+++ China’s BYD will launch a new “professional and personal” electric car brand in 2023, a senior executive said on Thursday as the automaker expands its range following a year of strong sales. Brian Luo, the company’s branding assistant general manager, made the comments at a media event. The new brand will be an addition to Yangwang, a premium brand set for launch in the first quarter of 2023 that it announced last month. Having ditched gasoline vehicles from its product mix this year, BYD has been able to capitalize on a range of incentives for electric cars offered by the central and local governments. It has also been making a wider global push, selling its pure electric to markets including Norway, New Zealand, Singapore, Brazil, Costa Rica and Colombia. Luo said BYD has sold cars to 35 countries outside China since it started exporting to Norway last May. The automaker, which also produces plug-in hybrid cars, was the topselling car brand in China in the first 4 weeks of November, brokerage data showed, outperforming Volkswagen in a reversal that highlights the pressure on legacy brands in the world’s largest auto market. +++
+++ The past year was sobering for investors who poured money into Tesla and rival ELECTRIC VEHICLE STARTUPS that hoped to emulate Tesla CEO Elon Musk’s success. As interest rates rose and financial markets gyrated, shares in many EV startups deflated. Rivian, which had a higher market value than Ford shortly after it went public in 2021, lost more than 70% of its value over the past year. Other EV startups fared worse. Electric van maker Arrival warned it could run out of cash in less than a year. Lucid, backed by Saudi Arabia’s sovereign wealth fund, struggled to build its sleek Air luxury EVs. Chinese Tesla challenger Xpeng’s shares lost more than 80% of their value. Now comes the hard part: Persuading more mainstream consumers to come along for the ride. The automobile industry is pouring more than $1 trillion into a revolutionary shift from combustion engines to electric vehicles guided by software. From Detroit to Shanghai, automakers and government policymakers have embraced the promise of electric vehicles to provide cleaner, safer transportation. European countries and California have set 2035 as the deadline for ending sales of new combustion passenger vehicles. Tesla’s surge to become the world’s most valuable automaker (achieving a $1 trillion valuation last year) humbled established automakers such as Toyota and Volkswagen that once were reluctant to go electric. Starting next year, a wave of new electric vehicles from pickup trucks to middle market SUVs and sedans will hit the world’s major markets. Industry executives and forecasters do not agree on how rapidly electric vehicles could take over half the global vehicle market, let alone all of it. In China, the world’s largest single automotive market, battery electric vehicles have captured about 21% of the market. In Europe, EVs account for about 12% of total passenger vehicle sales. But in the United States, EV market share is only about 6%. Among the barriers to EV adoption, industry executives and analysts said, were a dearth of public fast-charging infrastructure, and the rising cost of EV batteries, driven by shortages of key materials and uncertainty over government subsidies that have buoyed EV purchases in major markets including the United States, China and Europe. By 2029, electric vehicles could account for a third of the North American market, and about 26% of vehicles produced worldwide, according to AutoForecast Solutions, a consultancy. Electric vehicle sales likely will not increase in a smooth, ever-ascending curve, said AFS president Joe McCabe. If there is a recession next year, as many economists forecast, that will slow EV adoption. Wards Intelligence forecasts that combustion vehicles will make up just under 80% of North American sales in 2027. Based on automakers’ product plans, Wards analyst Haig Stoddard said at a recent conference that manufacturers “expect strong ICE (internal combustion engine) volume heading into the next decade”. What does it mean for 2023? Throughout 2022, established automakers such as Mercedes, Ford and General Motors unveiled dozens of new electric vehicles to challenge Tesla and the upstarts. Mass production of most of these vehicles kicks into gear starting in 2023 and 2024. By 2025, there could be 74 different electric vehicle models offered in North America, McCabe said. But he predicts fewer than 20% of those models are likely to sell at volumes above 50.000 vehicles a year. Automakers could be stuck with too many niche models and too much capacity. Slowing economies threaten overall vehicle demand in Europe and China, too. During the early years of the 20th Century, new auto companies sprang up, backed by investors eager to catch the wave of mass mobility that Henry Ford and other automotive pioneers started. By the 1950s, the global auto industry had consolidated and once-heralded brands such as Duesenberg had disappeared. The next few years will determine whether the 21st century’s crop of electric vehicle brands will follow a similar path. +++
+++ After a number of years of recalls troubling warranty costs, FORD hired former J.D. Power vicepresident Josh Halliburton in March of this year to be executive director of quality. In November, Halliburton got a new boss, Ford moving longtime product development exec Jim Baumbick into the role of chief transformation and quality officer to replace Stuart Rowley. Having just called the audible, it’s going to take Ford time to execute the play. When CEO Jim Farley recently spoke to the Ford Retired Engineering Executives (FREE) group, he told them: “Fixing quality is my No. 1 priority … It is the most important initiative in the whole company. And it’s going to take several years”. Farley’s already been on the mission for a couple of years, and things aren’t much better now than when he officially became Ford’s CEO on October 1, 2020. One of the pillars of his company strategy was improving quality. Ford spent $3.923 billion in warranty costs in 2020 for 4.19 million cars sold globally, nearly $2 billion more than GM in a year where auto factories had to shut down for 2 months. Consumer Reports’ Annual Reliability Study rated the Ford brand 22nd out of 26 automakers in 2020, Lincoln pulling up in the caboose at 26th. In 2021, things got worse, Ford spending $3.952 billion on warranty claims for 3.94 million cars sold, and those 2 years were massive improvements over 2018 and 2019. Ford did climb 2 spots in CR’s reliability survey, Lincoln remained last. This year’s a bit mixed, Lincoln reaching 10th place on the CR survey, Ford at 18th, the same place it held in 2021, and both brands moving up slightly in CR’s Brand Report. However, Ford has had 46 recalls covering 6.8 million vehicles through the first 7 months of this year, more than triple the next brand, Tesla, nearly 5 times GM in third. And CR rates bread-and-butter models like the Explorer and F-150 below average for reliability, so too the in-demand Mustang Mach-E, and says, “All other Fords are average”. As Farley told the engineers: “We didn’t lose quality in just 1 or 2 years”, and as everyone who’s been sick knows, getting back to health almost always takes longer than getting sick. In comments about the issue to other audiences, reportage has always mentioned Farley’s connecting the warranty issues to customer unhappiness and Ford’s bottom line. This time, it was apparently all about Job One. “Until we fix quality”, he told the engineers, “nothing else matters”. +++
+++ In July, Reuters published an investigative piece about child labor at a HYUNDAI parts supplier called Smart, in Alabama. Hyundai is Smart’s majority owner, and both Smart and Hyundai said they had no idea there were children as young as 12 working at the facility. A month later, another Hyundai supplier in Alabama, this one not owned by Hyundai, admitted to employing children. Reuters kept digging into the matter and has just published another lengthy investigative piece about underage labor in the Hyundai Group industrial ecosystem in Alabama. The news organization says it found at least 4 factories in the area used child labor and that “federal agencies are probing whether kids have worked at as many as a half dozen additional manufacturers throughout the automakers’ supply chain in the southern U.S. state”. The report names 2 more suppliers. Hwashin is a wholly Hyundai-owned plant in Greenville, while Ajin is a supplier in Cusseta, owned by a Korean-based parent company also called Ajin. In early, 2021, a local school official reported Hwashin to county authorities for possibly hiring kids as young as 12. Reuters interviewed employees who said they worked at Ajin, one an adult from Mexico who said he spoke to at least 10 workers under the legal age, and a manager at the plant who said he raised concerns but was told by bosses to “focus on production”. Reuters says that since the August report, “as many as 10 Alabama plants that supply parts to Hyundai or Kia have been investigated for child labor by various state and federal law enforcement or regulatory agencies”; a number that includes the 4 already mentioned. How is this happening? Partly through staffing agencies who stay in business by filling positions. The report dives into what it calls the “partially interconnected network of suppliers and staffing agencies, many Korean-owned, that exists to serve the Hyundai brands”. What it finds are the same issues that always hinder attempts to figure out who did what at the corporate level, trails of shell companies, hard-to-find executives, front office people with no comment, and spokespeople with boilerplate responses. However, in this case, Reuters also found connections like a staffing agency president owning a house where underaged workers lived, and reports of staffing agencies owning shuttle services to get workers from homes to the factories, those workers having the shuttle charges deducted from their pay. Why didn’t other workers say anything? Because these factories resurrect local fortunes by playing an “important economic role”, as Hyundai pointed out in a statement to Reuters, and no one wants to lose a job which could be the only decent employment for many miles. Why do these stories keep coming up? Because it’s too profitable to quit the practice. The U.S. Labor Department and the Alabama Department of Labor fined supplier SL Alabama and a staffing agency about $66.000. Meanwhile, another point in the Reuters piece notes the pressure of just-in-time manufacturing, saying, “To avoid halting assembly lines, Hyundai can fine suppliers (sometimes thousands of dollars per minute) for any delay, according to people familiar with its operations”. The DOJ didn’t comment on the state of its investigations, but we probably haven’t heard the last of this. Make that: We definitely haven’t heard the last of this. +++
+++ Would it have been easier to close down JAGUAR and start again? Perhaps so. Its Reimagine plan to reinvent itself as a maker of more exclusive, luxurious electric cars throws out everything but the brand name, and the connotations a brand name brings, for better or worse. For every person who loves Jaguar, its history and its great-looking and handling cars, there will be another for whom the ‘old man’ image can never be shaken. And in the more image-focused world that Jaguar is moving into, that latter point counts more than ever. It’s one thing trying to tempt people out of a BMW 3 Series into a Jaguar XE, quite another to swap their Bentley for a ‘Jaaaag’. Hence why it may well have been easier to close Jaguar down and start again with a new brand and a new name, one unburdened by history to live up to or with perceptions to change. Yet where we are: Jaguar exists and lives on. Jaguar had to do something, and closing it down would have been an easier way out. The plan is locked in, and the cars (3 of them) are coming. I can understand the logic of the plan but remain to be convinced, simply because of the height of the mountain that needs scaling. You can’t just decide overnight that you’re going to be a Bentley rival. Such opinions have been muttered and the debate has rumbled on for almost 2 years since the now-departed Jaguar Land Rover CEO Thierry Bolloré announced this boldest of plans. For a large part, the silence since from the company has frankly been deafening in the interim, save for a few tidbits on earnings calls from Bolloré and CFO (now acting CEO) Adrian Mardell, plus some engineering clues from vehicle line director Nick Collins. Now Jaguar has a voice and is ready to start speaking to the world again. The appointment of Philip Koehn as its director will provide it. Koehn was quoted in some Jaguar correspondence for the first time this week (a routine press release on the 2023 modelyear F-Pace). Nothing was given away, but there it was: a name attached to Jaguar for the first time in a long time. The ex-Rolls-Royce engineer was actually appointed back in April 2021 but has been hidden from public view until now. When I interviewed Bolloré around that time, he hinted at appointments having been made and a team set up but said they wouldn’t go public until they had something to share. Now Koehn has been unveiled to the world, that day is finally coming into view. The high point of his stellar career to date has been creating the modular architecture that underpins the current Rolls-Royce range. The similarities between that creation at Rolls-Royce and what Jaguar plans to do make you realise how appealing Koehn was to JLR, and credit to it for going out and getting perhaps the best-qualified person for the job who has plenty of experience outside the walls at Gaydon. For the past couple of years, Jaguar has existed in a strange hinterland of a physical brand in the present being wound down yet one that exists in the future only on Powerpoint presentations and in corporate soundbites. It has lacked a voice and a leader, someone to fight its corner. In the void of hard details will always come speculation and doubt. Koehn’s task is a monumental one, yet at last it’s now someone’s task to own. We often say that it’s always great people who make great cars and great car companies, and now we can start to hear from some of those people who will be making this new Jaguar a reality. +++
+++ It has been quite the year for significant anniversaries, and here’s another. 25 years ago, Swedish magazine Teknikens Värld inadvertently rolled a MERCEDES-BENZ A-Class as it spectacularly failed the ‘moose test’. If that sounds like over-enthusiasm from the journalists, know that the moose test comes from the Swedish driving test, in which candidates are asked which side of a moose should they steer into if they find themselves on a collision course with one. The answer is the rear, because once a moose decides to cross a road, it won’t stop. Elsewhere, the moose test is known as the double-lane-change manoeuvre, for obvious reasons. Either way, its purpose is to evaluate stability, because suddenly forcing a vehicle to yaw one way and then the other makes it extremely unstable. The A-Class was a big deal at the time and the roll disastrous for Mercedes-Benz, but on a positive note, it had an enormous effect on the safety of all vehicles. It accelerated the roll-out of its electronic stability programme (ESP), which became standard on the A-Class a year after the test failure. These days, most major manufacturers subscribe to the idea of making driving accident-free, and in Mercedes’ case the aim is to achieve that by 2050. It’s a tall order, because the company doesn’t just mean no accidents in Mercedes vehicles but no accidents involving Mercedes vehicles. As stability systems have evolved into even more comprehensive advanced driver assistance systems (ADAS), it’s hard to see what else could be done to protect drivers from themselves and others, but inevitably the answer has something to do with data. Mercedes’ Accident Research unit has been reconstructing accidents since 1969 and has so far analysed more than 5.000. Today, augmented reality is moving the work on a step further, with teams in India and China exchanging data with engineering teams at the mother ship in Germany. The idea is to develop safety systems that can account for the regional differences in accident patterns. More recently, a digital tool called the Mercedes-Benz Road Safety Dashboard is being brought to bear on anonymous data with the consent of drivers. It’s collected from Mercedes vehicles in London to identify which urban locations pose higher risk to drivers. It identifies the GPS location of potential collision spots, the details of which are analysed by an intelligent algorithm. The information is then displayed on digital maps so that local authorities and emergency services can better understand what action to take to make those areas safer. The emphasis, for now at least, is on vulnerable road users and areas around schools, nurseries and universities. Taking things one step further, a pilot project in the Netherlands is building up a picture of which roads are most dangerous and even detects areas of black ice in the winter, warning other vehicles directly as well as a control centre. It’s something Mercedes was talking about back in the early 2000s and now, by all accounts, the tech has finally arrived to make it possible. +++
+++ There is a theory about Elon MUSK , largely peddled by his legion of creepy, armchair fanboys, that everything he touches turns to gold. There is no doubt that he is among the world’s great visionaries. After all, this is a man who has effectively created the carmaker of the future from nothing. He is also on a quest to power the world with solar panels and batteries, plans to construct a network of tunnels to eliminate congestion, and one day colonise Mars. But his foray into the fickle world of social media is testing the hypothesis of Musk as a modern-day Midas to its absolute limits. His ownership of Twitter, while still in its infancy, has been for the most part, one crisis after another. In fact, at a company where half the workforce and thousands of contractors have been shown the exit, there has been an exodus of major advertisers and the possibility of bankruptcy has already been raised, it’s hard to imagine how things could get much worse. Still, as long as his problems were confined to the troubled social media platform, Musk and his loyal followers could get away with saying it was a one-time blemish on an otherwise unimpeachable track record. Yet increasingly it looks as though that might not be the case. In his efforts to prove the doubters wrong, there are growing concerns that the serial entrepreneur is exhausting so much time and effort trying to get to grips with Twitter, that Tesla (the jewel in the crown of his business empire) is beginning to suffer. In a regulatory filing submitted on Wednesday it was revealed that the serial entrepreneur had sold another slug of Tesla equity (22 million shares in total) in the preceding few days, this time worth nearly $US3.6 billion. It is widely assumed that Musk needs the proceeds to help fund his takeover of Twitter. The financing arrangements for the deal read like a bad dream, particularly against a backdrop of rapidly rising interest rates. To meet the $US44 billion purchase price, Musk borrowed $US12.7 billion of bank debt and persuaded existing Twitter investors to part with $US7 billion of equity, which left him on the hook for the remaining $US24 billion. With the large bulk of Musk’s wealth tied up in Tesla, he has relied on large share sales to bridge the giant funding gap. But the latest has provoked something akin to fury and a demand for regime change among his usually ultra-loyal shareholder base, as each stock transaction weighs on Tesla’s share price. “Elon abandoned Tesla and Tesla has no working CEO”, Koguan Leo tweeted. Koguan is reported to be the third-largest individual shareholder of Tesla and has previously described himself as a Musk “fanboy”. He said: “Are we merely Elon’s foolish bag holders?” Someone “Tim Cook-like is needed, not Elon”. The latest share sale was the third since the billionaire declared (on Twitter, of course) in April that there would be “no further Tesla share sales” to support the deal. He has now cashed out a total of $23 billion worth of Tesla stock (just $1 billion shy of the funding shortfall) since announcing his plans to buy Twitter. Having begun the year trading at $399, shares in the carmaker were changing hands for $158 yesterday; their lowest level for more than 2 years and a fall of 60 percent since the start of the year. “Musk continues to throw gasoline in the burning fire around the Tesla story by selling more stock”, Dan Ives, at Wedbush Securities, said. Ives accused Musk of using Tesla “as his own ATM to keep funding the red ink at Twitter”. Justifiably, investors are also beginning to seriously question not just if Musk is distracted, but whether the constant controversy surrounding his chaotic overhaul of the social network is beginning to tarnish the Tesla brand and harm sales. “Elon is a brilliant business leader. He will realise soon if not already that his polarising political views are hurting customer perceptions of Tesla’s electric vehicles”, Gary Black, who runs the Tesla investor Future Fund, tweeted. “Customers don’t want their cars to be controversial. They want to be proud as hell to drive them. Not embarrassed”, Black said. And that’s before you get to the structural challenges that Tesla is obviously facing, chiefly among them what the future holds in China, which Ives calls “the heart and lungs of the Tesla growth story”, if a trade war with the US escalates. Beijing has fired a warning shot, imposing restrictions on Tesla cars on the basis of spying fears, but there must be concerns over whether it ultimately ends up being locked out of China if trade relations continue to deteriorate. Meanwhile, traditional car manufacturers seem to be finally getting their act together in the electric market, at the same time as larger Chinese rivals such as BYD pile into Europe. In an apparent attempt to address shareholder concerns, Musk tweeted: “I will make sure Tesla shareholders benefit from Twitter long-term”, without explaining how, precisely. But will many hang around to find out? +++
+++ NISSAN was caught testing what appears to be a camouflaged prototype of an upcoming performance variant for its overhauled Z sports coupe. Is this the rumored, 500-horsepower Nismo model? Judging by the over-the-top bodywork and fresh wheels and rubber, I’m inclined to say yes. Nissan’s new performance entry was rumored to debut by year’s end, but with just a little over a week and a half to go, we expect that deadline (if it was even real to begin with) will be missed. But at least there are spy shots! Let’s start with the obvious: no current Z model has hood nostrils like those clearly visible on the test vehicle, and it would stand to reason that cosmetic bodywork would be disguised from outsiders; that the hood is actually vented on this particular car suggests some sort of functional cooling and/or intake system. The last-generation Nismo Z was a bit old-fashioned by modern standards, with just a 350-horsepower, naturally aspirated V6 nestled between its front shock towers. Here, we’re expecting to see a 500-horsepower tune for the Z’s turbo V6 (itself lifted from Infiniti’s Red Sport) line of sport sedans and coupes. The prototype is also wearing new front and rear bumpers. Both appear to be more intricately sculpted than the squared off, subtly contoured parts used on the standard car. The wheels used here are similar (but not identical) to those on the current Z Performance, but I’m not certain whether they’re final. The brakes, however, appear to be the same from the Z Performance, which are already larger than the standard Z’s stoppers. Though Nissan remains committed to growing the profile and footprint of its Nismo performance sub-brand outside Japan, this will probably be the last hoorah for internal-combustion performance models named “Z.” Let’s hope it’s a solid send-off. +++
