AD #2631 – Ford & VW Partner on EVs and AVs, Daimler Once Again Cuts Profit Forecast, Industry Upheaval Underway

This is Autoline Daily reporting on the global automotive industry.

FORD TO USE VW’S MEB PLATFORM
In a very significant development for the automotive industry, Ford and Volkswagen are linking arms to develop electric and autonomous cars together. Ford will use Volkswagen’s MEB platform to develop electric cars but only for the European market–at least for now. In fact, VW will supply parts and components to Ford, while Ford will design its own tophat and interior. It will be built at one of Ford’s assembly plants, probably in Germany, which is where it will be designed and engineered. The car is slated to debut in 2023 and Ford expects to sell 600,000 of them over 6 years. Both companies are already negotiating to do a second car. Jim Farley told Autoline in a telephone interview that Ford will continue to develop its own EV-exclusive platform for North America because it can get enough manufacturing scale with it. But Ford could not get enough scale in Europe, so it wanted the partnership, which will also help VW lower the cost of making its electric cars.

VW INVESTS BILLIONS IN ARGO AI
Meanwhile Volkswagen is going to invest the equivalent of $2.6 billion in Argo AI, which is based in Pittsburgh. Ford already invested $1 billion in Argo to develop autonomous technology and both automakers will now be equal owners in the startup. These investments give Argo a theoretical market valuation of $7 billion. While VW and Ford will jointly develop AV technology with Argo, they will compete directly against each other in the marketplace when it comes to mobility services, like ride hailing and package delivery.

INDUSTRY UPHEAVAL UNDERWAY
So what does all this mean? Here’s our Autoline Insight. For several years, we’ve been warning that the auto industry is about to go through massive upheaval driven by electrification and especially autonomous technology. Now it’s starting to happen. Look at the alignment between GM and Honda, BMW and Daimler, and Ford and VW. It explains why FCA wants to become part of the Renault-Nissan-Mitsubishi alliance. Even suppliers are restructuring their companies and spinning off business units they no longer want. This is just the tip of the iceberg. Soon there will be a rush for the door. And in a decade, this industry is going to look very different than it does today.

CHINA PROPOSES TO RECLASSIFY HYBRID VEHICLES
Could this be a sign that China is worried about its head-long rush into electric cars? Up to now, it classified hybrids in the same category as gasoline and diesel-powered vehicles. Under Chinese regulations they actually generated negative credits for the New Energy Vehicle, or NEV, program. Under a draft proposal, China is considering reclassifying hybrids so automakers would get hit with less negative points than pure-ICE vehicles. This would be a huge help to Toyota and Honda, which sell a lot of hybrids. But it may also show that China is worried that EV adoption may not come fast enough to reduce pollution in its cities, and so it’s giving hybrids a bit of a break.

HARLEY LIVEWIRE OWNERS GET FREE CHARGING
Harley-Davidson’s first electric motorcycle called the LiveWire is no cheap bike at nearly $30,000, but at least customers will be getting free charging. Harley has teamed with Electrify America to offer anyone that buys the electric bike between August of this year to July of 2021 500 kWh of charging over 2 years. That works out to roughly 32 recharges or about 3,000 miles of seat time. I think the average motorcycle rider is much more likely to go on some sort of road trip than an EV owner, so this could be a decent incentive. But with other options like the ZERO electric motorcycles that range from about $11,000 to $20,000, the savings would pay for a lot of charging.

DAIMLER ONCE AGAIN CUTS PROFIT FORECAST
At the end of June, Daimler cut its profit forecast due to fines related to diesel emission violations. And now just a few weeks later, it’s once again warning about its profits, the fourth time in the last 13 months. Daimler says it lost 1.6 billion euros in the second quarter, compared to a profit of 2.6 billion euros last year. In addition to the diesel issues, the company cut its outlook because it set aside another billion euros to handle the Takata airbag recall. Daimler says it discovered new issues with airbags in lab tests and decided to set aside the money as a precaution. It’s been a rocky start for new CEO Ola Kallenius, who took over that position in May from Dieter Zetsche. All we can say is, it looks like Zetsche got out while the gettin’ was good.

TOYOTA NEEDS WORKERS TO BUILD THE HIGHLANDER
Toyota is pouring over $600 million to expand production of the Highlander at its plant in Princeton, Indiana. And the company is looking to hire 400 qualified assembly workers to help build the SUV. It’s encouraging women to join its workforce and says employees will be eligible for on-site childcare support, tuition reimbursement for continuing education, plus other benefits. But this shows how hard it is to get people to come into plants for a good paying job. They’re practically begging workers to come in.

But that wraps up today’s report, thanks for watching and have a great weekend.