Good morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important auto-related stories to read in our final hours together.
1st Gear: All Volvos Will Be Hybrid Or Electric After 2019
Over the past few years, Volvo has been pushing electrified powertrains hard, with both of the brand’s SUVS—the XC60 and XC90—and its flagship sedan—the S90—getting plug-in hybrid variants. Plus, last month, the brand told the world it was turning its performance division, Polestar, into its own electric sports car brand.
Between that, and the company’s website asserting that “The Future Is Electric,” it’s been pretty clear over the past few years that Volvo was going all-in on this whole electrification thing. So it’s not surprising that Volvo announced today that all of its models starting in 2019 will be electrified. The brand said in its press release “This announcement marks the end of the solely combustion engine-powered car.”
Note the term “solely,” which is there to clarify that this doesn’t mean all Volvos will be fully electric; instead, it just means that all Volvos after 2019 will be either gas or diesel hybrids (mild or plug-in), or fully electric models. Speaking of fully electric models, Volvo said in a press release that it has some coming down the pipeline:
[Volvo Cars] will launch five fully electric cars between 2019 and 2021, three of which will be Volvo models and two of which will be high performance electrified cars from Polestar, Volvo Cars’ performance car arm. Full details of these models will be announced at a later date....
The Swedish EVs are coming in hot.
2nd Gear: June Sales Numbers Aren’t So Hot For The Big Three
Digging into the numbers a bit further, the news site points out that U.S. automakers have been having the toughest time, with GM sales dropping 4.7 percent, Ford sales lowering by 5.1 percent, and Fiat Chrysler sales down by 7.4 percent compared to June of last year.
Ironically, Automotive News says The Big Three sales decline resulted not only from lower fleet sales, but also from decreased demand for small cars. Meanwhile, Toyota, Nissan and Honda saw slight increases thanks—in part—to record truck sales.
Is the sky falling? Automotive News quotes Edmunds.com analyst Jessica Caldwell who points out that even though sales are down for June compared with last year it’s worth noting that “June is sandwiched between two major holiday sales events, which makes it a bit of a gloomy month historically.”
Automotive News also quotes a report by Morgan Stanley analyst Adam Jonas, who describes the state of auto sales as a “gradual erosion” thanks to a healthy Seasonally Adjusted Annual Sales Rate and steady monthly volume declines, saying:
The debate at this point is not whether or not the cycle will get worse, but rather if the cycle will be more of a gradual erosion, or if the cycle is in imminent danger....Datapoints indicate more of a steady erosion within the deeper part of the U.S. auto cycle, with the industry still solid on an absolute basis. U.S. volumes will likely remain elevated, supported by [automaker’s] incentives, and auto financing is still healthy.”
So yes, sales are down. But it’s probably not time to panic. Yet.
3rd Gear: Autonomous Vehicles Make Sense Even In Warehouses
When we hear the term “autonomous vehicle,” most of us think about personal or shared cars that drive on public streets. But some of the most practical—and perhaps most easily implemented—applications of self-driving vehicle tech involves vehicles much less sexy than Teslas. While we’ve heard about self-driving mail carriers and autonomous 18-wheelers, one company in Spain is focusing on self-driving forklifts and other factory equipment.
Aeronautical engineer Veronica Pascual owns Asti, a Spanish company that designs unmanned automated guided vehicles, which aim to increase warehouse efficiency. In its story on the company, Bloomberg says that the recent trend towards further factory automation means Pascual’s business offers autonomous forklifts, pallet trucks and stackers that can move everything from food boxes and 30 ton airplane parts.
Asti is thriving and future prospects look good, too. Bloomberg cites experts at Bank of America Merrill Lynch, who say robots will perform 45 percent of all manufacturing jobs by 2025; in 2015, that number was only 10 percent.
The news site points out that the trend towards further automation is well underway, with Caterpillar and General Electric using tech from Canadian start up Clearpath Robotics to move goods in factories autonomously. Automakers BMW and Nissan also using autonomous machines in their factories.
As for Asti, it has a number of clients, including PSA Group, PepsiCo, Proctor & Gamble Co, and Mexican bread company Grupo Bimbo SAB, which Bloomberg says “uses Asti’s vehicles to move pallets with bread from its plastic wrapping station to the warehouse at one of its Spanish plants.”
According to the news site, Asti’s sales have increased five-fold between 2012 and 2016, when it sold 956 vehicles and reached 20 million euro in sales; by 2020, the company expects sales to eclipse 100 million euro. Asti says it aims to change the way automakers manufacture cars, saying:
Rather than taking parts to assembly lines, as has been always done, with automated vehicles you have the chance to move parts around, so a car-maker doesn’t have to be tied to the assembly lines anymore.
So while the world is focusing on autonomous automobiles, entire fleets of mobile autonomous robots may work behind the scenes to make those autonomous automobiles a reality.
4th Gear: On Trade, Trump Thinks The Germans Are Bad, But So Are The Koreans
President Trump really, really wants America to sell more cars in other countries. And until we can do that, he wants the influx of foreign cars to drop. In May, he voiced his disdain for Germany’s trade imbalance with the U.S., with Der Spiegel quoting him as saying:
The Germans are bad, very bad... Look at the millions of cars they sell in the US. We will stop this.
Now, according to The Detroit News, the South Koreans apparently aren’t much better, with the president saying:
South Korean companies sell cars in America. American companies should have that same exact privilege on a reciprocal basis, and I’m sure we will be able to work that out.
He went on, criticizing the U.S.-Korea Free Trade Agreement, or KORUS—which was originally conceived by the Bush administration in 2007, but renegotiated by President Obama in 2010—saying it was a poor deal for the American worker:
From when the U.S.-Korea trade deal was signed in 2011 to 2016, you know who signed it, you know who wanted it, our trade deficit has increased by more than $11 billion...Not exactly a good deal.
The News says that, under KORUS, South Korea dropped tariffs on American cars from 8 percent to 4 percent in 2012, and then ditched tariffs entirely. And though the Obama administration lauded the trade deal, saying it “resulted in a 24 percent increase in sales of exports from the Detroit automakers in Korea by 2014,” the deal hasn’t received praise from everyone.
Wilber Ross, the U.S. Secretary of Commerce, points out that it’s not just tariffs that restrict American auto exports to South Korea, saying:
The trade balance of South Korea has doubled since the KORUS treaty was put into effect. And the largest single component of that is automotive trade...There are a lot of non-tariff trade barriers to U.S. exports.
He went on, describing how Korea restricts American car sales without using tariffs, saying:
Only 25,000 cars per Big Three manufacturer are allowed in based on U.S. standards. Anything above that needs to be on Korean standards...So that kind of rule-making affects quite a few industries and really restricts the access that U.S. companies have to the Korean market.
On top of that, The Detroit News reports that American automakers have accused Korea of manipulating currency—a complaint that American automakers have been voicing about foreign-made cars for decades.
President of the American Automotive Policy Council, Matt Blunt, who lobbies for Detroit’s Big Three automakers, said his organization is glad the president is challenging the current state of trade with Korea, saying:
There is no question the Korean marketplace is one of the most difficult for any automaker to export into in the world. We appreciate the administration’s attention to the very real challenges we have seen in implementing this agreement.
It’s worth noting that, like Germany, Korea makes quite a few of its cars in the U.S., with The Detroit News saying Hyundai makes over half of its American-sold cars in Alabama, and Kia making 40 percent of American-market cars in Georgia.
Whether Trump removing any existing unfair trade barriers will help American automakers remains to be seen. But Senior analyst for KBB Karl Brauer isn’t sure, saying: “If we still can’t sell cars in Japan and Korea even when the barriers go away...then the market has spoken.” That wouldn’t be the first time this has happened.
5th Gear: Daimler Is Dropping Some Serious Coin On Chinese EVs
Last month, we learned that Stuttgart, Germany-based Daimler and its Chinese partner BAIC—who are both part of a joint venture called Beijing Benz Autonomotive Co., Ltd.—would upgrade their Chinese factories to build more electrified vehicles. The point of the agreement was to allow the two companies to take advantage of China’s booming EV market.
Now we know the scale of the two companies’ ventures into China’s EV market, with Reuters reporting that the companies will both drop $735 million on electric vehicles and the associated infrastructure by 2020. The news site says that, of that sum, over $100 million will go towards a new Chinese battery factory built by the joint venture “Beijing Benz Autonomotive Co., Ltd.”
The companies realize that, to meet the high EV demand, they’ll have to spend a lot up-front to re-tool the factory and to establish infrastructure. And as much as that might hurt the benefits could be staggering. Hubertus Troska, a member of the Daimler board of management, told Reuters that “By 2025, the Chinese market will have a substantial share in global sales of Mercedes-Benz electric vehicles.”
Reverse: The Founder Of American “Drivers Ed” Dies At 91
In the early 1930's, using his 1929 Graham-Paige automobile, Mr. Neyhart (pronounced NIGH-hart) began a campaign for safe driving. He established the first course in driver education at State College High School in 1932, and taught the first teacher-preparation course in driver education four years later. (Read More In The New York Times)
Neutral: Volvo Says It’s Going All-Electrified By 2019, Who Will Follow?
Volvo promising to go all-electrified by 2019 doesn’t seem like too tall of an order, but could a larger automaker go this route as well? And if so, when?