AD #3517 – Tesla to Halve Assembly Costs; OEMs Expect Billions, But Consumers Don’t Want Subscriptions; Renault & Geely Tap Oil Giant for ICE Joint Venture
March 2nd, 2023 at 11:53am
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Runtime: 10:05
0:00 Highlights of Tesla’s Investor Day
2:23 Tesla Dominates S&P’s Loyalty Study
3:50 OEMs Expect Billions, But Consumers Don’t Want Subscriptions
4:47 Renault & Geely Tap Oil Giant for ICE Joint Venture
6:05 U.S.’s Largest Lithium Deposit Found
7:12 F1 Says It Will “Never” Go Electric
8:06 Honda Teases New IndyCar Hybrid in 800HP CR-V Beast
8:47 Breathe Easier Thanks to Improved Manufacturing
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TESLA TO HALVE ASSEMBLY COSTS
Yesterday, Elon Musk and his top executives at Tesla presented their most detailed look inside the company, how it works, and what it plans to do in the future, but investors were not impressed. The stock fell 8% in after hours trading. Even so, the presentation was a gold mine of information, too much to list here. But here were some of the highlights for us:
- Musk presented a compelling way for the human race to achieve 100% sustainable energy in 20 years. It would cost $10 trillion, but that’s less than the $14 trillion that was spent on fossil fuels over the last 20 years.
- Tesla’s next gen platform will have half the assembly cost of today’s platform. Tesla is developing a radically different way of assembling cars. Future assembly plants will be 40% smaller, probably starting with its new plant in Mexico.
- The next drive unit will cost $1,000 and have a permanent magnet motor that doesn’t use any rare earth minerals.
- By data mining customer information Tesla found that people rarely used the sunroof so they deleted it from all models.
- Charging stations are now made as modular units that can be dropped in place with a crane lifting them off a truck, lowering installation costs by 20% to 70% depending on the location.
- Tesla is still shooting to make 20 million vehicles a year, which will require up to a $175 billion investment, but Tesla will be able to handle that from its own cash flow.
- Musk says Tesla will need about 10 models to hit that 20 million goal. Right now Tesla has 5 models. The S, the X, the 3 and the Y, and the Semi. We know of two more that are on the way, the Cybertruck and the new roadster. That’s a total of 7. So what do you think will be the other three models that Tesla is thinking about?
TESLA DOMINATES S&P’s LOYALTY STUDY
S&P Global came out with its study of owner loyalty this week. It looks at which car company has the highest loyalty, as well as which brands, which models, which segments, and which powertrains. It even breaks it down demographically. GM, Hyundai and Ford are the manufacturers with the highest loyalty, and in that order. But Tesla dominates in just about every other category. And that’s going to be the topic on Autoline After Hours today. How does Tesla get such high loyalty ratings? We’ve got Vince Palomarez from S&P coming on the show, and Jeff Gilbert from WWJ Newsradio 950 will be on board. So join John and Gary when the show goes live at 3 pm eastern time.
OEMs EXPECT BILLIONS, BUT CUSTOMERS DON’T WANT SUBSCRIPTIONS
Automakers dream of making billions of dollars by selling subscription services to their customers in the coming years. But that dream could turn into a nightmare because consumers hate the idea. According to a survey from Autolist.com, 69% of the people they surveyed said they wouldn’t subscribe to those types of services. They’d rather pay up front for them, though 7% said they would subscribe. And interestingly, the higher the income, the less likely people are to pay for a subscription. Age matters, too. Gen Z shoppers are more willing to pay for a subscription. Older buyers tend to say, ‘No way.’ The type of feature also matters. In-vehicle entertainment is rather appealing. But most people have no interest in paying for things like heated seats, a heated steering wheel or even a performance upgrade.
RENAULT & GEELY TAP OIL GIANT FOR NEW ICE COMPANY
As we reported yesterday, Germany, Italy and Poland are pushing back against an ICE band by 2035. And that could be music to the ears of those who want to preserve IC engines. Renault and Geely agreed to form a joint venture to make IC powertrains and oil giant Saudi Aramco just joined the club. Aramco said it will take a minority stake in the company and its investment will be used to develop synthetic fuels and next-gen hybrid technology with the goal of lowering emissions. The new company will have an annual production capacity of more than five million internal combustion, hybrid and plug-in hybrid engines and transmissions per year. That scale should keep costs down. And the way this whole thing came together is pretty interesting. First, Volvo spun off its ICE operations, which were purchased by Geely and renamed Aurobay. Renault then split itself in two; an EV side called Ampere and an ICE side called Horse. Now Geely and Renault are merging Aurobay and Horse together, and bringing Aramco into the mix, but they don’t have a name for it yet.
U.S.’s LARGEST LITHIUM DEPOSIT FOUND
Here’s something that should help with building more batteries for EVs in the U.S. The American Battery Technology Company, a battery materials company, announced it has discovered the largest known lithium deposit in the U.S. at a site it owns in Nevada. It found an estimated 15.8 million tons of lithium carbonate equivalent. There’s concern that there aren’t enough raw materials needed for building EVs and batteries. But now we have people searching for the materials.
CEO SAYS F1 “NEVER” GOING ELECTRIC
You’re told to never say never, but that’s exactly what F1’s CEO is doing. Stefano Domenicali says the racing series “will never go electric.” Maybe he feels that’s already being covered by Formula E, but as you probably know, F1 has been using hybrid technology for the last 10 years and the amount of electrification is only going to increase. In 2026 it will start using updated hybrid units that are estimated to have nearly triple the power of the current system. The cars will get roughly 550 horsepower from their ICE powerplants and 450 horsepower from the electric motors. And F1 the IC engines will run on synthetic fuel as a way to further reduce emissions.
HONDA TEASES NEW INDYCAR HYBRID IN 800HP CR-V BEAST
Speaking of racing series switching to new, updated hybrid powertrains, IndyCar will be doing just that next year. And Honda is teasing the setup in an 800 horsepower beast of a CR-V. But don’t be fooled, the only thing CR-V about it is a mild resemblance to the mild-mannered crossover. This is a completely custom tube chassis fitted with a 2.2L twin-turbo V6 that’s mated to a hybrid unit and 6-speed transmission. It will make its debut at IndyCar’s 1st race of the season, this weekend’s Firestone Grand Prix of St. Petersburg in Florida.
BREATHE EASIER THANKS TO IMPROVED MANUFACTURING
Every year the U.S. EPA hands out its ENERGY STAR certificates for the most energy efficient manufacturing plants. It’s given to companies from 20 manufacturing sectors, and a number of car plants made the list. All told, 86 plants earned the agency’s award, including seven from Honda and two each from General Motors and Nissan. The certificate is given to plants that are in the top 25% of energy efficiency in their sector. The EPA says the 86 plants saved over 105 trillion BTUs or British thermal units of energy and prevented more than 6 million metric tons of carbon dioxide emissions from going up into the atmosphere.
And on note, we end today’s show. Thanks for joining us.
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Comments (36)
March 2nd, 2023 at 12:36 pm
I think Tesla will make a shorter, efficiently packaged hatchback of VW Golf proportions for “the rest of the world” outside of North America. I’d expect versions with smaller batteries, and ~200 mile range to keep cost down. Then, I’d expect a more trucky looking Model X size crossover, without the stupid doors that can’t be opened in most garages. Then, if they really want to sell 20M cars a year, they might do a short range, inexpensive “city car” to compete with some of the Chinese offerings.
March 2nd, 2023 at 12:42 pm
As far as F1 “never going electric,” I agree that they won’t, until and unless they can run a complete ~90-120 minute race at roughly current speeds without stopping, except for tires. If battery technology progresses to where they could run an entire race on a charge, and without the cars being obscenely heavy, I’d say “never say never.”
March 2nd, 2023 at 12:46 pm
I expect Tesla to spin more models off of the sizing they already have, especially in niches where they can charge more for more reliable products. I’m thinking cargo van, police vehicles and taxicabs. For the volume city car, I expect their smallest chassis, with both ends cut off.
March 2nd, 2023 at 12:48 pm
1. My guess for the three missing models: Next gen model 3 hatchback variant (low cost compact), next gen model Y trucklet / offroad (Rivian competitor, under Cybertruck), a van (in the spirit of FSD, interior space to the max, with a delivery panel van variant). This means a platform for M3/Y/roadster/new hatchback/new trucklet, another for S/X/new van, a third for Cybertruck, and of course a fourth for Semi.
March 2nd, 2023 at 12:51 pm
#1. Amen on those X doors!
March 2nd, 2023 at 12:52 pm
@!, 3, 4: good portfolio additions, those make sense to me
March 2nd, 2023 at 12:58 pm
Not sure if it would be a stretch for Tesla but I wouldnt be surprised if they offered an Electric motorcycle or maybe a 3 wheeled type car. Why not when you already have the car, SUV, truck, Semi, and 2-seat sportscar segments covered. Plus they are very popular worldwide. I could also see a smaller truck like vehicle. Maybe unibody like the Chevy Montana. That would be a good addition to Tesla lineup and offer a vehicle that would have worldwide appeal.
F1 probably never will go electric. It will most likely be regulated out of existence or taken over by the Formula-E.
Its really cool to see that Tesla is improving the way it installs charging stations. Proves they are committed to continually improving their process and not just when it comes to auto manufacturing.
March 2nd, 2023 at 1:08 pm
@7 if they would leave the powertrain design up to the teams (full electric, hybrid or gasoline only) we could see what performs best.
March 2nd, 2023 at 1:09 pm
All one has to do is watch a Formula E race vs. a Formula i race to know electric isn’t going to replace it any time soon.
March 2nd, 2023 at 1:15 pm
3,4 Yeah, a delivery van would be good, and should be easy to do off the existing platforms.
For a smaller hatchback, they could chop off the ends, and cut out some of the middle. If they cut out 9 inches in the middle, the difference between the Model 3 and the Golf wheelbase, they’d lose some length for batteries, but should still be able to easily get 250 mile range.
March 2nd, 2023 at 1:42 pm
Since Tesla has already announced a “hot hatch” one for the Chinese market and another one for the European, the Cybertruck, Roadster and Plan #2 has called for a van that gives them 10 but it is about 10 so that could be 9 or 15 or in between?
March 2nd, 2023 at 1:52 pm
Since VW is dragging their feet, a Tesla version of a 1966 MicroBus would be perfect for me.
March 2nd, 2023 at 1:57 pm
@9 I have not done that, so I have no knowledge about Formula E. How would it be if they could swap batteries?
March 2nd, 2023 at 2:03 pm
Early in Formula E they would swap entire cars . Now they have to manage battery power to make it to the end of the race . So it is not unusual for many cars to runout on the final laps or basically ride around coasting to finish. Thrilling to watch. I haven’t seen a race in a year or more so I’m not sure if they found a way to improve that or not.
March 2nd, 2023 at 2:12 pm
13,14 I watched one race when they swapped cars, but haven’t watched since then. They now have 45 minute races, and get by, barely, on a full charge. When they swapped cars, they must have had a time allocation for the swap, and would wait in the pit until the time elapsed. Otherwise, the swap time would probably be the main thing that would determine the outcome of most races, given the importance of a few seconds lost in tire changing in most racing.
March 2nd, 2023 at 2:17 pm
12 C & D says the VW bus will arrive in 2024. We shall see. It seems to be at least as “late” as the Cybertruck.
https://www.caranddriver.com/volkswagen/id-buzz-microbus
March 2nd, 2023 at 2:34 pm
I think Tesla will make an electric version of the Zeal Motor Fat Truck and call it the Fat E and they won’t even have to change the way you drive it since it is currently controlled by a single joystick, which matches perfectly with electric drive. Excellent for going off-road and keeping it green! Can even be trailered behind a Cybertruck if that ever makes production.
March 2nd, 2023 at 4:12 pm
17 That skid steer would be easy with an EV, compared to how they do Fat Truck, probably with hydraulic motors controlled by electric valves of some sort.
March 2nd, 2023 at 5:03 pm
Like many have already said, I believe Tesla will build the coupe/convertible, the Model 2 and a mini van/delivery vehicle, like a number of the other start ups are doing! A delivery van, much like their semi, the customer base would not be as picky, but would be a solid repeat customer base, too.
With the leader of F1 saying ‘never’ to EVs and having a big following around the world (especially in Europe), the fact that some EU leaders are pushing back on the ICE ban by 2035, has got to be good news to them! With ICE motor sport pioneer a lot of passenger vehicle ICE development, the thought that if would end in little over a decade, might have be pretty frightening to them. I know that OEMs have been working with efuels and hydrogen, but there is no guarantee that these fuels would’ve been ready for prime time be then and then the questions would be: at what cost and does it have a viable future?
So ABTC just happens to have ‘stumbled’ on the largest lithium deposit in the US and it just so happens to be on property they already own??? Hmmm…I think the fix is in! So at a time when everyone is on the hunt for more rare earth metals, they just happen to find some on property they already own? They didn’t finding it on someone else’s property, convince them that their property was worthless and have them sell it to them for pennies on the dollar and then magically ‘find’ it on said property?
March 2nd, 2023 at 5:24 pm
#19.)…and regarding in vehicle subscription services, I would only be willing to pay for added services, not things that should standard with the vehicle. Music, heated seats and wheel steering have classically been features one buys or leases a vehicle with already and pay a subscription for. Not something that is in the vehicle’s software, that I have to pay them to turn on or off! If OEMs offered something like AAA’s roadside assistance, that could work. With so many potential buyers having range anxiety, perhaps an OEM can provide roadside assistance so that in the event they do run out of power, they’ll have service to them to boost their battery up, to get them on their way to the next closest recharging station. That would be a subscription service that I believe customers would pay for! Even if that didn’t use it, having the reassurance that if they ever run out of power, someone will be there at a short amount of time, to rescue them from this situation. While it would still require BEV owners to be vigilant and responsible with their vehicles, having that peace of mind could go a long way toward greater EV adoption. It would be like Hyundai/Kia’s and others in the past, with their 100K bumper-to-bumper warranty. While most would probably never use it, those few who did, while not happy to have had that experience, would love the fact that they had the subscription when they needed it!
March 2nd, 2023 at 5:28 pm
#19.) What happened? I had posted something number 18 and it vanished??? It was too much to retype and maybe it wasn’t interesting so it was cut! On well.
March 2nd, 2023 at 5:43 pm
Glad I’m not looking to buy a Tesla, because a moon roof (sun roof, as they called it) is an absolute must-have option for me. Except for when I’m on a phone call or don’t want to hear the person’s music driving next to me, I use mine almost religiously in +60degree weather.
No surprise that consumers reject the idea of automotive subscription services. Who wants extra stuff to pay for month after month? It’s bad enough that almost all software makers have moved to that model. Heck, I’m still using versions of Microsoft Word & Excel and AutoCAD drafting software that are 12+ years old, simply to avoid having to pay an annual subscription fee for the privilege of using the newest versions.
Lastly, I find it really hard to believe that most people surveyed by AutoList said they would not pay for heated seats. They must have not surveyed anyone up here in the snow belt. That’s another must-have feature for me.
March 2nd, 2023 at 6:35 pm
21 I have a sun/moon roof in one of my cars, and the only time I use it is in ~70-85 degree weather when driving in town with the driver’s window down. I pop up the roof at that back, and it prevents “buffeting.” Opening the right rear window in my Highlander about 1/3 of the way does the same thing, as does opening the right window of my Cayman or Corvette about 1/4 of the way. If I’m driving over about 45-50, I close the car up, and use HVAC to maintain comfort. I don’t like noise for the sake of noise, including what you get from open windows or sunroofs at high speed. It seems a lot of people do like noise, given the number of people I see driving at 85 mph on the interstate with windows open.
March 2nd, 2023 at 6:46 pm
21, I had a sunroof with my old S-10 that I would open with the sliding rear window at any speed, no buffeting, just fresh air. I live in Cleveland, leave for work at 5:30am and never felt the need for heated seats. Now, I’ve always had cloth seats and for the last 20 years my garage doesn’t go below 50. My extended cab pick-ups always heated up quickly so I’m not really cold on the way home either.
March 2nd, 2023 at 6:49 pm
23 I spent my first 55 years in Indiana and never saw much need for heated seats, until I got my GTI VR6 with leather seats. My earlier cars all had cloth seats.
March 2nd, 2023 at 7:01 pm
23, In the 90’s we had a full sized conversion van especially for traveling with our 3 teenagers. It had leather trimmed seats. We had to put a towel on the front seat bottoms so that they burn our bare thighs in the summer. I swore off of any leather after that.
March 2nd, 2023 at 8:17 pm
25 It’s hard to get cars any more without either leather or vinyl, but my lowest trim lever Highlander hybrid has cloth, which I like.
March 2nd, 2023 at 8:50 pm
26, I don’t understand why cloth is so had to get. The quality and longevity is so good now. The seats on my 12 yr old trucks have always been intact, coffee stained, but intact when I replace them.
March 2nd, 2023 at 9:03 pm
27 A friend has a cheap 2002 Pontiac Sunfire with 250K miles, and the cloth seats are still in good shape. It’s dark grey, so the coffee stains barely show. My Highlander has light grey cloth, so I need to be careful about spilling stuff.
March 3rd, 2023 at 5:33 am
Let’s try this again. With some leaders of the EU pushing back on the ICE set for 2035, I’m sure the leader of F1 can sound more convincing when he says ‘Never’ about the racing series going completely EV! With the racing series popular around the world, especially in Europe, and along with with the tech used in the series doing much to inform ICE development in passenger vehicles, that ban could eventually sound the death ring of the series. Even with efuels, there is no tells where it’s development with will be in a decade, its availability and at what cost! Having policy makers in the EU rethinking and pushing back their ICE ban time frame, may be a bit of a life line for the series.
ABTC just happens to fine the larges Lithium deposit on property they already own?!? As companies are scouring the world for rare earth metals, materials and minerals, they just ‘happen’ to fine a deposit on property they already own? Hopeful that does really mean that found a deposit on property owned privately, convinced the owns that they property was worthless and convince them to sell it for pennies on the dollar, then bang, look what we have here!
March 3rd, 2023 at 10:09 am
29 Regulations for road vehicle don’t have anything to do with F1 or any other racing series. F1 will do what it wants to, based on what seems best as time passes.
March 3rd, 2023 at 10:40 am
Just some more hot air coming from Elon Musk and the stock market knows it. They’ve been fooled too many times before.
March 3rd, 2023 at 10:45 am
30 No but if no one is using an ICE engine who is going to keep developing them? It could super expensive to build even a race engine when the foundries stop casting blocks and heads. Could be like the next chip shortage and will be limited manufacturers.
March 3rd, 2023 at 10:45 am
30 No but if no one is using an ICE engine who is going to keep developing them? It could super expensive to build even a race engine when the foundries stop casting blocks and heads. Could be like the next chip shortage and will be limited manufacturers.
March 3rd, 2023 at 11:13 am
32,33 F1 engines/hybrid power units have nothing in common with road car engines. For a start, the ICE runs at up to 15,000 rpm and uses pneumatic valve “springs.” If F1 remains popular, hundreds of millions of dollars will continue to be spent to produce whatever is needed to compete within the rules at the time.
March 3rd, 2023 at 12:36 pm
#24-#29 – I forgot about the fact that cloth seats make the cold temps much more bearable. I’ve been in leather seats for the past 19 years, which can be like sitting on a block of ice when you’re wearing jeans with no thermal long-johns underneath. But I do remember back when I had a car with velour seats that even when temps dipped down to zero, my seats were still kind to me.