+++ ALFA ROMEO will break its annual sales record in 2025 as it continues to broaden its range, CEO Jean-Philippe Imparato has promised. The brand has already seen sales rise on the back of the launch of the Tonale and next year it will launch a small electric SUV as an indirect replacement for the Mito. Alfa Romeo sales have slumped in recent years but will rise to around 80.000-90.000 this year before breaking its own record in 2025, Imparato predicted in an interview. The highest annual sales the brand has achieved was in 1990, when it posted a global figure of 223.643. +++
+++ BYD has introduced its Dolphin electric car to Japan, betting that the compact hatchback will help spearhead sales in a market still hesitant to embrace Chinese automakers and electric vehicles. The Dolphin starts from ¥3.63 million ($24,560), BYD Auto Japan said at a launch event in Tokyo. The base model has a 70 kWh battery with 400 kilometers of range. The extended-range model costs ¥4 million, with its bigger battery offering 476 km per charge. While BYD is China’s biggest carmaker and a front-runner in the industry’s rapid transition to EVs, it has made little headway in Japan, where people prefer domestic powerhouses Toyota, Honda and Nissan. Imported cars, mostly luxury models from the likes of BMW and Volkswagen’s Porsche division, account for just 6% of the market, according to Bloomberg Intelligence senior auto analyst Tatsuo Yoshida. BYD hopes to sell 1.100 units of the Dolphin in Japan by March 2024. In October, the Chinese maker plans to have a booth at the Japan Mobility Show, previously called the Tokyo Motor Show. “We’re taking it one step at a time”, BYD Japan president Atsuki Tofukuji told reporters. “We’re making progress in building our customer base”. BYD has delivered only about 700 units of its Atto 3 in Japan since sales started in January. The SUV is priced from ¥4.4 million, but has struggled to compete with Nissan’s electric Leaf, which starts from around ¥4.1 million. Nissan’s mini Sakura, at just over ¥2.5 million, is Japan’s top-selling EV. In Japan, hybrids also remain far more popular than pure battery EVs, with market leader Toyota having been notoriously slow to shift to EVs. BYD plans to open 100 dealerships and showrooms by 2025 in Japan, and aims to launch its Seal sedan in the country early next year. Pushing into Japan (the world’s third-largest auto market) also gives BYD a new growth opportunity as Chinese carmakers face increasing hostility in Europe and the United States. The European Union has launched an investigation into Chinese subsidies for EVs in an attempt to ward off cheap imports it fears are a threat to the future of the bloc’s own automakers. While BYD has pushed into Southeast Asia, South America and Australia, it has stayed out of the U.S., where U.S. president Joe Biden’s Inflation Reduction Act doles out tax credits of as much as $7.500 toward consumer purchases of EVs, but only if they’re manufactured in North America. “This is a chance for BYD to capitalize on an untapped, niche market”, said Takeshi Miyao, an analyst at automotive consultancy Carnorama. The Dolphin should sell well in Japan because the quality of BYD’s cars has been steadily improving, and Japanese customers aren’t as biased against Chinese products as they used to be, he said. In Japan, the Dolphin will use the Chademo charging system developed in 2010 by 5 companies including Toyota and Tokyo Electric Power Company Holdings. Vehicles fitted for this charger have become a minority, with the charging systems of BYD and Elon Musk’s Tesla now the de-facto standard in major markets. +++
+++ CHINA warned that a probe by the European Union into Beijing’s subsidies for electric cars would have a negative impact on its trade relations with the bloc, which it accused of “naked protectionism”. The investigation could see the EU impose duties on cars it believes are unfairly sold at a lower price, undercutting European competitors. China “believes that the EU’s proposed investigative measures are to protect its own industry in the name of ‘fair competition’ and will have a negative impact on China-EU economic and trade relations”, a commerce ministry statement said. It said the investigation was “naked protectionist behavior that will seriously disrupt and distort the global automotive industry supply chain, including the EU”. European Commission president Ursula von der Leyen announced the anti-subsidy investigation, vowing to protect the bloc against unfair competition. The move was hailed as a “positive signal” by European automakers and by EU member states. French Finance minister Bruno Le Maire said during a visit to Berlin the probe was a “very good decision”, while Germany’s Economy Minister Robert Habeck said it showed the “right attitude” and was about tackling “unfair competition”. Beijing has already hit back against the probe, with Wang Lutong, director-general of the Chinese foreign ministry’s department of European affairs, saying “many EU members subsidize their electric vehicle industries”. “In what position is the commission to launch anti-subsidy investigation into electric vehicles from China?” he said. But there have long been concerns across Europe about how much the continent relies on Chinese products, especially those needed for the EU’s focus on clean energy. The EU’s internal market chief Thierry Breton warned last week about a trend emerging where Europe was “being relegated to net imports of electric vehicles or solar panels”. China could overtake Japan to become the world’s largest car manufacturer this year, according to some experts. European manufacturers have also to contend with state subsidies for electric vehicles across the Atlantic.Beijing called on the EU on Thursday “to carry out dialogue and consultation with the Chinese side, create a fair, non-discriminatory and predictable market environment for the joint development of the China-EU electric vehicle industry”. China “will pay close attention to the protectionist tendency and follow-up actions of the European side, and firmly safeguard the legitimate rights and interests of Chinese enterprises”. +++
+++ Even before the European Union targeted imports of cheap Chinese electric vehicles, their makers faced another big challenge: winning over consumers who don’t know or necessarily trust their brands. At the heart of their strategy is the traditional dealership model that EUROPEAN CAR MAKERS have been exiting in favor of direct sales. BYD, Xpeng, Great Wall Motor and others hope dealerships will quickly help them mobilize robust sales and service networks as they try to establish reputations for quality and reliability. “European consumers have no inkling of Chinese brands”, said Daniel Kirchert, the head of e-mobility consultancy Noyo and former BMW executive who co-founded the now defunct Chinese EV maker Byton. “It’s a huge challenge for Chinese carmakers to make clear to Europeans that their cars are on par with Tesla, at a better price”. So far, BYD, Nio, Lynk & Co, Xpeng and China’s other homegrown EV makers have barely made a dent. Their share of pure-electric and hybrid cars sold in Europe has risen to 5.6% over the past few years. The bulk of those deliveries have come from MG Motor, a brand more associated with its British roots than its Chinese ownership. Whether that proportion stagnates or skyrockets will depend on their ability to convince European consumers to stray from household names like Volkswagen, Renault and BMW that have long-standing track records on safety and performance. “We believe in the power of car dealers and the service they provide”, Xpeng’s Germany manager Markus Schrick said. “They are our face to the customer”. The dealerships’ customer relations could become even more important as political tensions escalate over the EU’s decision to open an investigation into China’s state support of its EV makers. If the roughly nine-month probe results in new EU tariffs on Chinese EV imports, it could quickly erode a pillar of their competitiveness. BYD, China’s biggest carmaker, entered Europe via Norway in 2021, and its Atto 3 model became the top selling EV in Sweden in July. In Germany (Europe’s biggest auto market) the company only has 15 dealer locations, but it’s targeting 50 in the medium term. BYD will need “considerably more to be represented nationwide”, said Jan Grindemann, chief operating officer of Hedin Electric Mobility, the carmaker’s German importer. To increase brand recognition, BYD has a deal with rental company Sixt to provide 100.000 EVs through 2028 and has already opened 150 stores across Europe. But to increase its scale, the company is focusing on a distribution network with conventional car dealers. Great Wall Motor, which is set to produce the new electric Mini Cooper with BMW, has teamed up with Emil Frey, the EU’s largest car dealer group, to distribute its Ora and Wey cars. Xpeng is following a similar path to sell its P7 sedan and G9 SUV, targeting as many as 20 dealers this year and double that in 2024. MG, the legacy British brand owned by China’s SAIC Motor since 2009, sold more than 100.000 vehicles in Europe last year and says it currently has more than 800 distribution points at local car dealers across Europe and the United Kingdom. Europe has seen its fair share of new entrants trying to win over buyers. The successful ones, like Toyota and Hyundai, only slowly crept higher in the ranks and never posed a real threat to Volkswagen’s dominance. Now, the industry’s paradigm shift to EVs is creating unprecedented opportunity for newcomers. Tesla’s success has shown that consumers are open to outsiders, though it’s unclear whether Chinese brands will be able to match the marketing draw of Elon Musk. But with its unmatched control of the battery supply chain, China is well positioned to expand its share. Part of the Chinese newcomers’ strategy is to entice buyers with a range of commitment-light ownership options, starting with Lynk & Co’s monthly subscriptions. Dealers, though, remain central. Because of consolidation in the industry and smaller shops going out of business, the number of car dealers in Germany has fallen to 6.800 in 2020 from nearly 3 times that in 2000, according to the IfA institute, which monitors auto-industry trends. The number is expected to almost halve by 2030, as carmakers move increasingly toward online sales. While new potential partners from China could be a boon to struggling dealerships, there are also risks. With so many new EV entrants flooding the market, some are bound to fail, which could leave dealers sitting on unsellable inventory. Where Chinese upstarts will land in a few years will depend on how things go during the next 24 months, according to Bernstein analyst Daniel Roeska. Market share could be between 5% to 20% by the end of the decade, and it’s unclear whether they’ll be able to follow Tesla’s path. “Re-creating Tesla’s success will be a challenge”, he said. “But it’s not impossible”. +++
+++ Dongfeng – HONDA became the first Sino-foreign joint venture (JV) to launch its electric vehicle (EV) brand in China, Lingxi. So far, major Sino-foreign JVs, such as SAIC–Volkswagen or FAW–Audi, released electric models under their existing brands. Lingxi is an entirely new energy vehicle (EV) brand that is being built on a new chassis dedicated to EVs and will feature a new battery safety system. The first model that should enter the market next year will differ from Honda’s current electric model, e:NS. Lingxi will use the brand-new electric vehicle platform. It will be different from e:NS when it comes to product positioning, target consumers, and market pricing, Dongfeng-Honda explained. The team behind the brand will use JV’s technology, design, service and sales network to create unique, fun cars that offer a better price-value-performance ratio. The new brand also presented its concept car, Lingxi L. The model’s development is in the hands of a team that just entered their 30s. The exterior uses a multi-faceted design and will use Lingxi Space cockpit and Drive ADAS. It will also feature folio doors. The Lingxi brand, along with the company’s hybrid technology and developments under e:NS, will be the basis for the electrification of the Dongfeng-Honda product offering. The JV plans to have over 50% of the models as electric by 2025. It also plans to launch ten new EV models by 2030. Currently, Dongfeng-Honda offers 3 electrified models. One EV and two plug-in hybrid (PHEV) models. The sales have been less than impressive in the past year. The most sold model was CR-V e:PHEV with close to 8.000 units sold. The e:NS EV was the second most sold model with little over 6.900 units. The Inspire e:PHEV recorded less than 500 units sold. +++
+++ HYUNDAI ’s Ioniq 5 N, a high-performance vehicle based on the foundations of the automaker’s awards-winning all-electric crossover, does not look like a typical car built for motorsports. To be fair, it is not a race car. Nonetheless, Hyundai has put together an everyday sports EV that boasts monstrous power with the Ioniq 5 N. Some journalists could get a closer look at the automaker’s first N-labeled EV and tested out the new functions and high performance of the car at the HMG Driving Experience Center in Taean County, South Chungcheong Province. At first glance, the Ioniq 5 N appears to be a slicker version of the Ioniq 5. With a length of 4.715 millimeters, a width of 1.940 mm and a height of 1.585 mm, the Ioniq 5 N is longer, wider and lower than the EV to improve aerodynamics. The high-powered Ioniq 5 N has also added air flaps on the front face for improved cooling. Still, the design and structure changes are just the tip of the iceberg. It is hard to comprehend the true value of the Ioniq 5 N until you have the chance to take the wheel. Hyundai has installed 7 new technologies specifically developed for the N lineup in the latest EV: N Active Sound+, N Drift Optimizer, N Pedal, N Torque Distribution, N Race, Track SOC (State of Charge) and N Battery Pre-conditioning. N Active Sound+ offers 3 sound system types (futuristic EV sounds, fighter jet sounds and the internal combustion engine’s ignition and exhaust sounds) to bring sonic diversity to one’s high-speed driving experience. With the 2 electric motors under the hood, the Ioniq 5 N touts a maximum horsepower of 650 and a maximum torque of 770 Nm if the N Grin mode is turned on. The N Grin mode gives a 10-second burst of maximized power and torque for launch control and overtaking. If the N Grin mode is activated, the Ioniq 5 N can reach 100 kilometers per hour in just 3.4 seconds. The EV can also reach a maximum speed of 260 kph without much trouble. The accelerating power is incredibly forceful as if the driver were on a departing airplane and the car’s weight makes the driving experience feel stable and safe despite the high speed. N Drift Optimizer makes it easier for not-so-experienced drivers to drift by automatically optimizing the distribution of torque between the front and rear wheels. Even for this Herald reporter who has never succeeded in drifting using internal combustion engine cars, the Ioniq 5 N’s new function allowed for a few moments of drifting. Of the new functions, N Pedal was what stood out the most during the test drive. Once the N Pedal mode is on, the driver does not have to worry about putting their foot on the brake when entering a corner at a high speed. N Pedal, which has three levels of decelerating force, uses a regenerative braking system and creates a quick weight transfer in the vehicle once the driver takes their foot off the accelerator to lead to a sharper corner entry. All the driver has to do is turn the steering wheel and lift their foot off the accelerator for fast cornering. The price of the Ioniq 5 N begins at 80.05 million won ($59,800) in the Korean market. Autointernationaal.nl expects the car to cost close to 80.000 euro in the Netherlands. +++
+++ TOYOTA plans to increase its production of electric vehicles to around 600.000 in 2025, more than 3 times the number of units expected to be produced in 2024, it has been learned. The automaker plans to expand its production capacity for EVs in stages to reach its target of selling more than 1.5 million vehicles worldwide, according to sources. Toyota plans to begin producing an electric SUV in 2025 at its Kentucky plant in the United States. With the popularity of SUVs in the U.S., the move is expected to help the carmaker increase its EV sales. Toyota sold about 38.000 EVs in fiscal 2022 and is aiming to sell about 202.000 in fiscal 2023. The company intends to invest more in EVs while increasing its profitability through a broad production strategy, which includes gasoline-powered and hybrid vehicles. +++
+++ It’s been a central argument for the UNITED AUTO WORKERS union: If Detroit’s 3 automakers raised CEO pay by 40% over the past 4 years, workers should get similar raises. UAW President Shawn Fain has repeatedly cited the figure, contrasting it with the 6% pay raises autoworkers have received since their last contract in 2019. He opened negotiations with a demand for a similar 40% wage increase over 4 years, along with the return of pensions and cost of living increases. The UAW has since lowered its demand to a 36% wage increase but the 2 sides remain far apart in contract talks, triggering a strike. Fain’s focus on CEO pay is part of a growing trend of emboldened labor unions citing the wealth gap between workers and the top bosses to bolster demand for better pay and working conditions. In June, Netflix shareholders rejected executive pay packages in a nonbinding vote, just days after the Writers Guild of America wrote letters urging investors to vote against the pay proposals, saying it would be inappropriate amid Hollywood’s ongoing strike by writers. The WGA wrote similar letters targeting the executive pay at Comcast and NBCUniversal. Fain has pushed back against arguments that a big pay bump for the union would jack up costs of vehicles and put the Big Three automakers (General Motors, Ford and Stellantis) at a disadvantage against foreign competitors with lower-cost workforces in the race to transition to electric vehicles. “The reason we ask for 40% pay increases is because in the last 4 years alone, the CEO pay went up 40%. They’re already millionaires”, Fain told. “Our demands are just. We’re asking for our fair share in this economy and the fruits of our labor”. CEO pay has ballooned for decades, while wages for ordinary workers have lagged. But did the Big Three chief executives really get 40% pay increases? Not exactly. “I don’t know where the 40% came from”, said General Motors CEO Mary Barra at a new conference when asked if the UAW’s numbers were accurate. Executive pay is notoriously complicated to calculate because so much of it comes in the form of stock grants or stock options. A detailed look at the compensation packages at all 3 companies shows how the UAW’s claim both overstates and understates reality, depending on the view. Barra, the only one of the three who held the role since 2019, is the highest paid, with a compensation package of worth $28.98 million in 2022. The single biggest component was $14.62 million in stock grants, which vest over three years and whose ultimate value depends on stock performance and other metrics. Her pay has increased 34% since 2019, according data from public filings analyzed for AP by Equilar. Ford CEO James Farley received nearly $21 million in total compensation in 2022, a 21% increase over the $17.4 million then-CEO Jim Hackett received in 2019, according to the company’s proxy statements. Farley’s package last year included $15.14 million in stock awards, which also vest over 3 years with an ultimate value dependent on performance. Where the the comparison gets complicated is at Stellantis, which was formed in 2021 with the merger of Italian-American conglomerate Fiat Chrysler Automobiles and French PSA Group. Because it is a European company, the way Stellantis discloses executive pay differs significantly from GM and Ford. In its annual renumeration report, Stellantis reported CEO Carlos Tavares’ 2022 pay was 23.46 million euros. That’s a nearly 77% increase over then Fiat Chrysler CEO Mike Manley’s 2019 pay of 13.28 million euros. Those are the numbers used by the UAW when it calculated that 3 automakers have, collectively, increased CEO pay by 40.1% since 2019, according to the methodology the union. But there’s a catch: Stellantis’ figures reflect “realized pay,” which include the value of previously granted equity that vested during the reporting year. U.S. companies, in contrast, use grant date value of stock packages awarded to executives during the reporting year. In its analysis, Equilar used the “grant date” method to make an equivalent comparison between all 3 CEOs. By that measure, Tavares’ 2022 compensation was in 21.95 million euros in 2022, including 10.9 million in stock awards with a 3-year vesting period. That’s actually 24% decline from Manley’s compensation package in 2019, which was 29.04 million euros, according to Equilar. So, is Tavares really making less than Manley was 4 years ago? Not really. That’s because in some years, talking about a CEO’s “realized pay” can obscure exorbitant pay packages approved by company boards. Take Tavares’ 2021 compensation package, which included special incentive award of 25 million euros in cash as well as stock worth 19.56 million euros (all contingent on long-term performance goals) granted to Tavares in recognition of “his essential role” in leading the company through the merger. That one-time award, which came on top of millions of more in regular compensation, alone pushed Tavares’ 2021 compensation package far above what Manley got in 2019. Stellantis shareholders voted 52.1% to reject the pay proposal in their annual meeting, though the vote was only advisory and the board approved his package anyway. The CEOs of GM and Ford also saw their compensation packages peak in 2021, before declining slightly in 2022. However you slice the numbers, the gap between CEO pay and rank-and-file workers at all three companies is gigantic. At GM, the median worker pay was $80,034 in 2022. It would take that worker 362 years to make Barra’s annual compensation. At Ford, where the media pay $74, 691, it would take 281 years. At Stellantis, with a median pay of 64.328 euros, it would take 365 years, although the company noted its its annual report that the disparity includes expenses related to Tavares’ one-time grant. Excluding that, the pay ratio is 298-1. How extreme that disparity? It depends on the comparison. It’s far above the typical pay gap at S&P 500 companies, which was 186-1. And it’s astronomical by historical standards. According to a study of the 350 largest publicly traded U.S. firms by the left-leaning Economic Policy Institute, the CEO-to-Worker pay ratio was just 15-1 in 1965. The automakers, for their part, emphasize that their foreign competitors pay their workers much less. Including benefits, workers at the Detroit 3 automakers receive around $60 an hour, according to Harry Katz, a labor professor at Cornell University. At foreign-based automakers with U.S. factories, the compensation is about $40 to $45. Then there’s Tesla. CEO Elon Musk’s 2022 compensation was reported as zero in the company’s proxy statement, rendering its official pay ratio meaningless. Of course, that’s because Tesla hasn’t awarded Musk new packages since a 2018 long-term compensation plan that could potentially be worth more than $50 billion and is facing a legal challenge from shareholders. But the proxy offers glimpse at the mind-boggling wealth disparity between its nonunion workers and one of the world’s richest men. The filing reported Musk’s total “realized compensation” in 2021 at more than $737 million. A typical Tesla worker earned $40.723 that year. According to the proxy, for that worker to make Musk’s “realized compensation” that year, it would take more than 18.000 years. +++
