January 14th, 2011 at 12:17pm
Toyota may be on the verge of a breakthrough developing electric motors that do not need rare-earth materials, in an effort to sidestep China’s stranglehold on the market. Audi is now the top automotive luxury-brand in the world, thanks to sales in China. The U.S. Department of Transportation issued new rules aimed at preventing occupants from being ejected from a vehicle during a rollover. All that and more, plus a preview of this week’s Autoline Detroit about TechShop, a place where anyone can create just about anything they want.
This is Autoline Daily for January 14, 2011. And now, the news.
RARE-EARTH FREE ELECTRIC MOTOR (subscription required)
Looks like Toyota has come up with a way to deal with China’s stranglehold on the market for a rare-earth elements. The Wall Street Journal reports that Toyota may be on the verge of a breakthrough developing electric motors that do not need rare earth materials. It sounds like a pretty simple solution. Instead of using permanent magnets Toyota’s motor will use electromagnets. General Motors and the supplier company Continental are working on the same thing. In fact Continental says it will have an electric motor that does not use rare-earth materials out this year for an unnamed electric car in Europe.
TOYOTA MOVES PRODUCTION OUT OF JAPAN
Speaking of Toyota, the company is looking at moving more production out of Japan. Sounding more like a Detroit executive from the early 1980s, Akio Toyoda is blaming the high cost of currency. The strength of the yen reduced Toyota’s operating profit by more than $1.4 billion last year. Toyota says it needs the exchange rate to be ¥90 to the dollar to keep production in Japan. Right now the dollar is trading at ¥83.
DAIHATSU LEAVES EUROPE
And speaking of Japanese automakers having problems with currency, Bloomberg reports Daihatsu is pulling out of Europe. The Toyota affiliate and well-known builder of tiny Japanese kei cars – that’s K-E-I cars not like the K-cars Chrysler made – cites the rising value of the yen and upcoming carbon regulations as the reason for pulling out. Hey, did you know Daihatsu used to sell cars in the U.S.? They couldn’t make a go of it here, either.
AUDI #1 LUXURY BRAND
Let’s stay with the European market for a moment. Here’s something I bet a lot of people don’t realize: last year Audi was the top-selling luxury brand in Europe, outselling its arch rival BMW, which, in turn, finished ahead of Mercedes-Benz. In December, Audi’s deliveries jumped 16 percent, topping BMW’s 7.3 percent gain and 4.2 percent for Mercedes. When you add in global sales, especially from China, Audi is now the top automotive luxury brand in the world.
EX-DELPHI CEO CLEARED OF FRAUD
The former chairman and CEO of Delphi, once the largest auto supplier in the world, was cleared of fraud charges. The U.S. Securities and Exchange Commission had accused J.T. Battenberg III of misleading investors. But while a jury cleared Battenberg of fraud they did find that he had misrepresented payments to General Motors. He’ll get fined for that. Ironically, Battenberg had made a big deal about being the first CEO in the United States to sign the Sarbanes-Oxley law, which was all about transparent financial disclosure.
VALERO INVESTS IN CELLULOSIC ETHANOL
The energy company Valero will invest up to $50 million in Mascoma to build a $350 million cellulosic ethanol plant in Michigan’s Upper Peninsula. Valero wants exclusive rights to ALL of Mascoma’s cellulosic biofuels. The plant is expected to start production in 2013, delivering some 40 million gallons of fuel per year. This is not Valero’s first move in the biofuels business. It owns and operates 10 corn-based ethanol plants and has invested equity in cellulosic ethanol companies. It’s also involved with a couple algae-based biofuel companies.
RAW MATERIAL PRICES RISE
Raw material prices continue to rise. According to Bloomberg, palladium and platinum, which are used to maker catalytic converters, will jump this year due to booming car sales in China and a drop in supplies. Currently, palladium trades at just over $800 an ounce but could hit $1,000 an ounce sometime this year. Platinum costs over $1,800 today but that could jump to over $2,000 an ounce. It’s only a matter of time before we see this reflected in the sticker price of new cars.
MORE SAFETY REGULATIONS
And speaking of adding cost to vehicles. The U.S. Department of Transportation issued new rules yesterday aimed at preventing occupants from being ejected from a vehicle during a rollover. The new rule requires automakers to develop a countermeasure for cars under 10,000 lbs that prevents an unbelted adult from moving more than four inches past the side-window opening during a crash. The rule will begin phasing in during 2013 and by 2018 all vehicles will be required to have a system in place. The U.S. DOT estimates the rule will save 373 lives and prevent over 470 injuries a year. To me this is crazy. You want to prevent people from being ejected in rollovers? Get them to buckle their seat belts!
RICH CHINESE WOMEN DRIVE LUXURY SALES
We all know the Chinese are buying tons of new cars, but surprisingly, rich Chinese women are buying exotic sports cars more, on a percentage basis, than in any other country. Fiat says three times as many women in China buy Maseratis than in Europe. And for Ferrari it’s double its global average. Expect this trend to continue since the number of millionaires in China keeps growing and the country has over half of the Top 20 richest self-made women. I’m so impressed! Chinese women obviously have good taste in cars.
Do you like to make things? Wouldn’t you love to be able to get your hands on any kind of equipment to make anything that you wanted? Well there is such a place. They call it TechShop. And we’ll show you what it’s all about, right after this.
This week we’ve got a special on-the-road edition of Autoline Detroit, coming to you from California where I take you inside a place called TechShop. What’s TechShop? Well, think of it as a gym. You pay a monthly membership fee to use equipment, but instead of treadmills and weights it has milling machines, welders and lathes. It’s a place where anyone can create just about anything they want. Here’s a little taste of my tour.
By the way you can watch the entire show on TechShop on our website right now at AutolineDetroit.tv.
But that brings us to the end of today’s report on the top news in the global automotive industry. Thanks for watching, and we’ll see you on Monday.