Scrapped hybrids, dropping NEV sales in China, and some backtracking on big vehicles. All this and more in The Morning Shift for Monday, August 12, 2019.
1st Gear: GM And Volkswagen Are Scrapping Hybrids
As automakers around the globe lean on hybrids as a way to enable compliance with fuel consumption and emissions standards, two of the world’s leading manufacturers have decided to completely scrap that genre of vehicle from their lineup. General Motors and Volkswagen aren’t here to play: they’re going fully electric.
That’s right. The future is electric, baby.
From The Wall Street Journal:
GM plans to launch 20 fully electric vehicles world-wide in the next four years, including plug-in models in the U.S. for the Chevy and Cadillac brands. Volkswagen also has committed billions to producing more battery-powered models, including introducing a small plug-in SUV in the U.S. next year and an electric version of its minibus around 2022.
“If I had a dollar more to invest, would I spend it on a hybrid? Or would I spend it on the answer that we all know is going to happen, and get there faster and better than anybody else?” GM President Mark Reuss said in an interview.
That’s a big contrast to, say, Ford and Toyota, who both plan to expand their hybrid offerings while still building a fleet of EVs. Essentially, it’s an in-between stage for those marques while the industry moves from ICE to electric—a way to keep all their eggs from being in one basket.
More from WSJ:
Auto companies are spending $255 billion to develop more than 200 new plug-in vehicles through 2023, a figure that doesn’t include hybrids, consulting firm AlixPartners estimates. But predictions vary on how soon electrics will go mainstream.
For now, both hybrids and electric cars are more expensive to produce than comparable gas-powered vehicles. A hybrid system can add roughly $2,000 to a vehicle’s cost, while a fully electric version is an additional $6,000 to $10,000, said Alan Baum, an independent Detroit-area auto analyst.
It’s a bold strategy from GM and VW—it’ll be fascinating to see it play out in real time.
2nd Gear: New-Energy Vehicle Sales Drop In China
It’s been a good couple of years for NEVs in China—but after a pretty steady rise, it’s finally time for the fall, according to Reuters.
Here’s more from the article:
Sales of new energy vehicles (NEVs) in China fell 4.7% in July from a year earlier, the first drop in more that two years, data from the country’s biggest auto industry association showed
NEV sales fell to 80,000 units last month in China. That compared with a growth of 80% in NEV sales in June. Overall auto sales in the world’s biggest vehicle market fell 4.3% in July, down for a 13th consecutive month, the China Association of Automobile Manufacturers (CAAM) said on Monday.
That followed declines of 9.6% in June and 16.4% in May, as well as the first annual contraction last year since the 1990s against a backdrop of slowing economic growth and a crippling trade war with the United States.
CAAM had forecasted China’s auto sales to drop five percent, to 26.68 million vehicles this year. But it’s something of a downer to see NEV sales also impacted, given that China has been such a driving force in electric department.
According to Chen Shihua, the assistant secretary general at the CAAM, this drop corresponds to a change in policies. New NEV emission standards were implemented earlier than the 2020 deadline imposed by the government. The fifteen cities and provinces that made the change account for 60 percent of car sales in all of China—which has been pretty discouraging for potential buyers.
3rd: Nissan Isn’t Going To Battle Detroit’s Pickups
It’s always going to be a tough time trying to come between Detroit and its pickup trucks—but for about twenty years, Nissan has been trying to do just that. Well, until now, that is. The automaker will be stepping back from the challenge, as per Automotive News.
Here’s more from the article:
Nissan told its U.S. dealers last week that it will discontinue sales of the Cummins diesel engine Titan XD and also jettison certain other Titan configurations, including its single-cab models.
The moves are minor plays within the segment for Nissan. But they are symbolic. Nissan trumpeted the arrival of the Cummins V-8 diesel Titan in late 2015, making it the emblem of the brand’s second attempt to shoe-horn its way into the competitive full-size pickup market.
This is obviously a huge move for Nissan, considering truck sales have still been booming in the US, with The Big Three committing to manufacture even more trucks. You have to be really be struggling to take that large of a step back.
Here are some more harrowing numbers from Auto News:
For the first six months of this year, the Titan mustered just a 1.5 percent share of the full-size pickup segment, with sales of 18,026. That was a decline of 23 percent from a year ago.
Nissan’s walk-back underscores the powerful hold that Detroit’s brands have on the pickup segment. Ford, for instance, sold 448,398 full-size pickups through June.
It’s an unfortunately smart move for Nissan to pull back—but man, it must really sting.
4th: GM Might Be Scrapping Its Jeep And Bronco Rival
Rumor has it that GM might have nixed previous plans to develop a body-on-frame SUV that would have competed with the Jeep Wrangler Unlimited and Ford Bronco, Automotive News reports.
Here’s more from the article:
With more Americans embracing light trucks, forecasters LMC Automotive and AutoPacific say GM was developing a body-on-frame SUV for the North American market. But late last year, GM canceled the plans, according to Muscle Cars and Trucks.
GM won’t comment or speculate on future products. But the vehicle was still in LMC Automotive’s forecast — as the GMC Envoy — as recently as May. LMC had expected the SUV to be assembled at GM’s Wentzville, Mo., plant, where the midsize Chevrolet Colorado and GMC Canyon are built. Output would have started in 2022 and ended in 2028, with about 80,000 vehicles per year, LMC estimated.
We’re operating well within the realm of speculation here, but the rumors still would make some sense. Jeff Schuster, president of global forecasting at LMC, noted that, “If it was canceled, it may speak to the cost pressure automakers are under and the proliferation of the SUV/CUV body style.”
But why cancel those plans if the market could probably still absorb another SUV? Automotive News has the speculation:
The plans were reportedly canceled in November when GM hatched a restructuring that included slashing 15 percent of 54,000 North American jobs and ending output at five North American plants.
Muscle Cars and Trucks reported that the restructuring also led to the cancellation, restart or delay of several vehicle programs, such as the sixth-generation Chevrolet Camaro Z/28 and GM’s 32XX midsize pickups.
5th: Daimler Facing One Billion Euro Diesel Fines
Is it possible to make it through a few months without an automaker trying to cheat the system? Sources say “no,” because Mercedes-Benz parent Daimler is facing a fine of anywhere from 800 million euros to one billion euros for diesel violations.
Here’s more from Reuters:
German motor vehicle authority KBA had discovered cheating software fitted to Mercedes-Benz C-Class and E-Class vehicles and ordered the carmaker to recall 280,000 vehicles, Spiegel said.
A fine of up to 5,000 euros per vehicle is being considered by the Stuttgart prosecutor, the magazine said.
The investigation is currently ongoing and likely won’t be wrapped up before the end of the year. But given the fact that Daimler has been at the helm of several other investigations in both Germany and the United States, it seems likely that the automaker is not going to come out of this one unscathed.
Reverse: Great Train Robber Escapes From Jail
Neutral: Are GM And VW Making The Right Choice?
Are you ready to move fully into the EV world, or would you rather make a slower transition with a hybrid?