On today’s show…Daimler announces its next CEO…Volvo shows off a new version of the V60…and why Tesla could have a hard time maintaining its EV dominance. All that and more coming right up on Autoline Daily.
This is Autoline Daily the voice of the automotive industry.
DAIMLER NAMES NEW CEO
Daimler’s long time CEO, Dieter Zetsche, is stepping down from that position next year. The company announced that its head of Research and Development, Ola Kallenius will replace him. But Zetsche, age 65, isn’t leaving the company altogether. The plan is to name him Chairman of the Supervisory Board in 2021. But this shakeup shows just how much the auto industry is changing. Not only is Kallenius, a Swede, the first non-German CEO in the company’s history but unlike past Daimler CEO’s, he doesn’t have a background in engineering and has never spent time at its commercial truck unit. It shows the company believes a more tech savvy person is better off leading it into a new world of autonomy, connectivity and mobility.
EV SALES SOAR IN EUROPE
European customers are turning toward electrified vehicles more than ever before. Sales of hybrids, plug-ins and battery electric vehicles during the first half of 2018 in the region were up 37% compared to last year. By contrast, diesel sales fell 16% during the same period and lost nearly 8.5% market share. If automakers are able to maintain the same pace through the end of the year, sales of electrified vehicles will hit nearly a million units, which would set a new record.
VOLVO INTRODUCES V60 CROSS COUNTRY
Volvo has been making its slightly more off-road focused Cross Country range of vehicles since 1997 and it just introduced the new V60 version. Ground clearance has been raised by as much as 75 millimeters or nearly 3-inches, which comes from a specially developed chassis and suspension. The seating position has also been raised. Every V60 Cross Country comes with all-wheel drive, as well as off-road aids, like Hill Descent and Electronic Stability Control. Overall styling remains the same, but you will notice black cladding on the lower fascia, rocker panels and over the wheel arches. Volvo says it will add mild- and plug-in hybrid variants at a later date.
Still to come…Bob Lutz explains why it’ll be hard for Tesla to maintain its dominance in the electric vehicle market.
WHY TESLA’S EV DOMINANCE COULD BE SHORT LIVED
As we reported earlier in the month, electric vehicle sales would be dropping like a rock if it weren’t for Tesla. The company accounted for 70% of all electric cars in August. But on last week’s Autoline After Hours, Bob Lutz, said it’s going to be hard for Tesla to maintain that market dominance.
(The AAH preview is only available in the video version of today’s show.)
You can watch that entire interview right now on our website, Autoline.tv or just look for it on our YouTube channel. And speaking of After Hours, there won’t be a new show this week, but John and Gary will be back on Thursday, October 4th with some of the best insider discussions in the automotive industry.
Warren Buffett’s bet on BYD has really paid off. We’ll tell you more about that, right after this.
VW ADOPTS VIRTUAL TESTING
We’ve talked about testing assistance systems in the virtual world and now Volkswagen is adopting the process. The automaker is using virtual validation as a way to make the next-generation of driver assistance systems production-ready even faster. A virtual library of situations can be stored and then passed on to the next system. This software will first be used for teaching assistance systems on the I.D. family of vehicles.
BRINGING CONNECTIVITY TO OLDER MODELS
AT&T and HARMAN have partnered up to offer connectivity to vehicles without that capability. It’s a device called the Spark, which plugs into your car’s OBD II port and you control the features with a smartphone app. Spark works with most models 1996 and newer. Some of its features include roadside assistance, Wi-Fi hotspot and a virtual mechanic. Spark is available starting this week and costs $80.
BUFFETT’S BYD BET PAYS OFF
Billionaire investor Warren Buffett’s bet on Chinese automaker BYD has paid off and then some. Back in 2008, his company Berkshire Hathaway, bought around 25% of BYD stock for $232 million. And since that time, Bloomberg reports BYD’s shares have soared 500%, which makes Buffett’s stake worth around $1.6 billion now. And because of that, BYD is his most-valuable holding in a publicly traded company that’s based outside the U.S.
But that’s it for today, thanks for watching and please join us again tomorrow.
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Comments (37)
September 26th, 2018 at 12:13 pm
I’d love to hear Sandy Monroe’s thoughts on Bob Lutz’s pontifications regarding Tesla ability to be profitable *and* price competitive.
September 26th, 2018 at 12:20 pm
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.
September 26th, 2018 at 12:38 pm
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.
September 26th, 2018 at 12:42 pm
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.
September 26th, 2018 at 12:54 pm
No AAH this week? Sad face!
September 26th, 2018 at 12:54 pm
I’d give Tesla another 3 years at the top…
September 26th, 2018 at 1:00 pm
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.
September 26th, 2018 at 1:21 pm
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.
September 26th, 2018 at 1:32 pm
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.
September 26th, 2018 at 1:34 pm
@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.
September 26th, 2018 at 1:35 pm
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.
September 26th, 2018 at 1:37 pm
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.
September 26th, 2018 at 1:39 pm
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.
September 26th, 2018 at 1:45 pm
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
September 26th, 2018 at 2:19 pm
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.
September 26th, 2018 at 2:53 pm
You talk about the increase in EV sales in Europe. But what is the percent of EV sales compared to overall sales in Europe?
September 26th, 2018 at 3:01 pm
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.
September 26th, 2018 at 3:06 pm
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.
September 26th, 2018 at 3:09 pm
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.
https://en.wikipedia.org/wiki/Electric_car_use_by_country
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.
September 26th, 2018 at 3:12 pm
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.
September 26th, 2018 at 3:13 pm
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.
September 26th, 2018 at 3:16 pm
19 Tiny Norway, with about 5.25M population, is Tesla’s 3rd biggest market, or at least was in 2017.
https://1reddrop.com/2018/06/16/tesla-sales-by-country/
September 26th, 2018 at 3:19 pm
The same article
https://en.wikipedia.org/wiki/Electric_car_use_by_country
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.
September 26th, 2018 at 3:22 pm
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.
September 26th, 2018 at 3:22 pm
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).
September 26th, 2018 at 3:28 pm
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.
September 26th, 2018 at 3:32 pm
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.
September 26th, 2018 at 4:46 pm
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.
September 26th, 2018 at 5:02 pm
Here’s why there are so many EV’s in Norway.
https://www.theguardian.com/money/2018/jul/02/norway-electric-cars-subsidies-fossil-fuel
September 27th, 2018 at 8:33 am
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.
September 27th, 2018 at 8:33 am
My comment was to your link kit 29
September 27th, 2018 at 9:01 am
#30 – Tax the vehicles annually or increase the tag fees and the problem is solved.
September 27th, 2018 at 9:54 am
32. They charge more for EV tags in Indiana. I don’t know how much more.
September 27th, 2018 at 10:30 am
Or you can soon expect to see a road repair tax added to your electric bill.
September 28th, 2018 at 9:24 am
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.
September 28th, 2018 at 8:25 pm
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).
September 28th, 2018 at 8:38 pm
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