Newsflash: stekker hybride auto’s verliezen snel terrein

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+++ The shortages of COMPUTER CHIPS that forced global automakers to scrap production plans for millions of cars over the past 2 years are easing, at a new and permanent cost to the car companies. What had been “war room operations” to manage chip shortages are becoming embedded features of vehicle development, say executives in both industries. That has shifted the risks and some of the costs to automakers. Newly created teams at the likes of General Motors, Volkswagen and Ford are negotiating directly with chipmakers. Automakers like Nissan and others are accepting longer order commitments and higher inventories. Key suppliers including Robert Bosch and Denso are investing in chip production. GM and Stellantis have said they will work with chip designers to design components. Taken together, the changes represent a fundamental shift for the auto industry: higher costs, more hands-on work in chip development and more capital commitment in exchange for better visibility in their chip supplies, executives and analysts say. It is a U-turn for automakers who had previously relied on suppliers (or their suppliers) to source semiconductors. For chip makers, the still-developing partnership with automakers is a welcome (and overdue) reset. Many semiconductor executives point the finger at automakers’ lack of understanding of how the chip supply chain works (and an unwillingness to share cost and risk) for a large part of the recent crisis. The costly changes are coming together just as the auto industry appears to be moving past the worst of an even more costly crisis that by one estimate has cut 13 million vehicles from global production since the start of 2021. C.C. Wei, chief executive of the world’s biggest chipmaker Taiwan Semiconductor Manufacturing, said he had never had an auto industry executive call him until the shortage was desperate. “In the past 2 years they call me and behave like my best friend”, he told a laughing crowd of TSMC partners and customers in Silicon Valley recently. One automaker called to urgently request 25 wafers, said Wei, who is used to fielding orders for 25.000 wafers. “No wonder you cannot get the support”. Thomas Caulfield, GlobalFoundries chief executive, said the auto industry understands it can no longer leave the risk of building multibillion-dollar chip factories to chipmakers. “You can’t have one element of the industry carry the water for the rest of the industry”, he told. “We will not put capacity on unless that customer is committed to it, and they have a state of ownership in that capacity”. Ford has announced it will work with GlobalFoundries to secure its supply of chips. Mike Hogan, who heads GlobalFoundries’ automotive business, said more deals like that are in the pipeline with other car makers. SkyWater Technology, a chip manufacturer in Minnesota, is talking to automakers about putting “skin in the game” by buying equipment or paying for research and development, chief executive Thomas Sonderman told. Working closer with carmakers and their suppliers has brought onsemi $4 billion in long-term agreements for power management chips made from silicon carbide, a new material gaining popularity, said chief executive Hassane El-Khoury. “We’re making billions of dollars of investment every year in order to scale that operation”, he told. “We’re not going to build factories on hope”. Michael Hurlston, the CEO of Synaptics, whose chips drive touch screens, which had held up some auto production, said the recent, more direct collaboration with automakers could create new business opportunities as well as managing risks. Hurlston said the automotive industry has warmed up to using OLED screens, which are less durable than the LCD screens, a factor that many perceived would limit their use in cars despite better contrast and lower power consumption. “But that perception has changed pretty dramatically over the last two years. And that perception has changed as a direct result of us being able to talk to (the auto industry)”, he said. “The paradigm has really, really shifted for us”. Chief executives of Renesas Electronics and NXP Semiconductors have both told they are co-locating engineers to help automakers design a new architecture where one computer would centrally control all functions. “They have woken up”, said NXP CEO Kurt Sievers. “They have understood what it takes. They try to find the right talent. It’s a big shift”. The average semiconductor content per vehicle will exceed $1.000 by 2026, doubling from the first year of the pandemic, according to Gartner. One example: the battery-powered Porsche Taycan has over 8.000 chips. That will double or triple by the end of the decade, according to Volkswagen. “We have understood that we are a part of the semiconductor industry”, said Volkswagen Group’s Berthold Hellenthal, a senior manager for semiconductor management. “We have now people dedicated just to strategic semiconductor management”. Securing (and keeping) chip engineers will be a challenge for automakers, which will have to compete against the likes of Google, Amazon and Apple, said Evangelos Simoudis, a Silicon Valley venture capital investor and adviser who works with both established automakers and startups. “I think that that would lead to acquisitions”, he said. Unlike Tesla, which designs its own core chips, Simoudis said traditional automakers will have to juggle production of legacy auto models as they make new investments. AutoForecast Solutions (AFS) estimates that microchip shortages have forced automakers around the world to cut over 13 million vehicles from production plans since the start of 2021. “It’s an arrogant industry”, said Sam Fiorani, vice president of global vehicle forecasting at AFS. “Sometimes it just bites them in the rear”. +++

+++ The boss of French premium car brand DS AUTOMOBILES says a new supermini could be on the cards as it ramps up plans to renew its smallest offering, the 3 Crossback. The crossover replaced the former DS 3 supermini (first sold as a Citroën) in 2019 in a bid to capitalise on the hugely popular and still growing B-SUV segment. But as the car maker looks to its next generation (especially ahead of its 2024 full-electrification plan) boss Béatrice Foucher told that she wouldn’t rule out a return to the 3’s roots, adding that the original 3 “was very successful”. If it were to return, it would do so with an electric powertrain and sit on parent brand Stellantis’s STLA Small platform, which is due to be released halfway through the decade. Foucher said: “We are working on the renewal of the DS 3, and when we say ‘renewal’, it doesn’t say that we will renew the car strictly as it is today. The purpose of renewing is to say: ‘Okay, we have customers already and we are also looking at some new customers we would like to talk to with a new car, and what would be the best product in order to do so?’ We need to capitalise on what has been done. This is what we are thinking about for the time being”. However, a smaller car comes with risks, said Foucher, with comparatively high production costs per unit, and therefore lofty retail prices. She added that the brand would also have to look at what the market wants, as a new supermini would buck an automotive trend. Most firms, including Ford and Honda, have shifted their focus away from smaller cars in favour of more popular crossovers and bigger SUVs. “At the end of the day, when looking at the premium market, it is more difficult to sell small cars than big ones, obviously because when you pay a lot for big ones, you have the status, and you have the volume for the price, so the cost for the volume is appropriate”, said Foucher. “But when you have small cars, this is more difficult to argue. It means that it is always a difficult equation to have a small car while being a premium brand”. +++

+++ NISSAN said Thursday that net profit sank nearly 60% in the 3 months to June, as pressures including a lockdown in Shanghai and chip shortages weighed on business. The firm, which in May reported a positive full-year net profit for the first time in 3 years, said it logged a net profit of ¥47.1 billion ($347 million), down 58.9% on the year. The slump was also the result of a one-time boost in the first quarter of last financial year when Nissan unloaded Daimler sales. But the firm said it was facing a range of headwinds. “During the first quarter, the extremely challenging business environment put pressure on earnings”, Nissan said in a statement. “Production was constrained by the Shanghai lockdown caused by spread of the new coronavirus, and semiconductor supply shortages, while external factors such as soaring raw material prices and logistics costs also intensified their impact. The pandemic understandably remains a priority challenge”, chief operating officer Ashwani Gupta told reporters. “At the same time, we experienced tailwinds with favourable foreign exchange rates” he added, referring to the yen‘s recent slump against the dollar, which helps inflate overseas profits for Japanese firms. The firm left its full-year forecast unchanged, projecting a net profit of ¥150 billion. That would be a 30.4% slump, however, from the previous year’s ¥215.5 billion. Operating profit was down 14.2% to ¥64.9 billion, but that beat analyst estimates. The firm was on a rollercoaster even before the disruption caused by the pandemic and the conflict in Ukraine. It had been struggling with increasing sales costs, and is currently implementing a plan involving slashing models, cutting costs and restructuring operations. “Nissan is making progress after an excessive expansion policy in North America in the past that was a factor causing it to lose money”, said Satoru Takada, auto analyst at TIW, a Tokyo-based research and consulting firm. “Profits declined year-on-year relative to the robust rebound in last year’s April-June quarter, when there was a recovery from the pandemic’s impact and cost-cutting efforts”, Takada said ahead of the earnings report. “Nissan’s challenge is how to minimize the impact of the chip shortage and sell attractive new cars, including those recently released”, he said. The automaker has also been buffeted by the saga surrounding its former chief Carlos Ghosn. The one-time auto tycoon was detained in Japan in 2018, accused of financial misconduct charges that he denies, but jumped bail and fled to Lebanon the following year. In March, a Tokyo court handed a 6-month suspended sentence to former Nissan executive Greg Kelly over allegations that he helped his boss attempt to conceal income. The company had pleaded guilty in a separate case, and was ordered to pay a fine of ¥200 million. In April, French authorities issued an international arrest warrant for Ghosn (who has lived in Lebanon since his daring getaway from Japan) on allegations including corruption, misuse of company assets and money laundering. +++

+++ Everybody likes to have options to choose from, or at least they think they do. That’s part of what led some automakers to bet heavily on PLUG-IN HYBRID ELECTRIC VEHICLES , or PHEVs, which offer consumers a way to get a sampling of the EV experience without jumping fully in. PHEVs are often described as a transition technology: a bridge to a fully electric future. But sales of these models are faltering in Europe, which has been their most important market to date. The latest data shows two very different trajectories between plug-in hybrids and battery-electric vehicles, or BEVs. Country-level data paints an even starker picture. Sales of PHEVs in France fell 28% in June. In Germany, another former stronghold for the technology, registrations dropped 16%. In the United Kingdom, plug-in hybrids were neck-and-neck with BEVs as recently as 2019. Now, 2 battery-electric cars sell for every 1 PHEV. Some of this is to be expected. In 2020 and 2021, automakers had to meet Europe’s stricter CO2 targets for new vehicles, and plug-in hybrids were treated favourably under the regulations. Many automakers didn’t have their new BEV architectures fully ready. When faced with 2 options (to market fully electric vehicles underpinned by modified internal combustion platforms, or PHEVs) many opted for the latter. Europe’s vehicle CO2 regulations don’t tighten again until 2025. As more automakers get their fully electric platforms ready for model launches, BEVs look poised to continue their ascendency of the sales charts. Consumers are clearly ready, with wait times already stretching well into next year for most of the popular fully electric models in Europe. Many PHEV owners are happy with their cars. But from a policy perspective, there’s an elephant in the room: drivers often don’t end up charging these vehicles all that frequently. A recent study of 9,000 vehicles from the International Council on Clean Transportation found that real-world fuel consumption from PHEVs was 2.5 to 5 times higher than what’s approximated under official laboratory testing procedures. That gap between theory and practice is part of the reason national governments are cutting purchase subsidies for PHEVs faster than for fully electric models. The United Kingdom, for example, eliminated purchase subsidies for plug-in hybrids in 2018, while Germany announced just this week that PHEV subsidies will end this year. One critical distinction here is that the share of electric kilometers driven on a PHEV depends heavily on who owns it. Among privately owned vehicles, the ICCT study found real-world electric-driving share was 45% to 49%. Not bad, though still short of what the official test cycles assume. For company cars, that dropped to a dismal 11% to 15%. Company vehicles are a huge part of the market in Europe, accounting for more than half of new-car sales in many countries. Upcoming policy changes could further erode the case for PHEVs. The European Commission is expected to introduce new “utility factors” for PHEVs from 2027. These are the values intended to reflect how often the vehicles are driven in electric mode, and critically, what CO2 emissions value they’re assigned. The goal for the regulation is to use real-world driving behaviour from both private and company-owned vehicles to set the values, using on-board monitors. Unless something dramatic changes in the next few years, this will make PHEVs a less attractive way for automakers to meet emissions regulations. Manufacturers will see this change coming down the road and start to allocate investments accordingly. Relatively strong sales of plug-in hybrids in China are keeping the global numbers afloat for now. PHEV sales there more than doubled last year, led by offerings from BYD and Li Auto, though even that wasn’t enough to keep pace with growth in BEV demand. China has more high-rise apartment dwellers with limited home-charging options, but the government is making a huge push to build out public-charging options and help keep the BEV market expanding quickly. The municipal government in Shanghai is also set to remove favourable treatment for PHEVs beginning in 2023, and others could follow. If plug-in hybrids are a bridge, it’s starting to look like a short one. +++

+++ PORSCHE is trying to secure anchor investments from some of the largest Middle Eastern sovereign wealth funds, as the iconic sports-car maker looks to pull off one of Europe’s biggest listings amid market headwinds and valuation concerns, people familiar with the matter said. Abu Dhabi’s Mubadala Investment and ADQ are among those considering committing funds to the Volkswagen unit’s listing, according to the people, who asked not to be identified discussing confidential information. State-owned entities in other Gulf markets, including Saudi Arabia, are also exploring investments, they said. Advisers on the IPO have also approached major Canadian and Malaysian funds, as well as the Norwegian sovereign wealth fund, one of the people said. Volkswagen is considering offering more than 5% of Porsche’s preferred stock to anchor investors, the people said. Existing Volkswagen shareholder Qatar Investment Authority has already decided to become a strategic investor in Porsche. Volkswagen wants to gather firm commitments from other funds by the end of the month, one person said. Securing more big backers would be a vote of confidence as the German carmarker looks to push a premium valuation for Porsche. The German state of Lower Saxony, another Volkswagen shareholder, and the controlling Porsche-Piech family are seeking a valuation of no less than 60 billion euros ($62 billion), the people said. Currently, the Volkswagen Group has a market value of 86.6 billion euros. In early meetings with portfolio managers, the IPO has been pitched as a chance to invest in a company that combines the best of car making rivals like Ferrari and luxury brands such as Louis Vuitton. But some investors are concerned about a listing structure that fails to make Porsche more independent from its parent, as well as headwinds in the IPO market, people familiar with the matter said previously. Last month’s decision to put Porsche chief executive officer Oliver Blume in charge of parent Volkswagen has also drawn scrutiny from investors. In a Bernstein & Co. poll of 58 fund managers, 71% said Blume’s dual role is a clear negative for the IPO. Deliberations are ongoing and there’s no certainty the funds will proceed with firm commitments, according to the people. A spokesperson for Porsche and Volkswagen said more information on the progress of the IPO is expected to be released in late summer. Representatives for ADQ, Norges Bank Investment Management and QIA declined to comment, while a spokesperson for Mubadala didn’t provide comment. Middle Eastern wealth funds control trillions of dollars and have seen their holdings boosted by surging energy prices this year. They’ve been plowing money into global markets to take advantage of falling valuations, buying everything from football clubs to luxury electric-vehicle startups. Volkswagen, Europe’s largest automaker, is planning to list a minority stake in Porsche to help finance the industry’s biggest push into electric cars and boost its valuation. It’s earmarked 89 billion euros in spending on technologies like software and electric cars through 2026, and the separation of Porsche could offer new funding options for the group. Volkswagen has picked Goldman Sachs Group, Bank of America, JPMorgan Chase & Co. and Citigroup as joint global coordinators for the Porsche IPO. +++

+++ TESLA has been accused by a California state transportation regulator of falsely advertising its Autopilot and Full Self-Driving features as providing autonomous vehicle control. In complaints filed with the state Office of Administrative Hearings, California’s Department of Motor Vehicles (DMV) said Tesla misled prospective customers with advertising that overstated how well its advanced driver assistance systems (ADAS) worked. Tesla “made or disseminated statements that are untrue or misleading, and not based on facts”, the DMV said in complaints dated July 28 and which it made public on Friday. Vehicles equipped with Autopilot and Full Self-Driving technology “could not at the time of those advertisements, and cannot now, operate as autonomous vehicles”, the DMV added. The DMV is seeking remedies that could include suspending Tesla’s license to sell vehicles in California and requiring the company to make restitution to drivers. The Los Angeles Times earlier reported the DMV complaints. Tesla has said Autopilot “enables your car to steer, accelerate and brake automatically within its lane”, while Full-Self Driving also enables vehicles to obey traffic signals and make lane changes. According to Tesla’s website, both technologies “require active driver supervision”, with a “fully attentive” driver whose hands are on the wheel, “and do not make the vehicle autonomous”. But the DMV said Tesla’s disclaimer “contradicts the original untrue or misleading labels and claims, which is misleading, and does not cure the violation”. California is Tesla’s largest U.S. market. The company sold 121.000 vehicles there in 2021, out of an estimated 352,000 sold nationwide. Since 2016, the National Highway Traffic Safety Administration (NHTSA) has opened 38 special investigations of crashes involving Tesla vehicles where ADAS systems were suspected of being used. 19 deaths were reported from those crashes, including a motorcyclist killed last month in Utah. NHTSA had no immediate comment on the DMV complaints. National Transportation Safety Board chair Jennifer Homendy in an interview last year said “there is zero comparison” between Tesla’s Autopilot and the tool used in aviation. “Some manufacturers are going to do what they want to do to sell a car and it’s up the government to rein that in”, she said. +++

+++ New car registrations in the UNITED KINGDOM fell by 9% in July as global supply shortages and Covid-19 lockdowns meant manufacturers struggled to fulfil orders, according to figures from the Society of Motor Manufacturers and Traders (SMMT). Registrations totalled 112.162 units in July, down from 123.296 in July 2021. The SMMT said it was the fifth consecutive month of decline this year, but the smallest drop in 2022 so far. The ongoing semiconductor shortage and supply issues contributed to the drop, according to the SMMT. Supply shortages were further exacerbated by Covid-19 lockdowns in major manufacturing countries such as China. Large fleet registrations were hit most significantly, down 18.2% year on year to 50,014 units. Dealers are said to be prioritising private registrations, which grew by 3.7% in July to 59.847 units. Battery-electric vehicles (BEVs) achieved healthy growth, with registrations rising 9.9% year on year to 12.243 units. Despite this being the weakest monthly uplift in BEVs sales so far this year, they now claim a 10.9% market share in the UK. Meanwhile, hybrids suffered a small drop of 6.7%, taking a 12.2% market share, and plug-in hybrids fell heavily by 34%, slicing their market share to 5.8%. With a drop of 29.3%, diesel registrations continued to decline. Petrol registrations also dropped slightly by 7.2%. SMMT boss Mike Hawes suggested the next prime minister would have to restore customer confidence and create the right conditions to grow the economy while focusing on the shift to cleaner automotive technologies. Hawes said: “The automotive sector has had another tough month and is drawing on its fundamental resilience during a third consecutive challenging year as the squeeze on supply bedevils deliveries. “While order books are strong, we need a healthy market to ensure the sector delivers the carbon savings government ambitions demand. The next prime minister must create the conditions for economic growth, restore consumer confidence and support the transition to zero-emission mobility”. The brand with the largest growth was Cupra. It achieved 1.839 sales last month, representing growth of 210.13% year-on-year. The month’s poorest performers were Abarth (-97.04%), Jeep (-62.67%) and Lexus (-57.81%). The Nissan Qashqai was July’s bestselling car in the UK, as the Japanese car maker shifted 2.514 units. It was closely followed by the Mini Hatch (2.410) and the Hyundai Tuscon (2.267). The Vauxhall Corsa once again topped the overall sales rankings for the year so far, with 24.333 units sold for the year to date. +++

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