Episode 444 – EV Lease Wars Heat Up, July Sales Looking Better, Saab Shoots Back

July 28th, 2010 at 12:04pm

Runtime 6:35

The war is on and the EVs are battling each other point for point. July car sales are looking good, and reports predict the best numbers since last year. The Senate passes an energy bill that will make T. Boone Pickens proud. All that and more, plus Saab’s President and CEO responds to your comments on yesterday’s show.

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Transcript and Story Links after the jump . . .

This is Autoline Daily for July 28, 2010. And now, the news!

DOWN, BUT NOT OUT
While automotive analysts have been predicting tough times for European car companies, so far it hasn’t happened. Bloomberg reports that Peugeot just reported earnings for the first half of the year that easily beat everyone’s expectations. The French automaker reported a net profit of €680 million, whereas analysts had expected it to be €420 million. However, it warns that it could lose money in the second half. In Germany, Daimler just boosted its forecast for the operating profit it expects to earn this year to €6 billion, which is nearly $8 billion. So if sales are slowing down in Europe, how come European car companies are still reporting stronger profits? One word people: China. Sales increases in China have easily offset sales declines in Europe and elsewhere.

OH LORD, WON’T YOU BUY ME…
In fact when you’re talking about China, the more expensive the car, the better the news gets. The National reports that luxury cars represent the fastest growing segment in the Chinese market. While overall sales are up roughly 50% so far this year, Audi is up 75%, BMW is up 100%, and Mercedes-Benz is 120%. And the German luxury brands have a choke hold on the Chinese market, easily outselling Cadillac, Lexus, Acura and Infiniti.

EV LEASE WARS
We reported yesterday that the price of Chevrolet Volt would come in at around $40,000, and we were right. It came in at $41,000. But that’s not what you should focus on. GM announced that it will offer 36-month leases for $2,500 down and $350 a month, which puts the car well within reach of the vast majority of new car buyers. Of course that’s exactly what GM had to do to match the lease that Nissan is offering on the Leaf. And Nissan in turn, just announced an eight year warranty on the batteries for the Leaf, which matches the warranty that Chevy is offering on the Volt.

SEQUOIA GETS THE AXE
PickupTrucks.com reports that Toyota plans on killing the Sequoia at the end of its life cycle. Slow sales have plagued the vehicle lately, so far this year fewer than 6,000 have been sold. Also, cutting ties with the Sequoia will help the company reach its CAFE numbers. Even though the Sequoia is getting the axe, the Tundra, which is the platform the Sequoia is based on, will get a refreshed model in 2014. That’s just in time to compete with new models from GM, Nissan and Ford.

SENATE PASSES GAS (BILL)
Billionaire tycoon T. Boone Pickens has done some serious lobbying to promote the use of natural gas and it looks like it’s working. Yesterday, Democrats in the U.S. Senate unveiled a $4.4 billion energy bill, mainly aimed at boosting sales of natural gas powered vehicles. According to the Detroit Free Press, the government will provide rebates between $10,000 and $64,000 for the purchase of a natural gas powered car or heavy truck. The bill will also provide grants for the installation of natural gas pumps. Another portion of the bill, around $400 million, will go towards the development of an electric vehicle infrastructure. It’s interesting to note that this bill started out as an $11 billion proposal to boost EV sales and infrastructure.

JULY SALES LOOK BETTER
Car sales in the American market slowed in June but they now look like they’re picking up again. According to the Detroit Free Press, car sales are on their best pace since last year’s cash-for-clunkers program. Truecar.com, estimates July’s SAAR will be 11.8 million units and JD Power predicts it will be an even better 12.2 million. Both those estimates are the highest since last August, when the SAAR hit 14.9 million due to cash-for-clunkers.

After yesterday’s report on the manufacturing of the new Saab 9-5, the comment section on our website was all abuzz about whether Saab could even survive. Coming up next, we’ll show you what Saab had to say about your comments.

Many viewers posted comments on yesterday’s feature spotlighting Saab’s all-new 9-5 being built right now in Sweden. In fact some of you questioned how the company can survive in an expanding world of premium car competitors. Well, Autoline caught up with Saab’s president and CEO yesterday afternoon and got a chance to ask him what it’s going to take to not only keep this iconic brand alive, but help it recapture whatever it was that made Saab so special back in its hey day some 40 years ago.

That was Jan Ake Jonsson, President and CEO of Saab.

And that covers the most important news in today’s global automotive industry, thanks for watching, we’ll see you tomorrow.

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49 Comments to “Episode 444 – EV Lease Wars Heat Up, July Sales Looking Better, Saab Shoots Back”

  1. jesse Says:

    41 grand!Well,obviously GM head honcho’s are still way out of touch with reality.

  2. Tony Gray Says:

    Ah, now we have Cash for Gassers and Cash for Zappers. I truly wish the government would find a way to stay OUT of the free enterprise system and let the market handle the future of the automobile. Since the automakers are already providing the chicken with the Volt, Leaf, etc, I am sure the market would have provided recharging stations without a bunch of government intervention…and our tax dollars.

    I wish Saab well. I think Mr. Jonsson has the handle on what he needs to do. Get them back on their niche and keep the production capability in line with demand. Trying to take Saab mainstream was a mistake they can’t afford to repeat.

  3. tj Martin Says:

    SAAB ;

    First of John , brilliant catch getting Jan Ake Jonsson to respond to our comments and concerns .

    Second ; I truly hope Mr. Jonsson is right in his predictions about SAAB’s future . I’ve still got my doubts but will be thrilled to be proven wrong .

  4. tj Martin Says:

    E/V’s

    Well this will probably show I’ve got way too much time on my hands this summer , but thinking about the current state of E/V’s I came up with the following analogy .

    Todays state of E/V technology feels like a Baker thats created a wonderful , lush and beautiful Icing . But forgot to make the Cake for the Icing to go on .

    Don’t get me wrong , I’m all for E/V’s and Hybrids when and if they can actually be made to work . But currently with a very poor infrastructure for E/V’s ( the state of the US’s electrical grid ) as well as for Hybrids ( what to do with all those worn out batteries ) and the fact that the Hybrids do not deliver as advertised ( MPG etc. ) well my analogy begins to make more sense by the minute .

  5. Brett Cammack Says:

    I question whether or not today would even have seatbelts were it not for that pesky “government intervention”.

    We are suffering today from a profound lack of “government intervention” and far too much “free market” ideology applied. I don’t know about you, but I do believe that the government is supposed to represent ME. Who represents you? The NYSE?

  6. HtG Says:

    Here is Joe White’s video at WSJ on the Mitsu iMiev he drove around DC. At least the Lady on the Bicycle will be happy.

    http://online.wsj.com/video/all-electric-chevy-volt-will-cost-41000/EB7A46E6-837F-4767-83F3-B93F1F4F1B32.html?mod=WSJ_hps_videocarousel_3

  7. jim Says:

    To all the nattering nabobs of negativism when it comes to E85, EVs and other alternative fuel vehicles, let’s just keep pumping billions of dollars to the Middle East and the Department of Defense so we can keep our insatiable addition to cude oil satisfied. I say full speed ahead with alternative forms of fuel for personal transportation and if you get in my way I may just run you over.

  8. Steve Says:

    Brett – This may come as a shock, but the founders wanted you to be free to represent yourself. This means if you (you in general, not you Brett)want to be a moron and not wear seatbelts, you can skip them. If you want to drive a motorcycle without a helmet, be my guest, but leave some money in an account, so I don’t have to pay to have your brains hosed off the freeway. Whatever our problems are today, a profound lack of government intervention isn’t one of them. Imagine what would’ve happened if BP hadn’t been ordered to drill in 1 mile of water.

  9. HtG Says:

    What would Nixon drive?

  10. captguybob Says:

    government kickbacks will be the ony thing that will spur sales of the volt. everytime they sell one, i’ll be $7500 poorer. if these vehicles cant go head to head with current technology,they need to go back to drawing board or get venture capatalists to bankrole
    new tech.
    jim, when is a look into investigating corruption in cash for clunkers problem going to start .i bet chopshops had a field day.

    also, let nasa try to develop a battery powered rocket. that would really kickstart the logjam of battery suppliers trying to get weight and
    excess cost out of their seemingly follow me technology.
    love the show!

  11. G.A.Branigan Says:

    I’m still not convinced that Saab will have enough unique/innovative designs or powertrains to survive the competition.It all boils down to research and development dollars,do they have it?

    Natural gas…….yes,providing they do follow thru on the all important infrastructure.Were it in place,and I still couldn’t buy a diesel whatever here,I would go with Nat.Gas.

    PS: I would rather have a diesel first and foremost.

  12. dcars Says:

    Turning Saab back into a niche brand is interesting. Looking at what it did for Subaru! and we all know what they want to be in the future with Toyota; Un-Niched.

  13. dcars Says:

    I had a Saab 900ng. I liked the car, but to many things broke so i got rid of it.

  14. Chuck Grenci Says:

    The 349 dollar lease on the Volt will get enough cars in the real world to see if the concept is feasible and palatable to the general public. As part of the solution, at least it will be ‘out-there’ so the market can decide if it can be a winner. (though I agree, the government subsidy grits at socialism; at least that will go away as the model ages, and then, we can see if the idea has legs)

  15. dcars Says:

    Sorry guys I like the Volt concept. it seams to make a lot sense to me. An electric car with backup gasoline engine system that really doesn’t require any change in infrastructure! I’m preparing for the beating I know is coming!

  16. alloverx Says:

    THE EV subsidies should start fading away in 1-2 years. (I am aware of how oil is subsidized)

    I’m all for CNG & LPG as long as we
    1) have it here in the US
    2) can get at it for a reasonable cost.
    3) get it distributed.

    As is often stated, we need an all-of-the above approach.
    The (corn) ethanol debacle has gone on long enough. Lets remove the ETHANOL import tariff’s gradually too. I’d rather send money to Brazil than the middle-east.

  17. pedro fernandez Says:

    GM announced they will sell a Chinese version of the Volt through Fu-King Motors of Shanghai, it will be called the Fu-King BS-230.

  18. Willi Says:

    i’m really pissed that 7k of my tax money is going to all you ev buyers

    sure i may own an electric one day, probably a Mitsu, but i won’t expect taxpayers to help me

    bad enough there are a bunch of rich people out there driving around in my electric golf cart

  19. Dale Says:

    From a realistic standpoint, will the government and auto industry be able to convince the American public that electric vehicles are what we need to solve the energy crisis? Pushing consumers into alternative fueled vehicles might be well and good for local travel, but I still don’t believe the electric powered cars will meet the needs of long distance travelers. Why should I spend a lot of money for a car that will only take me 40 or even 100 miles and then require several hours to recharge the batteries? They better be sure they have a viable power system before they try to shove them at us. The government rebates need to be at least 50% of the cost to make them mildly attractive to the average car buyer and that may very well happen when they don’t sell.

  20. Mike W Says:

    Saab should be careful not to different for the sake of being different. The buyer has to see a reason for being different or they will say “who cares”?

  21. Salvador G. Says:

    JohnMc., I wish you could include the federal tax credit that will be given for getting the new Volt in the final pricing.

    SENATE PASSES GAS (BILL)-
    I say OK -Good – But Why not the American goverment try to be more like China?, I know, I know; those evil communist bastards, but they would have passed those 11 billion to put into production their country gas.

  22. Kit Gerhart Says:

    tj Martin Says:
    July 28th, 2010 at 12:24 pm

    “and the fact that the Hybrids do not deliver as advertised ( MPG etc. )”

    My Prius is getting 50-51 mpg so far in mixed driving consisting of short trips, ~60mph two lane highway, and a little interstate driving thrown in. I’d say that with it’s 51/48 EPA numbers, it is “delivering as advertised” better than a lot of cars.

  23. Kit Gerhart Says:

    Natural gas cars have a lot in common with electric cars, limited driving range, and no infrastructure for refueling. It is also the case that the infrastructure for refueling is the best where the fewest people are likely to want them, houses in the suburbs, where you can set up a charging station in your garage.

  24. Donan Says:

    EVs are not meant to be the end all and be all. The Volt is like no other car so how can it be priced competitively. The Prius is still around $30,000 out the door, gets around 50 mpg, and still uses 20 year old nickel hydride battery technology. The Leaf is pure electric and will run on electric power for possibly up to 100 miles (time will tell real life numbers). The Volt is supposed to run up to 40 miles on pure electric power, then another 300 through the use of an engine as a generator to repower the batteries. The Volt can be plugged in to a home outlet. The Leaf I believe needs a special charging station due to its larger battery pack. The Leaf is listed at $33,000. The Volt, with its additional engine/generator plus its more of a midsize (Leaf is a 5 door hatchback), for $41,000. If these two cars catch on, expect more EVs to be brought to production in the next 2 or 3 years. When more EVs are being sold, then I believe, this will spawn alternative electrical resources (minimize coal and natural gas as electrical sources). I would like to see the big oil companies allow for biofuels to be given an equal chance to compete in the market. That is unlikely to happen without legislation.

  25. Donan Says:

    Addendum: The Leaf charging system is an additional $2,200.

    “Just the facts” Dragnet

  26. HyundaiSmoke Says:

    That Bill Sucks.

    Whatever happened to the Mandatory Provision where Class 6, 7, and 8 trucks would be forced to switch from Diesel to CNG?

    How would they have gotton this done you may ask?

    Well:

    1. When an owner operator needed a new truck, they would only be able to buy a CNG truck as the truck makers would have been forced to build only CNG engines for new trucks.

    2. There were also provisions in this bill to subsidize gas stations to provide CNG pumps for the truckers.

    This was Mr Pickens idea, I guess the Conservos won this time. Probably whining, bitching, and moaning about the debt.

  27. C-Tech Says:

    Interesting. Most people use their cars to commute to work less than 50 miles – roundtrip. This is well within the range of most plug-in hybrids and electrics. Most households have 2 cars, why shouldn’t one of them be electric? since there won’t be 100,000 e/v’s sold next year and the ramp-up will be relatively gradual, why can’t the utility companies improve the grid? After all with all this additional revenue coming at off peak hours, as a CEO it only makes sense. Surely someone is developing a solar home charger for electric vehicles, particularly in the south and west. I’m sure the horse and buggy people objected to the road paving subsidies given to car buyers at the beginning of this century.

  28. Alex Kovnat Says:

    We note the Volt will have a MSRP of $41,000. Only massive government subsidies will motivate anyone to buy a car that you’ll have to drive for as much as 50 years to break even (i.e., save enough money on lower fuel costs to justify the high initial price).

    I have a marketing idea, which I hope GM will consider: Forget about selling to Volt to individuals. Instead, market the Volt to businesses and government agencies, who would then assign these cars to employees for commuting to and from work.

    Its just part of the way it is that if GM were to assign the first thousand or more Volts off the assembly line for use by their people to commute to and from work, we might see more global warming prevented per billion dollars invested than trying to get individual purchasers to buy said vehicles.

    Also, if GM can convince some big organization – a business or something like the Department of Defense – to buy hundreds or thousands of Volts, it might bring down the cost per car.

  29. C-Tech Says:

    No offense Alex, but why do you think people buy a $40K, $50K, $60K car or truck? It is not always about the economic value of one vehicle vs. another. Some people will buy this car to make a personal statement, just as people buy luxury cars, Mini’s, Smart Cars, Porsche’s etc. It is a question whether there are enough of them with cash or credit!

  30. Kit Gerhart Says:

    Donan Says:
    July 28th, 2010 at 4:07 pm

    “The Prius is still around $30,000 out the door, gets around 50 mpg, and still uses 20 year old nickel hydride battery technology.”

    My Prius, with an MSRP of ~23K, and with a 1K rebate was less than 24K “out the door” including sales tax. My car is a Prius 2 which is the “base model,” but is well equipped and has some things, like a key that never has to leave your pocket, that are normally seen only in luxury cars.

    As far as the batteries, the nickel metal hydride batteries work well for the application, but are not very environmentally friendly at the end of their life. The next generation Prius will use some type of lithium batteries, which will do the same job with less weight, and will be better to dispose of at the end of their life.

  31. Kit Gerhart Says:

    C-Tech Says:
    July 28th, 2010 at 6:12 pm

    “No offense Alex, but why do you think people buy a $40K, $50K, $60K car or truck? It is not always about the economic value of one vehicle vs. another.”

    Exactly. It is amazing to me how many people buy diesel pickup trucks which only make sense economically if you are going to use them for 100K miles of towing 10,000 pound trailers. Since very few of them are used that way, I guess it’s a “macho” thing.

    I buy cars which certainly aren’t the best “bang for the buck,” like my Mini which gets about the same gas mileage, but cost more and has less room than, say, a Honda Fit. The Mini is more fun, though, and I just like it. I don’t understand the appeal, but some people “just like” monster pickup trucks with big diesel engines.

  32. XA351GT Says:

    gee great timing that all these EVs will hit the market just in time for the Electric rate caps to expire. Face it you either get hosed by oil companies or electric companies. The only green that is worried about is money. So either pick a gas powered car that can be worked on by most any capable mechanic or a premium to get a EV worked on by one of a few qualified techs for the 1st few years at least.

  33. XA351GT Says:

    Oh here’s a question . Who’s gonna be the 1st to run up to a wrecked EV a grab the door and help the passengers out? How will you know that you won’t get fried touching a wrecked car?

  34. Nick Stevens Says:

    # HtG Says:
    July 28th, 2010 at 12:48 pm

    What would Nixon drive?

    Whatever I drive. In many countries, my last name would translate to Nixon if you use the “Son of Nick” interpretation, and I am sure everybody here knows what cars I drive.

  35. Nick Stevens Says:

    # Kit Gerhart Says:
    July 28th, 2010 at 3:20 pm

    tj Martin Says:
    July 28th, 2010 at 12:24 pm

    “and the fact that the Hybrids do not deliver as advertised ( MPG etc. )”

    DO catch up, TJ! What you say was true in many cases BEFORE the EPA significantly lowered their MPGS in 2008 to account for higher speeds, use of A/C etc vs their older 1984 or so ratings, according to which the Prius was rated 60 city and 55 or 52 hwy.

    “My Prius is getting 50-51 mpg so far in mixed driving consisting of short trips, ~60mph two lane highway, and a little interstate driving thrown in. I’d say that with it’s 51/48 EPA numbers, it is “delivering as advertised” better than a lot of cars.”

    UNtil winter comes, you should be able to beat 50 MPG even with your Prius 2. A prius 3 could well exceed 55-58 MPG average.

  36. Nick Stevens Says:

    “# dcars Says:
    July 28th, 2010 at 1:33 pm

    Sorry guys I like the Volt concept.”

    I like it too. I’d buy it if it was as reliable as the Prius and cost only $2k more than the prius 3, NOT $17k more!!!!!!

    “it seams to make a lot sense to me.”

    Not at 41k it does not. That is why even GM offers it for $8k less if you get the lease. Then it is almost as cheap as the loser Nissan Leaf Pure EV. The only car the VOlt is better than is the LEAF, which is a TOTAL loser with its theoretical 100 mile and real-life 50 mile range, UNACCEPTABLE to any driver. Only fmailies with 6 car garages can afford the stupid Leaf as a 6th car. How many such families are there? 1% of all US families? Not even that.

  37. Nick Stevens Says:

    # alloverx Says:
    July 28th, 2010 at 1:37 pm

    THE EV subsidies should start fading away in 1-2 years. (I am aware of how oil is subsidized)”

    They absolutely SHOULD. (note this is quite different than WOULD…

    I’m all for CNG & LPG as long as we
    1) have it here in the US CHECK, in huge quantities
    2) can get at it for a reasonable cost. CHECK, due to 1)
    3) get it distributed. If you start by converting 18-wheelers and other large trucks to nat gas, you only need nat gas pumps at truck stops, not at all zillion gas stations. And trucks will save a huge amount of fuel plus a lot of pollution by con verting to CNG or LPG.

    As is often stated, we need an all-of-the above approach.

    Agreed

    “The (corn) ethanol debacle has gone on long enough. Lets remove the ETHANOL import tariff’s gradually too. I’d rather send money to Brazil than the middle-east.”

    Absolutely, totally correct. Let’s have some policies that finally MAKE SENSE. ANd also remember that HALF of our trade deficit is the god-damned oil we import, mostly from the ME (although it does not make a difference at all, oil is fungible, so even if we get most of it from Canada Mexico and Venez, it makes no diff at all, we still pay HUGE amounts to them)

  38. Nick Stevens Says:

    “# Kit Gerhart Says:
    July 28th, 2010 at 3:25 pm

    Natural gas cars have a lot in common with electric cars, limited driving range, and no infrastructure for refueling.”

    Only to a small extent. Nat gas cars have FAR longer range than the 50-100 miles EVs have, the Honda CIvic GNX has 250 miles range approx, which makes long trips feasible. And it it was offered as a WAGON, the cylinders would leave enough room for cargo, and the fuel could last for 300-350 miles. hwy.

    BUT as Pickens suggests, we should FIRST use nat gas to replace diesel powered 18-wheelers by converting them, then the infrastructure you need is only at Truck Stops (see above) AND the huge trucks have plenty of space to put the nat gas cylinders fuel tanks.

  39. Nick Stevens Says:

    C-Tech Says:
    July 28th, 2010 at 6:12 pm

    “No offense Alex, but why do you think people buy a $40K, $50K, $60K car or truck? It is not always about the economic value of one vehicle vs. another. Some people will buy this car to make a personal statement, just as people buy luxury cars, Mini’s, Smart Cars, Porsche’s etc.”

    I would be willing to pay $100k for a 3-yr old Rolls ROyce Phantom with low miles, since it cost new close to $400,000, BUT I would NOT be willing to pay $41k for a stupid Cobalt (OK< Cruze) with a battery, when I can buy the gas version for HALF the price, also new.

    The volt has none of the attraction of the ICONIC cars you mentioned, of which weven the TOTAL LOSER "Dumb" (aka "Smart") at least has excellent styling and you can park it ewverywhere. Still, even the Smart lost tons of $ for TEN YEARS even in $8 a gallon EUROPE, before it came here to lose even more. SO WILL THE STUPID VOLT, and even more the idiotic LEAF.

  40. Nick Stevens Says:

    and PS C-tech these cars you mentioned are low-volume to very-low-volume high to very high-priced niche cars. The VOlt cannot compete in this segment. After the few enthusiasts get theirs for $41k (or, more likely, at $350 a month lease), the demand will drop like a rock. But the $41k will also drop, maybe the 2nd gen volt will cost only 32k….ROsy Scenario, very low probability battery breaktrhrus will make prices plummet.

  41. Nick Stevens Says:

    In case you missed them:

    $41,000 Chevy Volt?

    No, thanks. TWO Priuses please!

    Phony Sticker price of the day:

    The Volt’s $41,000.

    GM has priced the Volt’s $350 a month lease to compete nose-to-nose against Nissan North America’s upcoming electric Leaf, which will lease for $349 a month — even though the Volt retails for $8,000 more than the Leaf.

  42. pedro fernandez Says:

    Monday’s Top Gear dissed the new Chrysler 300, saying Chrysler took the excellent MB E platform and managed to mess it up by making the car too big, heavy and giving it sub-par braking. They did like the engine, however.

  43. pedro fernandez Says:

    On that same episode they gave kudos to a high performance Holden with a Corvette engine and a sweet chassis, I don’t understand why Gm doesn’t bring more Holdens over here, I think they would do well, if properly executed and marketed.

  44. Kit Gerhart Says:

    Maybe Top Gear likes the Holden because it is right hand drive, better for use in the UK.

  45. Donan Says:

    Nick,

    2 Prius’ will cost you $13,000 more. Not really a 2 for 1 deal.

  46. Nick Stevens Says:

    It’s called “poetic license”, DOnan. Have it your way, 1.67 Priuses then, or even 3 priuses for every 2 Volts. BUT I bet you that if you include EVERYTHING (resale value, maintenance and repairs) it WILL cost as much total lifetime ownership for one VOlt as for two Priuses.

  47. Nick Stevens Says:

    But many buyers will say instead

    “Two and a half (volt clone) Cruzes, please!”

  48. Donan Says:

    Bottom line is that the Volt, Leaf and Prius are all different animals. Overall, the Volt is more technologically advance, followed by the Leaf then the Prius. Technology costs money, thus the same order follows by price.

  49. Donan Says:

    No idea why you want to continue comparing one Volt to two Prius’. Resale is unknown (recent Toyota recalls, new EVs entering the market, fluctuations in gasoline prices, overall economy, etc…) Maintenance and repairs would likely be higher for two vehicles versus one vehicle so that is nonsensical. Savings in energy costs of operating one Volt at current electric Kwh and gasoline prices compared to two Prius’, again favors the one Volt and will improve its margin when gasoline prices increase.