+++ Organizers of the BEIJING AUTO SHOW , which was scheduled to be held in late April, said that they will postpone the event until further notice due to the Covid-19 resurgence across the country. “We will pay close attention to the development of the epidemic, and strive to enhance the event’s organization and service work according to the requirements of the epidemic prevention and control policy”, the secretary of Auto China said in a post on its official WeChat account. “The specific holding time after the extension will be notified separately”. Auto China, the event’s organizers, have yet to decide on a new date, the sources cited in March said, declining to be identified as the information was not yet public. China is fighting its biggest wave of locally transmitted Covid-19 cases since it contained the initial outbreak centered on Wuhan in 2020 and multiple provinces have rolled out movement controls. The trade show in the world’s largest auto market alternates each year between Beijing and Shanghai. The Beijing Auto Show was also postponed in 2020 to September of that year from April due to the coronavirus. +++
+++ The BIDEN ADMINISTRATION announced it will invoke Cold War powers to boost domestic production of materials for batteries needed to power electric vehicles and the transition to renewable energy, a move intended to improve U.S. competitiveness in a market dominated by China. The decision adds lithium, nickel, cobalt, graphite, and manganese to a list of items covered by the 1950 Defense Production Act. It’s the same authority used by former presidents Donald Trump to spur mask production during the pandemic and Harry Truman to make steel for the Korean War. This could help mining companies access $750 million under the Defense Production Act’s Title III fund. A senior administration official said industries supported by large-capacity batteries, including transportation and the power sectors, account for more than half of the U.S. carbon emissions. The move also illustrates the tightrope President Joe Biden walks on this issue. On the one hand, climate-change activists, environmentalists and indigenous groups oppose many mining projects due to the impact on water supplies and nearby communities. On the other, the U.S. would need a colossal increase in domestic mining projects to begin providing even a fraction of the metals and materials that will be needed to supply the oncoming wave of electric vehicle production. “The clean energy transition cannot be built on dirty mining”, Lauren Pagel, the policy director of the environmental group Earthworks, said in a statement. “Earthworks strongly opposes the employment of the Defense Production Act to bolster mining because it adds to the generational trauma experienced by mining affected communities, particularly Indigenous communities”. Invoking the act provide key funding for existing operations, productivity and safety upgrades, and feasibility studies, but it won’t give the mining industry a tool it’s been clamoring for: an expedited process to dig ore out of the ground. Mining industry groups argue that it takes seven to 10 years to get a mine up and running in the U.S. That’s compared to about 2 to 3 years in neighboring Canada, according to the National Mining Association. Meanwhile, the Senate Energy Committee, whose chairman is West Virginia Democrat Joe Manchin, convened a hearing on producing critical materials domestically. Manchin repeated his view that the reliance on foreign countries for materials needed for electric vehicles is a reason why he wants to give equal treatment to boosting hydrogen vehicles. He has also suggested using the Defense Production Act to accelerate final approval of a natural gas pipeline from West Virginia to Virginia. Manchin and Alaska Republican Senator Lisa Murkowski have both backed using the act to boost production of these materials in hallway interviews with reporters at the Capitol this week. +++
+++ After nothing but guesswork about how BMW would name trim steps for the all-electric i7 sedan, BMW itself has given one of the trims away by promoting an i7 xDrive60 sedan on its website. This reads like a mashup of the trims available for the iX, which are the xDrive50 and the M60. Both use a 115 kWh battery and dual motors, the former puts out 523 hp and 765 Nm, the latter makes 619 hp and 1.015 Nm. We know that the electric i7 range will have as one of its models the most powerful version of the new 7 Series available. It’s possible the i7 xDrive60 comes with the same or similar power as the iX M60, while leaving room for an i7 M60 with even more giddy up. It is possible the ultimate performance edition could slot even higher with an i7 M70 or i7 xDrive 70. Another suggestion of tweenerism is the estimated EPA-rated range BMW lists for the i7 sedan. The automaker pegs the iX xDrive50 at up to 520 km, the iX M60 at 450 kmiles and the i7 in between 2 two at around 480 km. That’s it for the totally unexpected bits from the battery-powered seventh-generation 7 Series. The rest we’ve gleaned from teasers and previews, such as the crystal headlights for the upper DRL units, big sparkly kidney grille, the Interaction Bar, iDrive 8 and its curved display for the front occupants, and the 31-inch ridiculously 32:9 widescreen, retractable 8K display tied into to the Bowers & Wilkins surround sound audio system to serve the rear passengers. BMW chief technical officer Frank Weber also said the executive transport would offer SAE Level 3 autonomous driving from launch, a step above the Level 2 features to be had in the iX. The question now is when we’ll see it. Auto Beijing had been set aside for the debut, but a pandemic flare up in China has matters on edge over there, so we’re not sure that show will open as scheduled on April 21. +++
+++ The U.S. Securities and Exchange Commission has subpoenaed some members of FARADAY Future Intelligent Electric Inc’s management team as part of a probe into inaccurate statements made to its investors, the EV startup said. An internal review had in February identified certain inaccurate statements and the company cut the base salaries of its chief executive Carsten Breitfield and founder Jia Yueting, asking them to report to newly appointed executive chairperson Susan Swenson. The review by a special committee formed in November, however, rejected claims made by a short-seller that called the startup “a new EV scam in town”, saying they were not supported by the evidence reviewed. The startup said it would miss the deadline for filing its 2021 annual report due to delays caused by the internal investigation. It had previously delayed the filing of its quarterly report in November. Several EV firms that went public via acquisition by special-purpose acquisition companies have faced regulatory scrutiny due to issues with accounting and claims they made. Separately, Faraday Future said it expects operating loss to increase to about $186 million in the quarter-ended September 30, from about $18 million a year earlier, mainly due to higher expense related to a production rampup at its Hanford, California facility. +++
+++ Audi and Porsche owner Volkswagen is likely to give the green light for the two brands to make their entry into motor racing’s FORMULA 1 at a meeting next week, 2 sources familiar with the matter said. “We will hopefully be able to communicate our intention to enter into Formula One then”, one of the sources said, with the second adding there was a “good chance” of a positive decision. Volkswagen declined to comment. There has long been talk of Audi and Porsche forming partnerships with existing Formula One teams, their most likely method of entry into the highest class of international racing. Audi and McLaren denied reports last year that a partnership between the two brands had already been formed but said that it was under discussion, with a decision to be expected this year. Audi will offer around 500 million euros for McLaren, one source said, while Porsche intends to establish a long-term partnership with racing team Red Bull starting in several years’ time. Volkswagen has not previously been involved in Formula One but has worked with Red Bull, notably in the world rally championship. McLaren and Red Bull were not immediately available to comment. A source told in November that Volkswagen’s ultimate decision will rest on whether Formula One follows through on its plans to switch to synthetic fuels by 2026, and on McLaren’s progress regarding electrification of its vehicles. Volkswagen has invested the most of any global carmaker by far in electric vehicle production and batteries in an attempt to clean up its image from the Dieselgate emissions scandal and remain in line with governmental carbon reduction targets. The decision comes as Volkswagen grapples with the uncertainty of the impact of the Ukraine war on its finances, which will also be discussed at next Boardroom meeting. +++
+++ Automakers racing to develop battery-powered, software-driven vehicles to compete with Tesla are confronting a new challenge: what technology to build themselves, and what to keep buying from suppliers. Becoming more VERTICALLY INTEGRADED by doing more manufacturing in-house represents a major shift for most global automakers, who have relied for decades on suppliers to produce critical parts and software, and manage sprawling manufacturing networks in low-wage countries. But some established automakers are embracing drastic changes to their longstanding build-or-buy calculations. One factor is the success of Tesla’s electric vehicles, which rely on proprietary technology the company develops and manufactures itself. Another is the financial damage done by supply-chain breakdowns during the pandemic. “The most important thing is we vertically integrate. Henry Ford was right”, Ford’s CEO, Jim Farley, said at a conference in earlier this month. Farley’s reference was to company founder Henry Ford’s Rouge manufacturing complex in Dearborn, Michigan, which in the early 20th Century took in iron ore and other raw materials at one end, and churned Model Ts off the assembly line at the other. Farley said the company had to move away from its early EV strategy of buying components off the shelf. Now, he said, Ford aims to control the supply chains “all the way back to the mines” that produce battery materials. Rivals including Volkswagen, General Motors and Mercedes-Benz are pursuing similar strategies. Mercedes last year acquired British high-performance electric motor manufacturer YASA, and has retooled a factory near Berlin to produce motors based on YASA technology. The German luxury car maker in March opened a new factory in Alabama to build battery packs for U.S.-made electric vehicles, and said it will partner with Japanese battery maker Envision AESC to build battery cells in the United States. “We are going deep into sourcing”, Mercedes-Benz chief executive Ola Källenius told reporters during a briefing in Alabama. The investments by automakers in mines, motors and batteries are a departure from decades of handing control over development and production to suppliers, who could produce steering controls, semiconductors and electronic components at greater scale and lower cost for multiple vehicle manufacturers. In the new world of electric vehicles, however, investors have decided that Tesla’s approach of buying raw materials directly, building its own batteries and engineering its own software is the winning strategy. Tesla’s market capitalization has soared back above $1 trillion in recent weeks, outweighing that of Toyota, Volkswagen, GM and Ford combined. “Major players have realized electric vehicles are the future, but they have yet to widely recognize that they have to up their game in terms of motors, transmissions, battery technologies, inverters and electric powertrains”, Peter Rawlinson, CEO of EV startup Lucid Group, said in an interview. Rawlinson previously was vice president of vehicle engineering at Tesla. Between the 1970s and the 2010s, the share of automaker-owned intellectual property in their vehicles decreased from 90% to 50%, according to Guidehouse Insights analyst Sam Abuelsamid. That meant many automakers lacked the in-house engineering expertise to develop their own electric vehicle platforms, powertrains and battery packs when EV pioneer Tesla showed its vertically integrated cars were a hit with consumers. “We’re designing and building so much more of the car than other OEMs who will largely go to the traditional supply base and execute like I call it, catalog engineering”, Tesla CEO Elon Musk said during a 2020 earnings call. Tesla’s approach is costly and the company has raised vehicle prices repeatedly in the last few years. Despite promising to deliver a model that could start at about $25,000, Musk earlier this year said “we’re not currently working on the $25,000 car. At some point, we will. But we have enough on our plate right now”. There is also a gap between what automakers say about their vertical integration strategies, and what happens as engineers try to meet deadlines to deliver new vehicles, supplier industry executives said. “There’s a lot of narrative about in-sourcing and vertically integrating, especially in areas like software”, Kevin Clark, chief executive of auto supplier Aptiv, told analysts in February. “Virtually all the OEMs that we are doing business with are struggling with software development”. Xavier Mosquet, a senior adviser at Boston Consulting Group, said many manufacturers still prefer to buy EV technology to avoid the cost and complexity of manufacturing in-house. “There are a number of automakers who in a way want to continue buying and manage the final integration”, Mosquet said, adding that it would take several years to determine which approach is successful. Many automakers are also hesitant to completely in-source EV manufacturing at a time when EV purchases still make up only a fraction of total vehicle demand. Today, only Tesla, EV startup Lucid and Chinese BYD are completely making their electric motors in-house, according to IHS Markit, followed by Hyundai and the Renault-Nissan-Mitsubishi alliance. Other carmakers, including Mercedes-Benz Group, Ford and Porsche, are using electric motors by suppliers for their current EV models. “The electric powertrain cannot be bought off the shelf at a world-class standard, it is not a commodity,” Rawlinson said. “This is a technology race and the market doesn’t see it yet”. Mercedes said it plans to make electric motors, battery packs and electronics in-house starting in 2024. The company is also working to reduce costs by securing raw materials directly from miners, Chief Technology Officer Markus Schäfer told. +++
+++ Vietnam-based carmaker VINFAST is getting closer to its goal of selling cars in the United States. It announced an initial investment of up to $2 billion to build a new manufacturing facility in Chatham County, North Carolina, that will have an annual capacity of about 150.000 cars. Setting up shop in North Carolina, close to several manufacturers and suppliers, is expected to create thousands of local jobs. VinFast explained that its future plant will be split into three areas: the first will be dedicated to building electric cars and buses, the second will make batteries, and the third will be made available to suppliers. Construction is scheduled to start in 2022 and production should begin in 2024. As of writing, VinFast plans to build its VF9 and VF8 models (introduced as the VF e36 and VF e35, respectively) in North Carolina; the former is a 7-seater SUV and the latter is a smaller, 5-seater model. Looking ahead, the company will continue to invest in the North Carolina facility, though additional details haven’t been released yet. It’s reasonable to expect that, if everything goes according to plan, the plant’s annual capacity will increase in the 2020s. VinFast notably introduced three EVs at the 2022 Consumer Electronics Show (CES). Preliminary specifications released in January 2022 give us an idea of what to expect from the first VinFast model with a “made in America” tag. The VF8 and VF9 will both we powered by an electric drivetrain rated at about 408 horsepower and 650 Nm. The VF8 will offer a maximum driving range of about 510 km when put through the testing cycle used in Europe, which normally yields higher numbers than the one used in the United States, while the VF9’s bigger battery will unlock up to 675 km of driving range. And, speaking of batteries, they won’t be sold with the car: buyers will need to lease the pack though one of two subscription plans. Excluding the battery from the purchase price will help VinFast keep pricing relatively low: the VF8 will start at around $41,000 and the VF9 will carry a base price of approximately $56,000. Note that those figures don’t include options, the destination charge, or incentives. More details about VinFast’s ambitious plans to gain a secure foothold on the American market will emerge in the coming months. And, the firm isn’t pegging its growth solely on America: its facility in Haiphong, Vietnam, should be able to build 950,000 cars annually by 2026. +++
+++ As Tesla kicks off production at its new German plant this month, VOLKSWAGEN is weeks away from finalizing plans for a 2 billion euro electric vehicle (EV) factory that it hopes will bring it up to speed with its U.S. rival. Tesla says it can already churn out a Model Y in 10 hours at its new Giga Berlin-Brandenburg factory in Grünheide near the German capital, whereas it can take Volkswagen 3 times as long to make its ID.3 electric car. The German auto giant now aims to slash production times with its “Trinity” EV plant, which should be up and running in 2026, by using techniques such as large die casting and cutting the number of components in its cars by several hundred. “Our goal is clear: we want to set the standard with our production”, Volkswagen brand production chief Christian Vollmer told. “If we can get to 10 hours, we have achieved something big”. The carmaker has been improving productivity at a rate of about 5% a year but must take bigger leaps to keep its upper hand in the European market, Vollmer said, without providing a new percentage target. Volkswagen, the world’s second-biggest carmaker behind Toyota with a stable of brands from Skoda, Seat and VW to Audi, Porsche and Bentley has a 25 % share of the European EV market, ahead of Tesla on 13 %. But the pressure on German carmakers to both master and ramp up EV production has been intensified by Tesla’s presence in the country and Volkswagen chief executive Herbert Diess has warned Germans must speed up to avoid getting beaten on their own turf. ‘Ignited the drive’ Volkswagen’s goals align with a wider trend in the industry of simplifying product ranges and streamlining production as carmakers scramble to find the cash to fund the electric transition, and keep up with rivals like Tesla that don’t have to juggle making EVs as well as cars with combustion engines. “Tesla really ignited the drive for reducing part counts and making simpler products”, Evan Horetsky, a partner at McKinsey who was formerly in charge of engineering at Tesla’s new Brandenburg plant, said. “Legacy manufacturers have a more difficult time because they have to maintain current orders”. A Tesla spokesperson said one of the reasons it can produce its Model Y vehicles in Germany within a 10-hour time frame is because it is uses 2 giant casting presses, or giga-presses, applying 6.000 tonnes of pressure to make the rear of the car. Its Grünheide press shop can produce 17 components in under 6 minutes. With 6 more giga-presses on the way, Tesla will soon be making the front of the car with the giga-press too. “That’s why we’re so fast”, the spokesperson said. The giga-casting technique that VW plans to adopt was popularized by Tesla as an alternative to the more labour-intensive method of assembling multiple stamped metal panels with crumple zones to absorb energy during a crash. German luxury carmaker BMW has rejected large castings in the past on the grounds that the higher costs of repair outweigh the lower manufacturing costs. But advocates say automated driving technology will reduce the frequency of accidents: “Tesla is designing a vehicle that most likely won’t be in a severe crash”, Cory Steuben, president of manufacturing consulting firm Munro & Associates, said. While VW can produce certain models such as the Tiguan or Polo in 18 and 14 hours in Germany and Spain respectively, its electric ID.3 (made in a factory juggling 6 models from 3 Volkswagen Group brands) still takes 30 hours to put together. At the Trinity plant, multiple work steps will be condensed into one through automation, shrinking the size of the body shop and reducing the number of jobs requiring uncomfortable physical labour, Vollmer said, dubbing it an expansion of “human-robot cooperation”. Volkswagen does not plan to have giga-presses at the new plant in Wolfsburg and will instead use the equipment at its factory in Kassel about 160 km away and transport the products by train. U.S. investment bank JPMorgan predicts that Tesla’s Grünheide factory will produce about 54.000 cars in 2022, 280.000 in 2023 and then 500.000 by 2025. Volkswagen, which delivered some 452.000 battery-electric vehicles globally last year, has not yet set an output target for Trinity, which will use its Scalable Systems Platform. It aims to build 40 million vehicles worldwide on the new platform, which combines multiple internal combustion engine and electric platforms into one, with half of its global output all-electric by 2030. Tesla, which produced 936.000 cars last year, has said it aims to put 20 million on the road a year by the end of the decade, or roughly double the current annual production of Toyota, the world’s biggest carmaker now. Still, Tesla can expect numerous challenges as it expands in Germany, from securing more water supplies to environmental groups angry about light pollution and congestion near the plant to unions worried about a management-heavy works council and wages being driven down by workers coming in from elsewhere. “Starting production is nice, but volume production is the hard part”, Musk told a cheering audience at a festival at the plant site in October 2021. “It will take longer to reach volume production than it took to build the factory”. +++