AD #2443 – Daimler Names New CEO, EV Sales Soar in Europe, Warren Buffett’s BYD Bet Pays Off

September 26th, 2018 at 11:28am

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Runtime: 7:13

0:28 Daimler Names New CEO
1:15 EV Sales Soar in Europe
1:50 Volvo Introduces V60 Cross Country
3:02 Why Tesla’s EV Dominance Could Be Short Lived
5:19 VW Adopts Virtual Testing
5:46 Bringing Connectivity to Older Models
6:15 Buffett’s BYD Bet Pays Off

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37 Comments to “AD #2443 – Daimler Names New CEO, EV Sales Soar in Europe, Warren Buffett’s BYD Bet Pays Off”

  1. Brett Cammack Says:

    I’d love to hear Sandy Monroe’s thoughts on Bob Lutz’s pontifications regarding Tesla ability to be profitable *and* price competitive.

  2. Larry D. Says:

    Lots of interesting items in the show today.

    Dieter Zetsche: When he becomes Chairman of whatever, when he enters a room, they should play not “Hail to the Chief” but… the oldie “I am the Walrus” (could not resist)

    EV Sales in Europe. What is amazing is that their sales have been so pitifully low for so long, given both 1. gas there is on average $8 per US gallon, and 2. Distances are much smaller than in the US, especially for the smaller nations, and an EV with 200-300 mile real range, can easily go from one end of these nations to the other without recharging. Instead, their recent rise was connected with the drop in the sale of the one time darlings of Europe, the Diesels, which now are frowned upon and even banned from city centers there.

    Volvo: I could care less.

    Lutz on Tesla. VERY interesting remarks, but I sure do not agree with all of them.

    Lutz starts out reasonably, with some facts. His prediction that the competition will offer EVs at sacrificial prices is nothing new, they have all been doing it already and saw NO market penetration because of it. Fiat admitted losing $15,000 on every execrable e-500, others lose as much, but do not admit it publicly.

    However, I will be surprised if Merc, BMW, and esp Porsche, also offer bargain priced EVs, and even if they do, I predict they will do little damage to Tesla, because when somebody pays a ton to buy a premium EV, he or she wants it to have a distinctive name, not associated to a maker of dirty gas and diesel cars.

    But more importantly, why did nobody in the panel tell Lutz of the results of Munro’s thorough investigation of the Tesla 3, which was at first very critical, but Munro himself later corrected himself and calculated that Tesla can make a profit of 30% (!!!) the way they make the Tesla 3 (Gigafactory, electronics design etc)

    So I would not worry about Lutz’s points if I were a Tesla Shareholder. (which I never was).

    If Musk pulls this off, which there is every indication that he can, his rewards, which his shareholders agreed to, will be huge. From a ‘puny’ billionaire worth 2-5 billion, he will enter the Stratosphere of Billionaires, with a net worth of about $50 billion (due to his stock option rewards agreed the last annual meeting).

    You never saw GM or Ford CEOs sleeping on the floor of their plant for weeks until they solved their production problems. now you know why Elon did.

  3. Albemarle Says:

    I realize that it was a throwaway line, but Sean, when you said that the new Daimler CEO is not an engineer, they were looking for a more tech guy, I nearly spilt my beer! Engineers are involved only in tech; taking new and undeveloped tech and translating that into useable and workable products.
    I assume you mean that they wanted to go in a different direction because they had beat their engineers into submission and weren’t getting the exciting, new and revolutionary tech that they needed and that other companies are getting from their engineers.
    If you spend time with engineers you’d know tech is all they think about; driving their friends and family nuts. Oh, and beer.

  4. MJB Says:

    I agree with Lutz. It’s only a matter of time before Tesla loses its market dominance in the all-electric category. Just look at what has happened with the iPhone.

    4 years ago, no one would have bet that the iPhone would have lost its death grip on the cell phone market. Once it picked up steam, a year or two after being introduced, it became the fan favorite, media darling. But now the Samsung Galaxy has out iPhoned the iPhone and taken away that #1 spot.

    The same will happen to Tesla. They won’t go away. But they also won’t be able to monopolize ingenious creativity and great design (except for that awkward looking model X) forever.

  5. Barry Rector Says:

    No AAH this week? Sad face!

  6. MJB Says:

    I’d give Tesla another 3 years at the top…

  7. Kit Gerhart Says:

    2 Are there many places to charge EV’s in Europe? A higher percentage of Europeans live in high density housing, than in the U.S., and if many of those housing units are like my condo in Florida, people would have no place to charge an EV.

    Elon needs to avoid some of these controversies, or Tesla’s cult status could fade, hurting sales, when when there is finally real competition, which there will be.

  8. Kit Gerhart Says:

    Speaking of Tesla, maybe they should stick with two niches, EV’s, and cars. The Model S looks great, the Model 3 looks good, but the Model X looks, well, not very good, at least to me. Maybe Tesla should let Jaguar and Audi have the expensive electric CUV market.

  9. Larry D. Says:

    4 6 LOL.

    Tesla was tested and won. it is over. It will triumph, and Musk will make out like a bandit. Even if he does not build a million-unit plant in China.

    7 there must be a ton of chargers in most advanced Euro nations, especially the EV friendly and gas hostile like Norway, and also in the small ones where EVs are a more attractive and feasible proposition. Denmark, Netherlands, Belgium, are really small nations where you don’t even need to recharge on most trips.

  10. Drew Says:

    @7 – Kit, you took the words out of my mouth. A smaller percentage of EU vehicles are parked in a garage where a charging port may be available. Also, the curb sides often don’t have a lot of room to install outdoor chargers. Thus, I suspect the EU market will be slow to saturate with plug-ins and pure EVs… but I’d expect conventional hybrids will grow healthy.

  11. Larry D. Says:

    7 I also do not like the proportions of the X, but John Mc Elroy was sold to Tesla after he spent a week or so in one, and wrote about it in a Wards Editorial.

    Tesla has a lot of irons in the fire. As it gets bigger, it should at least make a CUV, if not SUV, that is as affordable as the Model 3. I believe they even have plans for an even more affordable car than the 3. And a pickup truck even! As for their large trucks, it will be interesting to see if they work out, they got s ton of orders, and these are each $250,000 vehicles, ten times worth the average econobnox.

  12. Larry D. Says:

    The choice of the Swede to replace the (half-Turkish) Dieter is unusual. He is not just a regular engineer, he is from the research dept. Unlike US companies the CEOs in Europe do not seem to come from finance.

    I am still very skeptical about the prospects of AVs and Mobility, and when, if at all, the automakers who go big with them (in the case of Ford, they invest in virtually little else) will make a buck after they sink billions and billions in them.

  13. Larry D. Says:

    10 Hybrids have been around in Europe for the same 20 years they have been here, an they did VERY poorly. I know, it makes no sense, with gas at $8 there, but the reason is they had 60 MPG diesel econoboxes, non-hybrid, that cost less to buy. WHy would one expect they will do any better in the future? Only if big mommy Government outlaws diesel econoboxes there, which it might.

  14. motorman Says:

    the same people who are gung ho about EVs will also have solar panels to charge them. the cost per mile will be greater than ICE cars but they will feel better about driving them

  15. Lambo2015 Says:

    The manufacturer that finally designs a vehicle that can be ordered with a gas engine or as an EV will finally make them affordable. Rather than lose $15,000 on each EV and having to make it up with your large truck or SUV sales they need to think about it like current offerings. You can get many cars with multiple engine configurations. So offering a low volume diesel engine doesnt require a whole new vehicle. If they dont sell you still have a gas alternative. The EVs are so expensive not only because of the batteries but the tooling money of the specific vehicle is divided over a very low volume. So reduce that cost and design a car or SUV that can support either powertrain. Then you would see the true cost difference to go EV.

  16. Terry Quinn Says:

    You talk about the increase in EV sales in Europe. But what is the percent of EV sales compared to overall sales in Europe?

  17. kurt w Says:

    Harman’s Spark sounds clever except for one problem: Smart Phone use within a vehicle is prohibited in many states including Oregon. If vehicle is standing still in owner’s garage or parking lot it probably won’t be in issue.

  18. Kit Gerhart Says:

    10 Hybrids might make a lot of headway in Europe, if more cities get serious about NOx emissions, which even the “legal” diesels emit quite a bit of, when you have cities full of them. I’d think Prius C-like hybrid city cars should not be too expensive to make. The C has a small, less than 1 kWh battery, and the rest of the powertrain should be fairly cheap to make. Cars like that would be a very good replacement for the zillions of diesel powered Fiesta-class cars in the cities.

    Now, of course, the car companies aren’t prepared to build millions of such hybrids a year.

  19. Larry D. Says:

    16 it is easy to find recent data if you just google. I just checked it and found a Wikepedia article with all kinds of stats, which confirm my earlier comments here today.

    if you read the article you will see that, as early as 2016, NORWAY has a HUGE 21% of all its registered its vehicles EVs. California has 5.83% by comparison, The Netherlands 5.63%, Sweden only 2.42 %, and US on average 1.51%. The stats are for plug-in Electric cars.

  20. G.A.Branigan Says:

    Question; will Dieter Zetsche have to turn in his moustache?

    @ Kurt W.: We can use our cell phones while driving in Oregon,(where I live) but it has to be bluetooth connected so you are hands free,to keep on the wheel,lol.

  21. Larry D. Says:

    18 My oldestr friend’s daughter, who is married to a Canadian Musician but lives in the old country, asked me about buying a new car earlier this year, and although I advised her to buy a good used luxury car with lots of passive and active safety, she was worried about repairs and wanted to buy a new non-luxury car. Her parents had an ugly Renault Megane sedan from 96 with all kinds of problems and very low miles (they also did not listen to me when they bought it, I told them to buy the used merc E class of their father-in-law), and in 2005 or so they bought a 5-door Corolla, which the kids drove, until they bought a Prius C equivalent in Europe, it is called Toyota Auris Hybrid or something, but it is the same little old Prius C, which has received not as good reviews as the Prius. The price was not much more than the Corolla, if you adjust for inflation.

  22. Kit Gerhart Says:

    19 Tiny Norway, with about 5.25M population, is Tesla’s 3rd biggest market, or at least was in 2017.

  23. Larry D. Says:

    The same article

    says as of Dec 2017, the top selling global markets in plug-ins were

    1. CHINA, with 1,245,900 (!)

    2. Europe, 943,700, and

    3. USA, 764,700, of which California has about half (!), 365,300.

    4. is tiny 4,000,000 people Norway, with an impressive 209,100, higher than even JAPAN, which had 207.2. France, UK, Germany had even less. The Netherlands, with barely 15 million people, due to its small land area, is ideal for EVs, and had almost as many as GERMANY with its 80 million people.

  24. Kit Gerhart Says:

    21 A friend has a Prius C, which is used only as a “city car,” and likes it fine. A regular Prius is much better as a “do everything” car, roomier, quieter, quicker, etc., and in base trim level, is not that much more expensive, about $2800 MSRP in the U.S.

  25. Larry D. Says:

    A preview of tomorrow’s show (guessing here)

    Clueless Jim Hackett of Ford now blames the Trump tariffs for losing Ford an extra billion $! i find this almost UNbelievable, since raw materials are a small part of the cost of a car, and the metals in particular are not that expensive or a major part of the price.

    Conveniently, Hackett did not say over how much TIME will Ford lose a billion, allegedly to the tariffs. One year? ten years? (more likely, and much less important a loss in that case).

  26. Larry D. Says:

    24 Norway is tiny in population but has a huge area by Euro standards. it is surprising that it, and not truly tiny Denmark, which may have 1 million more people, but has a tiny area, is a leader here. Much of it is Government policy in Norway. it is also surprising because Norway is a huge oil producer AND exporter, while Denmark has to pay for all its oil.

  27. Kit Gerhart Says:

    A WSJ article says that the steel and aluminum tariffs would raise the cost of an average car about $300, not much.

    A much more significant effect on price, and maybe sales, would be tariffs on complete cars from Mexico, Canada, and Europe, if they occur, and parts from China and elsewhere. Those would, quite likely, raise prices enough to reduce sales significantly, or cost the companies real money.

  28. Bob Wilson Says:

    Lutz, “The competition is going to be coming on big time.” Some next year but most are claiming 2020. VW is waiting for commercial fusion power stations. In the meanwhile, Hyundai EV can’t get batteries and the low end EVs are being eviscerated.

    Lutz, “Sacrificial pricing increasing prices of conventional vehicles.” Just like GM did with the EV1. No, they want to avoid buying CARB credits from Tesla.

    Lutz, “10 or 15% over the German competition.” German because the USA competitors are too weak. Regardless, EU customers are already switching from diesels for EVs.

    Lutz believes ‘internal combustion engine’ cars have to support EVs which explains why GM’s hybrids, plug-ins, and EVs have been so lame.

    Lutz thinks only ’15,000′ EV cars a year by loss leader EVs is enough when Insideevs reports:

    Jul – Aug :: Model
    14,250 – 17,800 :: Model 3
    1,325 – 2,750 :: Model X
    1,200 – 2,625 :: Model S
    1,984 – 2,071 :: Prius Prime
    1,475 – 1,825 :: Chevy Volt
    1,175 – 1,225 :: Chevy Bolt

    Bob Lutz needs seat time in a Model X. An old dog, probably a week, not just a weekend.

  29. Kit Gerhart Says:

    Here’s why there are so many EV’s in Norway.

  30. Lambo2015 Says:

    28. Brings up a good point tho. Some of the taxes on gas by each state is used for road repair. If more people go EV and are not paying that tax it will need to be made up somewhere. Especially if the government starts exempting EV owners from many taxes and tolls. This tells me it will be attractive temporarily and then things will change and even the folks in Norway will be paying as much or more in taxes eventually.

  31. Lambo2015 Says:

    My comment was to your link kit 29

  32. Bob Wilson Says:

    #30 – Tax the vehicles annually or increase the tag fees and the problem is solved.

  33. Kit Gerhart Says:

    32. They charge more for EV tags in Indiana. I don’t know how much more.

  34. Lambo2015 Says:

    Or you can soon expect to see a road repair tax added to your electric bill.

  35. Brett Cammack Says:

    Lutz overlooks the fact that traditional manufacturers sell predominantly IC vehicles and if they build an EV, for every low-profit, complicated EV they sell, they don’t sell one of their familiar, profitable IC vehicles.

    Tesla doesn’t have that cultural impediment.

  36. stephen Says:

    Diesels ruled in Europe as gas taxes were traditionally lower (originally to aid commercial road transport). To cut C02, European governments made it tax advantageous to buy diesel (lower road tax/lower purchase sales tax/cheaper fuel). Sadly European car makers gamed the emission testing system and gov enforcement/oversight was near zero. Once diesel in public cars rose so did city smog. With diesel offering better MPG (km/L), there is less demand for EV to cut fuel efficiency. Remember Euro car buyers buy near zero pickup trucks, lots of subcompacts (Fiesta class) and more smaller cars (think Ford Focus and crossover class SUVs) and smaller-lighter cars = better mpg.
    Few cities actually ban diesel cars (so far) but just charging extra to drive into a city with a dirtier older diesel is killing sales and used car prices.
    As to Tesla, they have 1st move advantage and thats still a big plus (think Google/iPhone/Model T). Tesla just has to sell a share to another car maker (or outsource it) and it solves the Model3 backlog (and gets help on purchasing parts and quality). European governments have lots more levers to alter buying behaviour like; fuel taxes/road tolls/city access/stricter emission testing/car sales taxes/public parking. BP in the UK has started building car chargers in city gas stations and every government has been investing in national fast recharger infrastructure (bar Eastern Europe). Whats missing is governments are poor at running and maintaining equipment (unless its dead simple like roads-rail) and insuring reliable charge points is a big problem. More choice is needed and its coming (slowly).

  37. stephen Says:

    BYD’s share price is based on it becoming a leader in EV cars (and exporting on that success). However Trump is not going to allow China the same car access as Japan did if the US cannot get the same. BYD may be able to build cheaply but its technical expertise in EVs is still poor compared with the west and research in nextgen battery tech is still weak in china. Also potential sales of EVs will remain weak in Asia until electrification is way more resilient (800m+ in India have no electric access and/or its very unreliable). Warren may have a unicorn on paper but unless China buys vastly more EVs and western car makers stay out then BYD maybe have to wait for a big strategic partner willing to share advanced EV tech just to gain market access knowing BYD has no interest in staying friends once they have the keys to making a globally competitive EV powertrain