+++ It took BMW more than 2 years to discover the extent of a braking system fault that is expected to cost the carmaker nearly €1 billion to fix. Customers and dealers began complaining to the German auto manufacturer about faulty brakes in June 2022. But it wasn’t until last month that BMW realized as many as 1.5 million cars might contain the defective part, supplied by car-parts maker Continental and touted as a lighter and more efficient system. A profit warning last week wiped €5 billion off BMW’s value, a debacle for a premium-car maker known as a driving-tech leader. BMW launched an in-depth review into the braking system in October 2023. A recall document shows that BMW found interference affecting the electric signals sent through the brake system. The first recall of about 80.000 vehicles followed in the U.S. in February this year. That has since snowballed to encompass 1.5 million cars across multiple brands made by BMW, including the $420.000 Rolls-Royce Spectre, the flagship 7-Series and the high-powered XM. “This isn’t just an ordinary recall, this is a significant shock”, said Ferdinand Dudenhöffer, director at the Center for Automotive Research in Bochum. “What’s also noteworthy is that BMW has been stepping up quality control among suppliers with a taskforce, indicating they see risks more broadly”. BMW is usually very cautious, preferring stability over short-term peaks, which is reflected in their margins. In the United States, carmakers risk fines if they don’t report safety issues in a timely way to the National Highway Traffic Safety Administration. In some cases a manufacturer may reasonably be unaware of a defect even after an extended period. The NHTSA hasn’t fined BMW over the brakes recall. A spokeswoman for BMW said that it took time to gauge the scale and financial impact of the recall, adding that the automaker needed to discuss the matter with officials across multiple markets and assess how much fixes would cost. A recall notice Rolls-Royce sent to its American dealers in March shows the company was aware at the time that it had a problem with one of its most prestigious brands. In capital letters, the luxury carmaker ordered a halt to sales and deliveries of all Spectre cars built between June 20, 2023 and June 23, 2023. The model’s braking system was potentially faulty, and a mechanic would have to follow a 26-step process to fix affected autos. The U.S. recall eventually ballooned to 688 Spectre cars built between January 2023 and July 2024, more than a quarter of the vehicles produced each year. Given recalls in other markets, the total number of Spectre cars affected is likely higher. The braking system that prompted the recall is known as brake-by-wire, which uses electronic impulses instead of the hydraulic technology built into most car brakes since the 1920s. Its components are a cornerstone product for Continental’s auto unit, which is in the process of being spun off. Yet problems soon arose with a “power braking” feature meant to reduce the amount of force needed to activate the brakes. The feature failed to fully activate in some vehicles. Physically weaker drivers might struggle to apply the necessary pressure in emergency situations as a result, increasing the risk of a crash. Continental traced the defect back to a plant in Hungary. Workers producing the brakes’ circuit boards there failed to maintain a sufficiently clean environment, leaving smudges or dust on the components that hampered the system’s performance, according to people familiar with the matter. No accidents or injuries have been reported as a result of the braking fault. But with repairs expected to take months and ultimate costs still unclear, the crisis marks the latest hit to Germany’s most important industry. The sector is already under a cloud as electric-vehicle sales slow and European manufacturers face headwinds in China. Volkswagen warned earlier this month that it may shutter factories in the country for the first time. Andrew Graves, an automotive analyst and emeritus professor at the University of Bath, said a rising number of recalls are raising “serious questions” regarding automakers’ due diligence of their supply chains. “Perhaps the sector needs to focus and concentrate on core competences to avoid such issues in the future?” he said. +++
+++ The HYUNDAI MOTOR GROUP has renewed its commitment to the hydrogen fuel cell vehicles industry in the Czech Republic, a booming market for the clean mobility sector. Ken Ramirez, vice president of global commercial vehicle and hydrogen Business division at Hyundai Motor Group, and Skoda Electric CEO Jaromir Silhanek participated in the signing ceremony held in Prague on Friday to join forces in hydrogen-powered mobility. The partnership agreement comes during South Korean president Yoon Suk Yeol’s state visit to the Czech Republic, where the administration is in the works to secure the 24 trillion won ($18 billion) nuclear export deal. Hyundai Motor Group executive chairman Chung Euisun has also reportedly accompanied Yoon on the 4-day trip and will attend the Korea-Czech business forum. Hyundai said it plans to roll out Skoda Electric vehicles equipped with Hyundai’s hydrogen fuel cells. The 2 will also work on hydrogen fuel cell systems and technology and efficient energy solutions for vehicles. Together they will look into business opportunities in the hydrogen ecosystem and value chain outside the mobility sector. In its push toward sustainable mobility, the Czech Republic vowed to put 40.000-50.000 hydrogen cars on the road and install up to 40 hydrogen charging stations by 2030. “With Skoda Electric, we will strive to achieve the Czech Republic’s net zero target. I believe we can take the lead in the hydrogen industry by creating synergy with Hyundai’s hydrogen fuel cell technologies”, Ramirez stated. The auto giant also pledged to discuss academic and technological partnerships in future mobility with the Technical University of Ostrava along with South Korea’s state-run research institutions. Kim Dong-wook, vice president of the strategic planning department at Hyundai Motor Group; Technical University of Ostrava President Vaclav Snasel, Na Seung-sik, head of Korea Automotive Technology Institute; and Chun Yoon-jong, head of Korea Planning & Evaluation Institute of Industrial Technology, signed the agreement earlier in the day. With the strategic partnership, Hyundai looks to research vehicle-to-everything (V2X), Vehicle-to-grid (V2G), artificial intelligence and cyber security as well as talent nurturing and academic exchange programs. V2X is a system through which a vehicle can share its data through wireless connectivity, and V2G enables plug-in electric vehicles to inject electricity into the power grid and control the charging rate. “Hyundai is planning to carry out a pilot project on creating a V2G ecosystem in South Korea since June this year”, Kim stated. “The nation’s V2G sector is expected to witness rapid growth based on institutional support and the company’s advanced technology. We plan to share the experience and know-how with Czech’s EV industry”. +++
+++ KIA is showing signs of recovery in China, recording more than 20.000 units in monthly sales for 3 consecutive months from June to August. If this momentum continues, the company is on track to reach or surpass its goal of selling over 200.000 units in China by the end of the year. Kia’s recovery is primarily driven by 2 factors: the introduction of new, market-specific models and an expansion of its export operations. According to Kia’s Chinese joint venture, Jiangsu Yueda Kia, the company sold 22.498 vehicles in August, marking a 36.2 percent increase compared to the same month last year. This is the highest monthly sales figure so far this year. From January to August, Kia’s total sales in China, including exports, reached 154.243 units; a 61.3 percent rise from the same period in 2023. This surge has positioned Kia as the top-selling brand among joint venture automakers in China. At the current pace, Kia expects its total sales in China to exceed 230.000 units by the end of the year, a return to the 200.000-unit threshold for the first time since 2020. A critical factor behind Kia’s success is the introduction of new vehicles tailored to the Chinese market. The company launched the EV5, a mid-size electric sport utility vehicle, for the first time in China in late 2022. This was followed by the release of the new K3, a refreshed version of its midsize sedan, in 2023. Sales of the EV5 have been promising, with nearly 6.000 units sold between January and July. Kia has also found success with its updated K5 sedan, which has been redesigned to be more competitive in the market. The 2025 K5 is priced up to 23,000 yuan (approximately $3.200) less than the previous model, making it more accessible to a broader range of consumers. By offering both high-end and entry-level versions, Kia has enhanced the appeal of the K5, driving higher demand. Kia’s rebound in China is not solely driven by domestic sales. The company has also capitalized on the growing role of its Yancheng plant as an export base. As of August, the plant had exported more than 300.000 vehicles, helping Kia achieve the highest export volume among joint venture automakers in China. This export strategy has been key in offsetting fluctuations in domestic demand and strengthening Kia’s market position in China. Jiangsu Yueda Kia is a 50-50 joint venture between Kia and Jiangsu Yueda Group in Yancheng, Jiangsu Province. The sales boost in China is also positively impacting Jiangsu Yueda Kia’s financial performance. While the joint venture posted an operating loss of 32.3 billion won ($24.12 million) in the first quarter of 2024, this loss was reduced to 27.8 billion won by the end of the second quarter. The company also achieved an operating profit of 4.5 billion won in the second quarter, reflecting a gradual recovery in profitability. “By sustaining monthly sales of over 20.000 units, Kia has shown it’s on the right path in China. This level of consistency signals that the company is well-positioned to boost profits as its operations continue to strengthen”, said Kim Sung-rae, a market analyst at Hanwha Investment & Securities. +++
+++ On Thursday, Autointernationaal.nl reported that NIO was considering buying the Audi factory in Vorst. This morning in China, Nio founder and CEO William Li flatly denied the story. Vorst is one of the 19 municipalities that make up the capital region of Brussels, Belgium. Audi has a factory there that produces the Q8 e-Tron and employs 2.910 employees. Due to poor sales of the model, production is set to end next year, after which Audi appears set to close the plant. A Nio delegation had visited the plant within the last few weeks and was possibly going to make a bid before a September 23 deadline. The main justification for this was that Nio, like other Chinese EV producers, is facing tariffs from the EU on imports from China. A number of Chinese producers have been actively looking into or are in the process of building plants in Europe to circumvent the regulations. The fact that the plant is being used to build an EV and that it is a premium EV makes the Belgian plant a better candidate than perhaps some other existing factories in Europe. William Li, however, was quite prosaic when denying the story, saying, “Can we afford a factory that Audi can’t even afford?” This comment was probably greeted with a sigh of relief from many long-suffering Nio investors, given the company’s cash burn situation. While having a factory in Europe could possibly give Nio a much-needed boost with its European sales that would be quite a gamble given the current low level. Li even went as far as saying such a purchase would be digging a hole for themselves. Notably, Li said Nio is cautious about investing in fixed assets with the exception of battery swap stations. +++
+++ The electric version of the striking PEUGEOT 408 is set to be revealed on 2 October, Peugeot’s managing director has told. The simply named Peugeot E-408 will go on sale before the end of the year. The regular 408 sits on the same platform as the Peugeot 308 and Opel Astra, so I’m expecting the E-408 to use the same running gear as their EV versions, the E-308 and Astra Electric. That means a 156 hp front-mounted e-motor and a 54 kWh battery, which should give the E-408 a range of around 400 kmiles. I don’t expect the E-408 will receive any styling or interior design changes, as the 308 and E-308 are identical, and it’s the same story with the Astra. Prices for the Peugeot E-408 are likely to start in the Netherlands from around €44.000, considering the Peugeot E-308 Allure is priced from €42.070; nearly €3.600 more than a pure petrol 308 in the equivalent specification. For reference, the starting price for a petrol 408 is currently €40.270. The arrival of the E-408 will mark a significant milestone for Peugeot, as it will mean every model in its line-up is available with pure-electric power. The latest EVs to join the range were the E-3008 and E-5008, which Peugeot has now confirmed will offer up to 700 and 670 km of range respectively when the long-range versions arrive next year. This achievement sets the brand apart in the marketplace. A spokesman told me: “There are 2 things going on in the market right now; you have the normal competition between brands who are trying to win customers from each other, but there is a subsurface economic war going on in the car industry between those who can and those who can’t. “Those who can achieve high driving ranges, will be put in a stronger position, which means that they will succeed in the future market. And those who can’t, who have nothing other than to fight back. So you have to choose what side of that market you want to be. Do you want to be an equivalent to a tobacco company that will be seen in ten, 15 years time as really not cool? Or are you a brand that actually in this market can really succeed? Peugeot is in that camp, as our whole range will be electric”. Unlike some brands, Peugeot has not set a date for when it will stop selling petrol or diesel-powered cars. The spokesman explained: “At the end of the day, what we all have to do is follow the legislation on the one hand, and follow customer demand on the other. I can’t give you a date in mind, and I wouldn’t be so arrogant to say that in ‘2027 I’m going to stop selling ICE cars’. Because if consumers are telling me in 60 percent mix that they want electric vehicles, then that’s what we would have to do. We have to have that agility and response to where the customer is at. It’s not for me to dictate. I will try and push to be better in that electric market in the future, but I’m not an evangelist”. +++
+++ SOUTH KOREA is being urged to brace for an influx of Chinese electric vehicles (EVs), which are feared to increase their market share while potentially impacting the local environment, experts and industry officials said. Data from the Korea International Trade Association (KITA) revealed that Chinese EV imports reached $848 million during the first 7 months of this year, accounting for 66 percent of total imports of such cars. Of particular concern is the rapid growth, with imports surging more than 8-fold compared to the same period last year. This was driven by the popularity of the Model Y, a mid-sized SUV manufactured by Tesla’s Gigafactory in Shanghai, China. Tesla has also imported the Model 3 from China. Both vehicles have been hugely popular apparently due to their price competitiveness. Chinese EVs are posing a significant threat to domestic EV makers. According to data from KAMA (the Korea Automobile Manufacturers Association), the share of Chinese electric buses exceeded 40 percent as of April 2023. Industry officials have emphasized the urgent need to create a fair competition environment for both Chinese and domestic carmakers. Most Chinese EVs are equipped with LFP batteries, which have a clear upside in terms of its price competitiveness. However, since LFP batteries cannot be recycled, experts are urging the government to impose additional costs on Chinese EVs equipped with these batteries. “Korea’s regulatory authorities are urged to impose a type of environmental improvement cost on EVs with LFP batteries, and build an ecosystem for both local and imported EV makers to compete on an equal footing,” said Kim Pil-soo, an automotive technology professor at Daelim University College. Fears of increased Chinese EV imports are escalating as BYD, the largest Chinese EV maker, is set to enter the Korean market in the latter half of 2024. Additional data from KAMA indicated that the growing presence of Chinese EVs, both domestically and internationally, poses an increasing threat to Korean carmakers. Korean EV makers’ share of global sales dropped to 9.6 percent in the first half of this year, a decline of 0.8 percentage point, as Chinese firms rapidly expand their footprints abroad. Industry officials argue that Chinese EVs offer unmatched price competitiveness in the global market, prompting local automakers to focus on strengthening their supply chains and improving their production methods. “One key downside of EVs is their relatively higher price range than conventional vehicles with internal combustion engines”, an official at a carmaker said. “It appears to be very difficult for local carmakers to gain more price competitiveness than Chinese EVs for the time being, so they will have to focus more on making their production more efficient to reduce unnecessary fixed costs and gain more advantages in terms of flexible production than their Chinese counterparts”. +++
+++ VOLVO is seeking the equivalent of $1.2 billion from the Swedish government to help fund the electric vehicle battery plant it’s constructing alongside Northvolt, through a joint venture known as Novo Energy. The plant, located in Gothenburg, has been years in the making and is scheduled to open in 2025. It will have a potential annual cell production capacity of up to 50 GWh, enough to supply the needs of around 500.000 vehicles per year, including Volvo and Polestar models. Dagens Nyheter has revealed the joint venture is asking for the largest direct grant that’s been sought from the Swedish Energy Agency (totalling 13 billion Swedish kronor ($1.2 billion) to complete the plant. According to Novo Energy communications director Christian Jebsen, “Starting industries like this is very expensive, and financial support is crucial at this stage”. In addition to asking for a substantial grant of taxpayer money, Volvo and Northvolt have applied for state loan guarantees through the local Debt Office. It’s not just the financing of the plant that’s proving difficult to secure. According to Dagens Nyheter, the factory lacks 70% of the electricity it needs to operate. A few years ago, Volvo had announced that it would sell nothing but EVs by 2030 when it committed to the plant. It recently walked back that promise, announcing it aims for electrified vehicles to account for 90-100% of its sales by 2030, with many of these to be plug-in hybrids and mild-hybrids. The Swedish brand has blamed the change on the slower-than-expected rollout of charging infrastructure, a lack of government incentives, and recent uncertainties created by new EV tariffs. In a statement discussing the matter, Volvo chief executive Jim Rowan said the carmaker is “resolute in our belief that our future is electric”, noting it “provides a superior driving experience and increases possibilities for using advanced technologies that improve the overall customer experience”. He added the “transition to electrification will not be linear, and customers and markets are moving at different speeds of adoption”. +++