+++ In CHINA , the electric vehicles of traditional overseas carmakers are struggling to gain the same level of market penetration as their newer and domestic competitors. The demands of Chinese customers vary from those in Europe or the United States as there is a much stronger emphasis on connectivity, smart functions, operating systems and driver assistance, analysts said. Volkswagen is the most popular carbrand in China, with a roughly 20 percent market share. And it was one of the first international carmakers to offer electric vehicles in the country. Its first 2 models based on the costly MEB platform started to be delivered in late March, another 2 larger ones followed in the middle of the year, and number 5 was launched last week to further enrich the offerings. However, Volkswagen’s target of selling 80.000-100.000 electric vehicles in China this year is falling way short. By the end of September, the German car company sold only 30.000 electric vehicles in China. The automotive giant is lagging behind China’s young startups, not to mention Tesla and BYD, who each sell over 30.000 cars a month and around 3 million new energy vehicles a year in China. “Electric cars designed and built with the idea of gasoline cars, which means they are good in every aspect but excellent in none, will not sell in this age”, said Yale Zhang, managing director of consulting firm Automotive Foresight. Zhang said it is especially true in the Chinese market, where dozens of startups are vying to present models that boast futuristic features including big screens, facial recognition, the latest in lidar and powerful computers. He said that also explains why Volkswagen’s ID series are popular in Europe but not in China. “European buyers are usually older, more traditional, and they have better brand loyalty. But here, consumers prize new technology when it comes to electric cars”, Zhang said. Volkswagen is not alone. What Chinese consumers complain about most over electric cars from major international brands from Chevrolet to Hyundai is poor connectivity and difficult-to-use navigation systems, although they agree that their models have good handling. Fu Chunyu, a 30-year-old office worker in Beijing, said she recently test drove a Hyundai but finally chose a local GAC Aion, admitting that what won her over was a better onboard operating system and its driving-assist functions. Cui Dongshu, secretary-general of the China Passenger Car Association, said international volume brands’ failure to offer smart and connectivity features on par with those provided by local ones are hurting their electric car sales. The association’s statistics show that 350.000 electric cars and plug-in hybrids were sold in September, up 184 percent year-on-year. For Chinese carmakers, such vehicles accounted for 33 percent of their total sales, but for international joint ventures the figure was just 3 percent. Cui said the situation may change in the coming years with international brands coming to realize the problem and begin tailoring electric models to appeal more to local customers, whose standards for electric cars have been set by Tesla and startups like Nio. Besides customers, investors are refusing to value conventional carmakers the same way as startups too. Last week, Volvo set the price for its initial public offering at 53 Swedish kronor ($6.18) per share, the lower end of its target of up to 68 kronor. The offering would value Volvo at just over $18 billion, much less than the $23 billion valuation that the company had hoped to achieve. Volvo seeks to sell only electric vehicles by the end of this decade and build a battery plant in Europe. Potential new investors refused to value Volvo’s business using the same math as used for new EV makers, saying Volvo’s transformation strategy was bold but still unproven. Instead, they indicated to Volvo that they were willing to value the company based on the lower multiples that traditional carmakers attract, one person familiar with the discussions said. In comparison, New York-traded Nio is valued at $66.8 billion, New York-traded Xpeng $39.5 billion, and Nasdaq-listed Li Auto $35.7 billion, although they are much younger and sell fewer cars. And Tesla, which is expected to sell 1 million vehicles this year, is now the first-ever carmaker with a valuation of over $1 trillion. +++
+++ New Energy Vehicles from CHINA are gaining more footing in overseas markets, including Europe, where demand for green transportation has been rapidly growing. The popularity of Chinese electric vehicles in other markets, which have fitted into the drive to reduce greenhouse emissions, symbolizes their competitiveness arising from efforts to develop green and smart technology. Earlier this year, NIO, a Chinese EV designer and manufacturer, opened a showroom in Oslo, Norway, the first of its kind in Europe. Green technology from China helps develop a green way forward in Norway, said Marius Hayler, CEO of NIO Norway. NIO is among a long list of Chinese brands marketing EVs in Europe, which also includes rising startup XPeng, iconic sedan brand Hongqi, and BYD (Build Your Dreams), a Chinese automaker famous for its electric bus fleet in Europe. In the first half of 2021, sales of new energy vehicles by MG and Maxus, 2 brands of Shanghai-based SAIC Motor, a major Chinese auto manufacturer, exceeded 12.000 in European countries, including Britain, Norway, the Netherlands and Denmark. “From the very beginning, the overseas business has been included in our development plan”, said Lan Qingsong, vice president of SAIC Motor. “After 10 years of operation, our products and services have entered more than 50 countries and regions”. Data from the Ministry of Commerce of China showed new energy vehicles have driven the growth of China’s auto exports, which increased 102.5 percent year-on-year from January to July. “Only when Chinese auto companies enter the markets of developed countries can they truly participate in international competition”, said Cui Dongshu, secretary-general of the China Passenger Car Association. The rapid rise of China’s auto exports in 2021, according to Cui, reflects the significant increase in the global competitiveness of China’s auto industry, although there is still huge room for export growth. Chinese EV manufacturers are charging into the global auto market with their latest products and new technology, including battery swapping. With just one tap on a display, NIO cars can be automatically parked into a battery-swap station and it takes only three minutes to swap a fully charged battery. NIO said it aims to install 20 battery-swap stations in Norway’s 5 largest cities and on some of the country’s major roads. Zhang Hui, vice-president of NIO Europe, said the company contributes to sustainable development in China and Europe through a unique technological base, adding their smart and digital experience edge and cloud-based upgraded hardware features are NIO’s technical advantages. A number of Chinese technology giants have recently jumped into the EV market, bringing more competition and innovation to the auto industry. Xiaomi, a Chinese electronics manufacturer, unveiled in September an EV subsidiary, with a starting capital of 10 billion yuan ($1.57 billion). Guangzhou-based GAC Group announced earlier this year a joint project with Chinese tech giant Huawei to develop a “smart SUV”. Artificial intelligence has been a major feature of many Chinese EVs. With tech companies entering the industry, competition surrounding AI is expected to be more intense. +++
+++ HYUNDAI is expected to start production of hydrogen vehicles’ fuel cell systems in China from late 2022, with the annual capacity to reach 6.500 units, said a senior executive at the South Korean carmaker. Oh Seung-chan, head of the fuel cell plant in Guangdong province, said in a recent interview that cities including Beijing, Shanghai and Guangzhou in Guangdong are aiming to have around 30.000 fuel cell vehicles on their roads in 4 years. This is part of China’s ambitious initiative to promote clean energy vehicles. The nation is expected to scale up the ratio of non-fossil fuel vehicles sold in the country to 40 percent by 2030, according to the latest action plan unveiled last week. Oh said fuel cell systems to be produced at the Guangzhou plant will be used in vehicles from Hyundai and other carmakers as well. He said the carmaker has been in talks with local Chinese companies in terms of fuel cell systems. In the Chinese market, Hyundai will first start with hydrogen heavy trucks and then move into passenger vehicles, said Oh. Hyundai started to develop its first fuel cell vehicle in 1998. It unveiled the Tucson (iX35) FCEV in 2013. The carmaker launched the Nexo in 2018, and the world’s first heavy-duty fuel cell truck, XCient Fuel Cell, in 2020. Representatives at Hyundai China said the company will showcase its latest hydrogen products at this year’s China International Import Expo that is scheduled to kick off later this week. In September, Hyundai said it plans to introduce fuel cell systems into all its commercial vehicle models by 2028 and expects fuel cell vehicles to have price tags similar to battery electric vehicles around 2030. “We want to offer practical solutions for the sustainable development of humanity and with these breakthroughs, we aim to help foster a worldwide hydrogen society by 2040”, said Hyundai Chairman Euisun Chung. At the same event, it showcased two third-generation fuel cell stacks, which are crucial components of hydrogen vehicles. The 100 kW stack is 30 percent smaller than the previous generation product, while the 200 kW version, which is designed for commercial vehicles, is similar in size to the one used in the Nexo but its power output has doubled. The carmaker expects them to extend their life cycle by 50 percent to 100 percent compared with the generation launched in 2018, which can work for 5.000 hours and enable vehicles to run for 160.000 kilometers. Hyundai said the stacks’ prices will be slashed as well, saying that they will be the key factor to achieving cost parity of fuel cell vehicles with battery electric cars by 2030. +++
+++ Cars already know how to park themselves, warn drowsy drivers, steer back into the right lanes and propose map routes to destinations. The cars MAZDA has in the works for next year in Japan know when drivers have a stroke or heart attack. By 2025, the cars will even know when drivers are about to have a sudden health problem and warn them, according to the Japanese automaker. What’s involved are data from cameras inside the car, without resorting to laser sensors or other more obtrusive technology. And it’s going to be offered in affordable models, not just luxury vehicles. The technology holds promise for one of the most advanced aging societies in the world. Mazda told reporters recently it has been working with medical experts, including Tsukuba University Hospital, researching the collected image data to figure out what a healthy driver looks like, as opposed to an incapacitated driver, suddenly slumped forward over the steering wheel. Once recognizing a problem, Co-Pilot Concept, which has yet to have an official name, will bring that car to a stop in a safe spot, such as the curb of the road, as quickly as possible. The car will be honking, with blinker and hazard lights flashing, according to Mazda, although the exact warning signals are still undecided. An emergency call to the ambulance and police will also get relayed. Other major automakers, including Volkswagen and Toyota, are working on similar technology. Mazda plans to offer the technology in Europe after Japan. Mazda wants to wait and see before offering it in the U.S., because it believes questions remain about their social acceptance, although similar systems that stop vehicles are already being offered by rivals. As for privacy concerns, the personal data does not leave the car, according to Mazda. Takahiro Tochioka, the engineer in charge, said Mazda is working on ways to predict a health problem that may be coming even if the driver may not be conscious of it. What the car will be looking for are the ways people focus their vision, the swaying of their heads, slight aberrations in driving habits and other subtle changes, he said. “And it will warn drivers even before actual symptoms appear”, he told reporters proudly. “But understanding and cooperation from the drivers around that car is crucial for this technology to work”. Mazda is hoping the Japanese public will see a driver in distress and help them, since an assumption of widespread public goodwill is characteristic of Japan. The technology will empower people to keep driving through their lifetime, and will help reassure families and friends not to be worried, Tochioka said. Offering Co-Pilot will also allow Mazda to get feedback from real-life users, he said. +++
+++ SKODA is readying the Scala for its facelift. The updated family hatchback will go on sale in 2023, sporting a redesigned front-end and spec changes to keep it competitive with the Volkswagen Golf and the upcoming replacement for the Opel Astra. Styling updates seem to be few and far between and look limited to a reshaped front bumper with new vertical intakes, new-look LED headlights and a redesigned rear end with updated taillights. I’m expecting changes to be minimal on the inside, with the current car’s 8 inch and 9.2 inch infotainment systems being carried forward to the new model. However, the entry-level car’s 6.5 inch screen could be dropped from the line-up. We can expect a slightly reshaped dashboard, but the instruments and steering wheel look identical to the current car. It’s likely Skoda will also update the upholstery to keep the cabin looking fresh. The engine line-up won’t change over the current model. The Scala is offered with a range of 1.0-litre and 1.5-litre petrol engines, all of which now power the all-new Fabia supermini too, so it seems likely that Skoda isn’t planning to kill the engines off any time soon. Like the Fabia, as the Scala sits on the brand’s MQB A0 platform, hybrid drive also isn’t expected. The cheapest Scala will feature a 95 hp 1.0-litre 3-cylinder petrol engine, above which there’ll be a 115 hp version of the same unit. At the top of the line-up, there’ll be a 150 hp 1.5-litre 4-cylinder petrol option. +++
+++ TOYOTA has come joint last in a Greenpeace ranking of carbon emission efforts by auto firms, according to a list published during the COP26 climate summit. The campaign group gave Toyota and US-European firm Stellantis “F minus minus” grades for decarbonization efforts including phasing out engines that burn planet-warming fossil fuels in favor of electric vehicles. Minimizing carbon emissions in the supply chain and reusing or developing greener technology for car batteries were among the factors examined in the report that compared 10 major automakers. General Motors received the least damning rating with a C- grade, followed by a D for Volkswagen and D- for Renault. All the other firms, including Ford, Honda and Hyundai-Kia, were rated F plus or minus. “Toyota, the world’s number-one car seller last year, is the most stubborn in holding onto internal combustion engines”, said Ada Kong, senior project manager of the auto industry campaign at Greenpeace East Asia. The Japanese giant is also “most vocal in such advocacy, domestically and abroad”, Kong said in a statement. Toyota, which releases its earnings later Thursday, said in September it would invest 1.5 trillion yen ($13.2 billion) in batteries for electric and hybrid cars by 2030. It declined to comment ahead of the publication of the emissions report, in which Greenpeace urged automakers to embrace fully-electric vehicles. “Some Japanese companies, such as Toyota, are confident that hybrid technology is an effective alternative to the internal combustion engine”, the report said. “However, the real-world emissions reduction and fuel economy of hybrid vehicles are not as good as expected”, it said, noting that plug-in hybrids only reduce emissions by an estimated one-third, compared with petrol or diesel cars. The assessment came as world leaders met in Glasgow this week as part of the COP26 climate conference, billed as vital for the continued viability of the 2015 Paris Agreement, which set a goal of limiting global warming to 1.5 degrees Celsius. Greenpeace said none of the 10 auto firms had announced plans to phase out combustion engines before 2035, which would make the 1.5-degree goal “almost impossible”. +++
+++ TOYOTA raised its profit outlook helped by favorable currency rates but warned that the global semiconductor shortage still posed risks to its full-year production plans. Like other global automakers, Toyota has been forced to cut output due to the chip shortage and lockdown measures that have slowed component production at factories in Malaysia and Vietnam, even as vehicle demand around the world rebounds from a pandemic slump. It has already cut its production target for the year to end-March once to 9 million vehicles and last month slashed November output plans by as many as 150.000 vehicles. “Even if we operate our plants at full capacity from December it will be tough to meet the production target, but we will try to achieve that”, chief financial officer Kenta Kon told a news briefing. After a better-than-expected jump in second-quarter profit, the world’s largest carmaker by volume hiked its full-year operating profit forecast 12% to 2.8 trillion yen ($24.5 billion), which would mark a 6-year high. But Kon said that without the impact of a weaker yen which inflates the value of profits earned abroad, it was “in substance a downward revision” due to higher materials costs. The annual profit outlook was lower than a consensus estimate of 2.9 trillion yen. For the 3 months to end-September, Toyota reported operating profit of 750 billion yen, a 48% jump over the same period a year earlier and 26% better than market expectations. It also announced a share buyback of up to 150 billion yen or 0.86% of shares and hiked its first-half dividend by 15 yen to 120 yen. Although Toyota stuck to the production goal it announced in September, it lowered its full-year sales target by 260,000 vehicles to 10.29 million units. Toyota’s vehicle sales edged up 0.9% in the second quarter to 1.9 million units, as sales in Asia jumped 24%, while sales decreased in most other markets including Japan, North America and Europe. In general though, car demand in key markets, such as China, the United States and Europe is rebounding following an earlier pandemic-induced slump, with demand for electric vehicles (EVs) in particular seeing healthy growth. Like its peers, Toyota is investing heavily in technology and production capacity to build EVs as countries around the world impose tighter rules to cut carbon emissions. It has announced plans to have 15 battery electric vehicle models on the market by 2025, and will spend $13.5 billion by 2030 to develop EV batteries and their supply system. +++
+++ With the ongoing 26th United Nations Climate Change Conference of the Parties (COP26) being held in Glasgow in the United Kingdom, where decisions will be made on reducing carbon emissions, the world’s largest car company seems to be at odds with a sizable chunk of global opinion when it comes to electrification. TOYOTA was an early adopter of hybrid electrification for its vehicles, innovating with the Prius model, but has fallen behind when it comes to full electric vehicles. The company’s senior management have even made statements against going toward full electric. At Toyota’s annual meeting in January, CEO Akio Toyoda denounced the Japanese government’s proposals to phase out gasoline-powered vehicles by the mid-2030s. He claimed that electric vehicles produce more emissions than internal combustion engines. He added that electric vehicles are too expensive and that the car industry would collapse if internal combustion engines were phased out. The first point has been proved false by numerous studies. The second is somewhat correct, with the cost of mass-market electric vehicles significantly higher than comparable internal combustion models. But prices are coming down. It has even been reported that the Japanese automaker has lobbied lawmakers in the United States to dissuade them from all-electric future. More importantly, Toyota seems to be at war with itself. While its CEO attacks a market that is growing at a significant pace, it must invest in electrification to mitigate strategic risks. Toyota has joint ventures with Panasonic and China’s BYD, and is building a $1.2-billion electric vehicle manufacturing base in Tianjin. But its electrification pales in comparison to major rivals such as Volkswagen. Could it be that Toyota is bitter because of all the money it invested in hydrogen fuel-cell technology, which has not captivated the market as it planned? While hydrogen technology has been advanced by the Japanese carmaker in recent years, battery electric vehicles have improved at a faster rate across many metrics-efficiency, range, charging network, price and popularity. But Toyota is making some effort, despite the grumblings of its CEO. The company claims that it will have 70 electric models by 2025. Currently, it has 3 pure electric models on sale in China. Compared to rivals such as Tesla and Volkswagen, and Chinese brands such as BYD and GAC, Toyota is lagging far behind in the world’s largest car market. A total of 296.000 pure electric vehicles from all brands were sold in China in September alone. Another danger for the Japanese marque is that it can’t rely on its rich history of innovation and reliability. A host of pure electric startups are following the charge of Tesla and are potentially hovering up the current and future market share of traditional manufacturers. These startups are examples of how staying well-informed about the demands of the market can pay rich dividends. It’s not being said that hydrogen fuel-cell technology isn’t an environmentally friendly and achievable solution for future mobility, it is. But at the moment, pure electric is outperforming hydrogen and the marketplace has made its decision for now. Toyota’s mantra is to invite people to go on a journey: “Let’s Go Places”. However, if it doesn’t react more quickly to the current climate for pure electric, the only places Toyota’s customers will be going are to its competitors. +++
+++ TOYOTA is investing $461 million into its first U.S. plant to add new technology, increase production flexibility and reduce its carbon footprint, the company said in a statement. The announcement didn’t include new jobs at the central Kentucky facility, but officials said 1.400 temporary jobs would be converted into permanent positions in an effort to improve recruiting, retain top talent and provide a more inclusive work environment. Plans include upgrading the Georgetown plant with advanced manufacturing equipment and technologies that will increase speed, flexibility, and competitiveness, the statement said. That includes improvements to expand the plant’s ability to manufacture new electric products. The company also plans to add a 2.4-liter turbo engine line, which will support expanding the range of vehicles produced in North America. “As Toyota’s most experienced assembly plant in the U.S. with a workforce of about 9,000, TMMK must transform physically and strategically to meet the changing needs of customers”, said Susan Elkington, president of Toyota Motor Manufacturing Kentucky. Kentucky Gov. Andy Beshear praised the announcement and said the state looks forward “to being a part of Toyota’s future of electrification”. The plant will continue to build the Camry, Camry Hybrid and RAV4 Hybrid, but production of the Lexus ES and Lexus ES Hybrid will shift back to Japan in 2024. The plant began its transformation in 2017 with a $1.3 billion investment to equip the facility with the Toyota New Global Architecture manufacturing platform and a new paint operation. +++