This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.
VW PRODUCTIVITY LAGS BEHIND TESLA
Volkswagen CEO Herbert Diess says the company will lose 30,000 manufacturing jobs if it doesn’t transition faster to BEVs. Reuters points out that Tesla will make 500,000 BEVs a year in Germany with 12,000 employees, while VW makes 700,000 ICE cars a year at its plant in Wolfsburg with 25,000 employees. In other words, each Tesla employee makes the equivalent of 41 cars a year, while VWs workers make 28. VW’s unions don’t believe they’ll lose 30,000 jobs and they say that predictions like this are absurd and baseless. But here’s our Autoline Insight. Volkswagen cannot afford to give away a 46% productivity advantage to Tesla. And if VW’s works council refuses to help VW boost its productivity, it’s going to end up losing a lot more than 30,000 jobs.
| Manufacturing Productivity Comparison |
| Company |
Production/yr |
Employees |
Cars/Employee |
| Tesla Berlin |
500,000 |
12,000 |
41 |
| VW Wolfsburg |
700.000 |
25,000 |
28 |
| Source: Reuters |
BATTERY PRODUCTION IN CHINA SOARS
Battery production in China is soaring, up nearly 200% this year. So far in 2021, China has made almost 135 gigawatt hours of battery power. Even more amazing, CATL made over 50% of all those batteries. For comparison, BYD, the second largest battery maker in China only has 16% market share.
GM SEES DEALERS AS ADVANTAGE IN EV RACE
EV startups in the U.S. that are selling directly to consumers could run into retail problems as they try to scale up without using franchised dealers. Tesla, which just moved its headquarters to Austin, and is building a massive assembly plant there, cannot legally sell its cars in Texas. And it’s not just Texas. There are about 18 other states that either ban direct sales or limit Tesla to just a few stores. That’s why GM’s President, Mark Reuss, tells Wall Street analysts that “Our dealers are a huge advantage.” 80% of the U.S. population lives within 10 miles of a GM dealership. Reuss told analysts that GM’s goal is to surpass Tesla in the EV segment. And it clearly sees its dealer network as a key way to do that.
CONCERN OVER RAW MATERIAL SUPPLY FOR EV BATTERIES IN EUROPE
Most automakers in Europe have announced plans to go all-electric within the next ten years. But companies and analysts are worried that the supply of raw materials needed for EV batteries isn’t enough to meet demand. Automakers are scrambling to lock up supplies of lithium, nickel, manganese and cobalt. If they can’t get the materials needed it could slow the growth of EVs, make them more expensive and hurt automaker’s profits. At first, companies thought they could rely on importing the materials from Asia but that won’t be enough to meet demand. Recycling batteries can help but it can currently only meet 10 to 20% of demand.
TESLA SIGNS NICKEL SUPPLY DEAL
But Tesla is working on the supplies it needs. It just signed a deal with Prony Resources to supply it with nickel. Financial numbers weren’t disclosed but Reuters reports Prony, which is based in New Caledonia, will provide Tesla with 42,000 tonnes of nickel over the multi-year deal.
Ford’s designers were really challenged to come up with a good-looking truck with a base price of $20,000 when developing the new Maverick. While the interior is basic, it doesn’t look cheap. One way they got a good look at a low price, was using reground carbon fiber in the door trim panels. There’s a million stories in that truck and we’ll be getting into a lot of them tomorrow afternoon when Scott Anderson, who led the interior design of the Maverick joins us for Autoline After Hours. And we invite you to join us too, for some of the best insight into how new products get developed.
BRINGING AI TO THE SHOP FLOOR
Artificial intelligence could revolutionize the factory floor. But how do you make it easy for line workers to use AI? A company called Detect-It came up with a simple tool running on AI that people on the shop floor can use even if they don’t know anything about coding. We ran across Detect-It at the recent Motor Bella event near Detroit and Kevin Kerwin, the President & CEO of Detect-It, explained how it works.
(The Detect-It sound bite is only available in the video version of today’s show)
HONDA SHOWS OFF NEW JET CONCEPT
Air travel is soaring as people start to feel more comfortable getting back onto planes and so Honda is considering expanding its jet lineup. It showed off the HondaJet 2600 Concept, the first light jet that’s capable of flying across the U.S. It also features seating for up to 11 people and is estimated to cut carbon emissions by up to 20% compared to other light jets. No word yet if Honda is going to for sure make the new plane and based on how long it took for the last HondaJet to come out, it could be a number of years before we find out.
ZF CREATES ALL-IN-ONE SOLUTION FOR COMMERCIAL VEHICLE PTOs
There’s a lot of focus on electrifying commercial fleets, but less so on the trailers that some of these large trucks have to tow around. And when you think about a cement mixer or dump truck, they need some sort of Power Take-Off or PTO to operate, which, in the past, has typically been linked somewhere to the vehicle’s powertrain. But because the architecture of an ICE driveline is different from an electric driveline, familiar interfaces can’t be used. So, the supplier ZF developed eWorX, an all-in-one solution to electrify PTOs for operating work equipment. It includes the battery, battery management and charging system, which could also be used to power other equipment. eWorX can hook up to any truck cab, doesn’t matter if it’s powered by gas, diesel or electric and a remote-control feature means it can be operated whether it’s hooked up to the truck or not. ZF says it already has interested customers.
But that’s a wrap for today. Thanks for joining us.
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Comments (22)
October 13th, 2021 at 12:43 pm
@TESLA: the regulation of dealership which prevents TESLA from selling directly in Texas and other states puts a burden on TESLA. I know it has also benefitted from support during its initial stage of development, but to me it seems that this type of regulation prevents us from seeing what the most competitive sales and service model is. Let’s make automotive retail a free market and let it play out. If the dealership networks need to be restructured so be be it. Any labor that can be freed up can be deployed in new, more productive companies. There is enough work to be done in our economy, so there is no need to lock up labor in obsolete jobs.
October 13th, 2021 at 12:54 pm
# 1,, True, let there be competition , banning Tesla from operating the way it wants smacks of protectionism and NADA and MAGA are acting like Goons.
October 13th, 2021 at 12:55 pm
GMs (& others) dealers have lobbied for the laws to keep Tesla etc out. Not sure all GM dealerships are that interested in EVs. Thought a recent story had some Cadillac dealers “retiring”.
October 13th, 2021 at 1:10 pm
During Battery day last year Elon asked all raw suppliers to ramp up production and said Tesla was ready to sign contracts for supply as long as it was produced ethically and clean & concientiously with regards to the environment. The Caledonia contract sounds like it is for annual 800,000 units of cars just for Tesla battery cells of inhouse production, this is separate from LG CATL, and Panasonic contracts as those companies provide finished cells, GIGA Berlin and GIGA Texas will have its own 4680 Cell production lines , as of today GIGA Shanghai is supp,I’d with cells from LG 2170 cylindrical cells, CATL supplies LFP cells for base SR models are 3 and Y LG cells for higher end LR models , margins per car could be 18% to 25% or more.
October 13th, 2021 at 1:15 pm
#3 GM is the most active and involved in lobbying MAGA in keeping Tesla out of Michigan, shows that they are scared like S. Let the US Supreme C fix this monopolistic practice if they are serious about interstate commerce and true free market.
October 13th, 2021 at 1:26 pm
There are way less parts in BEV compared to ICE , and less maintenance and service required, the Auto World is ripe for disruption as the world turns to fix the environment and goes to BEVs.
Making batteries and E traction motors can easily be automated, giant MegaCast end pieces simplifies substructure, batteries as a structural member saves weight and materials. If the current mod 3 & Y requires less time than VW id 3&4 imagine what structural batteries will do to assembly process, as Elon says a box is eliminated and the steps for that box.
October 13th, 2021 at 1:35 pm
#1 – agree.
#3 – I can share my experience here in TX. Went to look at a Chevy Bolt and the Chevy salesman told me not to because it was electric. “Like a toaster oven” is how he described it. Pushed me to test drive an Equinox. I decided they would likely not be good servicing the Bolt, I just left. Got a Mazda instead, as Tesla was more than I wanted to pay and not good with trades.
October 13th, 2021 at 2:29 pm
On dealer network laws – y’all are missing the biggest piece of this story. I used to work in this area and got involved with state dealer boards in several states. The laws on the state books that protect the dealership franchise model are not there because of GM or other OEMs. Just the opposite. They are there because the dealers in those states did not want the OEMs to compete with them.
In the past, GM owned dealerships and the franchised dealers saw this as unfair competition and saw that GM had a distinct pricing advantage. Ditto for other OEMs. So, the dealers lobbied for laws prohibiting the manufacturers from owning dealerships in their states. It is primarily the state dealer groups that continue to push back against Tesla, not the OEMs. They want to compete with other dealers, not manufacturers.
October 13th, 2021 at 3:14 pm
8 Exactly. I remember hearing stories from my father, born in 1914, about GM and other OEMs wanting to sell directly and/or own stores, but the existing dealers didn’t want any part of it.
At one time, car companies did have “factory stores.” The Auburn Cord Duesenberg museum was a factory showroom.
October 13th, 2021 at 3:15 pm
#8 Tesla never had a Dealer Franchise model, so why lobby to prevent them from doing bznz the way Tesla wants too.
October 13th, 2021 at 3:52 pm
Most states do not want casinos but they now have them on Indian reserves [First Nations] now there is a Tesla centre within the borders of New Mexico
October 13th, 2021 at 6:49 pm
That’s a pretty cool drill. Going to have to check out the full video.
October 13th, 2021 at 8:13 pm
#10.) OEMs are supporting the the organizations that are selling their product, not that they necessarily agree with the said organization. That is why OEMs give awards to those that, not only sell the most of their products, but also offer the best level of service. This clearly demonstrates that there are some dealerships that are better then others, because, for the most part, dealerships are independent companies. So you can imagine some of the bigger dealership networks, not interested in OEMs selling directly to customers. It’s the same as the theater companies protesting movie makers streaming films direct to customers, for it cuts out the middle man, so to speak! Conversely, that also means that every buyer is dealing with a big, international company on a major purchase. Cutting out the dealership (a smaller company), when there is a problem, the buyer could feel like going from finding a goldfish in a fish bowl, to finding the same goldfish in a lake or ocean! With all the different points of contact at a dealership, from the inventory lots, sales floor, financing, service and parts, they do offer a lot for the customer. Not all of it may be good or necessary, and I’m sure the everyone has a horror story. But that said, most remember the bad much more clearer and longer, then remember the good! Should their be laws to force new vehicle sells to use dealerships and keep OEMs from direct sells? I don’t know or ccan’t say, but there was a reason that automakers were forced out and dealerships were locked in. Since i wasn’t around when these changes were made, I cannot answer that question. But could the large automakers been using their leverage, to push their buyers around, if the buyer had problems with their products after the sell? Without context and knowing the reasons why these changes were made, it’s difficult, for me that is, to support one side or or the other.
October 13th, 2021 at 8:35 pm
11 Could Tesla put stores on Indian reservations in Michigan?
October 13th, 2021 at 9:18 pm
14, good question. There are a lot of reservations in MI,based on the number of casinos. 9, the ACD Museum is a wonderful place. Great Art Deco architecture too.
October 13th, 2021 at 10:03 pm
15 The ACD Museum and the Chrysler Building in NYC are art deco at it’s best, and both auto industry related.
October 13th, 2021 at 10:54 pm
8-10 Seems the laws were put in place to protect a dealership from opening shop and then getting undercut by the manufacturer. So as Rey said Tesla and many of these new EV start-ups that haven’t had a dealerships to start with this law shouldn’t apply.
I think they just know that once it starts the ball will be rolling and it wont be long before other manufacturers will want to operate the same way. I think they are more fearful of what will happen than how Tesla or anyone else does business.
October 14th, 2021 at 8:49 am
One advantage dealers have over internet sales with home delivery, is that they do trades. That is a convenience for many customers, and also, the dealers can give ~7% less for a trade than you’d need to get in a private sale of your used car, because you pay sales tax on the “difference” when you trade a car to a dealer.
October 14th, 2021 at 9:21 am
Another benefit of dealerships starts on the manufacturing side of things and the need to maintain capacity. Unlike the present, when supplies become greater than demand, dealerships are offered sizeable discounts from the manufacturer to reduce inventory. Buyers share the savings and have a large inventory to choose from. Direct sales does not have this advantage for the consumer.
October 14th, 2021 at 10:44 am
Most of the complaints I hear about dealerships centers around the negotiation and finance process. TESLA, with their phone app, does away with negotiations and financing options. You accept whatever TESLA tells you to accept or you don’t buy a TESLA. People find this less stressful and even preferable.
Funny thing is, you can have this experience at any dealership. Just walk in and pay whatever is on the sticker and accept whatever financing the dealership throws in front of you. It gets really simple, fast, and zero stress when you do that. It isn’t necessarily cheap, but it is simple and low stress.
I suspect GM will introduce no haggle pricing and financing in the future. I am sure that financing will only be with GMs financing arm. They can still use the dealerships for all the good things that have been discussed in this thread, but do away with what people complain about the most. Sure it will get more expensive for the consumer, but nobody these days cares. Everyone has been conditioned to pay whatever a multinational company tells you to pay.
October 14th, 2021 at 2:07 pm
15 & 16 – Three cheers for Art Deco! I looked it up – the Auburn Cord Duesenberg museum is nice indeed.
October 15th, 2021 at 12:49 pm
Get rid of the chicken laws like we have in Michigan and let the franchise dealers survive without hiding behind the direct sales lockout. Allow freedom of sales and freedom of purchase. The franchises may thrive in that environment if they truly are better.