Article Type: News

Fiat Chrysler expands EV offering with new joint venture

Fiat Chrysler Automobiles (FCA) has entered a joint venture with energy-storage company Engie to create a new e-mobility business, offering a suite of solutions including charging infrastructure and green energy packages.

The new entity will be an Italian e-mobility technology company, with the carmaker saying it will have access to a portfolio of ‘more than a hundred patents, a strong team of electrical and system engineers, and an established automotive industrial footprint.’

The venture will rely on FCA’s financial resources together with its industrial footprint, while Engie will provide technical expertise and its intellectual property portfolio. The two companies are looking to create sustainable mobility, which will make access to electric automotive technology easier and more convenient for drivers and mobility users. It will offer products for electrically-chargeable vehicles (EVs) such as residential, business and public charging infrastructures as well as green energy packages, enabling customers to charge at home or at any public charging point across Europe with a simple subscription at a fixed monthly rate.

Future thinking

The joint venture represents another example of vehicle manufacturers looking beyond the sale of a vehicle, especially when it comes to EVs.

Profit margins are likely to be lower for EVs due to the high cost of components involved in their production. Volvo believes that margins will only start to improve in 2025 as it increases its range. Therefore, as carmakers look to an electric future, they need to explore new avenues of profit to recoup losses they may make as sales of petrol and diesel engines make way for battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs).

Hyundai recently announced it was becoming a partner in the manufacturer-backed charging provider Ionity. In the UK, Audi has teamed up with energy supplier Octopus to offer 5,000 ‘free electric miles’ (over 8,000km). Volkswagen (VW) is rolling out wallboxes and a recharge service with the release of the ID. family in Europe. Meanwhile, Ford has set up partnerships with infrastructure-installation service providers to deliver charging at home.

Therefore, FCA’s move to join forces with Engie and provide e-mobility services will give the Italian carmaker another option to make profits as it looks to increase its EV offering.

‘The signing of this Memorandum of Understanding originates from a fruitful three-year cooperation between the two companies. This allowed the implementation of truly disruptive projects, such as the introduction of the exclusive FCA easy Wallbox, an easy-to-use plug-and-play charging unit, the recently launched V2G Pilot Project and the innovative customer-oriented energy packages,’ said Mike Manley, CEO of Fiat Chrysler Automobiles. ‘The envisioned joint venture would allow an even higher commitment from both parties to expand the scope of the existing cooperation and further develop innovative products and services to enable and support a smooth shift to electric mobility in Europe’.

Commercial operations

Engie has also partnered with Scania, providing transport providers in 13 countries with made-to-measure e-mobility solutions.

This partnership will be for trucks and buses and will provide Scania’s clients with solutions to meet their e-mobility needs. It will include made-to-measure solutions to meet a fleet and depot’s actual management requirements, as well as those of electric heavy goods vehicles (HGVs). It will also cover smart charging infrastructure, service and maintenance, the provision of green energy, and financing.

‘A complete charging solution encompasses energy supply, charging hardware and software, as well as installation, maintenance and other associated services tailored to meet each client’s specific requirements,’ commented Alexander Vlaskamp, Scania’s head of sales and marketing. ‘This strong partnership with Engie and EVBox Group will simplify our clients’ transition over to an increasingly electrified fleet on the path towards a more sustainable transport sector.’

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Volvo recalls 120,000 cars globally after airbag defect

Volvo Cars is undertaking a global recall of its S60 and S80 models built between 2001 and 2003 due to an airbag defect, Autovista Group has learned.

‘The recall is global and in total around 120,000 cars will be recalled from markets with hot and humid conditions,’ the carmaker confirmed to Autovista Group’s Daily Brief. ‘All affected owners will be contacted directly by Volvo.’

The move looks to tackle an airbag defect which has already been linked to one fatality in the US. Documents published by the country’s National Highway Traffic Safety Administration (NHTSA), describe the potential for the driver side airbag inflator to rupture, causing fragments to be expelled on deployment.

This process has already begun, with the manufacturer reaching out to owners of the S60 and S80 models. According to NHTSA documents, Volvo plans to replace the faulty unit with modern propellant and inflator.

‘After being notified by Volvo in August 2019 of a field incident where it appeared that a specific type of airbag inflator ruptured upon deployment, ZF promptly informed the NHTSA and, together with Volvo, began investigating the incident,’ the airbag provider told the Daily Brief. ‘As a company committed to safety, ZF will continue to work closely with NHTSA and Volvo on this issue.’

Hot and humid conditions

The report lays out that when the faulty airbag’s propellant tablets are subjected to increased moisture levels and frequent high-inflator temperatures, the tablets can start to decay and form dust particles. Also, when exposed to increased temperatures, moisture leaves the tablet and when cooled down is absorbed and accumulated on its surface.

This localisation of moisture leads to ‘volumetric changes of the tablet’s surface,’ creating dust. This dust increases burn surface area and burn rate. This can result in higher combustion chamber pressure and the risk of inflator rupture.

‘In the event of a crash were the driver airbag is activated, fragments of the inflator inside the airbag may, in certain cases, project out and in worst case strike you, potentially resulting in serious injury or death,’ the US recall notice states.

The carmaker and the NHTSA have had meetings about the airbag fault since August 2019.

The agency confirmed that one person in the US died when a ZF/TRW FG2 twin driver airbag inflator containing the propellant 5AT-148N exploded. The government body said this was the only known fatality for this type of inflator globally.

Takata troubles

The development is reminiscent of the ongoing global recall due to an airbag issue by Takata. According to the NHTSA, it affected tens of millions of vehicles, from 19 different automakers. These airbags were recalled because they could explode when deployed, causing serious injury or even death.

Ford and Volvo to pool emissions as recalls wreak havoc

Ford will enter a pool with Volvo Cars to meet its 2020 European CO2 emissions target. The recall of the Kuga plug-in hybrid (PHEV) reduced the number of low-emissions models the carmaker could sell this year, impacting its fleet-average CO2 level.

But while Volvo Cars announced it was set to overachieve on this year’s targets, its subsidiary Polestar confirmed it is also initiating a recall. As safety concerns continue to plague electric vehicles (EVs) and shake consumer confidence, manufacturers will need to act decisively if they want to meet their respective emissions targets.

Ford’s recall

In August, Ford recalled and suspended sales of Kuga PHEVs built up until 26 June, after four vehicles reportedly caught fire. The problem was traced back to the potential for water to cause an electrical short, which could then lead to overheated battery cells. It was estimated that over 20,000 models could be affected. With the Mustang Mach-E not yet in showrooms, Ford lacks a mass-market EV, leaving it heavily reliant on PHEVs to meet its emissions obligations.

‘Ford always has, and will continue to meet, the EU’s emissions targets. Based on our product roadmap and production schedule for this year, we expected to comply with the new regulations, and this was still our intent with the COVID-related disruption to manufacturing,’ the carmaker said in a statement sent to Autovista Group. ‘However, given the current supplier battery issue with the Kuga PHEV, Ford now will enter a pool to meet the EU’s 2020 emissions regulations without penalty for passenger vehicles, just as many other OEMs have done in Europe.’

‘We recently declared our intent to join an open pool with other OEMs and can confirm we are doing so with Volvo Car Corporation,’ Ford added. ‘Conversely, as we anticipate over achieving our CO2 targets on light commercial vehicles, we have filed separately our intent to form an open pool so other OEMs can benefit from the positive CO2 performance of our light commercial fleet.’

Pooling with Volo

At the end of October, Volvo Cars and its EV affiliate Polestar confirmed they would be able to reduce fleet emissions beyond their joint CO2 target. This left them with enough surplus to enter a pool with Ford, with the resulting revenue from the deal to be reinvested in new green-technology projects.

‘For Volvo Car Group, the future is electric and we are transforming our company through concrete action,’ said Håkan Samuelsson, chief executive of Volvo Car Group. ‘I am pleased to see that we are exceeding our CO2 reduction targets. It proves our strategy is the right one for our business and for the planet.’

PHEVs made up more than a quarter of Volvo Cars’ sales in Europe during the first three quarters of 2020. By 2025, the carmaker aims for its global sales volume to consist of 50% BEVs, with the rest made up from hybrids. Meanwhile, Volvo’s EV brand began deliveries of the Polestar 2 in July. But as Ford joins Volvo’s emissions pool, the Polestar 2 has climbed into the same boat as the Kuga PHEV, as it too hits stormy waters.

Polestar recalls

In a statement issued at the end of October, the BEV-maker confirmed it is initiating a recall as well as a service campaign of the Polestar 2. The recall will involve the replacement of faulty inverters on most delivered customer vehicles. This unit transforms stored energy in the battery into the power required by the electric motors. Polestar confirmed the total number of affected vehicles delivered to customers is 4,586.

Meanwhile, the service campaign relates to the high-voltage coolant heater, which is responsible for both cabin and high-voltage battery heating. The carmaker confirmed that faulty parts fitted to early production cars need to be replaced. The total number of affected vehicles delivered to customers is 3,150.

So, in the wake of the Kuga PHEV recall, Ford found emissions regulations relief in Volvo Cars, whose affiliate is now coming face to face with EV issues itself. As recalls ravage new EV models, carmakers must act quickly to ensure consumer confidence does not take too much of a nosedive. If public opinion takes a dramatic turn against PHEVs and BEVs, the potential for manufacturers to achieve their emissions targets will plunge.

Mini model range to expand and electrify

BMW has outlined new plans for its Mini brand, including the electrification of the entire model range, in cooperation with Chinese manufacturer Great Wall, and the addition of two new crossover models.

Mini started on the road to electrification in 2008, with the low-volume production of the Mini E. With the plug-in hybrid (PHEV) variant of the Mini Countryman alone, electric vehicles (EVs) accounted for 5% of the brand’s total sales in 2019, according to a BMW Group release. Following the launch of the Mini Electric earlier this year, the EV share has doubled to 10% of all new registrations for the brand.

Looking forward, Mini ‘will enable customers all over the world to have emission-free driving with a completely electrified model family.’ However, the brand will continue to offer internal combustion engines (ICEs) as they remain an ‘ideal solution for target groups and regions whose mobility needs are not yet met by all-electric vehicles.’

‘With the two pillars of our drivetrain strategy, we are pursuing the Power of Choice approach to meet the needs of our customers around the world,’ Bernd Körber, head of Mini, said in the statement. ‘This will create the conditions for further growth and actively shape the transformation of mobility.’

Speaking to the German publication WirtschaftsWoche, Körber commented that ‘we will electrify the whole Mini portfolio by 2024.’ He added that there will be Mini cars with ICE until 2030 but the brand will be ‘completely electric earlier than most other brands.’ Körber predicts that beyond 2025, more than half of all Minis sold will be purely electric, and Mini could be an electric brand in 2030. ‘Already at the end of 2020, the share of pure-electric and plug-in hybrid Minis sold will be about 10% to 15%. In 2021, it should then be about 15-20%.’

Crossing over

The future Mini range of all-electric vehicles will include the three-door hatchback, a new crossover model in the small-car segment and a compact crossover model. The Mini Countryman compact crossover will therefore be joined by a new crossover model in the small-car segment, which will be supplied exclusively with an all-electric drive. The next-generation Countryman will be available with both ICE and electrified powertrains.

However, this does leave a question mark over the future of the Mini Clubman compact hatchback model, which is produced at Mini’s plant in Oxford, UK. The Clubman spearheaded Mini’s move into the premium compact segment before being joined by the Countryman. Around 40% of the brand’s vehicle sales are in this segment.

Building with Great Wall of China

The Chinese vehicle market continues to grow and will become even more important for Mini in the future. Currently, around 10% of all new vehicles produced for the brand are delivered to customers in China. It comes as little surprise, therefore, that Mini will move from being an import brand to producing cars locally.

Based on a new vehicle architecture, developed from the ground up for pure e-mobility, battery-electric vehicles will be produced in China from 2023, in cooperation with local manufacturer; Great Wall Motor.

‘This venture will enable Mini to meet the rising demand for emission-free driving both in China and in the other global markets. Cooperation with the Chinese partner will be based on a clearly defined principle: production follows the market. With locally manufactured vehicles, Mini will serve the growing Chinese automotive market whilst maintaining stable production at other locations,’ BMW Group said in its statement.

Automotive industry worries as Brexit no-deal seems likely

With a deadlock in Brexit trade-deal negotiations following the passing of a UK-imposed deadline, both the British and European automotive industries are nervous about the looming threat of a no-deal scenario.

Last week, the UK government signalled that ‘the talks are over’ in regards to a free-trade agreement with the European Union (EU). Prime Minister Boris Johnson added that the country has to ‘get ready’ to trade in 2021 without an agreement, although stopping short of confirming that discussions would not resume. Government television messages are running in the UK warning businesses to get ready for change from 1 January 2021.

While the EU is keen to continue talking, the UK government is now giving businesses in the country warning that the likelihood of any deal is diminishing rapidly, and they should prepare for tariffs and customs checks. For the automotive industry, which relies on competitive pricing and ‘just-in-time’ deliveries, this is a hammer blow – particularly for those companies based in Britain.

Government response

The UK is looking for a ‘Canada-style’ deal. The EU’s agreement with Canada is called the Comprehensive Economic and Trade Agreement (CETA), which removes most tariffs, but not all, while increasing quotas, meaning more goods can be shipped before tariffs are applied. Instead, it looks likely that an Australian-style deal will be adopted. This means tariffs on imports and exports to and from the EU, together with stricter customs checks at borders.

‘We were totally clear that we wanted nothing more complicated than a Canada-style relationship, based on friendship and free trade,’ Johnson said last week. ‘To judge by the latest EU summit in Brussels, that won’t work for our EU partners. They want the continued ability to control our legislative freedom, our fisheries, in a way that is obviously unacceptable to an independent country.

‘Given that they have refused to negotiate seriously for much of the last few months, and given that this summit appears explicitly to rule out a Canada-style deal, I have concluded that we should get ready for 1 January with arrangements that are more like Australia’s, based on simple principles of global free trade.’

The Chancellor of the Duchy of Lancaster Michael Gove, added: ‘At the end of this year we [the UK] are leaving the EU Single Market and Customs Union and this means there are both new challenges and new opportunities for businesses. Make no mistake, changes are coming in just 75 days and time is running out for businesses to act.

‘It is on all of us to put in the work now so that we can embrace the new opportunities available to an independent trading nation with control of its own borders, territorial waters and laws.’

Automotive outcry

Numerous carmakers and suppliers have stated over past months that should a no-deal occur, they would seriously consider their manufacturing positions in the UK. In contrast, others have highlighted the problems that such a scenario would pose on importing items into the country.

The Society of Motor Manufacturers and Traders (SMMT) has stated that with tariffs added, the cost of a UK-built car could rise by as much as £2,700 (€3,000). Recently, it was reported that Toyota and Nissan would look for compensation from the UK government should such costs be added, as to export their vehicles for sale in the EU with tariffs added would make them less competitive than those from European-based marques.

Volkswagen has warned that it would be unable to absorb any tariffs placed on vehicle imports. The carmaker has no manufacturing presence in the UK. As the country’s second-largest brand by market share (according to SMMT figures), it is possible the company will look to stockpile vehicles in the country before the end of the transition period.

Responding to the Prime Minister’s statement, Mike Hawes, chief executive of the SMMT, said: ‘Make no mistake, the automotive industry will not prosper from ‘no deal’. It would have a devastating impact on the sector, on the economy, and on jobs in every region of Britain.

‘Businesses have been battling coronavirus at the same time as investing heavily in decarbonisation, all while preparing as best they can for a seismic change in trading conditions come year-end. But to avoid permanent damage, we urge both sides to keep talking, to remain calm but work with renewed vigour on a deal that supports automotive, a sector that is Britain’s biggest exporter of goods and one of the UK and Europe’s most valuable economic assets.’

According to Reuters, when asked about Brexit trade talks at a recent speaking event, Daimler chairman Ola Källenius– said: ‘I am hoping for last-minute common sense,’ before confirming that the company ‘would have to live with tariffs’ and has no plans to open any manufacturing plants in the UK to avoid them.

Bentley chief executive Adrian Hallmark told Reuters that a Brexit no-deal would be ‘extremely damaging’ for the Volkswagen Group-owned luxury carmaker.

‘If you took the duties on components, 45% of the bits we buy in, and the 10% tariff on cars, worst-case scenario, it would take out a significant percentage of our profits,’ he said. ‘(It) would probably ACEA appeals to EU.

Furthermore, the European Automobile Manufacturers Association (ACEA) has written to Brussels urging the EU parliament to ‘reconsider its position’ on a trade deal with the UK, according to the Financial Times

The body’s demands include the EU lowering the percentage of components in a car that must be either European or British for the vehicle to qualify for the benefits of any EU-UK trade deal, a process known as ‘cumulation’. ACEA is also seeking a ‘phase-in period’ of these new rules to help the industry adapt to the changed business environment.

The EU looks unlikely to sanction parts from Japan and Turkey that could count towards ‘local-parts’ figures. Manufacturers with plants based in the UK will need to prove that exported goods are actually British-made, with a specified threshold of British parts. Should the threshold not be met, tariffs will be included on exports, even if a trade deal is in place.

Brussels has proposed that non-UK/non-EU content be limited to 45% of the car, a figure ACEA wants pushed up to 50% ‘in line with the UK’s position.’

Autovista Group is keen to hear your views on Brexit and the effect it will have on both the UK and Europe. Look out for our in-depth Brexit survey launching tomorrow (22 October) and make sure you have your say.

Japanese carmakers look for UK government compensation on no-deal Brexit

With just over 12 weeks until the UK’s transition period with the European Union (EU) ends, and no trade deal yet agreed, carmakers with British-based plants are starting to worry about the possibility of tariffs on their imported and exported parts and vehicles. In particular, Japanese manufacturers Toyota and Nissan are demanding that the UK government cover any additional tariffs should a free-trade agreement with the EU fail to materialise, according to Nikkei.

Without a deal, a 10% tariff would be added to any parts imported and exported to and from the UK. With thousands of parts crossing the border as carmakers rely on ‘just in time’ deliveries, plus a high number of vehicles exported from British plants to European markets, the imposition of tariffs would dramatically impact the profits of those building automotive-related products in the country.

According to the UK Society of Motor Manufacturers and Traders (SMMT), around 1.3 million passenger cars were built in the UK during 2019, 1.05 million of which were exported, with 55% of these going to the EU. In addition, 88.6% of the 2.3 million passenger cars sold in the UK during 2019 were imported, with 78.1% of these coming from the EU.

In 2018, the SMMT claimed that import tariffs would push up the cost of UK-built cars sold in the EU by an average £2,700 (€3,000) and that of light commercial vehicles by £2,000, impacting demand, profitability and jobs. UK buyers of EU cars or vans would also face additional costs – an average of £1,500 per car, £1,700 per van – if manufacturers or dealers were unable to absorb the costs.

Less competitive

Nikkei reports that Nissan and Toyota’s profit margins are expected to be in a ‘narrow range of several percent.’ Therefore, it would be impossible for the manufacturers to absorb the cost of tariffs, and would likely have to increase prices of vehicles as a result. Should this happen, the carmakers would become less competitive in the EU market, making it difficult to continue doing business in the UK. Nikkei also reports that Nissan and Toyota executives acknowledge they are demanding that the UK cover an increase in tariffs.

Volkswagen has warned that it would be unable to absorb any tariffs placed on vehicle imports. The carmaker has no manufacturing presence in the UK. As the country’s second-largest brand by market share (according to SMMT figures), it is possible the company will look to stockpile vehicles in the country before the end of the transition period.

No guarantees

The Japanese carmakers may be unable to avoid tariffs, even if a trade deal is struck, as the EU is refusing to mark Japanese and Turkish-built car parts as ‘British-made’. This will alter the balance of components in a vehicle towards the ‘non-UK’ threshold that would impose tariffs on exports from the country to the EU, even if a free-trade agreement is reached.

Manufacturers with plants based in the UK will need to prove that exported goods are actually British-made, with a specified threshold of British parts, expected to be around 50%. Under the terms of any anticipated deal with the EU, components from countries in the bloc will count as British, a move known as ‘cumulation’.

This move could see Toyota and Nissan look to pull some production back to Japan, as has already occurred with the Nissan X-Trail. The fact that the UK has negotiated a free-trade agreement with Japan would make this process easier, as vehicles can then be imported to the country tariff-free.

UK Prime Minister Boris Johnson has said that going into next year ‘without a deal’ is acceptable if the UK and the EU cannot agree on one by the time of an EU summit on 15 October.

‘We remain committed to working with the automotive industry to try to ensure an outcome that reflects business interests across the UK,’ a government spokesperson told Nikkei. ‘A negotiated outcome remains our clear preference. We have put forward our proposals and are working hard to reach a deal with the EU. Our aim is a zero tariff, zero quota-free trade agreement, as avoiding tariffs is beneficial to both sides.’

Coming Soon: The Autovista Group survey on Brexit exploring your views on its impact on trade and business. Sign up to the Autovista Group Daily Brief for notifications.

German new-car registrations rise by 8.4% in September

New-car registrations increased in Germany by 8.4% last month, compared to September 2019. A total of 265,227 passenger vehicles were registered according to the latest figures published by the automotive authority Kraftfahrt-Bundesamt (KBA).

This marks the first month of growth for Germany this year. So far, the country has recorded double-declines almost every month in 2020, reaching of its biggest decline of minus 60% in April as the coronavirus (COVID-19) pandemic froze the automotive market.

New-car registrations, Germany, year-on-year percentage change, January to September 2020

Pkw-Neuzulassungen, Deutschland, Veränderung gegenüber dem Vorjahr in Prozent, Januar bis September 2020

Source: KBA

Powered by electric incentives

In some cases, alternative drivetrains underwent three-digit increases compared to the same month last year, no doubt buoyed by incentives. From 1 July, Germany increased its incentives for BEVs costing up to €40,000. The one-off payment rose from €6,000 to €9,000 and for models costing between €40,000 and €65,000, the incentive is now €7,500.

A total of 21,188 battery-electric vehicles (BEVs) were registered, up 260.3% compared to September 2019, capturing a market share of 8%. With 20.4% of the market, 54,036 hybrids were registered, up 185.2%, including 20,127 plug-ins (PHEVs), with a share of 7.6%, up 463.5%. LPG experienced an increase of 176.1% with 809 vehicles and a 0.3% market share. A total of 606 natural-gas vehicles was registered, up 17.9% with a share of 0.2%. 

Meanwhile, not benefitting from any incentives, cars powered with internal combustion engines (ICE) saw double-digit drops. Petrol fell by 17.6%, with 120,645 new cars registered and 45.5% of the market. A total of 67,901 new cars were powered by diesel, decreasing 6.4%, and a 25.6% market share. The average CO2 emissions fell by 13.4% in September at 134.3g/km.

With a share of 21.2%, most of the new vehicles were allocated to the SUV segment, up 9.7%. After an increase of 5.7 %, the compact class achieved a share of 21%. Small cars held a share of 16.8%, up 28.9%. However, not all segments faired so well. Mini vans fell by 46.8% to a 1.3% market share, sports cars to 1.0%, down 12.1%, and minis down 2.8% to 6.0%.

Brand performance

Audi recorded a double-digit increase in new registrations at 42.2%. Other German brands like Mini (4.7%), BMW and Mercedes (1.9% each) and VW (1.6%), showed single-digit increases. Meanwhile, Smart suffered one of the worst declines in registrations at -41.2%, followed by Opel (-27.6%), Porsche (-19.7%) and Ford (-0.8%). The VW brand claimed the largest share of new registrations at 15.2%.

As for imported brands, Tesla (82.7%), Seat (71.1%), Subaru (70.4%), Alfa Romeo (59.5%) and Renault (58.4%) all experienced increases of more than 50%. In contrast, DS (-41.5%), Ssangyong (-29.0%) and Mazda (-24.7%) all saw double-digit declines. Recording a 29.6% increase in registrations, Skoda claimed 6.8% of the market share.

Japanese and Turkish car parts may not count as ‘local’ in Brexit blow

In a new blow for UK-based car manufacturers, the European Union (EU) looks unlikely to sanction some third-party country vehicle parts as ‘British-made’, leaving the door open to tariffs on exports even if a Brexit deal is reached.

According to a letter sent to the automotive industry in the UK, and seen by the BBC, chief negotiator Lord Frost says one of their key priorities – that parts and components from Japan and Turkey count as British in any deal – has been rejected by the European Commission. Therefore the UK ‘obviously cannot insist on it’ according to Frost.

A separate draft legal text also asks the EU to treat battery-electric vehicles (BEVs) manufactured in the UK favourably, especially as many of the components within will not be supplied by UK-based businesses.

Cumulation

Manufacturers with plants based in the UK will need to prove that exported goods are actually British-made, with a specified threshold of British parts, expected to be around 50%. Under the terms of any anticipated deal with the EU, components from countries in the bloc will count as British, a move known as ‘cumulation’.

However, car parts imported to the UK from Japan and Turkey are not treated as British, and therefore these will count against locally sourced and European components. This means that even if a trade deal is put in place, some vehicles could end up attracting tariffs when exported.

Brexit negotiators have tried to get the cumulation agreement extended for Japanese and Turkish components, with both markets currently supplying European factories under trade agreements, but with little success.

According to the BBC, the letter says: ‘I am sorry to say that so far they [EU negotiators] have neither been willing to discuss these nor share any proposed text with us.’

It is believed that discussions over the situation have stalled due to negotiators attempting to clear an impasse around fishing rights and subsidy powers.

Speaking to the BBC, Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said: ‘Given its importance to the economy and livelihoods and the damaging consequences of tariffs we need the sector prioritised in negotiations, not traded off against other industries.’

Electric issues

One big issue around the subject of cumulation is the manufacturing of BEVs in the UK. Currently, a majority of battery components are sourced and assembled outside of the EU, and therefore battery cells would significantly count against British and European parts.

The original Brexit deal negotiated by former prime minister Theresa May contained a route to minimise checks on what are known as ‘rules of origin’. That option was removed as part of the revision to the withdrawal agreement a year ago. But Lord Frost pointed out that the UK and EU27 car industries have jointly asked for such arrangements, including special consideration for electric vehicle exports.

Bad timing

The news will come as a blow to an automotive industry that is already mired in Brexit confusion, with the current transition period between the UK and the EU coming to an end on 31 December 2020. Without a trade deal in place, parts and vehicles will be subject to tariffs when imported and exported, potentially up to 10%. Should cumulation not include Turkish and Japanese components, a deal would be irrelevant until such a time that supply-chains can be amended – a move that would likely increase costs anyway.

In an additional blow, the UK recently agreed a free-trade deal with Japan, the first such deal following Brexit taking place at the end of January 2020. At the time, the automotive industry lauded the deal, however, if parts count against locally-sourced components, it nullifies any potential benefit from tariff-free imports.

There may also be a likelihood that the situation could see car making pulled out of the UK. Japanese carmaker Nissan has often speculated about the future of its Sunderland plant should a Brexit deal not materialise. The factory counts the Leaf BEV model amongst its output, and there is potential for the carmaker to move production elsewhere should components in the battery count against locally-sourced parts, meaning tariffs on exports. Japan also has a free-trade agreement with the EU, so by pulling production elsewhere, it could concentrate on shipping its leading BEV model to European markets tariff-free.

BMW to pay $18 million sales probe penalty

BMW AG and two of its US subsidiaries will pay $18 million (€15.5 million) to settle charges with the Securities and Exchange Commission (SEC). The probe concerned the carmaker disclosing ‘inaccurate and misleading information’ about its sales while raising approximately $18 billion from investors in a number of corporate bond offerings.

The SEC said from 2015 to 2019, BMW inflated its reported retail sales in the US, which it says helped the carmaker close the gap between its actual volume and internal targets, while publicly maintaining a leading position against its competitors.

‘The bank’

The 2019 SEC probe found that BMW of North America (BMW NA) ‘maintained a reserve of unreported retail vehicle sales,’ which it referred to internally as ‘the bank.’ This was used to meet internal monthly sales targets without regard to when the underlying sales occurred. The SEC said BMW NA also paid dealers to label vehicles as demonstrators or loan vehilces so it could count them as having been sold to customers.

The report went on to detail that BMW NA ‘improperly adjusted its retail sales reporting calendar in 2015 and 2017 to meet internal sales targets or bank excess retail sales for future use.’ The SEC explained that this meant the information passed to investors in bond offerings and to credit rating agencies contained material misstatements and omissions about BMW’s US sales.

‘Companies accessing US markets to raise capital have an obligation to provide accurate information to investors,’ said Stephanie Avakian, director of the division of enforcement. ‘Through its repeated disclosure failures, BMW misled investors about its US retail sales performance and customer demand for BMW vehicles in the US market while raising capital in the US.’

Antifraud provisions

The SEC outlines that ‘BMW AG, BMW NA, and BMW US Capital violated antifraud provisions of Sections 17(a)(2) and (3) of the Securities Act of 1933.’ However, without admitting or denying the probe’s findings, the three companies agreed to pay a joint penalty of $18 million and to discontinue any future violations.

‘The BMW Group is pleased to have resolved, after substantial cooperation, the US Securities and Exchange Commission’s inquiry which started in late 2019 focusing on retail sales reporting practices of BMW of North America,‘ the carmaker said in a statement sent to Autovista Group.

‘According to the Order issued by the SEC, BMW was found to have provided inaccurate information regarding US retail sales,‘ the manuafctuer said. ‘Much of the conduct at issue in the SEC settlement occurred over three years ago. The Order is based on U.S. securities laws which can be satisfied by negligence. There is no allegation or finding in the order that any BMW entity engaged in intentional misconduct.‘

‘The SEC has ordered a fine of $18 million USD which the BMW Group has accepted. The BMW Group attaches great importance to the correctness of its sales figures and will continue to focus on thorough and consistent sales reporting,‘ it added.

The SEC did note BMW’s significant cooperation during the investigation amid challenges posed by the coronavirus (COVID-19) pandemic. This included travel restrictions, work from home orders and office closures. The carmaker’s cooperation was accordingly considered when the penalty was imposed. 

‘This settlement illustrates the significant benefits to companies for providing concrete cooperation that substantially advances the quality and efficiency of our investigations once contacted by agency staff,’ said Anita B. Bandy, an associate director in the division of enforcement. ‘As we continue to vigorously pursue wrongdoing during the COVID-19 pandemic, companies wishing to receive credit should be forthcoming in their approach to cooperation.’

This article has been updated to reflect a statement sent by BMW Group.

Geely launches EV architecture as VW premieres ID.4

Zhejiang Geely Holding Group has launched its sustainable-experience architecture (SEA), which it claims is the world’s first open-source electric-vehicle (EV) platform. SEA will be deployed across the manufacturing group’s nine global automotive brands, beginning with Lynk & Co.

As Geely promotes its shared platform, Volkswagen (VW) premieres its first fully-electric compact SUV, the ID.4. This will be the third battery-electric vehicle (BEV) to be released based on Volkswagen Group’s modular electric drive (MEB) platform. The ID.4 enters the market behind VW’s hatchback BEV, the ID.3, and Skoda’s Enyaq iV.

Open-source architecture

Promising to transform the availability of zero-emission cars and trucks in the world’s largest automotive markets is no mean feat, but that is exactly what Geely hopes to achieve with SEA. The Lynk & Co Zero Concept will spearhead the new platform. Unveiled at a brand event on 23 September, the BEV will go into production in 2021, with plans for a market launch the same year.

However, Geely does not plan to keep its BEV platform in-house, having already entered preliminary discussions with other OEMs about accessing SEA. The architecture can accommodate segments A through to E, and will have a variant developed for light-commercial vehicles (LCVs) with offerings including front, rear and all-wheel drive specifications across the spectrum.

‘Our development of this transformative electric-vehicle architecture marks the biggest leap forward at Geely in more than a decade,’ said Li Shufu, chairman and founder of Geely. ‘This far-reaching innovation will greatly expand the volume and scalability of our zero-emission models, and we intend to offer the benefits of this innovation to other manufacturers – reflecting the common interests in our industry in addressing the challenges of climate change. Open-source architectures will be a hallmark of new mobility services, of which Geely Holding is proud to be the pioneer.’

Common-module architecture

The new platform has been developed over the last three years at research and development centres in China, Sweden, Germany and the UK. SEA will take the shared design benefits from Geely’s common-module architecture (CMA), which has been used in nearly 700,000 vehicles since its introduction in 2018.

‘This is a highly-scalable pure-electric architecture that will allow us to make the best-in-class vehicles with leading dynamics, connectivity, intelligence and shared functionality in very high volumes that will bring zero-emission transportation to many more consumers,’ said Kent Bollevan, head of advanced vehicle architectures at Geely.

The manufacturer estimates that, in the short term, hundreds of thousands of SEA vehicles will be produced in China, with those numbers accelerating as subsidiary brands introduce their own products. Geely hopes the platform will attract customers with connectivity, shared-vehicle functions, e-motor capabilities, constant over-the-air-updates, autonomous functions, and a maximum range exceeding 700km between recharging, with the capacity to increase range in the future.

MEB platform

Meanwhile, VW’s MEB platform has been equipped in the newly released ID.4. The carmaker is looking to take advantage of the popular SUV segment, which leads the market in the US and China. The BEV follows its smaller sibling, the ID.3, and pulls in behind Skoda’s Enyaq iV, which was the first all-electric SUV on the MEB platform to hit the market – in early September.

The ID.4’s battery stores up to 77kWh, enabling a range of up to 520km (WLTP). The motor generates 150kW – enough to accelerate from 0 to 100kmh in 8.5 seconds and deliver a top speed of 160kmh. The BEV can be recharged to cover the next 320km (WLTP, at 125kW) at a DC quick-charging station in around 30 minutes.

https://youtube.com/watch?v=75gvK0YuXS0

‘The ID.4 is an emotional all-rounder which will impress many customers with its efficient electric drive, generous amount of space, modern assist systems and powerful design,’ said Ralf Brandstätter, CEO of VW brand. ‘As the first global electric car, this model will roll out our modular-electric drive matrix platform that has been developed specifically for electric mobility the world over. Volkswagen is thus once again demonstrating its leading role in innovation, technology and quality on the high-volume market.’

With the performance of BEVs increasingly tied to a small core of platforms like MEB or SEA, most consumers could eventually end up driving around in nearly identical vehicles. The only thing setting them apart would be the shell encasing the shared architecture.

Tesla promises better batteries and cheaper car

At Tesla’s Battery Day yesterday (22 September), CEO Elon Musk outlined how the electric-vehicle (EV) manufacturer is looking to produce a more affordable vehicle as well as further advancing its battery technology. The event had been slated to take place earlier this year but was delayed, in part because of the coronavirus (COVID-19) pandemic.

The socially-distanced event took place outdoors, on the back of the company’s annual shareholder meeting. Speakers addressed an audience of parked cars; whose occupants honked their horns in approval of the announcements.

Battery Day stood as a platform for a plethora of announcements. Musk confirmed new and improved in-house battery production will lead to a $25,000 (roughly €21,000) Tesla. A Plaid powertrain was also unveiled which will allow a Model S to reach speeds of 200mph with a range of around 520 miles between charges.

Better batteries

The event’s headline announcement confirmed Tesla will begin producing batteries in-house. The new ‘4860’ cylindrical cell gets its name from the size of the component. It looks to provide five times more energy, six times more power and 16% more range than cells the EV maker currently employs.

The key to this new battery will be a nickel-based dry electrode, which does not need a tab to connect the cell to the components it is powering. Tesla claimed the ‘tabless’ units would speed up production, with the manufacturer eventually moving away from its current external suppliers.

However, it looks like these advancements could take at least three years to come to fruition. Musk took to Twitter the day before the event to set expectations, saying high-volume production would not come to pass until 2022. This means at present, Tesla’s battery cell purchases from Panasonic, LG and CATL are likely to increase. But Musk warned that as cell suppliers go at ‘maximum speed’, the company still foresees ‘significant shortages in 2022 and beyond unless we also take action ourselves.’

Tesla’s CEO also announced that the company plans to eliminate the use of cobalt in its cathodes. Given the terrible conditions the mineral is often mined under, EV makers are doing all they can to move away from it. No timeline was given for when this would be achieved, but Musk confirmed it would make batteries significantly cheaper.

Part of Tesla’s fresh approach will also involve integrating the battery into the vehicle, making it integral to the structure. This means a lighter car and more space for cells. This comes as the EV maker uses die-cast machines for the Model Y in the ‘Giga Press’.

An affordable EV

By reducing the cost of its batteries, Tesla plans to produce a $25,000 car. Looking at halving the price per kilowatt-hour, the EV maker will employ its new ‘tabless’ cells, as well as changing the materials inside the battery.

‘It’s absolutely critical that we make cars that people can actually afford,’ Musk said. ‘Affordability is key to how we scale.’

However, this is not the first time the concept of an affordable Tesla has been discussed by the company’s CEO. He also said a $25,000 EV would be possible within three years back in 2018. It could be that investors remembered this, as $50 billion was wiped off the company’s stock-market value following the Battery Day announcements.

Powerful plaid powertrain

At the other end of the price spectrum, Musk also confirmed that a Model S with a Plaid powertrain would be available in late 2021. The car aims to be capable of a top speed of 200 mph (321kph), 0-60mph in two seconds and a range of 520 miles (836km). However, all this would come with a price tag of $139,990. Tesla appears to be taking aim at cars like the recently announced high-performance Lucid Air with this new powertrain.

European Commission proposes 55% emission reduction by 2030

European Commission President Ursula von der Leyen has proposed increasing the bloc’s emissions reduction targets. At her state of the union address yesterday, she outlined plans to increase the 2030 goal from 40% of 1990 levels to ‘at least 55%.’

Von der Leyen said that some 170 business leaders and investors had written to her the previous day, calling for the increased target. Other European bodies also backed the 2030 climate target plan, but outlined the need for supportive policies as well as cautioning against undercutting national action.

European Green Deal

At the core of the Commission’s Green Deal are its plans to achieve continental climate neutrality by 2050. Von der Leyen explained this target cannot be achieved with the status quo. Instead, things need to be done faster and better. So, after holding a public consultation and conducting impact assessments, the Commission decided to increase the 2030 target for emission reduction to at least 55%. ‘I recognise that this increase from 40% to 55% is too much for some, and not enough for others. But our impact assessment clearly shows that our economy and industry can manage this,’ she said.

To reach these targets, the Commission will introduce a series of measures, including reforming energy taxation as well as the EU emissions trading scheme, improving energy efficiency, and boosting renewable energy sources. Furthermore, all existing climate and energy legislation looks to be revised by next summer, in line with the new target. ‘We can do it. We have already shown we can do it,’ Von der Leyen said. ‘While emissions dropped 25% since 1990, our economy grew by more than 60%.’

Von der Leyen confirmed in her speech that 37% of the €750 billion NextGenerationEU package will be committed to green deal objectives. The scheme will also look to invest in ‘lighthouse European projects with the biggest impact’. She identified hydrogen, renovation and one million electric charging points as key examples.

Automotive reaction

The European Automobile Manufacturers’ Association (ACEA) confirmed the automotive industry’s support for the 2050 climate neutrality target. ‘It is clear that the EU strategy needs to be reviewed and adapted periodically to ensure that all parties are on track to meet its objectives,’ said ACEA’s director general, Eric-Mark Huitema. ‘However, policy makers need to put in place not only targets but also the required supportive policies for all vehicle types, without which these targets will simply not be achievable.’

These policies include a dense EU-wide network of charging points and refuelling stations, alongside economically-sustainable incentive schemes. ACEA views these as essential to make zero-emissions mobility accessible and affordable for all Europeans. The association also called for all energy carriers to be part of a stronger EU emissions trading system, that applies a carbon price at a level that ‘drives real change.’

Regarding the CO2 emissions from new passenger cars and vans, ACEA called for the Commission to ensure all necessary enabling factors are delivered and strengthened before last year’s targets are raised. ‘We recognise the desire to be a global trailblazer when it comes to climate action, but we will need an unprecedented regulatory shift to ensure all the right enabling factors are secured,’ said Huitema. ‘Until we have a clearer vision on the accompanying policy framework and the impact assessment, it is difficult to predict what a realistic scenario is in terms of future CO2 targets.’

Transport and Environment (T&E) called the new 55% target ambitious but warned against undercutting actions on a national level to cut down vehicular pollution. It explained that once included in the EU-controlled emissions trading system, governments would no longer be responsible for road transport emissions, removing a driver from tax reform, investment in public transport or electromobility.

‘The EU is finally getting real on the climate crisis. The key to tackling transport, Europe’s No1 polluter, is CO2 standards that drive car and truck makers to go electric much faster whilst making charging as simple as filling up at gas stations,’ said William Todts, executive director of T&E. ‘But the plan to put road transport in the EU carbon market is a mistake. It will undercut the national climate targets whilst jacking up fuel prices for low-income families.’

Hydrogen technology bringing benefits to automotive industry

With the transition away from internal combustion engines (ICE), carmakers and governments are exploring the benefits of hydrogen technology, with the announcement of new schemes and programmes across Europe.

Hyundai has announced a new campaign, launching in Berlin that will promote the technology using social media influencers. Meanwhile, the French Government plans to use clean hydrogen in industrial processes and transport to cut the country’s CO2 output in 2030 by 27 million tonnes.

France aware

As part of a ‘relaunch’ plan, the French government has announced that it will invest €7 billion in hydrogen to help the country achieve its goal of becoming carbon-neutral by 2050.

‘The relaunch is an opportunity for France to position itself at the cutting edge of breakthrough technologies. Decarbonised hydrogen is one of them and France is convinced that it will be one of the most important revolutions of our century. It will aid development of solutions for emission-free mobility, energy storage and provide energy in response to intermittency of renewable energies,’ commented Barbara Pompili, minister of ecological transition, in a report dedicated to the benefits of a hydrogen society.

The €7 billion will be invested across three priorities: the decarbonisation of industry to help the country reach its 2050 goal, the development of mobility solutions using hydrogen and support for research and development in the sector, and the development of training initiatives.

France will launch tenders as soon as 2021 to create clean hydrogen hubs and electrolyser factories, targeting 6.5 gigawatts of installed capacity by 2030.

The announcement has been met with enthusiasm by automotive supplier Michelin, which is working with Faurecia to develop hydrogen systems for the market.

‘This plan is a major step in the development of a French hydrogen industry of excellence,’ commented Florent Menegaux, CEO of Michelin Group. ‘[We are] convinced that hydrogen mobility will be one of the essential components of clean mobility, complementary to electric batteries.

Hydrogen hubs

With regard to large-scale regional hydrogen hub projects, Michelin intends to accelerate its development with industry stakeholders. The Group is a pioneer with Zero Emission Valley, the first European initiative to deploy hydrogen mobility on a regional scale (Auvergne-Rhône-Alpes). This project provides for the installation of 20 stations powered by green hydrogen, and the deployment of 1,200 hydrogen vehicles for business use by 2023.

Michelin is also taking a number of other actions to facilitate the deployment of hydrogen mobility, including motor racing, which the Group considers an essential laboratory for innovation and technological showcase. As such, in June 2020, the Group and Symbio, the partnership between Michelin and Faurecia, became partners of the Mission H24 project that aims to apply hydrogen technology to endurance vehicles competing in the 24 Hours of Le Mans in 2024.

Social influence

Hyundai has been developing hydrogen technology for some time and is considered a leader in the technology, along with Toyota. Both carmakers have fuel cell electric-vehicles (FCEVs) on the market and are continuing to refine fuel cell technology.

As part of a vision to facilitate ‘Progress for Humanity’, the carmaker has launched its Hydrogen to You (H2U) campaign, which it hopes will raise awareness of its leadership in hydrogen fuel cell technology and its vital role in the emerging ecosystem of sustainable mobility, infrastructures and lifestyles.

H2U shines a spotlight on NEXO, the brand’s flagship FCEV. Working with Berlin-based H2U ambassadors, whose interests and talents span diverse aspects of everyday life, Hyundai takes them on a journey with NEXO and invites them to make hydrogen mobility personal.

The campaign challenges the ambassadors to reflect on the industries they work in and demonstrate how hydrogen fuel cell mobility fosters a sustainable lifestyle and positively impacts their everyday life, fostering a healthy environment and improving the economy and society for a better future.

This team of H2U ambassadors directly addresses consumers who have demanded new technologies and holistic solutions that do not require fossil fuels. These ambassadors span the worlds of music, fashion, science, photography and technology, and are made up of various influencers in these markets.

‘The H2U program is one expression of our company vision: Progress for Humanity,’ said Wonhong Cho, executive vice president and global chief marketing officer at Hyundai Motor Company. ‘It is a platform to raise awareness of hydrogen technology’s role in helping to overcome the environmental challenges of our time.’

Why now?

A need to rapidly reduce CO2 emissions across fleets has pushed carmakers to develop battery-electric technology, which was much more advanced in the research stage and offers an immediate answer to the decline of diesel, which was being relied upon to reduce emissions up until the dieselgate scandal. Now many manufacturers have launched battery-electric vehicles (BEVs), apart from refining their technology, they are able to consider other options.

Alongside this, governments across the continent see the potential of hydrogen in helping their countries become low- or zero-carbon. The biggest issue is the processing of the fuel into a usable medium. However, with funding, climate-friendly techniques can be found and the benefits of hydrogen can be exploited.

Hydrogen fuel cells produce electricity to drive a vehicle using a reaction between the fuel and oxygen. Vehicles using the technology still use a battery to benefit from no fossil-fuel related emissions. However rather than a 30-minute or more charging session, drivers simply fill a tank of hydrogen in much the same way as a petrol or diesel model. Therefore, a FCEV can travel distances upwards of 200 miles and refuel in minutes, making it as convenient as current ICE vehicles. The reaction of hydrogen and oxygen in the fuel cell only produces one emission – H2O, or water.

UK needs to commit more to BEV infrastructure to meet 2035 target

As the UK looks to ban the sale of petrol, diesel and some hybrid powertrains by 2035, a new survey has highlighted the key issues consumers identify as putting them off purchasing battery-electric vehicles (BEVs). This is leading to calls for incentives and targets from the government to ensure the switch can be made seamlessly.

The survey, conducted by Savanta Comres on behalf of the Society of Motor Manufacturers and Traders (SMMT) suggests almost half of UK motorists don’t feel ready to buy a BEV. This, the body says, means the government should commit to ‘significant long-term incentives for purchases and binding charges on charging infrastructure.’

Electric vehicles (EVs), including BEVs and plug-in hybrids (PHEVs), are rapidly growing in popularity, with demand more than doubling over the last year thanks to massive industry investment worth some £54 billion (€59.4 billion) in 2019 alone. Over the last 12 months, the number of PHEV and BEV models available to buy in the UK has leapt from 62 to 83, with more scheduled for launch in the coming months.

There is interest from consumers in EV technology, with drivers attracted to lower running costs (41%), while interest in improving the environment only accounts for 29% of responses. However, while these cars now accounting for one in six models on sale (17%), they make up just one in 13 purchases (8%).

Issues found

The survey found the biggest factors holding buyers back are higher purchase prices (52%), lack of local charging points (44%) and fear of being caught short on longer journeys (38%). Encouragingly, a third (37%) are optimistic about buying a BEV by 2025, 44% don’t think they will be ready by 2035, with 24% saying that they cannot ever see themselves owning one.

However, the SMMT believes that the main barriers, those of cost and charging infrastructure, can be overcome with the right strategy. It is calling for a long-term commitment to incentives, including the continuation of the Plug-In Grant, which sees £3,000 taken off the price of a BEV, and the reintroduction of the grant for PHEVs, a technology which acts as a bridge for those who want a low-emission vehicle but still want the reassurance of an internal combustion engine (ICE). This grant was cancelled in 2019.

‘This commitment, alongside VAT exemptions for all zero-emission capable cars, would reduce the upfront price of a family car by an average £5,500 for battery-electric cars and £4,750 for plug-in hybrids, and for an SUV by £9,750 and £8,000 respectively – vital given the high cost of producing this advanced new technology,’ the SMMT stated. ‘This would bring them more in line with petrol and diesel equivalents and potentially drive some 2.4 million sales over the next five years, with an estimated 28% market share by 2025 compared with 8% today.’

Increased charge

Extensive analysis by the SMMT, alongside Frost and Sullivan also shows that a full, zero emission-capable UK new car market will require 1.7 million public charge points by the end of the decade and 2.8 million by 2035. Given there are only some 19,314 on-street charge points available in the UK at present, the task is massive, needing 507 on-street chargers to be installed per day until 2035, at a cost of £16.7 billion.

‘Carmakers are leading the charge to zero-emission motoring, with massive investment in new models fuelling huge consumer interest but they can’t transform the market alone,’ commented SMMT chief executive Mike Hawes. ‘To give consumers the confidence to take the leap into these technologies, we need government and other sectors to step up and match manufacturers’ commitment by investing in the incentives and infrastructure needed to power our electric future.

‘Manufacturers are working hard to make zero and ultra-low emissions the norm and are committed to working with the government to accelerate the shift to net zero – but obstacles remain. Until these vehicles are as affordable to buy and as easy to own and operate as conventional cars, we risk the UK being in the slow lane, undermining industry investment and holding back progress.’

The UK government has already taken steps to support the emerging EV market. Purchase grants worth more than £1.7 billion have been paid out or budgets earmarked from 2011 to 2023, alongside £500 million committed to the Project Rapid motorway charging

Editor comment

Autovista Group Daily Brief editor Phil Curry recently spent two weeks testing an MG ZS EV to experience the differences of living with a BEV in the UK.

Switching from ICE to a BEV is a big step, and currently requires a lot of planning, not just from a financial aspect, but also logistically. Consumers will need to look at the range of a vehicle and work out how often they will need to charge it. This is easier for those who use their car purely for local journeys, but those covering long distances will need to factor in charging times and charge point availability.

Having lived with a BEV for two weeks, while the technology was good, the MG ZS EV having a range of 160 miles was enough for everyday use but needed planning for longer trips. With no access to a charging point at home and no opportunity to plug in to a domestic socket, I relied on local infrastructure. However, in my local area, there is only one rapid charger, and five slower units, two of which are not currently operational.

On a longer journey, I relied on the current UK motorway charging network. However, having driven as far as I dare, I came across a service station with faulty charge points. The only option was to travel into a nearby town and use the only charge point available, a slow 7Kw unit, that took almost three hours to provide enough charge to get me most of the way home, missing my appointment.

Therefore, I can appreciate the SMMT’s calls for charge point targets. The UK’s infrastructure is only going to improve, but the number of charging points, especially on-street locations, needs to increase quickly if the government is to make it easy to switch in time for the 2035 target. With the country’s housing mix including a large number of flats, and homes without off-street parking, there will be a lot of reliance on a public network. As seen in the SMMT survey, consumers do not have confidence in what is available at present.

Autovista Group survey explores industry thoughts in a post-lockdown market

30 July 2020

A pan-European survey carried out by Autovista Group revealed how dealers, manufacturers and leasing firms were impacted by the coronavirus (COVID-19) pandemic. In the latest update, we checked in with respondents to find out how they are adapting and surviving in the ‘new normal’.

Carried out in late June and early July, Autovista Group customers from across Europe completed the survey, including from countries not covered in the original April research: Finland, Poland and Sweden. Respondents ranged from dealerships to manufacturers and from workshops to financial services firms.

Optimism rising

Of the 41% of respondents that took part in both the April and June surveys, 40% said they felt more positive than they did before; while only 10% felt more negative. Those who were looking on the brighter side cited growing sales, especially of used cars, alongside pent-up demand as causes for their optimism. Many were just glad to see life, and therefore car usage, returning to normal.

However, 16% of respondents expressed that, when it comes to the impact of the pandemic, the worst is yet to come. Consumer uncertainty/caution remained the biggest cause for concern, albeit mentioned by only 21% of respondents compared to 36% in the April 2020 survey. The negative impact of high unemployment/furloughing was mentioned by 14% (down from 22% April).

Interestingly, there are signs that pre-pandemic concerns are returning, with 7% of respondents mentioning changing consumer behaviour (unrelated to the pandemic) as a concern, especially the move to electric vehicles (EVs).

Lacking support

A handful of respondents said their negativity about the future stemmed from poor government policy generally, or lack of governmental support throughout the pandemic. This was also reflected when respondents were asked whether they felt that government measures went far enough in supporting the auto industry through the pandemic. Here, we saw little change from the first survey, with 42% of respondents saying ‘no’, the measures did not go far enough (compared to 46% in April). As in April, one third of respondents said they were not sure.

Dealers were especially unlikely to express that they felt governmental support went far enough, with 58% of them saying ‘no’ in response to this question. In the previous survey, dealers saw government support measures more favourably than other company types.

Once again, UK respondents were much more supportive on average of their government’s measures, with 37% agreeing that the measures did go far enough and only 15% saying ‘no’ (down from 27% in the last survey). This is despite the UK not including any incentive scheme for buying vehicles as part of its COVID-19 recovery, whereas other major markets have, or are planning to, implement schemes.

In Austria and Germany, the ‘no’ figures were above 50%. Germany has launched a heavily EV-based incentive scheme, doubling the governmental grants for electrified models and cutting VAT as well. With these measures coming into force at the start of July, it is not yet known how successful these measures will be.

In contrast, numbers from France saw only 25% expressing that their government’s measures did not go far enough. The French incentive scheme covers all types of vehicles, new and used, electric and internal combustion engine (ICE), with the potential of grants up to €12,000 for an EV when government help and trade-in bonuses are applied. The country will be replacing its scrappage scheme, however, following the popularity of the incentives and the vehicle cap being reached. Sales rose 1.2% in June as a result of the help – the first of the major European markets to post a monthly rise this year.

Price wars

The latest survey asked dealers whether they had offered discounts to encourage sales since the pandemic began. Over half of dealers said that they had (56%).

It appears that the further a country is out of lockdown, the more likely its dealers are to be offering discounts. Only 8% of UK dealers were doing so at the time of the survey, compared with 40% and above in Austria, Finland, Germany and Sweden.

Again, it is franchised dealers that are much more likely to be taking action here, with 56% of them already offering discounts compared to just 14% of independents. In Germany, the variance is as big as 90% for franchised dealers and 15% for independents.

Leasing impact

Leasing and rental firms were less likely than respondents in other sectors to have shut their premises in response to the pandemic, with 40% not having done so. (The majority of these were rental firms rather than leasing firms). Of the 60% that did shut down, 40% had since reopened, at the time of the survey. Firms were closed for an average of 7.9 weeks.

In their follow-up comments, several respondents mentioned that they continue to work from home despite their premises being re-opened. Like dealers, leasing firms have experienced a significant decrease in sales since re-opening, with 38% of respondents experiencing a 50-75% decrease in sales, and no respondent reporting no decrease.

Cautious optimism for the future of the automotive industry is growing. However, negativity very much abounds, and the optimism we see expressed here feels much more like relief at the lifting of lockdowns than the expectation of future good fortune. Consumer caution remains a significant worry, and many respondents feel that worse is yet to come when it comes to the impact of the COVID-19 pandemic.

The results of part three of the survey can be seen in this whitepaper. Part one of the results can be seen here and part two can be found here.

EU new-car registrations fall 22% in June

16 July 2020

Generally, coronavirus (COVID-19) lockdown measures have been lifted across Europe, and dealers have been able to reopen. However, new-car registrations in the EU fell 22% year-on-year in June, according to figures released by the European Automobile Manufacturers’ Association (ACEA).

The volume of new-car registrations fell from 1,222,942 units in June 2019 to 949,722 in June 2020. There were two more working days last month than in June 2019 and so, on a comparable basis, the market declined by about 30% in the month. Nevertheless, this is a significant improvement on the dramatic downturns of 55% in March, 76% in April and 52% in May.

EU new-car registrations, year-on-year percentage change, January to June 2020

Source: ACEA

All 27 EU markets contracted last month – apart from France, which enjoyed 1.2% growth as demand is being stimulated by an incentive scheme that was introduced on 1 June. The €8 billion package includes a €7,000 grant for private buyers (€5,000 for fleet buyers) of battery-electric vehicles (BEVs) costing less than €45,000, while those looking at plug-in hybrids (PHEVs) can claim a €2,000 subsidy. Additionally, France has also doubled its premiums for consumers trading in older vehicles for a cleaner model, with a €3,000 grant for vehicles with internal combustion engines and €5,000 for BEVs.

The volume of new-car registrations was 23% lower in Italy and more than 30% lower in Spain and Germany. In the smaller EU member states, year-on-year contractions of more than 30% were also reported in several markets, including Greece, the Netherlands and Portugal. However, many markets were far more resilient, with downturns of less than 10% reported in Belgium, the Czech Republic and Slovenia.

Year-to-date registrations down 38%

In the first half of 2020, registrations of new cars in the EU fell by 38.1% as the healthier June figures slightly improved the 41.5% contraction suffered in the first five months of the year. The greatest loss among the major markets was in Spain, which has contracted by 50.9% in the year-to-date, second only to Croatia (down 54.4%). The EU market downturn so far in 2020 has been compounded by a combination of tax changes introduced in some member states, which pulled demand forward into December 2019.

New-car registrations, year-on-year % change, June 2020 and year-to-date (YTD) 2020

Source: ACEA

As dealer activity has returned in EU markets, a period of recovery is expected in the short term as the backlog is cleared and pent-up demand is released. Some markets may even enjoy year-on-year growth in new-car registrations in July, as happened in France in June.

Beyond this, however, the economic impact will broadly dictate whether markets return to pre-crisis levels. There are also positive and negative side effects of the COVID-19 crisis to consider, such as an aversion to public transport and increased working from home.

EU figures benefit from UK exclusion

Following the UK’s departure from the EU on 31 January 2020, the UK is no longer included in the EU new-car registration figures reported by ACEA. The country suffered a greater loss in new-car registrations in June than the EU, with volumes down 35%. Consequently, if the UK was still included in the figures, the new-car market in the EU would have contracted by 24% in June and 40% in the first half of 2020. This was expected as dealers could not reopen until 1 June in England, 8 June in Northern Ireland, 22 June in Wales and 29 June in Scotland, leaving many showrooms out-of-action until late in the month and therefore providing a disjointed picture of sales recovery.

As in other markets, a major surge in registrations is not expected after weeks of dealer inactivity. ‘The end of furlough will drive some change towards the end of the year and with Brexit on the horizon, we believe the worst is still to come next year’ commented Anthony Machin, head of content and product at Autovista Group’s Glass’s.

Autovista Group is maintaining its base-case forecast for the UK market, first published in June, of a 30% contraction in UK new-car registrations in 2020. That forecast was a downgrade from the 23% decline forecast in May and 20% forecast in April. In March, before the pandemic took hold, the expectation was that the market would only experience a 3% fall in 2020.

Manufacturer performance

Among the leading European carmakers, Fiat Chrysler Automobiles (FCA), PSA Group and Volkswagen Group registered almost 30% fewer new cars in the EU in June 2020 than in June 2019. Jaguar Land Rover (JLR) suffered the greatest loss, with EU registrations down over 50% year-on-year. New-car registrations of the Jaguar and Land Rover brands fell by 68% and 41% respectively.

Volvo, however, managed to register 1.6% more cars in the EU than in June 2019 and Renault also performed well. The French carmaker’s registrations were down by only 16% in the month, buoyed by the demand growth in France, especially for hybrid and electric vehicles.

As Europe emerges from lockdown, manufacturers with a strong electric-vehicle portfolio are expected to perform better than those without as EV consumers are less likely to be tempted by used cars instead of new. This is because they tend to be less price-sensitive buyers but there is also limited availability of the latest electric models on the used-car market.

Toyota launches new acceleration suppression system

13 July 2020

Toyota Motor Corporation (Toyota) has developed a new acceleration suppression system to help prevent collisions caused by misapplication of the accelerator pedal.

At the start of July, the carmaker launched this system as ‘plus support’ for new cars and added the function in the ‘pedal misapplication acceleration control system (PMACS) II’ retrofit device for use with existing models. In 2012, Toyota introduced intelligent clearance sonar (ICS) for new vehicles and launched the retrofit PMACS for existing vehicles in 2018.

How it works

Both these systems prevent accidents caused by erroneous accelerator pedal application when sensors detect obstacles like a wall or glass. Acceleration can also be suppressed if the driver presses the pedal too rapidly.

A warning sign is displayed and a beeping sound played to let the driver know when the system comes into effect. Instead of automatically stopping the vehicle in these situations, the car is prevented from accelerating at pace, meaning the driver must apply the brake pedal if necessary.

The statistics

According to data from Toyota, ICS helps prevent roughly 70% of all potential accidents caused by mistakenly pressing the accelerator. However, the carmaker went on to explain that new technologies need to be developed to reduce the remaining number of accidents. This apparently includes those where obstacles are absent.

During the most recent development stage, Toyota looked at incidents where the cause was determined to be erroneous acceleration. Particular attention was paid to analysing situations where the accelerator pedal was fully pressed. These situations were then compared with data collected from Toyota’s connected vehicles.

By removing instances where drivers genuinely needed to accelerate, such as when turning right or accelerating from a temporary stop, Toyota was able to identify and calculate moments of accelerator pedal misapplication. This led the carmaker to develop a function that could control acceleration, even when there are no obstacles.

Sights set on safety

Toyota does not look to be developing these systems purely for its own vehicles, as it has also been sharing the operational logic of the acceleration suppression function with other Japanese carmakers. This follows a trend for Toyota which has been openly sharing its safety systems with other carmakers with the aim of making roads safer.

In June, Toyota announced it was making its virtual crash test dummy, the Total Human Model for Safety (THUMS), free to access as of 2021. THUMS allows for the computer simulation and analysis of injuries sustained in different types of vehicle collision across age ranges and body types.

Launched in 2000, THUMS was developed in cooperation with Toyota Central R&D Labs. Since then, the virtual crash test dummy software has been through six iterations. This development has seen the system utilise detailed modelling of bones in the first version and then the face, brain and internal organs in the following years.

In later versions, THUMS added different physiques, all body muscles and models for children aged three, six and 10 years. These updates allow the software to replicate the effect of an impact on the skeleton, internal organs and muscle tissue of different genders, age groups and physiques.

Honda and CATL enter battery development alliance

13 July 2020

Honda and Chinese battery manufacturer Contemporary Amperex Technology (CATL) are to form an alliance on electric-vehicle (EV) battery strategy. The companies hope this latest agreement will strengthen their strategic partnership and promote the popularisation of e-mobility.

As part of the alliance, Honda and CATL will begin discussions on a broad range of areas including joint development, stable supply and the recycling and reuse of EV batteries. The carmaker is also set to buy a 1% stake in the battery manufacturer.

Speeding up strategies

CATL and Honda will cooperate on the research and development of fundamental battery technology, with an eye towards future applications. The carmaker will receive a stable supply of batteries from the Chinese company, which will be used predominantly in their battery-electric vehicles (BEVs). The first model to sport a CATL battery is scheduled for launch on the Chinese market in 2022.

Acquiring 1% of the battery manufacturer’s shares through the non-public issuance of stocks, Honda has become a leading strategic partner of CATL. This will further ensure the security of supply for the carmaker, with cost and product competitiveness in mind. CATL meanwhile will see strengthened battery development and expanded production capacity.

A strengthened alliance

‘This alliance enables Honda to further strengthen its partnership with CATL,’ said Toshihiro Mibe, senior managing officer at the carmaker. ‘As the speed of electrification continues to increase, CATL will be a partner that will give Honda new strength, and we believe that our long-term alliance will enable us to further increase the competitiveness of our electrified products. Honda will continue its challenges toward offering joy and freedom of mobility and the realisation of a sustainable society.’

‘Honda is a key player in global electrification,’ said Zhou Jia, president of CATL. ‘Through this strategic cooperation, CATL and Honda will establish a stronger global partnership. We are working together to deliver more competitive products and solutions to global electrification, and to finally achieve a clean and pleasant style of mobility.’

Cooperation is crucial

As automotive companies set their sights on an electrified future, they are also having to navigate the financial fallout from the coronavirus (COVID-19) pandemic. This has pushed many manufacturers into one particularly overcrowded boat. There is a need to quickly develop electric capabilities in a way that does not further endanger already constrained budgets. The solution has become apparent; greater cooperation. Both Toyota and CATL prove to be good examples of this.

In April, the carmaker announced an expansion of its partnership with battery-recycling enterprise Société Nouvelle d’Affinage des Métaux (SNAM). The agreement will extend the sustainable usability of end-of-life batteries from Toyota’s hybrids and BEVs. After collecting the used units, SNAM will prepare them for ‘second-life’ renewable energy storage or if they are not suitable, extract the valuable materials for recycling.

Meanwhile, in July last year, CATL entered into a supply partnership with Toyota. The deal saw both companies working on the development of battery technology, while the two manufacturers also discussed how to improve product quality and the reuse and recycling of spent units.

Germany opens antitrust case against EV charging suppliers

13 July 2020

Germany’s growing electric-vehicle (EV) charging infrastructure is to be investigated by the country’s antitrust authorities following complaints from consumers.

As the EV market grows in the country, with manufacturers committing to deliver both new and existing models with electric powertrains, there is a need to increase the charging infrastructure. However, the Bundeskartellamt (Federal Cartel Office) is concerned over competition problems in the charging sector at this early stage.

There are plans to develop a nationwide charging infrastructure by 2030, with many more publicly accessible charging points at the heart of the idea. However, the process of setting up and operating charging stations is not subject to the comprehensive regulation of electricity networks, leaving the market open to possible manipulation.

Potential competition problems occurring in this sector can, however, be addressed by competition law, according to the Bundeskartellamt. To ensure effective competition, non-discriminatory access to potential locations for charging stations, as well as the specific terms and conditions applying at these locations, are of key importance.

Monopoly building

‘In this early market phase we want to identify competition problems in the supply of charging infrastructure for electric vehicles in an effort to contribute to the successful expansion of e-mobility,’ states Andreas Mundt, President of the Bundeskartellamt.

‘The development of a nationwide charging infrastructure is a precondition for the successful implementation of e-mobility in Germany. Conditions and prices at publicly-accessible charging facilities are a key factor for consumers when deciding on whether or not to switch to electric vehicles. The market is, of course, still emerging. However, we have already received complaints about prices and conditions at the charging stations.’

There are fears that one supplier could end up with a monopoly as the market for public charging locations is required to expand rapidly to meet demand. This could lead to the dictation of both price and terms that other, smaller suppliers, may find it hard to compete with. This would also lead to higher prices for consumers, dependent upon charging location to keep their vehicles on the road.

Also, as the infrastructure grows, terms and conditions of usage are still being finessed. Any supplier with a monopoly would be in a position to dictate these terms, such as charging times and fines for overuse, which would impact consumers, especially those unable to charge EVs at their place of residence.

Location checking

The investigation will also cover the various approaches of cities and municipalities to providing suitable locations. The Bundeskartellamt will look at the competitive framework conditions for installing charging stations on motorways, an area where drivers will be ‘beholdent’ to suppliers, especially with lower-range vehicles.

In the course of its inquiry, the Bundeskartellamt will consult with and interview the main market participants in two subsequent phases. The first phase will primarily look at the current status of publicly accessible charging infrastructure and how cities, municipalities and other players plan and provide suitable locations. The second phase will involve more detailed investigations, in particular regarding conditions for access to charging stations for mobility service providers and end customers.

The results and conclusions to be drawn from the inquiry will be summarised and published in a report.