Episode 310 – Asian Autos Seek Lithium, CA May Reject CAFE, Detroit Show Attendance Up

January 20th, 2010 at 12:00pm

Runtime 7:43

Chinese and Japanese auto companies are taking a very proactive approach to securing long-term supplies of lithium. The California Air Resources Board is threatening to pull out of the CAFE compromise. The Detroit Auto Show shows a significant increase in attendance. All that and more, plus John answers your questions in the “You Said It!” segment.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Asian automakers are locking up global supplies of lithium. California threatens to drop out of the CAFE compromise. And the Detroit Auto Show shows a significant increase in attendance.

Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Wednesday, January 20, 2010. And now, the news.

Fascinating story in the Wall Street Journal. Toyota has just secured long-term supply contracts for lithium in Argentina (subscription required). Demand for the material to make light-weight batteries is expected to skyrocket in the coming decade, and there aren’t that many global suppliers, so availability could be tight in the future. The Journal reports that Chinese and Japanese companies are taking a very proactive approach to securing long-term supplies of lithium. And you have to wonder where that will leave the U.S. and Europe.

In a puzzling development, the Detroit Free Press reports that the California Air Resources Board is threatening to pull out of a deal with the federal government on the fuel economy standard to reach an average of 35.5 MPGs by 2015. That’s 6.6 L/100 km. California says it will pull out of the deal unless the federal government lowers the CO2 credits it gives for zero-emission vehicles, and unless it front-loads the standards, meaning automakers have a steeper ramp-up right now, rather than in 2015. I have to editorialize here to say this is just California craziness, because what it is demanding will have very little impact on the environment, but an extremely costly impact on the auto industry.

Ford’s latest buyout offer to UAW members isn’t attracting much interest. According to the Detroit Free Press, union leaders say workers aren’t opting for the buyout because of the company’s financial improvements and finding another job would be difficult in this economy. The offer expires on Friday. Last year a similar buyout was accepted by only 1,000 members, and workers say the company has offered so many buyouts that they’ve pretty much weeded out the ones who want to leave. This poses a problem for Ford because the only way it can lower labor costs is through new hires and if no one’s leaving they’re stuck with paying current employees higher wages.

This year’s Detroit Auto Show is a step up from last year’s, and the public must have taken notice. Through the first three days of the show this year, attendance is over 240,000 compared to about 205,000 last year. Good news for the city and organizers for one of Detroit’s premiere events.

Just like Commodore Matthew Perry in 1854, the U.S. has forced Japan to open to the West, except this time it didn’t take a fleet of “black ships” landing on their doorstep. The Detroit News reports that in the wake of heavy pressure, the Japanese government has finally changed its cash-for-clunkers program to include Detroit Automakers. This is an important political win for the Big Three, which have been fighting for fairer trade in global markets. But it’s just a token gesture. GM, Ford and Chrysler sold fewer than 9,000 cars in Japan last year, and this isn’t going turn that around.

Autoblog reports that Audi is expected to include Google Earth in its next-generation MMI system. With an in-car internet connection drivers will be able to pull up high-quality satellite maps right on their navigation screens. The idea is to make the setup as comprehensive and easy to use as your home computer. Just like Google Earth on a PC, you can zoom in and out, and even pull up Wikipedia pages on different cities and towns. Audi’s new MMI system should premiere on its redesigned 2011 A8.

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

And now it’s time for some of your comments.

Omar03dammam saw our report on Honda being mad at Hyundai’s fuel economy ads, saying it shouldn’t be rated No. 1 because it’s not a full-line manufacturer. I pointed out that Honda isn’t a full-line manufacturer, either, and that only the Detroit Three meet that definition. So omar03dammam wrote in to say, “Toyota and Nissan are full-line manufacturers. Just want an excuse for American automakers, McElroy??!!!”

Well, Omar, Toyota and Nissan are not full-line manufacturers. Close, but not quite. They don’t make or sell full-size vans. Collectively, the Detroit Three sold 150,000 of them last year, and in a good year they sell over a quarter of a million. Those big vans help drag down their fuel economy average, which is a key reason why GM, Ford and Chrysler always come out at the bottom of the CAFE ratings.

Salvador G. saw that we’ll be webcasting live next Tuesday from 12:30 p.m. to 2:30 p.m. from the Washington DC show, with a special emphasis on trying to figure out how diesels will fare in the American market, and he wrote in to say, “Since you mention next week’s auto show in DC, is there any way you could tell us who you are going to be talking to, so we can start sending in questions in advance.”

Salvador, we’re still putting that list together, but we’ll be talking to CEOs like Stefan Jacoby at Volkswagen and Johan de Nysschen at Audi, and politicians like Congressmen Fred Upton of Michigan from the Energy and Commerce Committee in the House. And I’m glad you brought this up, because we very much welcome your questions.

And finally, Ron Paris saw that Jason Vines will be returning for an appearance tomorrow night on Autoline After Hours and left this comment: “Oh PULEEEZE; not Jason Vines again! I know there’s nothing I can say to convince you to abandon this folly, John. Suffice it to say, I will skip this week’s show. I’m just not that into megalomania!”

But Ron, it’s hilarious megalomania. And yes, for those of you who didn’t know, the Rambo-like machine gunner we use in the Rapid Fire graphic is none other than that megalomaniac Jason Vines.

And that’s it for today’s top news in the global automotive industry. Thanks for watching, we’ll see you tomorrow.

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37 Comments to “Episode 310 – Asian Autos Seek Lithium, CA May Reject CAFE, Detroit Show Attendance Up”

  1. Tony Gray Says:


    Be sure to drive your hybrids to the Washington show. Don’t want you hauled on the congressional carpet for flying down in your corporate jet!

  2. Ron Paris Says:

    Let’s see, we allow the government to jam technology down our collective throats that is dependent on lithium (available from, what, 2 South American countries?) rather than petroleum (available worldwide from many countries) and you’re just now starting to worry about long-term supply?!

  3. Perry Cartwright Says:

    About the Jason Vines matter… For me he’s a stitch. But isn’t he now out of the industry entirely? I had thought he was working for a publisher. Is he baaahck?

  4. Alex Kovnat Says:

    Re California Craziness: I encourage as many young professionals as possible to move out of California. Maybe that would incentivize people like Arnold S. to take the needs of society, not just their neurotic ego needs, into consideration.

  5. Nick Stevens Says:

    it was too long ago that California was a haven for all kinds of manufacturing and other businesses, so most people do not know how terribly it has changed. Even as late as 2003, I believe, Boeing, which was then a Seattle based company (now chicago based) had THIRTEEN big-ass plants in the LA area ALONE…

    PRODUCTIVE and affluent people are LEAVING CA in droves already. Only the riffraff and SOME retirees can afford to stay…

  6. dave Says:


    I don’t care if its corn, sugar, oil, lithium, Nat. gas, etc once a market is set up the suppliers will get together, rrrr opec, and control pricing and supply.

  7. Nick Stevens Says:


    In fact, OPEC is the ONLY ONE successful cartel in history, for raw materials and commodities. VERY FEW other cartels exist. They are the Exception, not the rule. They cannot even put a Natural gas cartel together!

  8. Rick Wakefield Says:

    What and who is it going to take to tell CARB that their efforts are going to be disastrous to the US automakers if they keep pushing tougher standards that accomplish next to nothing, as I believe you said.
    Are they such an autonomous board, and all powerful, that someone or even a delegation from Washington can’t reign them in while the auto industry attempts to recover financially as well as given a chance to produce all the fuel efficient and clean cars they currently are either making or have on the drawing boards.
    It seems they keep adjusting the standards and goals (moving the stick)for the auto makers before anyone can react in a fiscally responsible manner. How are they (CARB) allowed to single handedly demand the impossible and cause the price of the automobile to go up substantially.
    I, as an observer, am VERY frustrated and can only imagine how the auto makers must feel. Then there is the added cost’s of litigation as well. Just another thing to raise the cost of a car.
    Frustrated in Massachusetts.

  9. Salvador G. Says:

    Thank you very much JohnMc,… Then, I got a couple of questions for tomorrows Autoline Afterhours.


    1- How much (in Percentage) do you think next week auto show in DC, will be about kissing up to congress and not about cars -compare to the NAIAS auto show??

    2- Do you think Johan de Nysschen of Audi in his own colorfull way will tell congress members what he thinks of their constant push for electrics??? while, he not obviously trying to push for diesels??

    3- Who tha’ heck is making all this lithium batteries or any other electric battery for car companies??
    ..You know it just hit me (Did I missed that show???) we don’t see the battery making companies at auto shows OR at least we never seem to hear any of them at auto shows.

  10. pedro fernandez Says:

    This recent catastrophe in Haiti and devastating hurricanes here and abroad point out the big problem with electric cars. When you lose electric power for days and weeks, you’re stuck. Then you’re gonna wish you had never bought the damn thing.

  11. Kit Gerhart Says:

    This would be a good time for California to do what is really needed to improve the efficiency of the vehicle fleet, raise gas tax. They need to set a schedule, like maybe a 5 cent a gallon increase every six months for five years, and then see where things are going at that time. If this is done gradually, and systematically, the car makers and car buyers will easily adjust, like the European car market adjusted years ago for high fuel prices. The people who are really concerned that gas went up 2% can slow down a couple miles an hour and spend the same on gas. Then, when people are shopping for their next vehicle, they might think twice before buying a 5500 pound truck to commute in. Come on, Arnold and CA legislature. Show that you can lead.

  12. Alex Kovnat Says:

    Kit, I’m glad you mentioned motor fuel taxation.

    I have believed for over 20 years, that raising motor fuel taxes is the only approach which directly addresses the main issue. What do I mean by main issue? If carbon dioxide really is a problem, and the auto is the cause of it, the main issue is NOT the size of one’s car — its how many gallons of fuel one consumes each year. Raising gas taxes addresses this issue directly. CAFE does not.

    Increasing motor fuel taxes is unpopular among political leaders and the public because it is an up-front, in-your-face tax. Squeezing automakers harder and harder on fuel economy, on the other hand, is a non-obvious tax. Its easy for someone with the gift of Blarney to sell the idea of draconian CAFE increases as championing the little guy against all those big, evil auto and oil companies.

    But one day the little guy is going to pay the price – and that may well be more than just a higher and higher sticker price for even the most basic car.

  13. Nick Stevens Says:


    While I fully support a huge gas tax, given the state of the economy, esp. in CA, if that tax is not balanced by an equal tax cut (income or sales) elsewhere, it could make the depression much deeper.

    Re Diesels,

    We already know that diesels are the most efficient, that’s why every single 18-wheeler big rig on the highway, and there are millions of them, not ONE of them nas a stupid gas engine, they are ALL diesels, because for professional trucks that do 100,000s of miles every YEAR and burn a gallon every 3-6 miles, it is the ONLY econ efficient way!

  14. Nick Stevens Says:

    I have a question to the diesel makers in AAH:

    How much REALLY does a diesel cost more than th egas engine it replaces in a given car?

    The PRICES of diesel upgrades vary very widely, and I strongly suspect they have LITTLE correlation with the actual COST difference.

    Mercedes charges a mere $1000 premium for its E-class diesel, but Ford and GM and Dodge charge many 1,000s for the diesel versions of their non-luxury, far less expwensive than a loaded E-class, trucks. WHAT GIVES?

    Back in 1980, almost 80% of all Mercedes sold in the US were DIESELS. are there any plans by Merc, BmW or Audi to go back to these very Sensible times? LOL….

  15. Derek Says:


    For tomorrow’s AAH, can you guys spend a few minutes ranting about The Automotive X-Prize – now that a timeline has been posted http://www.progressiveautoxprize.org/prize-details/competition-timeline. I just want to hear expletives about how dragged out it is, who is still in it, and of the cars(err, uh, trikes) left in there who is most likely to actually go into production (especially with only a $10M purse). Apparently there was something at the Detroit Autoshow – but I don’t recall anyone reporting on it – which probably says it all. But seriously, predictions would be interesting – maybe even something like we did for GM coming out of bankruptcy?

    Derek V.

  16. David B. Fishburn Says:

    Mac, regarding the supply of lithium, This is the reason why electric cars will never dominate the market like the gas and diesel engines have. With very limited supply, the price for lithium will remain high for years to come, resulting in prohibitely expensive batteries. As long as the cost of the batteries and their maintenance remain high, people will opt for cheaper gas/diesel cars. The companies keep saying that they are trying to reduce the costs, but that supply problem is gonna bite them in the ass.

  17. Alex Kovnat Says:

    The Diesel is in many respects the ideal traction engine, but mother nature throws a few frustrating showstoppers in our faces:

    1. Nitrogen oxides. Like a “lean burn” gasoline engine, you can’t use a 3-way catalytic converter with Diesel engines. The only exhaust gas post-processing that can reduce NOx from a Diesel engine (or for that matter, a lean burn spark-ignited engine) is selective catalytic reduction, which requires that your Diesel car carry a supply of urea at all times.

    2. Fine particulates. Ultrafine particulates, linked to lung problems, are another showstopper mother nature throws in our faces regarding Diesel engines.

    And now, I would like to bring up an economic issue concerning such cars: If everybody had one, the price of Diesel fuel would rise and rise, until finally you would be better off economically with a gasoline-burning car. We have to remember that although spark-ignited engines have an octane issue, is not a Diesel engine’s cetane requirement just as bad?

  18. Kit Gerhart Says:

    Nick writes:

    “Mercedes charges a mere $1000 premium for its E-class diesel, but Ford and GM and Dodge charge many 1,000s for the diesel versions of their non-luxury, far less expwensive than a loaded E-class, trucks.”

    Mercedes DID charge about $1000 extra for the diesel in the E-Class. Now, they don’t even offer it. You have to buy a truck to get a diesel in a Mercedes in the US.

  19. C-tech Says:

    A question: Is lithium the only (or best) game in town regarding battery material? What about Ni-cad or other materials?

  20. David B. Fishburn Says:

    One promising new technology is the paper battery. Granted, it’ll be a few years before we start seeing this developed enough to use in cars, but it will help ease the problem with lithium. A university in New York State invented it in 2007, and i believe Mac talked about it in a show, not sure when.

  21. Kit Gerhart Says:

    Lithium batteries store about four times as much energy for their weight as “the best of the rest” which is probably nickel metal hydride (that’s what’s used in Prius and most of today’s hybrids). Also, lithium batteries are much more environmentally friendly to get rid of at the end their life than other battery types, especially nicad.

  22. Sean T Says:

    California backs off threat to fuel-rules pact:

  23. Denis Says:

    Hey John….Lithium seems to be found under dry lake bed’s. Don’t the dry lake beds in Utah contain Lithium ?

  24. DT Says:

    If California wants to set there own CO2 standards then it should also apply them to imported luxury cars and trucks. Once the elite can no longer buy there BMW’s, Merc’s, Bentley’s, Lambo’s, etc. there will be a reversal of this madness. C02 isn’t pollution….plant’s need it. So plant more tree’s!!

  25. HyundaiSmoke Says:

    John, why are you old guys so resistant to California?

    Think about this, CAFE at only 35 MPG, come on now. That still puts us behind every industrialized nation on Earth in terms of fuel Eocnomy, including polution infested China with their 43 MPG requirements.

    The costs we incur now if we were to bump MPG up to 50, would be less than the long term costs of gas prices.

    I argue that Americans paying $6.00-$7.00-$8.00 a gallon only driving cars designed for a 35 MPG Fleet is more detrimental to the long term internal domestic financial security of this nation, than “Cry Baby OEMs” having to incur extra costs to bring MPG up to 50.

    They act like its a hard task. They have Audi A8s in Europe that get 35 MPG, much less the Audi A2s that push 50 most of their variants and top 50 in some of their Variants.

    You guys dont care about OEM cost. You only care about Horsepower, be honest let your real Agendas out.

    By the way, Hyundai will meet 35 MPG CAFE in Q3
    2011. Watch as their new products come out, youll see. 30 MPG Genesis Sedans (Yeah 3.8L V6 is getting GDI too) to 45 MPG Accents.

  26. HyundaiSmoke Says:

    Once Tuscon gets built at the West Point Georgia plant, tha will get GDI as wll, and once it gets GDI expect Sonata fuel economy.

    I want a Tuscon, but Im going to wait until its gets GDI. If I dont Im going to feel like a dumbass after I bought the 31 MPG verson when they now have a 35 MPG version.

  27. C-tech Says:

    HyundaiSmokingWhat? You answered the “old guys” (who remember smog and pollution alerts in the U.S.) question about our agenda. China’s choked with pollution even with high mileage vehicles. We are trying to keep cars clean yet affordable.

  28. C-tech Says:

    Thank you Kit G. for your answer.

  29. HyundaiSmoke Says:

    I think defense against criminally high gas prices are more important now than controlling pollution, C-tech. We have the same supply of oil we had in Summer of 08 when gas was closeto $5. The difference now is you have a multitude of umemployed to underemployed persons driving less and shopping less. I argue that High gas prices combined with climate change are a threat to modern day civilization itself.

    Most of you guys are too Naive to see it, but we are trapped in an never ending tale spin of high gas prices.

    Ill explain:

    1. As I have stated earlier, we still have the same FINITE (and decreasing) supply of oil as we had in summer 2008.

    2. Once employers start hiring at 100,000 jobs a month constantly OPEC supllies ar going to dwindle, thus forcing the price of gas back up.

    I think its a disservice by the media that they stopped hammering this point home as to why its good to buymore fuel efficient cars.

  30. HyundaiSmoke Says:

    I think those in the media want to see Gas Lines with people fighting and getting shot over gas.

    That’s theproblem with Americn Media, they have the power to influence options to make positive chage, but instead they pander to the inner adolescent in us to play around instead of take cake of business.

  31. Nick Stevens Says:


    Gas prices have always been criminally LOW, not high, in the US. Just because we are used to $2 prices and hate it when they go to $4 does not mean that even $4 even starts to cover all the internal AND external costs of gasoline. (pollution etc).

    The Europeans view the DIRT CHEAP US gas prices as some kind of… American Socialism, keeping gas affordable to the impoverished, unwashed masses.

    There were economic studies that estimated the fair cost of gas at as high as $8 a gallon, and that was decades ago, when the $ was worth something.

    $3 gas today is far cheaper than $1.30 in 1980. Because you could buy a buick then for $5000 new, and now you need at least $25,000!

  32. HyundaiSmoke Says:

    Nick, the Vehicles, wages, and living habits have to catch up to the Gas. At $8 a gallon not only people would have to change what they drive, but they will have to change where they work and live.

    $8 a gallon would empty out the suburbs of Detroit and any other American city. The Cities would be booming again, every last one of them, and youd have these decrepit suburban housing blocka, where the poor would be shiifted from the cities to there. With Gentrifiation in these cities, the land would be dirt cheap to redevelop.

    That would create the Suburban/Outskirt Ghettoes Common in most other countries. South Africa, Brazil are extreme cases, but those Suburban Ghettos in France (where those national Riots have been occuring) are comparable to many Urban American areas.

    With less access to public transpotation and Social services, I argue that the Social Consequences of these gas prices could lead to a New More Worse More Insidious Kind of Marginalization towards a Suburban Poverty Class that could be a threat to our civilization as a whole.

  33. Nick Stevens Says:

    At first I thought you got it right, but you gave it a negative hue at the end.

    The return to the downtown areas is desirable, not bad. A big reason for the bankruptcy of the downtown areas is that the more affluent, who paid the taxes, were able to afford long commutes due to dirt-cheap gas and moved 50 miles from their work. I know a ton of people who work for Ford and GM and Chrysler and live 40-50 miles (each way) away, in various small towns and suburbs. This is a huge waste of time AND energy and has made gas more expensive for all of us just because of the huge increase in the demand side.

  34. HyundaiSmoke Says:

    Exactly Nick, and that only led to unstable prices, and faster oil supply declines in the first place.

    We also have to think about the various VATs, etc… It Just popped up in my mind. So Id say $6 a gallon here less the extra Taxes would be our equivalent to European gas Prices.

  35. HyundaiSmoke Says:

    Also, Europeans are paid more-per higher Euro value. So even $5.00 a gallon for this country would be on par woth European Prices.

    $8 a gallon here would be like $11 a gallon there, and $10 a gallon gas=Riots all over Spain, Portugal, Greece in 2008, and one of the many contribuing factors to mass rioting in France in 2008.

  36. Nick Stevens Says:

    It costs me actually less to drive a mile here and in Europe, where gas prices are double ours, BUT in Europe I drive a 5-sp lightweight 1991 Civic hatch that gets actual 44 highway and 35 overall MPG, while here my 99 S500 gets barely 20 highway and 12 or so city.

    I feel equally safe in both places, since most cars in Europe are as small as the civic. I’d not feel safe using the civic here for logn highway trips, when everybody else and his mother-in-law drives Explorers and 5,000 lb crossovers and the like.

  37. Nick Stevens Says:

    I messed the syntax above, I meant it costs me less to drive a mile in Europe with the civic vs here with the S500.