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

This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.

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.