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The Autovista Group Daily Brief team takes a look at some of the challenges the automotive industry is facing, besides the ongoing complications caused by the coronavirus (COVID-19) pandemic. In this episode, emissions regulations, Brexit and the increased need for electric vehicles are up for discussion.
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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.
‘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.
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.
As the coronavirus (COVID-19) situation across Europe remains fluid, and infection rates start to rise again, many of the continent’s key automotive markets are still expecting a slow, u-shaped recovery, despite recent rebounds in economic activity. The potential for a v-shaped recovery is diminishing with a second wave coming in.
With cases starting to rise across the continent, it is likely that the automotive market will again be affected in some way – either through new lockdowns, restrictions in manufacturing or an impact on consumer confidence when it comes to large purchases. The new-car market saw sales rise following the lifting of lockdowns, as pent-up demand drove customers to dealerships. However, this demand has now waned. Incentive schemes are still helping to keep some markets afloat.
In June 2020, economic trade value was only 10% below levels seen in February, highlighting the beginning of economic recovery – a process that took eight months to begin in the financial crisis of 2008-2009. Shipping activity in the US, Asia and Europe had also normalised to previous levels in August.
In addition, an economic sentiment indicator, published by the EU commission has grown in the Eurozone, to 87.7 in August from 82.4 in July. However, in the UK it has slid to 75.1 from 75.5 in the same period.
Risk potential
Some of this economic rebound could be short-lived, as current consumer behaviour is driven by pent-up demand, and there is a risk that joblessness increases in coming months as furlough schemes come to an end. This will suppress spending. The pace of recovery should slow down.
Autovista Group’s European research and analysis on the economic impact of the pandemic on Europe’s used-car markets and residual values (RVs) was discussed in a recent web seminar.
Six of the company’s top experts came together in an online discussion chaired by Autovista Group Daily Brief editor Phil Curry, discussing how markets are reacting to the COVID-19 downturn and the scenarios that some countries may find themselves in. You can watch the entire seminar broadcast below.
In a poll held during the pan-European conference, 45% of attendees felt the automotive market would see a slow, u-shaped recovery. This showed a drop in confidence compared to an identical poll held during July, where 55% felt this path would be the most likely scenario. The most significant increase in likelihood scenarios came in the ‘deep recession, slow recovery’ category, where 34% felt this path would be the most likely outcome of the COVID-19 impact on the automotive market, compared to just 14% in July. This increase could be down to the threat of a second wave of infections, with many countries across the continent starting to see cases rise, a situation that might lead to further lockdowns or restrictions.
Robert Madas, valuations and insights manager Austria & Switzerland, Eurotax, noted that in Austria, new car sales had suffered, 33% down year-to-date. At the same time, the used-car market is also off-track, with an 8.2% decline in the first seven months of the year. However, government electric vehicle (EV) purchase incentives have stimulated demand for plug-in hybrids (PHEVs) and battery-electric vehicles (BEVs). Switzerland is seeing a similar pattern, although used-car sales have only declined by 3.5% in the same seven-month period.
Purchasing power uncertainty
‘Asking prices in the used-car market have decreased after the lockdown, but we have now seen a recovery to pre-coronavirus levels,’ Madas commented. ‘However, in both markets, there is uncertainty regarding purchasing power and general economic outlook. Higher discounts and government incentives for new EVs will affect used-car values in Austria.’
Zsolt Horvath, operations manager at Eurotax Hungary, highlighted that the Central European region saw less-severe lockdown conditions than Western Europe, leading to less impact on RVs in the area. However, he added that car-rental companies had suffered due to cancellations, and supply of used-cars had also been impacted due to border restrictions. With a potential second wave incoming, the likelihood of a slow u-shaped recovery in the region has increased from 35% to 45%.
Yoann Taitz, operations and valuations director at Autovista France, pointed to the country’s strong market recovery since June in both the new and used-car markets, mainly due to the country’s COVID-19 recovery plan. Used-cars saw sales growth of 29.2% in June as pent-up demand helped the market, with a 12.1% increase in July and 15.6% in August, leaving the sector down just 9.6% year-to-date.
The government incentive scheme has led to a positive RV impact, since it supported also the purchase of used cars. However, some risks remain, especially with EV sales, as growth will be driven by the new-car market, and coupled with an increase in grants for their purchase, any supply stronger than demand would negatively impact EV RVs.
In Italy, Marco Pasquetti, forecast & data specialist at Autovista Italy, pointed to the country’s gloomier economic outlook, with GDP likely to be down 11.2%, as a significant impact on the automotive market, with a 65% probability of a medium-risk, slow u-shaped recovery. The market will likely see pent-up demand continue to drive sales, however, due to longer lockdowns and a drop in public transport use, estimated at around 35%-40% compared to pre-COVID-19 usage.
Johan Trus, head of data and valuations Nordics at Autovista, discussed the situation in Finland and Sweden, where no lockdown was observed, and dealerships remained open. Both markets have been in recovery since April, with a high demand for used-cars when people were asked to avoid public transport when commuting.
With various parameters for different scenarios taken into account, including a potential second wave of infections, continuing fluctuations in GDP, supply issues and country-specific factors, the landscape for scenarios in all countries is continuously changing. Autovista Group experts continue to monitor developments and will update their expectations accordingly.
You can find the information presented in the Autovista Group web seminar here. There are further details in the whitepaper: How will COVID-19 shape used-car markets?
Special guest Szabolcs Jánky, head of product management for aiSim at AImotive, talks with Autovista Group Daily Brief journalist Tom Geggus. The topic up for discussion: how over-the-air-software updates are changing the future of vehicles…
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A growing number of stakeholders has begun to address the legal, ethical and technological challenges around autonomous vehicles. The limited-use cases for autonomously driving vehicles may prove to be even more challenging. Autovista Group’s chief economist, Christof Engelskirchen, covers the top five issues with autonomous technology – from a use case perspective – and what ‘level’ of autonomy we should expect in our next vehicle.
The electric car, the connected car, the autonomous car… all great ideas take time. Like the battery-electric vehicle (BEV) that was conceived in the 1880s. Some 140 years later and it is far from being a breakthrough success. On that basis, the self-driving car still has around 132 years to go, if you consider 2012 as the starting point of the autonomous revolution. In that year, it became legal for Google’s autonomous car to drive on the roads of Nevada under one condition: a human driver had to be on board.
Since then, a lot has happened with respect to technology and legislation. A completely new universe of high-tech companies, traditional car manufacturers, suppliers and startups has emerged around autonomous driving technology (Figure 1).
Figure 1: Participating and exhibiting companies at Automotive Lidar 2020, 22-24 September
This impressive line-up of companies has made strong progress in driving technological development and standards forward. However they have not yet been able to overcome the autonomous disillusionment we are facing collectively as an industry, namely that autonomous cars have a limited-use case for the near future. So what are the top five issues from a use case perspective?
Gartner publishes a hype cycle for emerging technologies (Figure 2). Last year’s curve already shows Autonomous Driving Level 4 is post-hype and Level 5 almost at its peak. In their next update, the disillusionment might be even more visible.
Figure 2: Gartner Hype Cycle for Emerging Technologies 2019
To conclude, autonomous driving Level 4 is the desirable technology as there are business cases that could work.
Take the following example. A non-autonomous truck delivers goods to a hub, where the trailer is hooked to a Level 4 truck. That truck drives a distance of 500-1,000km in a dedicated lane, autonomously and without a driver, to the next hub. From there, a non-autonomous truck delivers the goods to the final destination. On university campuses,factory sites, or places like airports, transport could be organised with Level 4 people movers. For private individuals and their vehicles, consumers can look forward to improved ADAS, or Level 2+ technologies as expensive features: for example a 60km/h hands-offsteering wheel and eyes-off-road traffic jam assistant.
Autonomous cars will continue to be insured by the vehicle holder
Under the scenarios described above, cars with autonomous features will continue to be insured as individual vehicles by the holder of the vehicle. That system has proven to be highly effective. Suing an OEM, or one of the many suppliers, in an attempt to hold them liable for causing an accident is not what the holder of the vehicle or victim of the accident should be concerned with; insurers should pursue that route and they already do.
With Level 2+ features or further advanced driver-assistance systems, differentiation is possible between one OEM and another. These features will also impact the ability to remarket the vehicle – the most important building block for any leasing rate. Furthermore, it will be of interest for those looking at total cost of ownership optimisation for their fleet.
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.’
The automotive industry looks to have reached a critical evolutionary step. Emerging from a mechanical mindset, vehicles are undergoing a process of electrification and digitalisation. As this fresh era of design expands, new materials are also erupting onto the scene. Daily Brief journalist Tom Geggus examines the potential of one such material; graphene.
When considering the construction of vehicles throughout the 20th century, particular materials spring to mind. Ford’s Model T was shaped by steel, GM engineered aluminium into its engines and Renault made progress with plastic. But as vehicles become smarter, so do the materials which go into their production. One new source of innovation for carmakers looks to be graphene.
A science lesson
So what is this new wonder material? Graphene is a one-atom-thick layer of carbon, arranged into a hexagonal lattice. While scientists have known about its existence for years, they were unable to extract it from graphite, the same mineral used in pencils.
But that was until 2004, when two professors from the University of Manchester, Andre Geim and Kostya Novoselov, made a Nobel Prize-winning discovery, with little more than a roll of sticky tape. The two would often hold ‚Friday night experiments,‘ venturing into experimental science that was not necessarily linked to their day jobs.
Armed with their tape, the pair removed flakes from a lump of graphene. Realising some samples were thinner than others, Geim and Novoselov began separating fragments repeatedly. Eventually, they were left with carbon flakes only an atom thick.
This means the graphene can be stretched along its length and width, but at an atom thick it cannot be manipulated on its third dimension, making it two-dimensional (2D). To put this into perspective, it is one million times thinner than the diameter of a single human hair.
While the sticky tape method opened the door to the discovery of graphene, it is not workable on an industrial scale. Instead, alternative methods like chemical deposition are now being used to extract the material en masse.
Groundbreaking graphene
Now, Graphene@Manchester leads the business-based development of the material at the University. Based in the UK, this includes the National Graphene Institute (NGI) and the Graphene Engineering Innovation Centre (GEIC). NGI brings together the scientific elements while GEIC deals with prototypes for pilot productions.
Speaking with Autovista Group’s Daily Brief, James Baker, CEO of Graphene@Manchester explained why graphene is so groundbreaking.
Because it is 2D, the material has unique properties that set it apart from 3D ones. ‘So you often refer to what’s called the graphene superlatives, and you hear things like 200 times stronger steel,’ said Baker. ‘It’s more conductive than copper. It’s both electrically and thermally conductive, it’s stretchable, it’s flexible, it’s transparent.’
Re-shaping cars
Used as an additive, the material can improve multiple elements of vehicles. When combined with rubber, it could potentially give a tyre both durability and grip, Baker explained. This could mean no more trade-offs between longevity and traction. One company, SpaceBlue, even looks to recycle tyres after they have reached the end of their life, by converting them into hardwearing floor mats, which have been enhanced with tiny amounts of graphene.
The 2D material can also be used to form compounds with other elements of a car to make it lighter. GEIC partner Briggs Automotive Company built the Mono, ‚the first production car in the world to fully incorporate the use of graphene-enhanced carbon fibre in every body panel‘. The material improved the structural properties of the fibre to make the supercar’s panels stronger and lighter, while also significantly improving the car’s mechanical and thermal performance.
Ford ran trials to see how the material could be used in components like fuel rail covers, pump covers and front engine covers. The carmaker also looked to reduce noise inside of its vehicles by mixing graphene with foam constituents. Tests carried out by Ford and suppliers revealed an approximate 17% reduction in noise, a 20% improvement in mechanical properties, and a 30% enhancement in heat endurance properties, compared to a non-graphene foam.
Even outside of the car, the material could help make a difference to motorists. Responsible for the UK’s motorways and major roads, Highways England is working with GEIC to explore the additon of graphene to bitumen in road surfaces. The aim is to make roads not only hard-wearing but flexible when it comes to extreme weather. If surfaces are able to expand and contract to adapt to hot and cold conditions, the likelihood of potholes would decrease, alongside the potential for damage to vehicles.
EVs and graphene
But how does graphene play into current automotive trends? As the industry experiences an electrified undercurrent, pulling vehicle development towards e-mobility, a material which decreases weight could be essential.
Baker explained that ‘light-weighting’ is a key challenge with electric cars as they get progressively heavier. This process can help shed weight from all over the car, including the interior, with plastics and fabrics being made thinner and lighter. The less an electric vehicle (EV) weighs, the less work the motors will have to do and the more efficient the car will become. Graphene can also be added to battery elements, such as the casing, to make it lighter and tougher, as well as more thermally conductive.
Ultracapacitor specialist Skeleton Technologies, also recently partnered with the Karlsruhe Institute of Technology, to complete the development of a graphene ‘SuperBattery.’ With a 15-second charge time, the unit would also be capable of charging cycles counted in hundreds of thousands. The company claims this makes it ‘a perfect solution for the three main issues affecting electric vehicles: slow charging times, battery degradation, and range anxiety.’
Forward-thinking
Discussing the potentially disruptive areas graphene might one day impact, Baker considered whether a vehicle’s structure could itself store energy. This could mean a car’s door or floor panels taking the place of a battery pack. However, he acknowledged the challenge with an idea like this would be dealing with a potential collision, and what would happen if a panel became damaged.
Going forward, Baker believes the wonder material is more likely to be crucial to the development of a new type of supercapacitor. This could allow vehicles to be equipped with a relatively smaller battery for range, which is then supplemented with a supercapacitor used for acceleration. For taxis and buses, which do a lot of stop-start driving, this split would be ideal as they would receive better range and performance from a supercapacitor that can recharge through braking.
Getting any graphene product into the market place requires jumping two major hurdles, Baker said. First, there is the development of the product itself, then secondly obtaining all the necessary certificates and coming into line with regulations. For a safety-critical product, this could mean roughly two to five years to get the required performance, and then a similar time scale to get the product certified. Meanwhile, simpler, non-safety related items could reach the market in 12 to 18 months.
However, with targeted investment, Baker believes certain areas of development could undergo acceleration. With countries looking to lower their carbon outputs, any technology capable of assisting the reduction of emissions would be well received. As environmental necessity continues to drive change, graphene could start shaping more of the automotive industry before too long. If used to its full potential, the 2D material could make its predecessors, like steel, aluminium and plastic, seem outdated, old-fashioned and one-dimensional.
Images courtesy of the University of Manchester.
The Autovista Group Daily Brief team discusses the biggest automotive news stories of the last fortnight. In this episode, Neil King examines Europe’s registration figures, Phil Curry focuses on fuel types, and Tom Geggus studies battery supply chains.
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Following the emergence of Europe’s automotive sector from coronavirus (COVID-19) lockdowns, a ‘three-speed’ development of residual values (RVs) has prevailed across the region. Senior data journalist Neil King explores the region’s variations.
The UK and France have enjoyed a rally, driven by pent-up demand in the initial post-lockdown period. Autovista Group’s COVID-19 tracker, which tracks 12 European markets, shows that the index of RVs, compared to early February, has risen since mid-May and peaked at 104.8 (a 4.8% rise) in the UK and 102.4 (a 2.4% rise) in France in the week to 6 September. The start month was February, with a value of 100.
The UK is enjoying the release of pent-up demand, both from the lockdown and the uncertainty running up to the country’s departure from the European Union on 31 January. It also faces a starker vehicle-supply challenge than any other market, which is filtering through to higher RVs as used-car demand outstrips supply. ‘Stock of both new and used cars is the biggest issue in the UK. This is driving up used prices and we do not see the bubble bursting quite yet. It’s September and even convertible demand is still high, with values increasing,’ commented Anthony Machin, head of content and product at Glass’s.
French Revolution
France benefitted from pent-up demand and a new incentive scheme that came into effect on 1 June. The €8 billion package includes a €7,000 grant for private buyers of new battery-electric vehicles (BEVs) costing less than €45,000 (€5,000 for fleet buyers), while buyers of new plug-in hybrids (PHEVs) can claim a €2,000 subsidy.
Additionally, France doubled its premiums for those looking to trade in older vehicles for a cleaner model, with a €3,000 grant for vehicles with internal combustion engines (ICE) and €5,000 for BEVs and PHEVs. Crucially, the enhanced trade-in bonus also applies to used cars and hence the notable rise in RVs. However, the scheme reached its 200,000-vehicle cap before the end of July and the Ministry of Ecological Transition announced the replacement of the recovery scheme with a conversion bonus, applicable from 3 August.
‘In France, OEM plants restarted late and slowly, creating a lack of new-car stock in July and even more in August. Moreover, as people have defected from the new-car market to the used-car market, increasing demand, the low stock of used cars explains the ongoing increase in residual values. This is especially true in the A- and B-segments, where the conversion bonus is working really well, but this is not the case for all fuel types and segments,’ commented Yoann Taitz, operations director of Autovista Group in France.
Used-car transactions surged; 595,942 used cars changed ownership in France in June, 29.1% more than in June 2019, according to data published by the French carmakers’ association CCFA. This was followed by year-on-year growth of 13.3% in July and 16.8% in August. Nevertheless, there were still 9.2% fewer used-car transactions in the first eight months of 2020 than in the same period in 2019.
Autovista Group anticipates a slowdown in the RV development in France and our latest RV outlook calls for prices of used cars to be 0.3% lower in France at the end of 2020 than when the COVID-19 crisis erupted in Europe, in March. In the forthcoming September update of Autovista Group’s whitepaper, How will COVID-19 shape used car markets?, we will reveal which market is forecast to be the most resilient among the 18 European countries covered.
Source: Autovista Group, Residual Value Intelligence, COVID-19 tracker
Rapid-reaction markets
Sweden, Finland and Portugal all had rapid negative reactions to COVID-19. Dramatic lockdown measures were not introduced in Sweden and Finland, but RVs fell from early February to mid-May in both markets.
However, RVs have climbed in Sweden since mid-June and recorded 100.7 on the index in the week to 6 September, i.e. 0.7% higher than in early February. ‘The used-car market has recovered fine as stocks are decreasing and sales volumes and values are rising,’ said Johan Trus, chief editor of Autovista Group in Sweden. ‘People were not allowed to travel to other countries, so the summer vacation has been spent in the country, and then people needed a car to travel. In addition, car exports have picked up.’
In Finland, the index of RVs fell from early February to only 97 in mid-June and has remained at the lowest level in Europe since. ‘Finland is still running on low numbers, and we don’t see the same quick recovery as in Sweden. The import of young used Swedish cars has picked up again too, in combination with lower used-car values than normal, already before the crisis started,’ Trus commented.
Portugal also endured falling RVs since the tracker index started in February but a more pronounced downturn commenced at the end of March. As in Finland, the price index is only showing a modest increase and has not recovered to pre-coronavirus levels.
‘Used-car sales continue to recover quicker than new-car sales. In July, used-car sales grew 25% year-on-year whereas new-car sales fell 16.9%, although this was a significant improvement on June, when the drop was 56.2%. There was just a small 0.1% decline in new-car sales in August but the drop was 8.6% including light commercial vehicles,’ said Joao Areal, editorial manager of Autovista Group in Portugal.
‘In the next months, we will understand if the demand for used cars continues to grow or if this was due to pent-up demand built during the lockdown. The car market represented more than half of consumer credit in July but of this amount, 85% was for used cars. Although we can see a recovery in the car market, we are still far from pre-COVID-19 values,’ added Areal.
Late starters
The rest of Europe’s tracked markets remain ‘late starters’, where several effects are balancing each other out.
The first reason for the ongoing stability in many markets is that they have essentially remained ‘on hold.’ In Italy for example, ‘the market has been waiting for a better understanding of the full impact of the economic crisis, especially considering that many experts are convinced that we could face a second wave and a new lockdown in autumn,’ explained Marco Pasquetti, forecast and data specialist of Autovista Group in Italy.
RVs fell again in Italy from late June to late July. This is partly because of the incentives to support the country’s automotive industry, which came into effect on 1 August. ‘There is also the Ecobonus incentive scheme, but the amount allocated is insufficient in our opinion (so far). We think that we’ll see an impact on values starting from September,’ Pasquetti added.
The significant disruption to new-car supply and registrations is also impacting RVs in ‘late-starter’ markets.
In Germany for example, used-car transactions were just 6% lower in the first eight months of the year than in the same period in 2019, according to the KBA. They have even performed better than last year for two consecutive months. New-car registrations have been far more affected, however, and are still 29% lower in the year-to-date than in 2019.
‘The lack of new-car supply still boosts young used-car sales but dealers seem to be unnecessarily discounting them even more than before the crisis – probably in favour of a quicker turnaround of stock. After a proper autumn, we expect stronger price competition at dealers in the last two months of the year as they compensate for the loss in new-car sales with higher used-car turnover,’ commented Andreas Geilenbrügge, head of valuations and insights at Schwacke.
The situation is a bit more optimistic than before in Spain, but the country faces the same challenge. ‘The automotive sector is resisting the crisis better than expected, helped by the measures to boost the sector that the government put in place. The production stoppages have also reduced pressure on used-car stock and the average number of stock days is much longer now. However, there are fewer new used cars coming into the dealers and I think the MOVES and RENOVE plans and/or the high discounts for new cars and young used cars will end up affecting transaction prices in the coming months,’ said Ana Azofra, valuation and insights manager at Autovista Group in Spain.
Switzerland saw the same dramatic decline in new-car sales volumes as elsewhere. ‘So, nearly new cars, aged 0-6 months, served to fill the gap left by missing new cars and increased their values temporarily. However, used cars aged 0-6 months, as well as those aged seven to 17 months, are losing ground again as new-car sales slowly regain some of the terrain lost during the lockdown,’ commented Hans-Peter Annen, head of editorial for Autovista Group in Switzerland.
‘Now manufacturers have resumed production and all the individual new-car incentives are back, this will most likely increase the used-car stock volume and the pressure on RVs,’ Annen added.
Meanwhile, there has been continued positive development of RVs in Poland.
‘I can observe continuous good demand for young used vehicles. They are a lower financial risk for buyers in the volatile market situation. Besides, list prices are growing very fast. That’s probably due to expected penalties for CO2 targets and the introduction of WLTP and the new Euro 6d norm, with more complicated engines (mild-hybrids),’ commented Marcin Kardas, head of the Autovista Group editorial team in Poland.
‘On the one hand, the financial contracts between companies and fleet suppliers are extended, which will cause a lack of the youngest used cars on the market. But a lot of people still work from home so don’t need a car and the economy remains unstable. In this environment, it is really hard to predict the direction of RVs. Growing list prices will decrease them but strong demand for used cars will positively influence them. To recognise the real post-COVID effect, we should wait a bit longer but I don’t expect significant changes in the coming months,’ concluded Kardas.
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.
Kia Motors Corporation (Kia) is expanding its partnerships with mobility companies to ‘meet the needs of a diverse range of customers worldwide.’ The move will mean increasing its fleet sizes, providing customised transport offerings and launching new rental capabilities. In July, Kia also announced the formation of Purple M, a startup focused on electric-vehicle (EV) mobility services.
From the outset of 2020, Kia has been revealing how it wants to change the way these platforms operate. In January, the carmaker announced ‘Plan S,’ its long-term strategy to shift focus away from internal combustion engine (ICE) vehicles towards EVs and other customised mobility solutions. This strategy includes establishing hubs in cities with strict environmental regulations, as well as developing services based on electric and autonomous vehicles in the long term.
‘Kia is striving to provide customised products and differentiated mobility services based on its long history in automotive manufacturing,’ Kia’s President and CEO Ho Sung Song said. ‘Kia will further enhance its collaboration with global partners to offer regionally customised mobility services as it implements its ‘Plan S’ strategy.’
Regional strategies
During a visit to the carmaker’s Sohari plant in South Korea, Song revealed the company’s plans to develop different regional approaches to its mobility partnerships. So, in South Korea, the carmaker will build on its ‘Kia Flex’ vehicle subscription programme by expanding the fleet to 200 vehicles. The line-up will include the new Carnival, which is nearing its launch date in the country, as well as a new EV model to be added in the future.
Meanwhile, in Europe, Kia will collaborate with its partners to provide customised offerings. In 2018, Kia worked with Spanish energy company, Repsol, to establish a car-sharing service called ‘WiBLE’. Currently operating with a fleet of 500 Niro plug-in electric hybrids (PHEVs), it allows customers to rent and return vehicles at designated locations on a ‘free-floating’ system. Kia plans to provide a multi-modal service in the future, which will offer multiple means of travel, like public transport and car-sharing.
Later this year, the manufacturer also intends to launch a dealer mobility service in Italy and Russia. This will enable dealers to rent out vehicles for any period, from a single day up to a full year. Kia hopes to gradually go global with the offering in future.
In the US, the company plans to accelerate the electrification of its fleet and enhance cooperation with its mobility partners. The carmaker provided 200 Niro EVs to Lyft last year and this year it supplied 44 Niro HEVs to MoceanLab, Hyundai Motor Group’s mobility service company.
In emerging markets, the South Korean manufacturer has partnered with companies like Ola, India’s largest ride-hailing company, Revv, an Indian car-sharing company, and Grab, Southeast Asia’s largest ride-hailing company. Through these partnerships, Kia hopes to better understand the needs of its customers in the development of future vehicles.
Purple M
Investing further in mobility solutions, Kia has also partnered up with CODE42.ai, a technology firm focused on the transition to autonomous Transportation-as-a-Service (TaaS). Together, they have launched a joint venture called Purple M.
This new company aims to establish a flexible e-mobility platform, as well as develop a sustainable EV ecosystem. While consumer interest in EVs is on the rise, mobility services are still driven primarily by ICE vehicles. Kia reasons that this leaves room for an e-mobility ‘first mover’.
‘With the newly established Purple M, Kia will be reborn as a leader for the era of e-mobility,’ said Song. ‘CODE42.ai is a leading Korean company in the field of future innovation technology, and is the best partner for successfully promoting a differentiated e-mobility service business.’
Purple M will use CODE42.ai’s Urban Mobility Operating System (UMOS), a cloud-based platform that integrates autonomous vehicles and air transportation services. This includes e-hailing, fleet management, demand-responsive shuttles and smart logistics.
‘Our goal is to accelerate the era of electric vehicles through Purple M,’ said Chang Song of CODE42.ai. ‘The integrated mobility and logistics platform UMOS will be central to building an e-mobility ecosystem encompassing everything from infrastructure to services.’
The two companies will use the new platform to establish further collaborative partnerships with specialist providers, hoping to develop a flexible e-mobility infrastructure. In particular, Purple M aims to help revitalise South Korea’s domestic mobility industry. It hopes to achieve this by cooperating with mobility market players while presenting new standards in what Kia calls ‘the post-coronavirus (COVID-19) era’.
COVID-19 complications
Currently, manufacturers are having to focus on EV production to keep in step with emissions regulations. But as the COVID-19 economic downturn means fewer people will have the money to buy expensive vehicles, traditional means of car ownership might be questioned by consumers.
This, arguably, is exactly what services like Purple M have been designed for – a chance to challenge the status quo of ownership. Why own an expensive EV when you can rent one as and when you need it?
On the other hand, there may be some reluctance to make use of these offerings straight away. As consumers seek to avoid public transport and contact with other people, shared-mobility services may suffer the same fate. Providers like Purple M will need to routinely disinfect shared vehicles in order to reassure customers.
What is more, as offices remain closed to prevent further spread, fewer people will need a vehicle to commute. More broadly, if lockdowns continue to be intermittently enforced, travel will take a nosedive across the board. Until a vaccine is created, there will continue to be less person-to-person interaction and, consequently, far fewer journeys.
So, in the short term, the mobility services offered by the likes of Kia might be facing an uphill battle. But in the long term, consumers may recognise the potential of breaking free from traditional forms of car ownership and only pay for a car when they have an immediate need for one.
It has been almost seven months since the first official coronavirus (COVID-19) case was reported in Europe. Since then, governments across the continent have put procedures in place that had never been seen before. Whole countries locked down, travel bans were implemented and entire industries stopped as countries raced to reduce their rates of infection.
The automotive industry was particularly hard hit by the outbreak and resulting lockdowns. Vehicle production stopped, and dealerships closed, bringing a halt to sales. Since these lockdowns have eased, it is starting to become clearer how markets are reacting.
Yet questions remain. Will incentive schemes across Europe present additional residual value (RV) risk? How severe an economic decline should we expect towards the end of 2021? Are there still hopes of a V-shaped recovery?
To provide further insight into how the automotive market is reacting in the wake of COVID-19 lockdowns, and the impact the economic turmoil is having, or could have, on RVs, Autovista Group is holding a webinar: COVID-19 residual value impact – where are we now?
The 45-minute session is taking place on 16 September at 11.00 CEST (10.00 BST) and will see a number of Autovista Group’s experts, representing markets across Europe, come together to discuss the current state of the automotive market and the effect on RVs. Topics to be discussed include:
‘With the COVID-19 threat still present around the world, it is essential for businesses to have up-to-date information to help them understand the current situation and navigate through whatever the future holds,’ commented Phil Curry, Autovista Group Daily Brief editor and chair of the webinar. ‘When economic problems strike, the automotive industry is often particularly affected, yet there is more of an opportunity for used-car sales during these times, so having the latest information on RVs and the outlook for markets across Europe is essential, especially in these unprecedented times.’
To register for the free Autovista Group Webinar: COVID-19 residual value impact – where are we now? click here and fill in your details.
In-car infotainment systems appear to be expanding endlessly across cockpits, becoming more technologically advanced as they go. Examples range from the Honda e’s dashboard-wide multimedia suite to Tesla’s titanic touchscreen-driven approach. While this is great news for gadget lovers, it does raise issues around driver concentration.
Andy Cutler, car editor of forecast values at Glass’s, the UK arm of Autovista Group, recognises the increasingly distracting nature of touchscreen technology. He argues that drivers now need to navigate a number of on-screen menus to adjust features like climate control, even though this can be far more distracting than simply locating a physical button. Any time the driver spends looking away from the road is dangerous, and touchscreens have the potential to elongate this hazardous period.
Reaction times
This position was supported by the findings of a study published by the UK’s Transport Research Laboratory back in March. It found that the latest in-vehicle infotainment systems can impair driving reaction times more than alcohol and cannabis use. Reaction times slow by 12% at the drink-drive limit, which then decreases to 21% with cannabis. While using a touchscreen display with Android Auto or Apple CarPlay however, reaction times were more than 50% slower.
During the study, many participants realised the system was distracting them and tried to compensate by slowing down, for example. However, their performance was still adversely affected, with drivers unable to maintain a constant distance with the vehicle in front, reacting more slowly to sudden occurrences and deviating from their lane.
Drivers who took their eyes off the road for as long as 16 seconds while driving and using touch controls resulted in reaction times that were worse than texting while driving (35% slower reaction time). Some also underestimated the amount of time they spent looking away from the road by as much as five seconds when engaged with these infotainment systems.
Tesla touchscreen trouble
A German court case has highlighted the turning tide against this technology. A ruling was passed down that Tesla’s touchscreen controls should be treated as a distracting electronic device. The judgement was made as part of a case concerning a collision where the driver had been trying to adjust the windscreen-wiper settings.
The defendant found himself facing a fine and a ban, under the same rules used to prosecute those found using a mobile phone behind the wheel.
In March this year, the Higher Regional Court in Karlsruhe, known as the Oberlandesgericht (OLG) in German, heard a case that stemmed from a collision almost a year previously, a legal blog revealed. A Tesla Model 3 driver had been out in the rain when the car’s automated wipers activated.
Their speed can be automatically adjusted by the car to compensate for the amount of rainfall. However, manually changing the intervals is done via the central touchscreen in the middle of the cockpit, rather than on a button or dial.
In this case, the Tesla driver had to navigate software menus to choose from one of five settings after touching an icon on the screen. The court said that due to the ‘resulting loss of vision from the traffic’, the driver left his lane and ended up in an embankment, colliding with a sign and several trees.
The ruling
Following the incident, the driver was initially handed a €200 fine and a one-month ban from driving by a local court. This penalty came into line with the rules surrounding the use of a mobile phone while driving, namely, ‘Improper Use of an Electronic Device in Accordance with Section 23 (1a) of the Road Traffic Regulations.’ But the driver argued that the wiper controls were a safety-related feature which he needed to access, and so appealed to the OLG.
However, the higher court denied the appeal, agreeing with the initial ruling. It found that ‘the touchscreen (permanently installed in the vehicle of the Tesla brand) is an electronic device in the sense of § 23 Para, it does not matter what purpose the driver pursues with the operation.’
‘The setting of the functions required to operate the motor vehicle via the touchscreen (here: setting the wiping interval of the windshield wiper) is therefore only permitted if the view is only briefly adjusted to the screen for road, traffic, visibility and weather conditions and at the same time a corresponding turn away from the traffic is connected.’
So according to this ruling, a fixed touchscreen is an electronic device, even if it is only being used to adjust the wiper speed. The Daily Brief did reached out to Tesla for comment about this verdict, but the company has yet to respond.
Alternative cockpit systems
So manufacturers might need to take stock of touchscreen alternatives. This could mean multifunction dials on the steering wheel or a voice-activated command system, capable of carrying out tasks quickly and effectively.
For example, Polestar’s Precept concept boasts a 15-inch screen with Google Assistant providing advanced speech technology. However, vital information is displayed on a separate nine-inch horizontal display that utilises eye-tracking technology, allowing on-screen adjustments based on where the driver is looking.
The UK Government has launched a ‘call for evidence’ to help shape innovative autonomous systems that could be used on the country’s roads as early as next year.
The plans relate to the Automated Lane-Keeping System (ALKS), which takes over control of a vehicle at low speeds, keeping it in lane, especially on dual-carriageways and motorways. The technology is designed to enable drivers to delegate the task of driving the vehicle – a first for the automotive market in the UK.
When activated, the system keeps the vehicle within its lane, controlling its movements for extended periods of time without the driver needing to do anything. However, they must be ready and able to resume control when prompted by the vehicle.
Following the approval of the ALKS Regulation in June 2020 by the United Nations Economic Commission for Europe (UNECE- of which the UK is a member) – the technology is likely to be available in cars entering the UK market from spring 2021.
Safety first
The government is seeking industry views on the role of the driver and proposed rules on the use of this system to pave the way towards its safe introduction, within the current legal framework. The call for evidence will ask whether vehicles using this technology should be legally defined as an automated vehicle, which would mean the technology provider would be responsible for the safety of the vehicle when the system is engaged, rather than the driver.
There is also a question regarding the use of ALKS at speeds of up to 70mph, the national speed limit in the UK.
‘[Autonomous technology] could make our roads safer,’ commented secretary of state for transport Grant Shapps. ‘In 2018, 85% of road collisions in the UK that resulted in injury involved human error. Automated vehicles could reduce these errors as they will not get tired or distracted.
‘I want the UK to be the first country to see these benefits and to encourage manufacturers to deploy this transformative technology on our roads by delivering the right environment for it to thrive. We are already familiar and comfortable with automation in aircraft, and I am keen that we embrace it on our roads too.’
Direction needed
With the UK leaving the European Union, the country is looking to become a leader in various technologies as a way of highlighting its economy, trade prospects and make a name for itself as it develops its own path on the international stage. The government has often spoken about becoming a leader in electric vehicle (EV) technology, specifically batteries. However, with various projects in Europe already underway, and carmakers running their own research, that target is going to be difficult to achieve.
Becoming the first country in Europe to adopt autonomous technologies for use in everyday situations could inspire companies to focus their research and development opportunities in the UK. Introducing ALKS will show favourability to legislation over driverless systems when other countries are still trying to untangle the red tape surrounding them.
‘Automated technology could make driving safer, smoother and easier for motorists and the UK should be the first country to see these benefits, attracting manufacturers to develop and test new technologies,’ added transport minister Rachel Maclean.
‘The UK’s work in this area is world-leading, and the results from this call for evidence could be a significant step forward for this exciting technology.’
Ready to go
Mike Hawes, SMMT chief executive, said: ‘Autonomous vehicle technologies, of which automated lane-keeping is the latest, will be life-changing, making our journeys safer and smoother than ever before and helping prevent some 47,000 serious accidents and save 3,900 lives over the next decade.
‘This advanced technology is ready for roll out in new models from as early as 2021, so today’s announcement is a welcome step in bringing the regulation up to speed so that the UK can be among the first to grasp the benefits of this road safety revolution.’
The UK Government plans to launch a public consultation later this year on the detail of any changes to legislation and The Highway Code that are proposed following the completion of the call for evidence.
Lucid Motors is seeking to set ‘new standards’ for sustainable transportation. Having recently announced the upcoming Lucid Air sedan can achieve an estimated range of 517 miles (832km) under US Environmental Protection Agency (EPA) testing, the California-based startup might just be able to go the distance.
Additional reports indicate that the luxury electric-vehicle (EV) maker is nearing completion of its factory in Arizona. The company also confirmed it has plans for the next generation of EVs that could follow its all-electric sedan.
Setting a benchmark
The Lucid Air set a benchmark EPA range of 517 miles with FEV North America, in Michigan. As an independent service provider of vehicle and powertrain development, FEV applied the EPA’s multicycle test procedure. The carmaker said that ‘the results confirm that the Lucid Air is the longest-range electric vehicle to date.’
The EPA’s range assessment focuses on long-distance cruising, given the US’s long highways. Meanwhile, the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) used in Europe, emphasises a start-stop driving style, which is more common on the continent.
‘I am delighted that the Lucid Air has been independently verified by FEV to achieve an estimated EPA range of 517 miles, and that this landmark in the history of EV development has been achieved entirely through Lucid’s in-house technology,’ said Peter Rawlinson, CEO and CTO of Lucid Motors.
‘I believe that our 900-volt architecture, our race-proven battery packs, miniaturised motors and power electronics, integrated transmission systems, aerodynamics, chassis and thermal systems, software, and overall system efficiency has now reached a stage where it collectively sets a new standard and delivers a host of ‘world’s firsts,’ he said.
Producing some of the longest-range EVs on the market, Tesla recently announced its Model S Long Range Plus achieved an EPA range of 402 miles. This equals a 20% range increase when compared to a Model S 100D from 2019, with the same battery pack design. While the Lucid Air can travel 100 miles further, Tesla claims its upcoming Roadster will boast a range of 620 miles. However, it now looks like the Roadster is unlikely to go on sale before 2022 as Tesla’s focus remains on the Model Y, the Cybertruck, and the Gigafactory in Berlin.
Rising range
The earlier ‘alpha’ prototype of the Lucid Air originally sported a range of 400 miles. The carmaker explained it was able to gain another 100 miles through proprietary technology and careful engineering.
The drivetrain was built in-house with Lucid miniaturising and integrating the Air’s motors, transmission and inverter. This was then paired with a 900-volt architecture to achieve compactness and efficiency. Lucid said battery packs were the result of ‘10 years of experience and over 20 million miles of real-world testing.’
Atieva, Lucid’s technology division, also played a big part given that it supplies battery packs to the Formula E racing series. The battery system, therefore, provides increased safety, performance, and energy density in a form sculpted around the cabin.
‘Range and efficiency are widely recognised as the most relevant proof points by which EV technical prowess is measured,’ said Rawlinson. ‘A few years ago, we revealed our alpha prototypes of the Lucid Air and promised over 400 miles range; a reflection of our technology at that time. In the intervening period, we have achieved a series of technological breakthroughs, culminating in an unsurpassed degree of energy efficiency.’
‘I am therefore pleased that we have consequently achieved an estimated EPA 517 miles of range today whilst also significantly reducing our battery pack’s capacity, thereby reducing vehicle weight and cost, and improving interior space. Such exceptional efficiency, achieved through in-house technology, is undeniably a measure of a true EV tech company,’ he concluded.
While customer deliveries are not scheduled until early 2021, the Lucid Air’s online reveal event on 9 September is fast approaching. Here, information about the vehicle’s final interior and exterior design will be announced as well as product specifications, available configurations and pricing.
Nearly finished factory
After breaking ground in early December 2019, construction has nearly finished on Lucid’s factory in Casa Grande, Arizona, with plans to install a pilot production line there later this month. It is here the startup will begin manufacturing ‘Beta 2’ models that will closely resemble the production models that will reach customers next spring, according to Green Car Reports (GCR).
Rawlinson told GCR that it is the first purpose-built EV factory in North America, built in record time. It will have taken eight months from there being no factory at all, to an operational one with cars coming off the production line.
In an email to Autovista Group, a Lucid spokesperson explained that this has been achieved by focusing on the initial phase of construction, which would allow the startup to meet a more modest manufacturing capacity in its first year of production.
‘We felt a greenfield factory was appropriate for Lucid so we could ensure production efficiencies at every stage of the company’s growth,’ the spokesperson wrote. ‘For the first phase, we’re constructing an 820,000 sq. ft. facility that will include manufacturing, assembly, storage and central utility, and employ around 750 workers.’
‘Production capacity for phase one is approximately 34,000 units per year. For phase two and beyond, the company will expand construction as higher sales volumes dictate, with the land in Casa Grande allowing for production growth of up to 400,000 units per year,’ they added.
More models
Rawlinson also confirmed with GCR that Lucid plans to produce an SUV, which shares the Air’s platform as well as its production line. Currently, the hope is to get this model into production by early 2023. He explained that the drive behind this move was creating economies of scale that will help grow the business.
GCR hinted that once this has been achieved, the advanced technologies featured in the Lucid Air could make its way into a more affordable vehicle. When asked about the potential for a more affordable vehicle, the spokesperson told Autovista Group ‘we are exploring all options for a full line up of Lucid vehicles, including vehicles that start below $100,000 (roughly €83,000).’ However, they stated ‘no additional information can be shared at this time.’
Large and established automotive companies find themselves needing to convert factories, redesign model lines and even call in specialist help to work out the fine details of EV production. Technology companies like Lucid and Tesla, on the other hand, benefit from having their roots firmly planted in EV soil. But entering the market in the first place can be hugely expensive, meaning the startups lean towards luxury models. This makes establishing economies of scale essential so they can work their way back down the cost tree, expanding their market share with more affordable EVs.
The latest data from the respective associations in the major continental European markets reveal that the volume of used-car transactions grew in July 2020 compared to the same month last year. Autovista Group senior data journalist Neil King considers this return to growth across Europe’s used-car markets as the sector tentatively recovers from the coronavirus (COVID-19) crisis.
Used-car sales increased by 13% year-on-year in both France and Germany in July, and were up 9% in Italy and 6% in Spain. Through to July, Germany is the only major European used-car market that has not suffered a double-digit decline, with a comparatively modest contraction of 8%.
Used-car data is not yet available for the UK for July but is expected to follow the growth trend, especially given the 11% surge in new-car registrations in the country’s first full month of trading since February. This is even without increased buying incentives, which have been introduced in France, Germany, Italy and Spain.
Used-car transactions, year-on-year percentage change, July and year-to-date 2020
Sources: CCFA, KBA, ANFIA, GANVAM/IEA
Outperforming new-car registrations
Prior to the positive results last month, the volume of used-car transactions declined in the first half of 2020 compared to H1 2019 in all five major European markets. However, the downturns in the first half of 2020 were not as dramatic as the contractions in new-car registrations.
Used-car transactions and new-car registrations, year-on-year percentage change, H1 2020
Sources: CCFA, KBA, ANFIA, ANFAC, GANVAM/IEA, SMMT
In the UK, the used-car market contracted by 28.7% in the first half of 2020, according to the latest figures released by the Society of Motor Manufacturers and Traders (SMMT) on 11 August. Following a comparatively modest decline of 8.3% in the first quarter of 2020 as the COVID-19 lockdown from March negated growth in January and February, there were only 1,039,303 changes of ownership in the second quarter, equating to a 48.9% slump in the second quarter. However, ‘the pace of decline eased as the quarter progressed, from a peak year-on-year loss of 74.2% in April to 17.5% in June, as private sellers and buyers got back on the move and transactions began to restart,’ the SMMT stated.
‘As devastating as these figures are, with full lockdown measures in place for the whole of April and May, they are not surprising. As the UK starts to get back on the move again and dealerships continue to re-open, we expect to see more activity return to the market, particularly as many people see cars as a safe and reliable way to travel during the pandemic. However, if we’re to re-energise sales and the fleet renewal needed to drive environmental gains, support will be needed for the broader economy in order to bolster business and consumer confidence,’ commented Mike Hawes, SMMT chief executive.
Continental transactions
There were similar contractions of the used-car market in Spain and Italy. Spain suffered the most, with 31.7% fewer changes of ownership in the first half of 2020 than a year earlier, but new-car registrations declined by more than 50%. There was a phased approach to relaxing the lockdown measures in Spain, which largely explains why both the new- and used-car markets were still weak, even in June. However, dealers can now fully reopen, and the introduction of the MOVES II incentive scheme for new battery-electric vehicles (BEVs) and plug-in electric hybrids (PHEVs) and the RENOVE scrappage scheme have stimulated the Spanish market since their introduction in early July.
Used-car demand fell 31.6% year-on-year in Italy in the first half of 2020, compared to a 46.1% contraction of the new-car market. However, many buyers of both new and used cars decided to hold off until government incentives came into effect at the beginning of August as part of the Decreto Rilancio (Relaunch Decree). This new scheme comes on top of the Ecobonus scheme, which incentivises cars producing less than 20g of CO2/km.
Electric and hybrid cars can now benefit from up to €10,000 in subsidies when scrapping an older vehicle. €3,500 is now provided for scrapping vehicles that are at least 10 years old when buying a new Euro 6 vehicle with CO2 emissions up to 110g/km, and a price of up to €40,000. Dealers will put forward €2,000 towards the incentive, while the state provides €1,500. Without trading in an older model, the funds drop to €1,750.
In France, the 17.4% decline in used-car sales in the first half of 2020 was a significantly better performance than the 38.6% fall in new-car registrations. Whereas the incentives introduced on 1 June for new BEVs and PHEVs remain, the additional bonus for trading in older cars for cleaner new and used cars was exhausted before the end of July. The scrappage scheme reached its 200,000-vehicle cap after just two months, but the Ministry of Ecological Transition announced it would be replacing the recovery scheme with a conversion bonus, applicable from 3 August.
Germany has weathered the COVID-19 storm better than the other major European markets, with only 11.4% fewer changes of ownership in the first half of 2020 compared to the same period last year. New-car registrations have also suffered less than in the other major markets, but were still down 34.5% in the first half, and have therefore been outperformed by used-car demand here too.
Residual-value resilience
As used-car markets have proven more resilient than new-car markets, the impact on residual values (RVs) has been rather marginal in European markets so far this year. Nevertheless, a ‘three-speed’ development of residual values (RVs) is emerging. The UK and France are benefitting from pent-up demand and some markets have had a rapid reaction to the impact of COVID-19, but most are ‘late starters’ with limited value movements thus far.
Source: Autovista Group – Residual Value Intelligence Coronavirus Tracker
As COVID-19 lockdowns are left behind, thoughts turn to economic recovery. However, as the latest update to the Autovista Group whitepaper ‘How will COVID-19 shape used car markets’ explains, in the last month, the situation has taken a gloomier turn. Download your copy here.
The Autovista Group Daily Brief Team discusses the biggest automotive news stories of the last fortnight. In this episode, Tom Geggus talks incentive schemes, Neil King reviews registration figures and returning special guest Christof Engelskirchen wraps up residual values.
You can also listen and subscribe to receive further episodes direct to your mobile device on Apple, Spotify and Google Podcasts.
Daily Brief editor Phil Curry looks at carmakers’ 2020 quarterly and first-half financial performance, exploring how the coronavirus (COVID-19) pandemic has affected the automotive industry. In this second part, Curry explores the impact of COVID-19 on the financial performance of BMW, Daimler and Toyota.
The BMW Group delivered 962,575 BMW, Mini and Rolls-Royce premium-brand vehicles to customers worldwide in the first six months of 2020, down 23% compared to the first half of 2019. Group revenues fell 10.3% to €43.2 billion. Earnings before interest and tax (EBIT) for the six-month period amounted to €709 million, down 74.6%.
As BMW expected, the negative impact of the COVID-19 pandemic was felt more sharply in the period from April to June. The carmaker reported a loss of €666 million in Q2, its first quarterly loss since 2009.
‘Our swift responsiveness and consistent management strategy enabled us to limit the impact of the corona pandemic on the BMW Group during the first half of the year,’ said Oliver Zipse, BMW chairman. ‘We are now looking ahead to the second six-month period with cautious optimism and continue to target an EBIT margin between 0% and 3% for the automotive segment in 2020. We are monitoring the situation very closely and managing production capacities in line with market developments and regional fluctuations in customer demand.’
Daimler – a challenging quarter
Daimler has issued a number of profit warnings in recent years, as it has struggled with EV development budgets, falling sales and the implementation of the Worldwide Harmonised Light-vehicle Test Procedure (WLTP). The COVID-19 pandemic has therefore added another layer to an already complicated situation.
The German carmaker reported that revenue slipped ‘significantly’ by 29% to €30.2 billion in Q2 2020. It reported a loss before interest and tax of -€1.7 billion, with a net loss of €1.9 billion.
‘Due to the unprecedented COVID-19 pandemic, we had to endure a challenging quarter,’ said Ola Källenius, chairman of Daimler. ‘But our net industrial liquidity is a testament to effective cost control and cash management, which we must continue to enforce. We are now seeing the first signs of a sales recovery – especially at Mercedes-Benz passenger cars, where we are experiencing strong demand for our top end models and our electrified vehicles. Going forward, we are firmly determined to continue to improve the cost base of our company. At the same time, we are committed to our key strategic objectives: to lead in electrification and digitalisation.’
Daimler countered the drop in demand by quickly suspending production in March, April and May, as well as introducing short-time working. To safeguard the company’s financial strength, expenditure and investments were focused on the most critical future projects. The company currently expects to return to profit by the end of the year.
Toyota turns a profit
Unlike Nissan, and other Japanese carmakers, Toyota reported a profit, albeit significantly reduced, in its 2021 financial year Q1 results, covering the period from 1 April to 30 June. The carmaker’s operating profits plunged by 98% compared to the same period last year, coming in at ¥13.9 billion (€110 million).
Net income tumbled 74% to ¥158.8 billion, as total retail vehicle sales, including those from Daihatsu and Hino, fell by 32%.
Toyota attributed its profit to a number of key elements that played out in the three months. First, the effects of foreign exchange rates decreased operating income by ¥75 billion. Secondly, cost-reduction efforts increased operating income by ¥10 billion. Lastly, the effects of marketing activities decreased operating income by ¥810 billion yen, largely due to the fall in sales volume caused by the spread of COVID-19.
The carmaker has not revised its forecasts for the year, which were made in May 2020, as it operates an April to March financial year. Therefore, it was able to take the COVID-19 effect into account when planning its year ahead. The company expects operating income will fall 79% to ¥500 billion in 2020/2021 while net income will slide 64% to ¥730 billion.
‘While we expect an increase in consolidated vehicle sales, we have left those forecasts unchanged given, for example, the possibility that the business environment will change significantly depending on such factors as the future spread of COVID-19 and the state of its containment,’ the company said.
Cautious optimism
Throughout the recent spate of financial results, one thing is clear. No company is currently able to accurately forecast its full-year results. Some have tried, with caveats added in case things change drastically, while others have simply said they are not in a position to produce forecasts in what is a volatile market.
However, there is cautious optimism, and as countries around the world start to get a grip on how to handle the COVID-19 pandemic, it is hoped that the extreme measures taken in March and April will not be repeated. What could cause further issues for the automotive industry is the economic impact, which has pushed some countries into recession and is increasing unemployment. These two factors that do not bode well for the purchase of new vehicles.
Read part one of Curry’s financial results round-up here.
Daily Brief editor Phil Curry looks at carmakers’ 2020 quarterly and first-half financial performance, and how the coronavirus (COVID-19) pandemic has affected the automotive industry. In this first part of two, Curry considers VW Group, Nissan, Renault and Ford.
Europe’s economy is in a state of flux in the wake of COVID-19 lockdowns, with Italy leading the way in extreme measures put in place to prevent the spread of the virus.
Some carmakers have weathered the storm better than others, and many remain optimistic that the impact is merely a ‘blip’ in their financial results, with improvements already developing.
VW – one of the most challenging periods
In its H1 2020 results, Volkswagen Group (VW) reported an operating loss of €803 million (before special items). This expanded to an overall loss in the first half of 2020 to almost €1.5 billion when special items are included. Vehicle sales were down 30% compared to the first half of 2019, while production fell 32.5%. Group sales revenue decreased by 23.2% to €96.1 billion.
Frank Witter, member of the group board of management responsible for finance and IT, said: ‘The first half of 2020 was one of the most challenging in the history of our company due to the COVID-19 pandemic. The health of our employees, customers and business partners is still the top priority. With our 100-points plan to ensure maximum health protection, we have, for example, created the best possible prerequisites for a safe working environment. At the same time, we introduced comprehensive measures aimed at reducing costs and securing liquidity early on, which enabled us to limit the impact of the pandemic on our business to a certain degree.
‘Thanks to the great team effort, we have gradually been able to ramp up operations within the Group and up until now, have steadily managed to navigate through this unprecedented crisis. Due to the positive trend exhibited in our business over the past few weeks and the introduction of numerous attractive models, we look cautiously optimistic to the second half of the year.’
Nissan – major losses
For the April to June period, consolidated net revenue at Nissan was ¥1.1742 trillion. The operating loss was ¥153.9 billion, equivalent to an operating margin of -13.1%. The net loss was ¥285.6 billion.
In its first quarter, Nissan’s global automotive sales fell by almost half amid the pandemic. To limit the spread of COVID-19, the company suspended production at manufacturing sites around the world. Nissan’s plants have since resumed operations but face reduced utilisation of their capacity due to lower demand. The company’s performance continues to be impacted by the challenging business climate, it said in a release.
Nissan raised concerns about its financial performance in April, saying that its full-year consolidated earnings ‘may differ by more than 30% from the previous financial forecast’ that was made in February. It is expecting an operating loss of ¥470 billion (€3.7 billion) for the year to March 2021.
Renault – impacted by Nissan
French carmaker Renault Group announced a €7.4 billion net loss in the first half of 2020, with the carmaker highlighting the negative impact of alliance partner Nissan’s results.
The contribution of associated companies came to -€4.8 billion, compared with -€35 million in the first half of 2019. ‘This decline came mostly from Nissan’s contribution, down €4.796 billion including -€4.3 billion of impairments and restructuring costs,’ the carmaker said.
Global sales dropped by 34.9%. However, the company stated it had a ‘high-level order book’ at 30 June, and sales of its Zoe electric model were up by 50%, highlighting the appeal of the technology. It is also likely that the generous incentive scheme in France helped the carmaker to increase sales in the period from 1 June.
No reliable guidance
However, Renault is unsure of how it will perform in the rest of 2020. ‘Given the uncertainties around the health situation, both in Europe and in emerging markets, Groupe Renault estimates that it is not in a position to give a reliable guidance for the full year,’ it stated.
Luca de Meo, CEO of Renault, declared: ‘Although the situation is unprecedented, it is not final. Together with all of the Group’s management teams and employees, we are fully dedicated to correcting the situation through a strict discipline that will go beyond reducing our fixed costs. Preparing for the future also means building our development strategy, and we are actively working on this. I have every confidence in the Group’s ability to recover.’
Ford quarter supported by Argo AI
Ford benefited from an investment made in its autonomous subsidiary Argo AI by VW Group, as part of a collaboration deal on driverless and electric-vehicle technology. Without the investment, Ford reported a loss for the second quarter of -$1.9 billion. Including the investment, the firm reported a second-quarter profit of $1.1 billion, up by $1 billion on the similar period in 2019.
Its H1 results reflect the wider picture of the coronavirus impact with six-month losses. For the first half of 2020, the company reported a loss of $900 million – a negative impact of $2.2 billion compared with the same period in 2019. Global sales fell 37% compared to the first six months of 2019.
Ford directed much of its capabilities and resolve in the second quarter to understanding and helping to meet the coronavirus-related needs of customers, dealers, suppliers, healthcare professionals and first responders, and patients and communities. Initiatives like enhanced and new online services, and deferred financing payments on new vehicles in the US, benefitted customers and Ford as commerce stalled, then began to recover. However, with the US yet to emerge from its first wave of coronavirus infections, let alone face a second wave, Ford’s global business may yet be facing deeper challenges in the second half of 2020.
In a follow-up article to be published tomorrow (14 August), Daily Brief editor Phil Curry explores the impact of COVID-19 on the financial performance of BMW, Daimler and Toyota.
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