Episode 960 – EVs: The Economic Lemon, 2014 Mazda6, GM Plans to Expand in Russia

August 29th, 2012 at 12:00pm

Runtime: 9:16

Fiat-Chrysler CEO Sergio Marchionne says the company is guaranteed to lose money on every zero-emission vehicle it makes. Mazda just revealed the all-new 2014 Mazda6 at the Moscow Auto Show. The head of General Motors’ International Operations says the company plans to invest $1 billion in Russia over the next five years. All that and more, plus John responds to your questions and comments in “You Said It!”

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Hello and welcome to Autoline Daily for August 29th. I’m John McElroy and here’s the news.

EVs: THE ECONOMIC LEMON
As we reported yesterday, the Obama Administration finalized its ruling on a new CAFE standard of 54.5 miles per gallon by 2025. And yesterday, Fiat-Chrysler CEO Sergio Marchionne said they are struggling with the choices they have to make to meet those standards by 2017. Marchionne is especially critical of electric-vehicle mandates. Speaking to members of the North American Car of The Year jury, he said, “I’m guaranteed to lose money on every-zero emission vehicle.” Referring to the electric version of the Fiat 500 they’re going to come out with, Marchionne added, “I’ll be the proud owner of an economic lemon.” As if to put an exclamation point on this, as we reported yesterday GM is idling production of the Volt for four weeks, and Chinese EV maker BYD just reported that its profits plunged 94 percent so far this year.

2014 MAZDA6
Mazda just revealed the all-new 2014 Mazda6. The car features the company’s KODO design theme, which means “soul of motion.” To our jaundiced eye it’s not quite as pretty as today’s model. The new 6 rides on a 111-inch wheelbase, which is slightly longer than the outgoing version. Also, that’s about an inch or so more than the wheelbases of the Toyota Camry and new Honda Accord. That stretch should make for a spacious interior. In the Russian market powertrains will include a 2.0-liter SKYACTIV-G gasoline engine or a larger 2.5-liter four-cylinder. A manual or automatic transmission is available, but the larger engine is slushbox-only. The car will feature Mazda’s groundbreaking i-ELOOP capacitor-based regenerative braking system. The company claims this will boost efficiency by up to 10 percent, a HUGE increase. The 2014 Mazda6 goes on sale in Europe this year. The car should arrive at North American dealers early in 2013.

HYUNDAI’S PRODUCTION STRATEGY
Last week we tested the brand-new Hyundai Sante Fe. We’ll have a report on this 2013 model in a future episode of Autoline Daily, so stay tuned. While we were at that drive event we ran across John Krafcik, President and CEO of Hyundai Motor America. He shared a little about how the company is coping with its incredible sales growth.

Hyundai has been growing like gangbusters. It’s interesting they’re throttling back on extra manufacturing capacity in order for focus on quality. I think they recognize they have to consolidate their gains. On that note, Krafcik mentioned if things continue as they are the company is on track to sell a whopping 700,000 units in the United States this year! Who could have imagined that just five years ago?

GM PLANS RUSSIA EXPANSION
The head of General Motors’ International Operations, Tim Lee, says the company plans to invest $1 billion in Russia over the next five years. Right now Russia is the only BRIC country that is booming. It’s a hot market everyone wants to be in and it’s expected to become a significant one. Last year sales were up 40 percent in the country to 2.5 million vehicles. Analysts expect the Russian car market will become bigger than the German market in the next decade.

LICENSE PLATE LUNACY
As you Autoline Daily viewers know, a number of cities in China are limiting the number of license plates they give out in order to limit car sales to curb pollution and emissions. But now it’s just about impossible to get a plate. According to Gasgoo, each month Beijing issues 20,000 plates or about 240,000 a year through a lottery system, but there are over 1 million applicants looking to receive one. As bad as that sounds, some cities are holding auctions to get plates and they’re going for thousands of dollars. In Guangzhou the average bid for a plate is over $3,600 and in Shanghai license plates go for nearly $9,500.

Coming up next, it’s time for you Said It!

YOU SAID IT!
And now it’s time for some of your feedback.

David Darovitz wrote in to say, “Volt is the best-selling EV in the world. Four months of sales growth. Very strong August retail sales. Highest scores in third party consumer and quality metrics.”

Dave, all I can say is that GM is losing a fortune on the Volt, and Nissan is losing even more money on the Leaf. As Sergio Marchionne said at the top of the show, electric cars are economic lemons.

Chuck Grenci saw our report on the piezo electric motors from DTI and says, “The story on the piezo electric motors left out one important piece of the equation; cost. A lot of benefits but… Anyone know what that might be?”

Chuck, the DTI people say their motors would be a little more expensive, but offer other offsets, such as being able to use lighter-gauge wiring.

Pedro Fernandez is keeping an eye on labor talks in Canada and has this to say. “CAW workers better watch out, Mexico is looking pretty inviting to the OEM’s with its lower labor and tax costs, and it seems the work force is not too shabby either. Just look at the Fiat 500 and the Fusion.”

Pedro is right, Mexico is red hot right now with all kinds of automakers expanding there. If the CAW isn’t careful it could see production moving to the southern part of the NAFTA region.

W.L. Simpson liked my editorial on how GM could save the situation with Opel. “John, I think you have a fine idea, but it exhibits entirely too much common sense.”

GMveteran said, “John, under your Opel liberation scenario, you mentioned that a Fiat-Opel-PSA tie-up would become possible. Does this mean that GM would be able to extricate itself from the highly questionable relationship it now has with PSA? That might add another billion or so onto the benefits of liberation!”

Good point, GMveteran.

And Kate McLeod said, “As someone pointed out to me, GM doesn’t need to be in Europe at all. They’re not important in Europe and they’re not going to be and there are worlds to conquer. I thought that made a lot of sense. There was a time when Opel was important to GM, but I think those days are gone.”

Kate, I would agree with you about Opel, but Europe is still one of the biggest, richest markets in the world and GM needs to be there. Besides, Chevrolet is one of the fastest-growing brands in Europe and still has a lot more room to grow.

Thanks for all your letters and comments, and keep ‘em coming!

And don’t forget to join me and the Autoextremist tomorrow on Autoline After Hours for the best car talk in the business. Our guest will be Randy Stephens, the chief engineer of the Toyota Avalon, the first passenger car that Toyota designed, engineered and will manufacture in the United States. It’s a milestone for Toyota and you’ll get the inside story.

And that wraps up today’s show, we’ll see you tomorrow.

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39 Comments to “Episode 960 – EVs: The Economic Lemon, 2014 Mazda6, GM Plans to Expand in Russia”

  1. pedro fernandez Says:

    From yesterday’s entries, I think Brett has been watching too many sci-fi movies.

  2. pedro fernandez Says:

    Once again I ask: “who really won the cold war?”

  3. Lex Says:

    John McElroy you are completely correct! The Styling on the current Mazda 6 is far better that the incoming 2014 model. Mazda and it’s new Styling and Sky-Active programs are heading for the scrap yard in the sky if you ask me.

  4. Lex Says:

    Why doesn’t GM use Opel production capacity in Europe to build Chevy’s and Cadillac’s?

  5. pedro fernandez Says:

    Sorry to see that Mazda has also adapted the “bigger is better” attitude that so many OEM’s have adopted, sorry Mazda, it is not better!

  6. Kit Gerhart Says:

    This 54.5mpg CAFE keeps being reported, but it is highly misleading to most people. It equates to a window sticker number of about 36mpg. That’s high, but not nearly as intimidating as 54.5, if the window stickers had to reach that level.

  7. HtG Says:

    SLUSHBOX?! Who you calling a slushbox? The auto transmission on Skyactiv cars has a lock up clutch and precisely tuning shift actuators. Oh, and could somebody give tjMartin a call? We bet dinner that Mazda would never come to market with its capacitor restart system.

  8. pedro fernandez Says:

    Who ever came up with the term slushbox must have driven a 4 cyl automatic Journey, last time I drove it, we had to pass some slow-ass pickups on a secondary road, and I step on it and it is a delay b4 it downshifts and I get some speed that passing becomes a dangerous maneuver.

  9. Kit Gerhart Says:

    The transmission is the part of “skyactive” that really makes sense. As I understand it, a torque converter is used in first gear to get started, but the clutch locks, and stays locked the rest of the time. You get the “feel” that people are used to at low speed, but the efficiency gain of the locked converter most of the time.

  10. pedro fernandez Says:

    Not all slushboxes are created equal, the FR-S reaches its 6th gear at a relative low speed (to save gas, I guess) but it is very quick to downshift if needed, even in its auto setting. It has to compensate for the car’s low torque, but it does a good job.

  11. Brett Says:

    Nobody imagined how rapidly the automobile would be adopted or how rapidly it changed society and our economy.

    Same thing for the microprocessor.

    When you consider just how significantly the world changed between 1960 and 1980 and between 1980 and 2000 what I propose is quite in keeping with the pace of advancement of technology.

    In ten years the autonomy will be a common option on mainstream vehicles. In twenty years, it will be standard equipment.

  12. pedro fernandez Says:

    And we were supposed to have moon colonies and be visiting Mars as well by this time, but when you got people in the Western Hemisphere living in tents 2 yrs after an earthquake hit and families living in cars cause they lost their homes, priorities have to be set, just look at the decimation of NASA.

  13. I.M. Buell Says:

    I guess Beauty is in the eye of the beholder. Maybe, maybe not better than the current 6 but I think the KODO design is far better than the rest of the Mazda fleet of vehicles. I guess I feel this way only because the KODA does not look like one of those wierd characters from the Olympic games held in China. If they continue to propagate this new design through the rest of their line up it would be a huge leap in the right direction….gawd their old face was awful.

  14. C-Tech Says:

    Electric cars are “economic lemons”. If so, then what are “Supercars” like the Toyota LFA, Bugatti (VW) Veyron, Ford GT40? It is rumored that Ferrari does not make make money for Fiat. My only point is that production now MAY lead the way to profitable electric car production and acceptance in the future.

    To register a car in many Chinese cities drives the cost of a car out of the reach of the middle class. The revolution may not be televised, but it may be riding a motorcyle or bicycle!

  15. C-Tech Says:

    @ #9 In addition to Mazda, I believe Chrysler and Mercedes does this with their auto trans. as well, particularly the NAG1 trans.

  16. pedro fernandez Says:

    There is a “super car” dealer here in town that only sells high end, low volume cars and I don’t see any Fiskers or Teslas in their showrooms.

  17. Jesse W. Henry Says:

    #14 – C-Tech

    I guess the biggest difference between those supercars and EV’s to me are there are not talks of forcing every automaker to build a supercar to be able to sell the rest of it’s lineup in certain areas JMO

  18. Kit Gerhart Says:

    Isn’t the intent of limiting of numbers of cars in Chinese cities to limit TRAFFIC GRIDLOCK as much as to limit pollution? Traffic was a mess in Shanghai the one time I was there, in 1994. I’m sure it’s a lot worse now.

  19. Kit Gerhart Says:

    Speaking of pollution in China, has anyone posting here been there lately? Maybe you have, John Mc. Anyway, do they still have zillions of 2-stroke motorbikes and scooters? In 1994, they seemed to be the source of most of the pollution in Shanghai, in the form of a blue haze, and that distinctive 2-stroke fragrance of an old Vespa.

  20. pedro fernandez Says:

    Do you think for a minute that the Chinese govt gives a damn about air quality and what their citizens breathe in? Are rrhoids a pain in the rear?

  21. G.A.Branigan Says:

    “slushbox” was the nickname given to the old GM Dynaflow transmission.It was later replaced by the hydramatic I believe.In 1953 the Hydramatic plant burned down so all GM’s were given a ‘slushbox’ with the no cost option to the customer to have it replaced with a hydramatic as soon as they became available.I had a slushbox in my old 53 series 62 (with factory air).

  22. pedro fernandez Says:

    21 Amazing how names stick even after decades, I’ll bet those early transmissions were very inefficient, but with gas at a quarter a gallon, no one cared.

  23. Kit Gerhart Says:

    My first car was a ’57 Chrysler which had a TorqueFlight, probably the best autobox of the time.

    Hydromatic was really something great when it first arrived, in 1940 or so in Cadillac and Oldsmobile. The early Hydromatics, which were 4 speed, had fluid drive coupling which was simpler, but less efficient than today’s torque converters.

  24. pedro fernandez Says:

    Hydromatics were 4 speeds, no kidding? Wow I don’t get why so many others were 3 speeds up to the 2002 models, the last holdouts were Neon and Corolla, lucky me!

  25. G.A.Branigan Says:

    @ Pedro: Or two speeds like the chevy powerglide.great for drag racing (not in stock form)but terribly inefficient as a road trans,and a total dog for street phunn.

  26. cwolf Says:

    GM’s Volt workers will have to get used to periodic shut-downs. In August,Volt sales of 2500 units beat the old record of 2000. I think this year total sales are approx. 17,000. These workers kinda mirror a Maytag repairman. One could almost bet your first born that these guys don’t get a profit sharing check! IMO, it’s still a nice car.

  27. Kit Gerhart Says:

    #24,
    The early Hydromatics were 4-speed, up to about ’60 or ’61. I remember riding in an HS friend’s parents’ ’59 Pontiac that had one. First gear was very short. In normal driving, it seemed like it hit second at fast walking speed. Full throttle, first went to maybe 15-20. My TorqueFlight shifted more smoothly, and probably got more performance out of the available power, but for something that had been around since before WW II, the transmission in that Pontiac was impressve.

  28. pedro fernandez Says:

    So do these Volt workers get paid when they’re not working as well? if so, it explains why GM loses money on every Volt it builds, hell of a price to pay for being green. I feel it would have been a better deal for everyone involved if the Cruze would have been sold with the Volt drive system instead of a whole different car.

  29. cwolf Says:

    I saw the coolest homemade motor coach today. This fella extended and modified a newer Ford chassis cab,with a V-8 diesel, and attached a 30 foot(ish)motor home. Listen to this!; the whole length was a pop-up that was no higher than the cab when lowered and had aluminum sides (not canvas),including two(2)all metal sided bump-outs! Each 3 piece hinged & on a rail bump-out hugged the sides when traveling. After the top was raised,the extending floor panel pushed the side panels into place. The other panels (with windows) required to fill the void between the lowered and raised positions were stored in the hold beneith the floor. The guy claims the whole set-up takes about 20 minutes and everything locks into place securely. The transition between the cab and camper was so well executed and smooth, it looked limo-ish. If’n you saw this thing, you’d know why this guy was as proud as a peacock to show it off. Talk about being innovative and talented!!!

  30. pedro fernandez Says:

    He should market it! RV use is up this year despite gas prices and the economy, people will give up some things, but vacation time with the family is not one of them!

  31. Kit Gerhart Says:

    #28,
    I think it would be great if they made a car with the Volt body, and a conventional power train. The body has very low drag, like a Prius or lower, and it’s a hatchback.

  32. pedro fernandez Says:

    GM should have done a Prius-like system instead of what they’ve done with the Volt it would have been cheaper, sold better and still got excellent MPG’s. They tried to out Prius the Prius and they failed. I honestly don’t think that people that look at Prius even consider the Volt, too much negative press while the Toyota has an outstanding reputation.

  33. Kit Gerhart Says:

    With the Volt, they did an electric car that is more flexible than Leaf, etc., in that it can go anywhere. The trouble is that batteries that big are very expensive. Time will tell how cheap batteries get, and how soon.

    Even if a Volt didn’t cost a lot more than a Prius, it would make economic sense only for people who do a majority of their driving within electric range, because a Prius gets a lot better mpg than a Volt running on gas.

  34. Kit Gerhart Says:

    #29,
    It sounds like that guy is quite a craftsman. I’m impressed with stuff like that, no matter what kind of project.

  35. UF19 Says:

    People say that Opel is not important but Opel has the diesel that American small cars and trucks should have been using for years and GM did not try to utilize this in the cobalt, g6, colorado or even the cruize from my understanding. Get the pollution control to US standards and use Opels diesel, please!!!!

  36. jmann Says:

    EVs: Defying the laws of physics. Perpetual motion. Nutso! Plus, it is old, old technology. New materials and electronic/digital controls but the basic physics is inescapable. If folks would take a trip down to the Henry Ford Museum, they would find a 1925 Detroit Electric that gets the same mileage as the current offerings. Henry Ford bought one for his wife, Clara, for her shopping around Dearborn. People are sooo gullible . . . and apparently can’t do basic math. Come to think of it, I just saw that USA has sunk to 23 in math science/science scores internationally. Maybe that’s the root problem! The old Greek Plato guy had a thing or two to say about this sort of thing.

  37. Al Says:

    If GM has a billion dollars to spend in Russia – how’s come it doesn’t pay back the good old USA that bailed it out???

  38. Mike S Says:

    You guys say the outgoing Mazda 6 is better looking than the new model? Are you MAD? The design is pure genius.

  39. 97 Sentra Says:

    The new Mazda 6 looks like an Aston-Martin, much better than the current one (from what I can tell from the pictures).