Wuhan 2 plant amid mounting uncertainty, although Chinese government restrictions on greenfield sites may help. Over the past 18 months, Dongfeng chairman Zhu tried repeatedly to persuade Honda or Nissan to take over one of the DPCA plants. Separately, Dongfeng is exploring options for its €2.2 billion stake in PSA including a potential divestment, people with knowledge of the matter said. +++ 

+++ A TESLA owner has filed a lawsuit against the electric vehicle maker, claiming the company limited the battery range of older vehicles via a software update to avoid a costly recall to fix what plaintiffs allege are defective batteries. The lawsuit alleges fraud and seeks class action status for the potentially “thousands” of such Model S and X owners around the world who have seen the range of their older-generation batteries suddenly curtailed, some by as much as 64 km. The lost range has been a hot topic since May on online owner forums in which many owners detail how their battery range has fallen. Some users bought more expensive models because they offered greater range. They say Tesla took this away with the software update, thereby devaluing the car, limiting the distance they can travel and forcing them to recharge more frequently. Plaintiff David Rasmussen’s 2014 Model S 85 lost battery capacity equivalent to about 8 kWh but was told by Tesla the degradation was normal, the lawsuit says. A Tesla spokesperson said the company’s priority was to deliver the best possible customer experience with the highest regard for safety. “A very small percentage of owners of older Model S and Model X vehicles may have noticed a small reduction in range when charging to a maximum state of charge following a software update designed to improve battery longevity”, Tesla said. It added that it was working to mitigate the impact on range for affected owners and “have been rolling out over-the-air updates to address this issue since last week”. The issue first came to light in May. After a Model S caught fire in Hong Kong, Tesla said that out of an overabundance of caution it was revising charge and thermal management settings on Model S and X vehicles via an over-the-air software update. The goal was “to help further protect the battery and improve battery longevity”, it said. In June, it said it planned to improve the impact of the software update after some owners complained. Some owners who have seen their cars no longer able to charge to 100 % have sought redress through arbitration, while at least 3 have sold their cars. Others have disabled their Wi-Fi to avoid any software updates that could affect their range. “Under the guise of ‘safety’ and increasing the ‘longevity’ of the batteries of the Class Vehicles, Tesla fraudulently manipulated its software with the intent to avoid its duties and legal obligations to customers to fix, repair, or replace the batteries of the Class Vehicles, all of which Tesla knew were defective, yet failed to inform its customers of the defects”, wrote the lawsuit. The lawsuit points to a recent spate of Tesla battery fires and claims that instead of informing its customers about a potential fire risk, the company “chose to go behind the backs of its customers and use software updates and throttling of the battery to avoid liability”. In its Vehicle Safety Report published on its website, Tesla says vehicle fires are “exceptionally rare” and from 2012 to 2018 there was approximately one Tesla vehicle fire for every 170 million miles traveled. It compared that with data from the National Fire Protection Association and the U.S. Department of Transportation showing a vehicle fire for every 19 million miles traveled in the United States. Those entities measure fires in all vehicles, not just Teslas. In May, Tesla said its vehicles were 10 times less likely to experience a fire than a gas car. It said that in its investigation of the Hong Kong fire, it found that only a few battery modules were affected and the majority of the battery pack was undamaged. One owner, Nick Smith of Orlando, Florida, said in an interview he has been frustrated by poor customer service by Tesla, with sluggish response to his calls and emails and being kept in the dark over the true root of the problem and what will be done to remedy it. “It’s as if you take your car to the shop and you have a 20 gallon tank but now you have a 10 gallon tank without your knowledge or permission”, Smith said in an interview. Smith’s 2013 Model S P85 will no longer charge past 90 % following the software update. Tesla told him the loss was due to normal regular battery degradation, he said. The batteries in question carry an 8-year warranty. +++ 

+++ TOYOTA will deploy an updated safety suite, called Toyota Safety System 2.0, next year to further improve the collision avoidance and driver assistance suite that it has made standard in its products in the U.S. Toyota, which has already made its safety suite standard across its lineup for both its eponymous brand as well as Lexus, has developed a simple mantra to keep its drivers and their passengers safer on the roadways: “Don’t hit anything. Don’t get hit. Don’t run off the road”, Wayne Powell, vice president of the Electronic Systems Division at Toyota North America Research & Development, said. Current onboard safety systems such as automated emergency braking are already cutting down on collisions, but enhancements that further improve automotive safety should be rolled out as quickly as possible to save lives, he told. “We have a moral obligation to deploy to save lives as soon as we can”, said Powell, who is responsible for driver-assist systems development and applications, vehicle cockpit electronics development and evaluation, and vehicle wiring systems development. Toyota Safety Sense 2.0 will help keep drivers in their lane, and will enhance safety in nighttime and low-light conditions, Powell said. Toyota is working on two complementary strategies to improve safety through enhanced driver-assist systems, Guardian and Chauffeur. Chauffeur is a down-the-road Level 5 autonomous system, while Guardian is a technology suite that allows the vehicle to “team up” with the driver for improved safety. Powell showed an example of a vehicle emerging suddenly between parked cars, with the Toyota vehicle initiating a lane change to avoid a collision. Powell said interim steps such as Guardian are important not only for their enhanced safety, but also as a way to develop more acceptance of the advanced technology with the public. “A big element of acceptance is trust”, Powell said. +++ 

+++ Some of the biggest nameplates among UPPER PREMIUMSEDAN cars are suffering large sales losses in Europe due to a combination of pressure from new large SUVs and crossovers, a falloff in demand for some electrified models and the fact that more sporty body styles are outpacing traditional limousines. The Mercedes-Benz S class was still leading the segment in the region through May despite sales dropping 22 %. Also losing sales was the third-place BMW 7 series, down 9 %, while the Porsche Panamera fell to fifth after a poor 5 months during which sales slid 31 %. One of the biggest losers, however, was Tesla, which saw sales of the Model S drop 52 %; likely a result of buyers switching to the new, smaller Model 3. As a result, the Model S, the segment leader in 2017 and 2018, dropped to 6th place. The most impressive growth in the segment came from the Mercedes CLS. Its sales of 4,689 were up 76 % and put the car into second place in the segment. Sales of Audi’s A7, in contrast, fell 1.7 % to place it 4th ahead of the Panamera. BMW, meanwhile, is phasing out its rival to the CLS, the 6-series Gran Coupe, and replacing it with the 8-series version, which will go on sale in September. The 8 series follows the lead of the Mercedes CLS in offering a 4-door version with a full 5 seats for the first time, instead of just 4. That is expected to make the car more appealing to those who might have previously gone for the more traditional limousine. “Today’s 4-door coupes give buyers the sporty image and performance they want with a usable back seat that is traditionally lacking in these flagship models”, said Sam Fiorani, vice president of AutoForecast Solutions. Mercedes also expanded its offerings in the segment under its AMG brand by launching the 4-door GT sedan. Sales are impressive so far, reaching 2,220 to place the AMG GT in 8th position through May. BMW is aiming for the same higher-end customer with the 8-series Gran Coupe. The upper premium sedan segment is fast expanding into the full-electric market. Starting next year, competitors for the aging Tesla Model S will include the Porsche Taycan 4-door EV, while Jaguar will replace its slow-selling XJ with a new battery-powered model. Audi is preparing to start production on the e-tron GT, based on the Taycan platform, at the end of 2020. “In theory, EVs should work really well in the segment”, said Tim Urquhart, principal analyst at IHS Markit. The larger platform size has room for enough battery cells for a long range and automakers can charge higher prices to absorb the cost of the cells”, he said. Electric cars also have the smoothness, torque and low NVH (noise, vibration and harshness) that are valued highly by the customers in the segment. The EVs’ zero emissions powertrains will appeal to company directors who want to appear environmentally friendly. “When you are spending a ton of company money, it’s hard to justify a V12 engine but electric gives out the right message”, Urquhart said. Plug-in hybrids are also becoming more popular in the segment. Through May, sales of the 740e plug-in hybrid version of the BMW 7 series grew 41 % to account for 19 % of the car’s volume, while sales of the new Mercedes S-class plug-in hybrid captured 6 % of its total. Mercedes says it also plans a plug-in hybrid version of its AMG GT. Sales of the Panamera’s plug-in version have surpassed sales of the conventional model in Europe since Porsche dropped diesels from the Panamera range in February 2018, but demand for the Panamera E-Hybrid models fell 45 % in the first five months to 1,853. E-Hybrid versions still accounted for 52 % of the Panamera’s total sales, but the decline is alarming. Porsche said the sales drop was due to the slow roll out of gasoline particulate filters the Panamera E-Hybrid needed to pass new emissions legislation, adding that the technology was now in place. “We are therefore looking forward to increasing the share of E-Hybrid models significantly within the next months”, a Porsche spokesperson said. The market for upper premium sedans could be under pressure from the launch of new SUV models such as the Audi Q8 and BMW X7, said Felipe Munoz, a global analyst at JATO Dynamics. “We need to wait to confirm the trend”, Munoz said, “but 1,042 sales for the X7 in May, for example, suggests customers might be shifting over”. The upper end of the premium market is growing fast enough to absorb both SUVs and sedans, said Sammy Chan, an analyst at LMC Automotive. “SUV model activity within the premium segment actually adds to the overall premium-model count, rather than at the expense of conventional models as in the mainstream segments”, Chan said. LMC predicts that sales of large premium sedans will reach close to 100,000 by 2022, up from below 78,000 in 2018. However, if the slump encountered by the traditional models this year is anything to go by, the segment will look quite different by then. +++ 

+++ VOLVO ’s sales growth in China accelerated in July, with volume advancing 25 % to 12,639 cars after adding more locally produced models. The growth reflected strong demand for the locally produced XC60 and S90. The locally built XC40, which went on sale in April, also contributed to volume growth, Volvo said, without disclosing sales of individual models. The XC40 is the 4th product the Swedish automaker assembles in China, following the XC60, S90 and the S60. While the other 3 vehicles are built at Volvo factories, the XC40 is produced in Geely’s Luqiao plant in east China’s Zhejiang province. The XC60 and the S60 are built at Volvo’s plant in the south China city of Chengdu, while the S90 is produced at a Volvo factory in the northeast China city of Daqing. Volvo also exports the XC60 and S90 to Europe from China. In the first 7 months, the Swedish automaker delivered 80,380 vehicles in China; a rise of 12 % from the same period last year. Globally, Volvo’s sales rose 7.1 % last month to 54,546 vehicle and its 7-month volume climbed 7.3 % to 395,372. Volvo will also start China production of the first 2 products planned under Polestar, its electrified performance-vehicle brand. The Polestar 1, a plug-in hybrid coupe, will be assembled at a plant jointly owned by Volvo and Geely Group in the southwest China city of Chengdu, with output to begin this year. Production of the Polestar 2, full-electric midsize sedan, is due to start in early 2020 at Geely’s Luqiao plant. +++ 

+++ Small electric truckmaker WORKHORSE is on the verge of buying General Motors’ Ohio factory in spite of its latest financial results. In a press release detailing its financial results for Q2 2019, Workhorse revealed that its sales fell drastically from $171,000 in the second quarter of 2018 to a meager $6,000 in the second quarter of 2019. The company blamed this drop, which saw its shares close 20.5 % down, on a “decrease in volume of trucks delivered”. Workhorse states that its total operating expenses decreased by 34 % to $3.2 million, from $4.9 million the same period last year, and that research and development expenses decreased 36 % to $1.2 million from $1.9 million this time last year. The company’s net loss for the second quarter was $36.9 million, significantly more than the $6.9 million loss of 12 months ago. These figures don’t paint a very bright picture, though Workhorse it did reiterate that it recently secured $25 million in financing from a private group of institutional investors, which will be funneled towards general working capital and research and development. The truckmacker and GM announced in May that discussions were ongoing for the latter purchasing the car manufacturer’s plant in Lordstown, Ohio. At the time, The General said that, upon final agreement with all parties, including the United Auto Workers union, work could soon begin to prepare the facility for production. Workhorse intends on initially building a commercial electric pickup at the plant, though the price it will have to pay to acquire it is still unknown. +++ 

+++ Old rivalries in the world of car making are falling away as companies start to WORK TOGETHER to bring down the enormous cost of developing electric cars and autonomy. In June, Toyota said it was hooking up with Subaru to develop a new electric platform that will first spawn an SUV. Mazda has since said it’s joining the programme, while Toyota is also working with Suzuki and Daihatsu on a smaller electric car platform. Ford and Volkswagen’s wide-reaching deal is also one of the most extensive and potentially fruitful collaborations yet. BMW and Jaguar Land Rover (JLR), meanwhile, are working together on electric drive units to take advantage of economies of scale. It goes on. BMW and Daimler are collaborating on autonomous driving technology and have also pooled their mobility services, such as car sharing. Volkswagen and Ford have joined forces on autonomous car development via Ford’s Argo AI operation, while Honda has linked with General Motors with a similar aim to make autonomous driving a reality. Partnerships are nothing new, but the rush to link up now is to spread the risk of investing billions into technology like electric cars when demand is still uncertain. “Makers are realising they’re having to get serious about EVs, but EVs are a difficult business case”, said Tim Urquhart, principal analyst at IHS Markit. “You have to find alliances to generate economies of scale”. The “massive investment” needed in an EV platform required a new way of thinking, Toyota said in a statement announcing development of its e-TNGA architecture. Both it and Subaru “choose a business model that goes beyond convention”, Toyota said. Car makers have a choice. Spend a fortune on a dedicated EV platform that reduces complexity, offers advantages like extra cabin space and might save money later. Or develop a platform that saves money by being flexible enough to incorporate all drivetrains but is ultimately compromised. The Volkswagen Group is gambling that the expense of creating the MEB electric car platform will be recouped by supplier and manufacturing efficiencies, offsetting the huge cost of the batteries. That gamble relies on the Volkswagen Group achieving its predicted annual sales of over a million via its brands in only a few years. “The risks attached to this are huge, in our view”, Max Warburton, an analyst at Bernstein, wrote in a recent report. “VW has the potential to lose significant amounts of money”. Having Ford as a customer will cut those risks. Even better is to split those risks with a partner, as Toyota is doing with Subaru and Mazda. Would the customer even notice all these shared parts? Unlikely, reckons Urquhart. “People are increasingly not going to care what’s underneath any more”, he said. “Exterior style, the latest infotainment, self-driving technology: all these will be more important to them”, he said. If car makers are not going to end up as merely hardware providers to Google, Apple or whatever tech company comes along next to transform the driving experience, they need all the money they can get to develop this tech themselves. “All the car makers are investing in CASE (connected, autonomous, shared, electric) and it’s going to take a lot of money out of the business until they can generate profits, so right now they are trying to further outsource to preserve cash”, said Francisco Riberas, CEO of chassis and body parts supplier Gestamp. Despite the aggressive moves to spread the financial burden, buyers will have to brace themselves to pay more for cars. As the PSA Group’s CEO, Carlos Tavares, put it earlier this year: “Everybody needs to realise that clean mobility is like organic food: it’s more expensive”. +++

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