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Episode 74 – Suppliers Need Help, Chinese OEMs to Consolidate, Bolivia Protective of Lithium

February 5th, 2009 at 12:00pm

Runtime 6:51

Suppliers have asked the U.S. government for $25.5 billion in aid and warn that the auto industry will collapse without it. China faces a major consolidation of its automakers. The Bolivian government wants to protect its lithium resources which could pose problems for making batteries. All that and more, plus a look at one of the advanced safety features debuting on the 2010 Volvo XC60.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Suppliers are asking Uncle Sam for bailouts. China faces a major consolidation of its automakers. And Bolivia could pose problems in getting lithium to make batteries.

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

This is Autoline Daily for Thursday, February 5, 2009. And now, the news.

The Wall Street Journal reports that automotive suppliers have asked the U.S. government for $25.5 billion in aid (subscription required). However, the AP reports they have not made a formal request and are still in discussions. The Motor Equipment and Manufacturers Association, or MEMA, warns that the auto industry will collapse without aid to suppliers. It points out that 40 suppliers filed for Chapter 11 bankruptcy last year. And there’s no question that many others are teetering on the brink right now.

U.S. Senators Diane Feinstein of California and Olympia Snowe of Maine have asked the Energy Secretary to set a timeline for distributing the $25 billion in loans for the Big 3 to retool to produce fuel efficient vehicles. Reuters reports the Senators argue the automakers need the money to afford retooling especially given the current economy. And the senators say this would allow them to better plan for retooling.

And talking of auto companies going out of business, the Journal says the auto industry in China is about to go through major consolidation. There are at least 80 different car companies in China, most of them very low volume producers. They’ve been able to thrive due to China’s booming car market, but the boom is coming off the rose. And while the Chinese government wants to see consolidation, the Journal says with the current global economic recession, it probably will not push too hard to drive most of those companies out of business.

In Japan, Honda started selling its 2010 Insight hybrid today. The Detroit News says the new model has a base MSRP of ¥1.9 million or roughly $21,000. When it goes on sale in North America sometime this spring its starting price is expected to be less than 20 grand, but that was before the yen soared in value against the dollar. The new Insight delivers 40 miles per gallon in the city and up to 43 on the highway, but we don’t know yet if that is on the Japanese driving cycle or the EPA rating.

As automakers race to develop lithium-ion batteries for hybrid and electric cars we could be trading our dependency on oil for a dependency on lithium. The New York Times reports that Bolivia has almost half of the world’s reserves of lithium, and its government is highly protective of them. The country’s president, Evo Morales, already nationalized its oil and natural gas industries. And if its lithium production is nationalized there are fears it will not get properly developed.

Chinese car maker Geely received permission from the country’s top economic planner to study the acquisition of Volvo. According to Gasgoo.com, Geely also got commitments from the Export-Import Bank of China to provide the necessary financing for a purchase. Ford has also approached Chinese automakers Chery and Chongqing Changan about buying Volvo.

And speaking of Volvo, we’ll take a look at one of the advanced safety features debuting on the 2010 Volvo XC60. We’ll be back right after this.

On Tuesday’s Daily our West Coast reporter Isaac Bouchard gave us a look at the styling of Volvo’s new small premium crossover the XC60. Today he goes behind the wheel to tell us about the new safety breakthrough the company has included in the vehicle as well as how it handled those diverse California roads.

Volvo just announced pricing for the 2010 XC60 and it comes in at just over $37,000. That includes a variety of standard features like the City Safety technology Isaac told us about. By the way, if you’d like to know more about this all-new safety feature you can watch an in-depth Volvo video on the technology at our website. You’ll find a link to that video in today’s show notes.

And tomorrow we’re hosting a live webcast with Ellen Hughes-Cromwick, the chief economist at Ford. She’ll give us the company’s forecast for how the economy will do this year and a lot more. That’s at noon tomorrow, Eastern-Standard Time or 1700 Greenwich Mean on both of our websites, AutolineDaily.com OR AutolineDetroit.tv.

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

6 Comments to “Episode 74 – Suppliers Need Help, Chinese OEMs to Consolidate, Bolivia Protective of Lithium”

  1. Howard Remeta Says:

    John,
    I am thoroughly confused. All this talk about lithium batteries. Fisker, tesla, others, everyone is selling a car with lithium batteries. Yet, I also hear they are not ready yet. There are still problems. How are they selling cars when the batteries are not ready yet? GM says the Volt won’t be ready until next year. Honda says batteries are not ready yet. Toyota still has nickel metal hydrite batteries. Who is right?

  2. William R. Walling Says:

    John,
    As you have previously warned,
    “Any time you exchange one limited resource (oil) for another (Lithium), DICTATORS shall emerge!”
    Li-Ion wares are NOT the only battery technology!
    Hybrids REQUIRE some form of energy storage, NOT solely Lithium based, time to pursue plan ‘B’.

  3. Richard Sutjerland Says:

    Today’s show just highlights how uninformed the talking heads in Washington and California are concerning the auto industry. They only care about their own agenda, not the consumer or the industry. They want trade oil dependence with lithium dependence, both of which compromise US security.

  4. Jeff Dennis Says:

    After seeing 2 news stories about lithium ion batteries blowing up I don’t think I’d ever want one in my car. There was a story of a guy in China and his cellphone blew up and killed him. The other story is of a Lexus hybrid and the battery blew up and caused a lot of damage to his car. I live in Arizona and with the extreem heat you’re lucky to get 3 years use out of a standard battery due to our extreem heat. I’d be fearful of what would happen to a lithium battery out here in the desert. I’d rather get a diesel that runs on bio-fuel before I’d consider a hybrid.

  5. JIm Thykeson Says:

    Forget the lithium and gasoline route and get going on CNG (natural-gas). I don’t know why we’re dragging our feet on this conversion to CNG. it’s cleaner (save the earth) we have a ocean of the stuff and its all in no. America! Plus its a ‘heavey’ fuel that can support the operation of big-rigs; something ‘light’ fuels (like electricity) can’t. Whats the hold up?

  6. Lawrence Says:

    Down in the provinces they are not going to take well to the idea of consolidation. They’ve been left alone for some time now and it seems most will choose to go down fighting.
    And does Geely know enough about vehicle safety to take over Volvo?