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+++ BMW will not develop a successor to its i3, the automaker’s marketing director, Pieter Nota, told. The i3 will be phased out slowly because BMW will focus on battery and plug-in technology on its other models, while also launching new full EVs. “There is no concrete plan for an i3 successor. We are now bringing electrification more into the mainstream”, Nota said. BMW wants to market its best-selling models as plug-in hybrids so that they can run on emissions-free electric power in the city, but also over longer distances. BMW is also planning to sell 13 full-electric vehicles by 2023. The i3 came onto the market in 2013 and is due to be renewed next year. It was BMW’s first purely battery-powered car. The aim was to test customers’ response to full-electric vehicles without compromising sales of the automaker’s sedans. BMW sold 157,129 units of the i3 in the first 8 months. +++

+++ CHINA sales at the Volkswagen Group, the country’s largest carmaker, dipped in August after a mild rebound the previous 2 months. Yet the German group continues to outperform General Motors, the second-largest car manufacturer, as the Detroit automaker posted another double-digit decline in volume. Volkswagen said its China group sales decreased 3.2 % to 341,100 in August. Audi deliveries gained 2 % to 58,580. Sales at the German auto giant’s other brands haven’t been disclosed. GM only discloses quarterly China sales. But according to local partner SAIC Motor, combined deliveries at its 2 joint ventures with GM slipped 14 % to 260,770 last month. August sales at SAIC-GM dropped 16 % to 133,770 while deliveries at SAIC-GM-Wuling declined 12 % to 127,000. SAIC-GM produces and markets cars for the Cadillac, Buick and Chevrolet brands while SAIC-GM-Wuling builds and distributes light vehicles for the Baojun entry-level marque and Wuling mini buses. Through August, Volkswagen Group’s China sales dropped 3.2 % to 2,571,100 cars, while aggregate deliveries at GM’s 2 partnerships slumped 20 % to 2,059,628. During the period, sales at SAIC-GM fell 14 % to 1,079,416 units while deliveries at SAIC-GM-Wuling plunged 26 % to 980,212 cars. +++

+++ Europe’s automakers arrived at the Frankfurt auto show armed with a raft of new ELECTRIC VEHICLE and a message to deliver to policymakers: These cars will not solve the climate crisis alone. Authorized to speak on behalf of his colleagues and competitors, PSA Group boss Carlos Tavares told reporters the industry should no longer be criticized for inaction now that consumers will be able to find a zero-emissions model in showrooms that suits their needs. The compact Opel Corsa-e and the sleek Porsche Taycan celebrated their public debut at the show, while Volkswagen added the cherry on top with its vaunted ID.3, the first in a family of affordable, mass-market EVs that are designed to be sold in the millions. But auto manufacturers used the show to make clear that product availability is only one factor, and customers must now complete the environmental equation by switching to the new technology. “Having electric vehicles in the dealerships is not going to be enough”, Tavares warned, calling on a coordinated societywide approach that includes a major ramp-up of charging infrastructure and meaningful financial incentives. “Freedom of mobility is something fundamental to our democracy”, he said. Thus far, the industry has had trouble moving the needle of change. High sticker prices, limited battery range and a sketchy charging infrastructure have conspired to hold down EV demand. Sales volume barely registered a blip in the first half of this year, with battery-electric vehicles accounting for just 1.5 % of the European Union’s car market. Plug-in hybrid electric vehicles achieved roughly half that. Social critics chide the transportation sector for not making any meaningful progress over the past two decades to reduce its absolute CO2 footprint. The shift in demand from more carbon-friendly diesels to gasoline cars in 2017, along with a rising market share of SUVs, reversed a decade-long trend of falling new-car CO2 emissions. Last year, industrywide emissions actually rose by 2 grams, to 120.4 gram per kilometer. In response, the EU Parliament mandated in April a drastic 37.5 % decrease in new-car emissions by 2030. That means the industry must now slash its emissions level to roughly 60 g/km on average or face steep noncompliance fines. Had the industry remained stuck at its 2018 levels through 2021, it would be liable for combined fines totaling nearly $40 billion. Opel boss Michael Lohscheller implied this was a reason behind General Motors’ August 2017 sale of the Opel business to France’s PSA Group when he admitted 3 months later that his company was on track to miss its target with “potentially dramatic consequences”. But now April’s EU legislation poses an entirely new dilemma. Volkswagen Group boss Herbert Diess warned that his entry model, the Up, has reached the point where it can no longer economically remain CO2-compliant by 2025. The only solution, the Austrian executive emphasized here last week, is to launch battery-electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). Diess even asked for understanding from the leader of an environmental advocacy group who was protesting at the show that VW continues to live from its conventional car business. “We plan to electrify 50 % of our fleet in the next 10 years, and that is a huge challenge, so it is unfair to say it’s just a fig leaf”, the Volkswagen boss said when accused by the advocacy group of “absolute greenwashing”. In fact, the ambitious new EU fleet targets mean Diess must now factor in a vehicle’s CO2 impact when calculating the profit potential of a new model. A high-margin vehicle that is a significant CO2 emitter will end up being substantially less lucrative as a result. A study published last week by European automaker association ACEA suggested a very strong correlation between economic prosperity and uptake rates for battery-powered cars. Norway, a non-EU state and the electric vehicle poster child with its 45 % EV market share, boasts a per capita GDP that is twice as high as the bloc’s average, for example. But to get where Europe wants to be, with mass acceptance of EVs, sizable infrastructure investment will still be necessary, automakers point out. The companies estimate they will need 2.8 million charging points at least by 2030. At the moment, there are not even 145,000 available across the EU. And three-quarters of them are located in just 4 of the 28 EU countries: Germany, the United Kingdom, France and the Netherlands. Almost all member states with fewer than one charging point per 100 kilometers of roads have a share of BEVs and PHEVs that is less than 1 %, they say. Public incentives also will be needed. Mercedes-Benz sales chief Britta Seeger has argued in favor of imposing fees on emissions-intensive vehicles, such as luxury sedans and SUVs, to raise revenue to help finance the purchase of EVs. She believes a policy of taxing one segment of products to foster support for another segment would “help get people enthusiastic about making a switch”. The heat continues to be turned up on the European industry. The EU is now preparing legislation that will commit the bloc to a goal of carbon neutrality by 2050. Incoming EU Commission president Ursula von der Leyen has made a “European Green Deal” a cornerstone of her agenda, including its plan for a carbon tax on imports. “There is no alternative,” said Hans Michel Piëch, a nonexecutive director on the Volkswagen Group board and large shareholder, referring to the industry’s electrification. “Neither for us nor for our competitors”. +++ 

+++ Negotiators for GENERAL MOTORS and the United Auto Workers are continuing talks to resolve a strike that shut down the automaker’s highly profitable U.S. operations. The UAW launched the first company-wide strike at GM in 12 years, saying negotiations toward a new national agreement covering about 48,000 hourly workers had hit an impasse. Workers took to picket lines outside GM factories, waving signs declaring “UAW On Strike”. During the walkout, UAW members will get $250 a week from the union’s strike fund. The UAW confirmed that talks had resumed and GM said the talks were continuing more than 5 hours later. Lost production could cost GM up to $50 million a day in pretax profit, RBC Capital Markets estimated in a note. GM could make up the lost production with overtime work after a settlement. Moody’s Investors Service said in a note the critical issue is whether GM will “secure the operating flexibility necessary” to address challenges including higher hourly costs than foreign automakers, a potential severe downturn in U.S. auto sales and the need for automakers “to begin transitioning to the production of more electric vehicles that will likely require fewer workers to assemble”. Company and union officials say there are a number of issues to be resolved and that no immediate resolution is expected. Contract talks with GM have been overshadowed by a mushrooming U.S. federal corruption probe into top union officials. The investigation has raised questions about UAW president Gary Jones, who a source said was an unnamed official cited in a searing federal complaint last week detailing alleged embezzlement by union leaders. The strike quickly became a political issue, as both U.S. President Donald Trump and Democrats who want to unseat him in 2020 weighed in. Trump and Democrats see the votes of UAW members in the Midwest as critical to victory. Trump told reporters he hoped the strike was a short one after taking to Twitter to urge the UAW and GM to “get together and make a deal!” GM spokesman Tony Cervone said the automaker “couldn’t agree more” with Trump’s call. GM Chief Executive Mary Barra met with Trump ahead of the strike deadline. Trump has attacked GM for Barra’s decision to stop building small cars at an assembly plant in Lordstown, Ohio. The state is pivotal to Trump’s re-election. The union wants to stop GM from closing Lordstown and an assembly plant in Detroit. The UAW has said workers deserve higher pay after years of record profits for GM in North America. GM argues the plant shutdowns are necessary responses to market shifts, and that UAW wages and benefits are expensive compared with competing non-union auto plants in southern U.S. states. GM initially insisted the UAW dramatically boost its share of healthcare costs but largely dropped that demand, union and company officials said. In a statement, GM outlined its offer to the union, saying the package included solutions for the Michigan and Ohio assembly plants currently lacking products, $7 billion in U.S. investment and a signing bonus of $8,000 per worker. A person familiar with GM’s offer said the company could produce a future electric pickup truck at the Detroit-Hamtramck plant that now has no future assignment. GM could also build an electric vehicle battery plant in Lordstown, and go through with the proposed sale of the plant to a group affiliated with electric vehicle start-up Workhorse Group. A new battery plant could give some UAW workers at Lordstown the chance to remain with GM. The UAW’s top negotiator at GM said the company’s proposal came just two hours before the strike deadline, and laid blame for the strike on the automaker. “Had we received this proposal earlier in the process, it may have been possible to reach a tentative agreement and avoid a strike”, UAW vice president Terry Dittes wrote in a letter to GM. A strike will very quickly shut down GM’s operations across North America and could hurt the broader U.S. economy. Prolonged industrial action would also cause hardship for GM hourly workers on greatly reduced strike pay. Suppliers of parts and services to GM’s U.S. operations could also suffer from a long shutdown, as could dealers and consumers. GM’s workers last went out on a brief 3-day strike in 2007 during contract talks. A more painful strike occurred in Flint, Michigan, in 1998, lasting 54 days and costing the No. 1 U.S. automaker more than $2 billion. The UAW has framed the plant closures as a betrayal of workers who made concessions in 2009 to help GM through its government-led bankruptcy. Some of those concessions are now matters of disagreement. The union wants to limit GM’s use of temporary workers in its plants, and narrow the pay gap between new hires and veteran workers. The strike will test both the union and GM at a time when the U.S. auto industry is facing slowing sales and rising costs associated with launching electric vehicles and curbing emissions. The impact of the strike on dealers and car shoppers will be delayed. GM started off the strike with healthy levels of inventory of some its key, high-margin vehicles. A prolonged strike could delay the planned introduction next spring of GM’s redesigned full-size SUVs in Arlington, Texas. Among the company’s most profitable vehicles, they include the Cadillac Escalade, the GMC Yukon and the Chevrolet Tahoe and Suburban. +++

+++ The price of batteries for electric cars won’t come down for up to 5 years, according to JAGUAR LAND ROVER boss Ralf Speth. As a result, he wants to see charging infrastructure drastically improve to allow drivers to feel more confident. Should that happen, car makers won’t have to fit batteries as large as they currently do to their electric cars, bringing the costs down as a result because the battery is often the most expensive component. “I hope the infrastructure is fixed”, Speth said. “The price of electric cars is still too high, as we need to do a big range. So, you have a big battery that is needed, as you can’t charge the car. If you can charge, we can make the battery smaller and bring the cost down”. He continued: “There will be no reduced cost for 3 to 5 years. We need a more dense charging network, more quality and more quantity, that are more standardised and provide faster charging. You clearly need a good spread across the country, not just in London”. Speth is convinced that electric cars are the future and that charging infrastructure will catch up as more are made by more car companies. “With more demand for chargers, it will come”, he said. “It will come later, but it will come”. Jaguar Land Rover’s first production EV, the Jaguar I-Pace, officially manages up to 470 kilometres on a single charge from a 90 kWh battery pack. The firm has only recently gone public with its next EV, the all-new XJ luxury saloon, while plans for further electric Jaguar and Land Rover models are believed to be well advanced. +++

+++ MAZDA may pride itself on internal-combustion prowess, but it will soon unveil a full-electric vehicle it plans to start selling next year. The EV will debut next month at the Tokyo auto show, spokesman Yoshikazu Nagai confirmed. Mazda has prepared prototypes with the powertrain for test drives. In the prototypes, the EV architecture is camouflaged under the sheet metal of the brand’s new CX-30. But the show car taking the stage in Tokyo will be a “brand new model”, Mazda says, though the company isn’t saying what shape that vehicle will take. For the prototype, the electric drivetrain gets a 35.5 kWh battery that delivers 143 hp and 264 Nm. Mazda wants to introduce the EV next year as part of its plan to gradually electrify the lineup. The company engineered the vehicle internally, and the project is separate from the joint development work Mazda is doing as part of a Toyota-led electric vehicle consortium. Formed in 2017, that group includes Subaru, Suzuki and Toyota supplier Denso. The upcoming EV will be available in 2 forms: a full electric and a range extender. The full EV will target markets such as Japan, Europe and China, where an EV can get by with a shorter range. But the range extender is seen as necessary for North America and other markets where daily drives are much longer. The range extender is expected to be powered by a small rotary engine. +++

+++ Mitsubishi’s former head of product strategy, Vincent Cobee, is joining the PSA GROUP , a source close to the matter said. Cobee will join PSA in a sales and marketing post, the source said. Cobee left Mitsubishi in April as part of a wider shuffle among the top ranks at Nissan and Mitsubishi in the wake of the arrest of Carlos Ghosn in November. The French national had previously worked at Nissan where he was in charge of global business for Datsun, Nissan’s rebooted emerging market brand. +++ 

+++ Here’s an unpopular opinion that’s hardly being voiced but needs to be heard amid the seemingly ceaseless swirl of scandal engulfing beleaguered Nissan. Despite being forced to resign under a cloud of controversy about his own compensation, departing CEO Hiroto SAIKAWA is not the villainous hypocrite many observers paint him out to be. From the moment it was revealed Saikawa improperly netted some $440,000 in stock-linked incentives, critics galore tried to paint him with the same brush as his former boss, Carlos Ghosn. But there are important differences between Saikawa’s transgressions and Ghosn’s, if you believe the official narratives proffered by Nissan. Both men benefited from a misuse of an executive incentive scheme called share appreciation rights, but that’s where the similarities end. Saikawa did not intentionally try to game the system, according to Nissan, and has said he will pay back the excess gains. All told, he pocketed hundreds of thousands of dollars. But Ghosn allegedly manipulated the system on purpose to reap bigger payouts and then tried to cover it up. He has not yet talked about returning any money. And Ghosn’s harvest was huge: 140 million yen ($1.3 million) over what he was supposed to get, according to Nissan’s audit. But obsessing over incentive pay misses the point. The share appreciation rights have nothing to do with Ghosn’s criminal case. Why? Because even Nissan concedes that abusing the in-house system is not illegal, just improper. Indeed, Ghosn wasn’t indicted for abusing the share-linked incentive pay. He was indicted for what prosecutors deem actual violations of the law. Those charges include alleged falsification of company financial filings and breaches of trust for inflicting damage on Nissan for personal gain. The amount of money involved (millions of dollars) also dwarfs that at stake the share rights. No one has accused Saikawa of anything even approaching the scope of these alleged misdeeds. Should Saikawa step down? Yes, to take responsibility for not being able to stop Ghosn’s alleged abuses in the first place and for breaking Nissan’s own rules on the share-linked incentives. He overstayed his welcome, and his position as an effective leader was increasingly untenable. His departure helps close an ugly chapter in Nissan history and paves the way to rebirth. But is Saikawa’s downfall proof that Nissan is still mired in a culture of corruption, as critics say? Ironically, it may show just the opposite. Saikawa set up a new independent audit committee as part of sweeping corporate governance reforms to improve transparency and accountability. That the committee Saikawa set up was the committee taking Saikawa down is solid evidence that Saikawa’s hard-fought reforms are actually beginning to work. +++

+++ President Donald TRUMP ‘s decision to delay imposing higher tariffs on Chinese goods last week did little to ease the anxiety of automaker executives who fear escalating costs from an ongoing trade war. Amid signs that the gears in the global economy are grinding to a halt, executives said higher import duties could trigger corresponding price hikes, affect shift plans at factories and potentially force production of some vehicles to move to different markets. BMW’s finance chief, Nicholas Peter, said he expected headwinds next year should fresh tariffs be imposed. He warned some volume in its U.S. plant in Spartanburg, South Carolina, could be lost. “We moved some production of the X3 to China last year, where we’ll soon start with the X2 as well, and we’re considering localizing a further model in China”, Peter told reporters at the Frankfurt auto show. “Is an X5 on the list of possible candidates? Sure”. BMW could also be affected in exporting from its plant in Shenyang, China. BMW is currently preparing to start production of its first electric SUV, the iX3, due to launch in 2020. It will be built exclusively in China, the world’s largest EV market, and shipped around the world. Ola Källenius, attending the Frankfurt show for the first time as CEO of Mercedes-Benz maker Daimler, also raised concerns. “We’re a strong believer that the global open economy has been a creator of wealth for companies like ours”, Källenius told reporters. The prospect of further tariff hikes, “if indeed those come into fruition, will affect our business, which we are evaluating right now”. Trump said that he would delay the imposition of higher tariffs on $250 billion worth of Chinese goods by two weeks to Oct. 15 at the request of Beijing, signaling a possible de-escalation. Negotiators are due to meet in Washington in coming weeks to push forward talks to end the trade war. There’s little sign that substantive progress is being made on the 2 countries’ differences. The next day, the European Central Bank cited a “rising threat of protectionism” and “prevailing weakness of international trade” affecting manufacturers behind its decision to stimulate the euro area’s flagging economy by restarting large-scale asset purchases that ended in December and increasing the penalties levied on lenders’ reserves at the bank to 0.5 percent of their deposits. “Each time measures are taken to increase tariffs, it is of concern to us; each time nontariff barriers are put in place, it is a problem for us”, said Erik Jonnaert, secretary general of Europe’s automaker association ACEA. “We want to have a level playing field, an open market”. Even if Trump backs off, the damage has been done, said Stephan Wöllenstein, operating chief of Volkswagen Group in China. He warned he no longer expected an improvement in the market in the second half. Light-vehicle sales in China fell 14 % through June. “At the end of last year, it looked like things were moving in the right direction”, said Wöllenstein. “Frankly, I am now more cautious. 12 months later the whole global economy has darkened and officials in the government here are saying they do not really expect a fundamental change ahead of the election year”. Chinese tariffs are just one trade risk. One senior industry lobbyist warned that Trump could also pull the trigger on steep tariffs for vehicles imported from the EU come November, just when the new EU Commission is slated to take over. “The prerequisites are there with the Wilbur Ross report”, he said, referring to the U.S. Commerce Department’s recommendation that the U.S. auto industry needs protection from European auto imports on national security grounds. Nonetheless, the lobbyist, who didn’t want to be named, believes Trump has bigger fish to fry. “As a target for tariffs, EU cars are a poor choice”, he said, explaining that the bulk of European engineered cars sold in the U.S. are also built there. “But as a symbol, they are very powerful”. About €37.5 billion worth of passenger cars were exported from the EU in 2018, according to ACEA. “This is leverage he wants to use in order to sell more agricultural goods”, the lobbyist said. Food and safety standards have led to the banning in Europe of U.S. products such as chicken that are chlorine-washed to kill bacteria. Nonetheless, the EU recently agreed to grant greater access to hormone-free American beef. Asked whether the insider’s view was an accurate assessment, ACEA’s Jonnaert replied: “I can confirm that”. The U.S. administration is not interested in auto tariffs, he contended, since it realizes that even if there was progress in a mutual elimination in tariffs, it wouldn’t improve its trade deficit given that American cars are typically ill-suited for European roads. “The U.S. is not interested in exporting”, Jonnaert said. “It’s a way to get more concessions on agriculture”. +++

+++ The VOLKSWAGEN brand’s multibillion-dollar electric makeover began at the Frankfurt auto show last week not with a roar but with a new 5-note signature sound and a soothing female voice softly invoking the German brand’s name. The new piece of electronic sound will be part of each of the millions of new battery electric vehicles Volkswagen intends to build and sell globally, part of its $50 billion global onslaught into electric vehicles. The sound, and a more simplified brand logo that also debuted last week, will adorn each coming battery electric vehicle: from the ID.3 that premiered in Germany last week to the electric compact crossover that will go on sale in Europe and the United States next year. A source with knowledge of the company’s plans told last week that the crossover will be called the ID.4X. The smaller ID.3 will go into production this year and will go on sale in Europe early next year at a base price below €30,000 in Germany, Volkswagen executives said here. It will not be sold in the United States. Volkswagen is basing its electric makeover on a simple mantra: bring what it calls carbon-neutral mobility to the global mass market at an affordable (yet still profitable) price. To do so, it’s relying heavily on a modular EV toolkit developed in-house called MEB, which it says is flexible enough to cover a wide range of vehicle sizes and deliver each at a scale that allows them to be sold profitably. But speaking to reporters last week at the show, Volkswagen Group CEO Herbert Diess acknowledged that the main components of the automaker’s huge electric push (batteries) will continue to present a challenge to the profitability of the company’s plan. “Batteries will remain expensive and in short supply for the foreseeable future”, Diess said. In the U.S., Volkswagen’s electric push won’t begin until late 2020, when U.S. dealers are set to get their first ID.4X crossovers imported from Germany. A new $800 million EV assembly line in Chattanooga is set to break ground soon, but the first sales-ready ID.4Xs are not due off that line until 2022. The ID.4X is expected to share a number of the ID.3’s technological features, including its interactive head-up display that, among other things, overlays navigational direction arrows onto the windshield to signal upcoming turns. VW plans to launch a product family of battery electric vehicles worldwide using the ID brand and the MEB global modular electric platform. The automaker says ID is an acronym for Intelligent Design. Volkswagen Group’s EV onslaught began this year with the Audi e-tron and is expected to encompass some 70 planned EV models by 2028 across its brands, Diess said. The automaker, still recovering from its global diesel emissions scandal, has pledged to be carbon dioxide-neutral globally by 2050. “In 10 years in Europe and China, every other Volkswagen car will be electric”, Diess pledged though an interpreter. “For the environment, there is no alternative”. +++

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