AD #3872 – Jeep Re-Prices As Sales Drop; Traffic Fatalities Up, Even With All That ADAS; Lack of Hybrid Hurts Nissan Rogue

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

OIL SUPPLY COULD TURN TO A GLUT
Could we be headed into an oil glut? The oil industry is sure worried about it. The IEA, or International Energy Agency, says there will be a surplus of oil later this year if OPEC goes ahead with planned production increases. And the main cause is a drop in demand because of the slowdown in the Chinese economy. China is now the world’s largest importer of oil. Crude oil prices are now down 12% this year, even though a war involving Iran could break out in the Middle East. One thing’s for sure. While the oil industry is worried about a glut, motorists at the pump will rejoice if it brings down prices.

NHTSA CLOSES TESLA INVESTIGATION
Do you remember those reports about front suspension failures on Tesla Model Xs and Model Ss? NHTSA, the National Highway Traffic Safety Administration, launched a preliminary investigation into the defect because it could potentially be a safety problem. But yesterday, the agency closed that investigation, saying the defect never prevented drivers from being able to control their vehicles. So it wasn’t a safety defect.

NHTSA CLOSES TOYOTA INVESTIGATION
It also closed down an investigation into lead acid battery fires in Toyota RAV-4s. The batteries supposedly shorted out when they came in contact with the hold-down frame that keeps the battery in place. But NHTSA found that fires were caused by aftermarket batteries that were too big, or from old batteries that exceeded their expected life. So, again, no defect.

TRAFFIC FATALITIES UP, EVEN WITH ALL THAT ADAS
We point to these cases because maybe it’s time for the agency to re-evaluate its priorities and strategy. Despite all kinds of safety equipment mandated on cars, the number of fatalities and the fatality rate involving motor vehicles is trending up. The fatality rate, which measures the number of people killed in vehicle accidents for every 100 million miles driven, peaked in the early 1970s and started a long-term trend downwards. It bottomed out around 2011, which is the year that electronic stability control was made standard, and then it started trending upwards. Since then we’ve seen blind spot detection, lane keeping, automated emergency braking, and other ADAS tech added to cars. And yet the number of people killed and the fatality rate are going up. The fatality rate is the most important to watch because it accounts for any increase in the number of drivers and vehicles. No one seems to know for sure why the rate is going up, but we strongly suspect that driver distraction is a major culprit. And that’s why NHTSA should re-evaluate what it should be doing. we think it’s to put a major effort into mandating V2V technology which can make it almost impossible for cars to crash into each other.

U.S. USED CAR PRICES FALLING
Good news for buyers looking for a used car, prices continue to decline. According to Edmunds, used car prices in the second quarter dipped nearly 7% to about $27,400 on average compared to last year. But used EV prices are coming down even faster with values plunging 20.5% in Q2 to about $33,800. Edmunds says used EV prices are falling faster because automakers are cutting prices and boosting incentives to increase sales of new EVs which have cooled off. And because of that it’s hurting owners looking to trade-in or sell their used EV.

EU RESIDUAL VALUES DROPPING
And over in Europe low EV resale values are hurting leasing companies. According to data from Autovista, resale values for BEVs in Germany are 24% below pre-pandemic levels and 30% lower in the UK. Meanwhile, used ICE vehicles only saw values drop 15% in both markets. As a result, Hertz says it lost $150 million selling close to 20,000 BEVs and rental company Sixt says lower residual BEV values cut its 2023 earnings by $44 million. And leasing companies have been forced to raise costs for customers. According to the Center for Automotive Research, in August of 2021, a lease for a €45,000 EV cost €284 a month but now that’s more than doubled to €621 a month. So, leasing companies are calling on governments to slow the transition to EVs until car buyers are more accepting of them.

HOW TO COMPETE WITH CHINA ON AAH TODAY
Alix Partners found that Chinese automakers and suppliers have a 35% cost advantage compared to everyone else. That’s a key reason why Chinese vehicle exports are booming. But it goes beyond exports. The Chinese auto industry is building factories around the world and could take over one-third of the global market by the end of the decade. If you’re a legacy automaker or supplier, how do you compete with that? Tune in to Autoline After Hours this afternoon, when we’ll have Mark Wakefield from Alix Partners on the show. Keith Naughton from Bloomberg will also join us. But we’re not going to get into a lot of hand wringing. We’re going to be talking about solutions and strategies. And we’re going to turn Autoline After Hours into a forum on how to compete.

POLESTAR STARTS U.S. ASSEMBLY
Polestar is producing vehicles in the U.S. for the first time. It started production of the Polestar 3 SUV in South Carolina at a plant it shares with Volvo. And it will also export them to Europe to avoid the EU’s new tariff on Chinese made EVs. Up to now, Polestars were made in China. Next year, Polestar will continue to expand its manufacturing footprint outside of China. The Polestar 4 will actually be made in South Korea.

POLESTAR TO INCREASE U.S. DEALERS BY 75%
Besides making cars in the U.S., Polestar is planning to expand its retail network, by adding 20 more stores to its 27-dealer network in the U.S. by the end of 2025. That’s a 75% increase. Currently, it only sells the Polestar 2 in the U.S., which saw a 41% slump in sales in the first half of the year. But with Polestar 3 sales beginning this month and the Polestar 4 entering the market at the end of this year, Polestar says it’s ready to expand its sales network.

JEEP RE-PRICES AS SALES DROP
Jeep sales in the U.S. market are going from bad to worse. They fell 19% in the second quarter. And Jeep knows what one of its biggest problems are. Its products are just too expensive. So it’s starting to re-price its line-up starting with the 2025 Compass. The base price of a Compass Sport is now $27,495 including destination. That’s about $2,500 cheaper than it was before. That includes all wheel drive and a new interior. The Latitude model gets a $3,725 haircut and now starts at just under $30,000. It also gets heated seats, a heated steering wheel and remote start as standard equipment. We expect to see Jeep re-price more of its vehicles. Sales have fallen sharply across the line except for the Wagoneer and Grand Wagoneer.

LACK OF HYBRID HURTS NISSAN ROGUE
Nissan is really struggling in the U.S. market. The Rogue is one of the most important vehicles in its lineup, accounting for a third of its sales and half of the production at its plant in Tennessee. But despite updating the model earlier this year, sales of the Rogue fell 4.5% in the first half. But more alarmingly, the decline accelerated in the second quarter, with sales slumping 29% to just over 50,000 units. Meanwhile, its competitors, the Toyota RAV-4 and the Honda CR-V saw first half sales increase 33% and 20% respectively. The lack of a hybrid option is a big reason why the Rogue is losing ground to those models. Hybrid versions of the RAV-4 outsold the Rogue by 25% and Edmunds estimates that the CR-V hybrid nearly matched the Rogue in Q2 sales.

EV BATTERY MAKERS TURN TO STORAGE
What do you do if you’re a battery maker and suddenly realize that EV demand is not as high as you thought it would be? Why, you look for new markets that need your batteries, that’s what you do. And that’s exactly what’s happening. Bloomberg reports that battery makers are turning to the stationary storage market, where utilities, commercial businesses and even homes use batteries to store electricity for later use. In fact, in China, the market for storage batteries is now bigger than the one for consumer electronics. Tesla is seeing a big jump in its battery storage business even as its car sales drop. Like the old saying goes, as one door slams shut, another one pops open.

And that brings us to the end of today’s report, thanks for watching, and if you haven’t done so already, please subscribe to this channel. Thanks.