Episode 993 – Great Wall Rising, Tesla Looks for New Revenue, Could Cardboard Replace Steel?

October 16th, 2012 at 12:00pm

Runtime: 8:40

Joint-ventured and government-owned companies dominate the Chinese market, but one company is thriving without bank or government backing. If you think the sticker price of a Tesla Model S is high, find out how they are getting even more money from their buyers. Take a look at what one Israeli inventor thinks will be the lightweight material of the future. All that and more, plus our first look at the updated BMW 7 Series.

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Welcome to Autoline Daily for October 16th. I’m John McElroy and here’s the news.

Foreign automakers joint-ventured with government-owned car companies dominate the Chinese market. But one domestic company is making a name for itself. Great Wall Motors, which gets no money from the Chinese government or state-owned banks, is growing faster than the overall market, is solidly profitable, and just broke into the Top 10 car makers in the country. It originally concentrated on making pick-ups and SUVs, but is now making passenger cars. This is the company that electric car maker Coda will get its next model from. And Phil Murtaugh, the CEO of Coda and who formerly ran GM’s operations in China, tells me that Great Wall is the best domestic car company in China. I share that with you because this is a company we ought to keep an eye on.

Nissan keeps figuring out more and more functions to add to its back-up cameras. On the new Altima it also does blind-spot detection, lane-departure warning and moving-object detection when you’re backing out of a parking space and can’t see if a car is coming down the lane behind you. But on the new Elgrand in Japan, Nissan is using the cameras and ultrasonic sensor that will limit acceleration and apply the brakes if the driver is in a tight parking situation and is in danger of colliding with another vehicle or walls or anything else. This could eliminate the pedal misapplication that causes sudden unintended acceleration, and no doubt we’ll see this technology spread quickly.

A123 systems is in trouble. The Massachusetts-based battery maker is running out of cash and it could face bankruptcy. The Detroit News reports it will likely fail to make its next loan payment. This is the latest in a string of bad news that has devastated its stock price. Shares lost 45 percent yesterday, closing at just 13 cents. So far the company has received about $500 million in grants from federal and state governments. Michigan alone chipped in nearly $240 million. You know, A123’s woes are indicative of the whole electric-vehicle industry – it’s an unmitigated disaster. EVs simply aren’t selling in the numbers these companies need to make money.

Speaking of electric car problems, Tesla Model S buyers may be in for more than just sticker shock. According to Autoblog, Tesla is charging customers $600 a year for a service fee! This includes a comprehensive inspection, software updates and replacement of brakes and windshield wipers. That’s an awful lot of money considering one of the selling point of EV’s is that they don’t need much service. But if owners do not bring their cars in for a yearly checkup they will VOID their warranty. The same is true if they take their Model S to a non-Tesla service station. Company CEO Elon Musk said this is comparable to the cost of owning a Mercedes-Benz E-Class, but I’d say it looks like Tesla has just found another revenue stream.

The Lincoln MKZ will be the first of four new models coming out soon, as Lincoln tries to reinvent itself. And the new hybrid version of the MKZ just got a 45 mile per gallon rating. That’s about 5.2 liters per 100 kilometers. That’s 5 MPG city better than the Lexus ES 300h; 18 MPG city ahead of Infiniti M35h and 20 MPG city ahead of BMW ActiveHybrid 3. Even so, Lincoln doesn’t have a good track record selling hybrids. Even though the hybrid version is sold at no extra cost, the take-rate is only 16 percent. The current MKZ hybrid is rated at a combined 39 miles per gallon. Maybe 45 MPG will entice more people to take it.

Automakers are using lightweight materials like aluminum, carbon, and magnesium more and more to reduce weight. I wonder if they have ever thought about using cardboard? Israeli inventor Izhar Gafni is using the material in new and interesting ways. Like his concept for a $20 bicycle made mostly of cardboard that has been treated to be water and fire resistant. Hey, if balsa wood is good enough for the Corvette floor pan, why not make things with cardboard?

(Autoline’s first look at the updated BMW 7 Series is only available in the video version of today’s show.)

Remember how much criticism the 7 Series got for its Bangle butt? And how the iDrive was the butt of so many jokes? Those days are well behind the 7 series, but it sure needs these new tweaks. So far this year it trails the Mercedes S-Class in sales by 111 units in the American market.

Don’t forget to join me and that Autoextremist, Peter De Lorenzo, this Thursday night for Autoline After Hours. We’ll have the new Ford Focus ST in the studio and we could have a surprise guest with us as well. But I can’t say who that might be because it isn’t confirmed yet. But I know you’ll agree with me that he’ll be the perfect person to talk about the ST, and how! Oops, did I just give it away?

I better wrap it all up now and get out of here. See you tomorrow.

Thanks to our Partners for embedding Autoline Daily on their websites: Autoblog and WardsAuto.com

15 Comments to “Episode 993 – Great Wall Rising, Tesla Looks for New Revenue, Could Cardboard Replace Steel?”

  1. pedro fernandez Says:

    When Tesla sets up their store here in So Fla, I’m gonna set up a kiosk outside to sell shares of the Brooklyn and Manhattan bridges to people who go in there, since they have to be the most gullible group of bone-heads gathered anywhere.

  2. G.A.Branigan Says:

    In regards to Tesla……..do the country a favor and dry up and blow away.It seems they always have a cash flow problem and always need more and more money.They produce an inferior product at an outrageous price and still want more from their customers,who I will add seem to have more money then sense.

  3. G.A.Branigan Says:

    “Lincoln doesn’t have a good track record selling hybrids”.Geez John,it seems Lincoln doesn’t have a good track record selling anything.

  4. Ron Paris Says:

    I’m sorry. Color me cynical, but ya gotta know when BMW spokespeople get breathless about the new 7 series’ 9 slot grill (versus old 12 slotter), revised rear bumper and chrome strip and start-stop technology, that the golden era of automobiles is slowly drawing to a government-mandated close.

  5. pedro fernandez Says:

    Today I looked at a new Chevy Spark up close and I have no doubt that if it gets hit from behind by a truck or SUV, the rear passengers (most likely children) will get badly hurt or killed, all attention is placed on front end and side collisions and nothing in the rear!

  6. W L Simpson Says:

    Elon Musk’s broad range of accomplishments speak for themselves & this olwrench is most impressed with the clean design & engineering
    of the Tesla platform. I expect he will redo the warranty/annual service thing ,since it was probably dreamed up by someone other than himself.
    i’ve always preferred owning & repairing GM
    products, & MJB , the Maxx is the ugliest thing
    Chevy has ever done , There should have been a Malibu wagon 2 models ago

  7. W L Simpson Says:

    Ethanol & the mismanagement of medicare are
    acts of criminality .

  8. Kit Gerhart Says:

    The Malibu Maxx was one of the best recent Chevys. It was roomy, and drove like a car, because it WAS a car and made no pretense of being a “crossover.” It looked just fine, as far as I was concerned.

    The only reason I sold mine was to get something with almost as much usable space, but uses half as much gas (Prius).

  9. Dave Marsh Says:

    I have to agree with Ron – I’m not sure for what product she is a manager (that’s what it said, right?), but interview presentation skills are not one of her stong skills – I found it awkward how every thought started with an “um” and the content was very thinly stretched – badge relocation as a highlight? The gentlemen in the car presenting I-Drive spoke well and presented clearly. There was a big difference and I am sortof surprised that a car of that calibre has people presenting with that low of a skill set.

  10. Kit Gerhart Says:

    The best thing they could do with I-drive, even the new, improved version, would be to get rid of it. Sadly, though, I guess such things are “expected” in $80K cars.

  11. cwolf Says:

    Sure, the MKZ looks and drives good, but it’s still a $37K Fusion. There is not much elbow room when seated, but hey, ya get a push button shifter! I’ve always liked Lincoln but it needs a personality and unmistakable look that is uniquely Lincoln and not Ford!

    Should there be any surprises to what would happen if the Spark was rear ended? Since it is a city car, most rear hits should not be serious. View it on the positive side; The back seat may be the perfect place for a mother-in-law!

  12. cwolf Says:

    A123 may be going down the toilet but technology may keep EVs moving forward. “left Lane” reports a new charging system is now available using direct current,rather than alternating,able to charge an EV in 20 min. or perhaps less! GM was going to give it a go with the Euro. Spark, but guess what? A123 make the battery for that car, so…. well it was a good thought,anyway!!!

  13. HtG Says:

    I sense a great gnashing of teeth in this afternoon’s comments.

  14. Kit Gerhart Says:

    Trabant bodies were made of “Duroplast,” a composite plastic using cotton scrap as its “fibre.”

  15. Philip Says:

    Is Tesla’s REQUIRED service fee of $600 legal?!
    I might understand if it were a leased car, but not if you have bought it. I can see the Feds taking a close look at that one.