March 18th, 2013 at 11:48am
Toyota is creating a new China-only brand that will build low-cost and alternative-fuel vehicles. Cellulosic ethanol has not caught on, due to its high price, but that could change soon. It looks like Volkswagen’s Tennessee facility could be the first transplant with union representation. All that and more, plus host John McElroy gives his insight into the global race going on amongst car companies to lock up the supply chain for carbon fiber.
Hello and welcome to a brand new week of Autoline Daily. And here are some of the latest developments in the global automotive industry.
NISSAN TO MAKE LEAF IN CHINA
Nissan, is all in when it comes to electric cars. And now it’s going to start making the LEAF in China. Production will start at only 10,000 cars a year and ramping up to 50,000 units…if sales go up that much. Nissan doesn’t need more capacity to make LEAFs, not with plants in Japan, the US and the UK. But unless EVs are made in China they don’t qualify for generous government subsidies and are slapped with hefty import tariffs.
RANZ IS FOR CHINA ONLY
And that’s exactly why Toyota is creating a brand new China-only brand, called Ranz, that will build low-cost and alternative-fuel vehicles. Ranz is a joint venture between Toyota and First Auto Works, or FAW. Ranz’s first model will be a pure-electric that will make its debut at next month’s Shanghai auto show. Toyota also has a joint venture with GAC that is expected to release its own China-only brand at the Shanghai show as well.
BETTER LATE THAN NEVER
Hey, what the heck ever happened with cellulosic ethanol? You know, instead of making ethanol out of corn or sugar, what happened to all those plans to make it out of non-food crops, or even garbage? Right now it costs about 90 cents a liter to make cellulosic ethanol, which is about 40 percent higher than corn ethanol. But a study by Bloomberg says the price is coming down and that cellulosic ethanol will cost the same as corn ethanol by 2016. The Renewable Fuel Standard is a law in the U.S. that mandates the use of 36 billion gallons of biofuel a year by 2022, including 16 billion gallons of cellulosic ethanol.
VW CONSIDERS UNION REPRESENTATION
We’ve been following the UAW’s attempt to organize Nissan’s plant in Mississippi but it looks like Volkswagen’s Tennessee facility could be the first transplant with union representation. The Detroit News reports that VW management is considering creating a works council for its Tennessee employees that could possibly work in tandem with the UAW. Employees would elect representatives to a council which then works with a union to negotiate wages and other issues. A decision is expected by the middle of the year. This is not that surprising of a move because I believe under VW’s by-laws all employees must be represented by a works council.
VW BEGINS APPRENTICE TRAINING
And speaking of VW’s Tennessee plant, the company has started apprentice training at the facility. So far, VW has trained 55 apprentices in mechatronics, and courses developed by the VW Group Academy. I think this is a really good idea. As I’ve mentioned before VW has around 550,000 employees worldwide, more than Toyota and GM combined. And it likes to brag that this type of training gets them the best workers.
EMERGING ON TOP
According to a report by WardsAuto and AutomotiveCompass, developing and emerging economies will soon pass other markets like Germany, Japan and the U.S. as the world’s largest automotive manufacturing sector. For the first time, these markets will account for more than half of the world’s light-vehicle volume, more than 50 percent of global output and pass the 50 percent mark in sales by 2014. Generally, an emerging market is defined as a country that’s ramping up its industrial output, growing its service sector and improving its technological infrastructure, like China and India.
Did you know there is a global race going on amongst car companies to lock up the supply chain for carbon fiber? That is coming up next.
CARBON FIBER SUPPLY CHAIN
Automakers are making important improvements to slash the cost of using carbon fiber in their cars. They are especially focused on developing cycle times that are well under 5 minutes, a key enabler for mass production.
And everyone is getting in on the game. Toyota, Daimler, Subaru and Nissan have agreements with the Japanese company Toray, the largest carbon fiber supplier in the world. Ford is teaming up with U.S.-based Dow, while General Motors recently signed an agreement with Teijin, another Japanese company. BMW formed a joint venture with the German supplier SGL. Indeed, BMW claims it will be the first major automaker to sell an all-carbon car, its electric i3.
This segment is so strategic that VW rushed in last year to buy 8.2 percent of SGL, which prompted BMW to buy another 15 percent of SGL simply to prevent VW from gaining any more control. Susanne Klatten, a member of the Quandt family and the heiress to the BMW empire, owns 29 percent of SGL. VW may want to find another source quickly. New suppliers from China and South Korea are emerging, but there are few other large-scale suppliers out there.
And no one wants to be left out. After 2015, carbon fiber applications in the automotive industry are projected to grow 10-15 percent a year. It’s almost like the computer industry was 40 years ago.
There are still many issues left to be resolved, especially repairing carbon fiber cars at dealerships and body shops. But mass-production carbon fiber could become be one of the greatest growth segments in the automotive industry in the second half of this decade.
Anyway, that wraps up today’s report. Thanks for watching and please join us again here tomorrow.