Listen to “AD #3316 – Renault Could Sell Russian Ops for $0.01; U.S. Giving Dealers Tax Relief; GM and Ford Get Credit Upgrades” on Spreaker.
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Runtime: 10:00
0:10 GM Hints at European Return
0:53 $500 Million Worth of Luxury Cars Stuck in Belgium
1:29 Renault Could Sell Russian Ops for 1 Cent
2:05 U.S. Giving Dealers Tax Relief
3:26 GM & Ford Get Credit Upgrades
4:21 Top 10 Automakers in China
5:09 Mach-E Gets Towing, Charging Upgrades in Europe
6:38 Stellantis to Invest Nearly $3 Billion in Canada
7:03 Stellantis Doubles Down on Mobility Services
7:41 Raw Materials Aplenty for 14 Million EVs
8:25 Biden Admin Provides $3 Billion for EV Batteries
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GM DROPS HINTS ABOUT EUROPE–AGAIN
General Motors keeps dropping hints that it’s going to get back into the European market with electric cars. GM pretty much abandoned the EU when it sold Opel and Vauxhaull to Stellantis, though it continues to sell a few Camaros, Corvettes and Cadillacs in Europe. At the Milken Global Conference this week, which is a sort of Davos-like conference, CEO Mary Barra reiterated that GM plans to get back into the European market with EVs and with Cruise autonomous vehicles. Half a world away, in China, GM is creating a new brand to sell upscale vehicles, and that makes us wonder if it would use that same brand in Europe.
$500 MILLION WORTH OF LUXURY CARS STUCK IN BELGIUM
Speaking of Europe, the Wall Street Journal reports there are 8,000 Cadillacs, Mercedes-Benz’s and Lexus’s stuck in the port of Zeebrugge in Belgium. They were supposed to be shipped to Russia, but thanks to war sanctions, they can’t be shipped there. Now, no one is exactly sure who owns the cars, which collectively are worth about half a billion dollars. That will get resolved, of course, and they’ll get shipped to other markets. But this couldn’t come at a worse time for an industry that is super tight on inventory thanks to the chip shortage.
RENAULT TO SELL RUSSIAN OPS FOR ONE CENT
Along those lines, Renault is reportedly going to sell its Russian automotive operations to the Russian government for one ruble, or about one cent. They’re actually worth about $2.4 billion. But the deal supposedly allows Renault to buy it all back within 5 to 6 years. No doubt Renault is hoping that once the war in Ukraine is over and things simmer down it can go back to doing business in Russia. Either way, Renault only has two options: worse and worser.
CONGRESS TO GIVE CAR DEALERS TAX RELIEF
It’s easy to tell that this is an election year in the United States. There’s a bill in Congress getting strong bi-partisan support that will protect car dealers from higher tax bills. Remember, car dealers are enjoying the biggest profits they’ve ever seen because tight inventory sent car prices sky high. Most dealers are charging prices above MSRP and have doubled their profits. Many have even tripled them. Several of the Congressmen supporting the bill own car dealerships, or have family members who do. It sure is good to see that politicians from both parties can leap into action and eliminate legislative gridlock whenever they want to, he said sarcastically.
GM & FORD GET CREDIT UPGRADES
Good news for General Motors and Ford. Their debt ratings were raised from stable to positive. GM was upgraded to a BBB- rating and Ford got BB+. Fitch Ratings raised their ratings because it said both companies have improved their core operations and profitability. Even though you can find a number of YouTube videos saying GM and Ford will go out of business because they are getting crushed by their debt load, those analyses seem to ignore the fact that GM and Ford have large captive finance companies that borrow billions from institutional banks and then mark it up to lend it to car dealers and customers so they can buy cars. Last year GM Finance made a net profit of $1.2 billion on its debt, while Ford Credit made a profit of $4.5 billion on all the money that it borrowed.
TOP 10 AUTOMAKERS IN CHINA
We’ve got the latest sales results in China. Here’s a list of the Top 10 brands from March. Volkswagen topped the list with nearly 140,000 registrations, followed by Toyota. Honda and BYD are pretty much neck and neck in the 3rd and 4th positions, respectively. And then there’s a bit of a drop off to Wuling which registered nearly 83,000 vehicles. In sixth place is Tesla, which was the only American brand, as well as the only foreign brand to record a year-over-year growth in registrations. Changan is next with more than 54,000 registrations. And Nissan, Geely and Mercedes round out the top 10, with only a few thousand vehicles separating them.
MACH-E GETS TOWING, CHARGING UPGRADES
EV owners want to be able do the same things they do in their ICE cars, so Ford is giving Mach-E owners in Europe more capability. Towing capacity for extended range models in either rear- or all-wheel drive has been increased to 1,000 kilograms or about 2,200 pounds. Charging time going from 80% to 90% is also down to 15 minutes, a reduction of 37 minutes. The improvements will be made to all Mach-E’s for Europe, so we expect that to be applied in the U.S. and other markets as well. Ford says existing owners can get the same benefits through software and homologation updates. We think the homologation update applies to a hardware upgrade to get the increased towing capacity, but we’ve reached out to Ford for clarification. And we’ll provide an update when we get one.
STELLANTIS TO INVEST $3 BILLION IN CANADA
Now we shift to Canada where Stellantis announced it’s going to invest nearly $3 billion to upgrade its assembly plants in Windsor and Brampton as well as expand its R&D Center. The investment will allow those plants to build electrified vehicles and at least one all-new EV. The R&D Center will be used to house Stellantis’ first battery lab in North America.
STELLANTIS DOUBLES DOWN ON MOBILITY SERVICES
And speaking of Stellantis, it’s putting its money where it’s mouth is when it comes to providing mobility services. Its mobility company, called Free2Move, just bought the mobility company Share Now from BMW and Mercedes. Share Now was actually a mashup of Daimler’s car2go and BMW’s DriveNow. It operates in 14 European cities, has roughly 1.4 million customers and 10,000 vehicles in its fleet. That all gets added to Free2Move, which operates in Europe as well as the U.S.
RAW MATERIALS APLENTY FOR 14 MILLION EVS
Every time you turn around there’s someone warning that there isn’t enough raw materials to make batteries for EVs. But the European climate group, Transport & Environment, says there’s at least enough lithium and nickel to make up to 14 million EVs globally in 2023. The good news is that’s more than enough to cover the 9 million sales of EVs that LMC Automotive is forecasting for then. But with increased mining in the U.S. and China, and with rising material costs and more vehicles hitting the market, Transport & Environment is calling on Europe to make sure it gets the raw materials it needs so it can quickly reduce its reliance on oil.
BIDEN ADMIN PROVIDES $3 BILLION FOR EV BATTERIES
Over in the U.S. the Biden Administration announced that a good chunk of its trillion dollar infrastructure bill will go towards EV battery manufacturing in the U.S. It’s providing $3 billion to upgrade and build new battery factories as well as build recycling facilities for those batteries. The Administration’s goal is that half of all new vehicles sold by 2030 will be electric.
WILL ENOUGH AMERICANS BUY EVS?
All this talk about the transition to electric vehicles is fine and good, but are enough people really going to buy them? Market research from Escalent shows that about 40% of Americans do not believe in climate change, they think electric cars are stupid, and they say that the government is trying to shove EVs down their throat. You can have their piston powered cars when you peel their cold, dead fingers off them. So I ask again. Are enough people going to buy EVs? That’s the topic coming up this Thursday on Autoline After Hours. So join John and Gary for some of the best insights into what’s really going on in the automotive industry.
And that wraps up today’s report, thanks for watching.
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Seamus and Sean McElroy cover the latest news in the automotive industry for Autoline Daily.