Listen to “AD #2890 – U.S. Sales May Never Recover; Mercedes Picks CATL's Cell-to-Pack Batteries; Cheap Cars Disappearing” on Spreaker.
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Runtime: 11:47
0:07 U.S. Sales May Never Recover
1:29 Chinese EV Startups Turn to U.S. to Raise Money
2:27 Toyota Manages to Turn a Profit
3:54 Mercedes to Use CATL’s Cell-to-Pack Battery Design
4:39 Electric Semi Trailer Coming Out
5:14 SEMA Cancels In-Person Show
5:28 Cheap Cars Disappearing
6:43 Audi Reveals More Powerful Vehicle Dynamics Computer
8:08 Audi Board Member Indicted for Diesel Cheating Roles
8:34 FCA to Recall a Million Vehicles for Exceeding Emissions
9:06 New 4-Cylinder Greatly Improves the G80’s Fuel Economy
10:13 Do Vehicles Look Better w/ Raised White Letter Tires?
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U.S. SALES MAY NEVER RECOVER FROM PANDEMIC
Car sales in the U.S. market will not recover from the pandemic for at least 5 years. In fact, they may never recover. That’s the prediction from analyst Rod Lache of Wolfe Investment. He says that 10% to 20% of the workforce will continue to work from home after the pandemic is over, compared to pre-Covid levels of 4%. And 34% of all vehicle miles travelled comes from people commuting to and from work. Those people will be putting far fewer miles on their cars, meaning they can keep them longer. And multi car households may decide to get rid of a car. Rod Lache also noted the upsurge in e-commerce as more people shop from home instead of going to stores. He says that for every 1% gain in e-commerce, vehicle miles travelled drops 2%. He forecasts that the SAAR will not go over 15 million units a year for the next 5 years. That’s down by 2 million units from pre-Covid levels. Rod Lache was a panelist at the Management Briefing Seminars and you can find our coverage at our website. Just look for the section titled “Autoline On The Road” or on our YouTube channel.
CHINESE STARTUPS TURN TO WALL STREET TO RAISE CASH
Relations between the U.S. and China are pretty rocky right now. But that isn’t stopping Chinese EV startups from rushing to Wall Street to raise capital. Chinese auto expert Michael Dunne points out that a startup called Li Auto pulled in $1 billion from an IPO on the Nasdaq exchange. Shares shot up 50% on the first day of trading. Kandi Technologies, which wants to sell cheap commuter cars in Texas, saw its shares triple in day one. And Xpeng, another startup, raised $800 million. Interestingly, 75% of the people buying their stock are from China. Mike Dunne says these startups face a cash shortage, so they’re desperate to raise money. And investors have been gripped by FOMO, the fear of missing out. They’re all hoping that one of these startups turns out to be the next Tesla.
TOYOTA MANAGES TO TURN A PROFIT
Toyota reported its earnings for the most recent quarter and while the numbers aren’t great, they beat analyst expectations. Its car sales dropped by 50% which led to a 40% decline in revenue. But the company posted a surprise operating and net profit for the quarter when most analysts were predicting a loss. Looking ahead, Toyota is keeping its full-year outlook intact and one analyst said the company should return to normal by the fourth quarter. Automakers have reported billions in losses due to the pandemic but Toyota’s profit shows just how good it is at keeping its costs under control.
| Toyota Q1 TY 2021 | ||
|---|---|---|
| Sales | 1,158,000 | -50% |
| Revenue | $42.6 Billion | -40% |
| Operating Profit | $129 Million | -98% |
| Net Profit | $1.5 Billion | 74% |
MERCEDES WILL USES CATL’S CELL-TO-PACK BATTERY DESIGN
Last month, Mercedes-Benz CEO Ola Kallenius revealed that its upcoming all-electric sedan, the EQS, which goes on sale next year, will have a range of 700 kilometers or about 435 miles based on the WLTP test cycle. And now the automaker has announced that the batteries for the EV will be supplied by Chinese battery maker CATL. The batteries will feature CATL’s cell-to-pack design which gets rid of conventional modules and integrates the cells directly into the battery. The two companies also announced they’re collaborating next-gen batteries that will be used in Mercedes passenger cars and vans within the next few years.
ELECTRIC SEMI TRAILER COMING OUT
And speaking of CATL, it’s developing a battery system for electrified trailers, which is a semi-trailer with an integrated electric drive unit and energy storage, to electrify long-haul trucks. The batteries will be used by Germany’s Trailer Dynamics and the trailers will go into operation in 2023. The lithium iron phosphate batteries will be liquid cooled, have a capacity of 300 kWh, and feature CATL’s previously mentioned cell-to-pack design.
SEMA CANCELS IN-PERSON SHOW
Just a week after CES announced it’s canceling next January’s in-person show, SEMA announced this November’s event in Las Vegas will not take place. Organizers say they’re considering doing the event online instead.
CHEAP CARS DISAPPEARING
Entry level vehicles are now an endangered species in the U.S. The Mazda 2, Honda Fit, Chevy Sonic, Toyota Yaris and Ford Fiesta to name a few, have been or will be discontinued. But it’s easy to see why automakers are abandoning the segment. According to Kelley Blue Book, new vehicles that cost under $20,000 account for just 1.3% of sales this year. New vehicles in the $20,000 to $30,000, only account for 22% of sales, down from 44%. On top of that, profit margins are low for entry level vehicles, which makes it harder to justify investment in the segment. With new vehicles costing an average of $39,000 according to KBB, if you want an affordable car, you’re going to have to head to the used lot.
AUDI ANNOUNCES MORE CAPABLE VEHICLE DYNAMICS COMPUTER
Last month the Volkswagen Group announced it’s developing a new electronic architecture for its vehicles that will first debut in an Audi and it looks like we’re learning more about that system. Audi revealed it’s coming out with a more powerful vehicle dynamics computer that’s capable of integrating more components together. Its current system looks at powertrain and chassis data from about components to create a greater spread between ride comfort and sportiness. For example, when the driver selects a sporty drive mode, the chassis control system will raise the outside suspension in a corner to reduce body roll. The new system, on the other hand, will be able to operate about 10-times faster than the current system and integrate up to 90 different components. And it’s not just looking to improve the difference between ride comfort and performance, efficiency will be another area of focus. By integrating the brake control system into vehicle dynamics, Audi can adjust how much or how little regenerative braking it wants in an EV, for example. That will impact an EVs range and thus how efficient it is. There’s no word on when we’ll see this new vehicle dynamics computer, but we’re guessing it comes out “in a few years” with the VW Group’s new electronic architecture.
AUDI BOARD MEMBERS INDICTED FOR THEIR ROLE IN DIESEL CHEATING
In other Audi news, prosecutors in Germany indicted four more Audi managers for their role in VW’s diesel cheating scandal. They’re accused of fraud, false certification and criminal advertising and what’s significant about this new indictment is that three of the four people are high-ranking former board members. It’s about time that these higher-ranking officials see their day in court.
FCA TO RECALL A MILLION VEHICLES FOR EXCEEDING EMISSIONS
Looks like FCA is facing more issues related to emissions. The automaker is working with the EPA to recall about a million vehicles with its 2.4L Tigershark engine that exceed in-use emission requirements. FCA said it found the issue during internal testing and is trying to come up with a repair. It’s not know what vehicles and model years will be recalled yet, but that engine is used in a number of Jeep’s SUVs as well as the Dodge Dart and Chrysler 300.
NEW 4-CYLINDER GREATLY IMPROVES THE G80’S FUEL ECONOMY
There was a time, not all that long ago, when a 4-cylinder engine in a top of the line luxury car would’ve been considered declassé. Not any more, and the Genesis G80 luxury sedan is the latest to debut with a 2.5 liter turbo four. But it’s numbers are impressive. 304 horsepower and 311 pound feet of torque. Autoblog reports the rear drive version delivers 26 miles to the gallon, combined, compared to 21 mpgs for the naturally aspirated V6 it replaces. By the way, we’re going to have Mark Del Rosso, the head of Genesis in the U.S., on Autoline After Hours this afternoon. If you’ve got questions you’d like to ask him, send an email to viewermail@autoline.tv, or tweet us @Autoline. Keith Naughton from Bloomberg will also be on the show, and we’ll get into why Ford decided now is the time to make Jim Farley the CEO. So join John and Gary for some of the best insights into the automotive industry.
DO VEHICLES LOOK BETTER WITH RAISED WHITE LETTER TIRES?
A buddy of mine had something happen to him and I’m wondering if anyone’s experienced the same thing? He got a flat tire on his truck and had all four of them replaced. But when he went to pick the truck back up, the tire place had put the raised white letter side of the tires on the outside, even though my buddy did not ask for this. He was a little miffed but decided to keep them as-is. This is where it gets interesting. My buddy is getting more compliments about his truck from strangers than he ever has before. And let’s be clear, the tires are exactly the same brand and size. The only difference is the raised white letters. Has anyone had the same thing happen to them? I’m curious to know. But of course, some vehicles just look better with raised white letter tires than others. A couple of us here have seen a few new Mustangs with the tires and we think it actually looks really good. I also think the Chevy Monte Carlo SS from the early- to mid-2000’s looked better than stock with raised white letters. Let us know what other vehicle you think looks good with the setup.
But that brings us to the end of today’s show, thank you for watching.
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John McElroy is an influential thought leader in the automotive industry. He is a journalist, lecturer, commentator and entrepreneur. He created “Autoline Daily,” the first industry webcast of industry news and analysis.
