Inside Chinese Automaker Geely's Plan To Save Lotus

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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 stories you need to know.

This is my inaugural Morning Shift, and it’s the Friday before Labor Day, so please be kind, and, as always, let me know, loyal readers, what I’ve messed up, in the comments. Life is short and full of mistakes and usually you only figure out the right answers after the the questions have completely changed.

Which is mostly fine. Everyone, in the end, is very nice. You should go to the beach this weekend. But I digress.


1st Gear: Geely Has Big Plans For Lotus

Ah, Lotus. The little car company that could. I mean, most of its history it has teetered on the edge of “couldn’t,” but it’s produced some amazing and philosophically pure machines along the way.

Still, the storied British carmaker Lotus has had a wobbly existence for most of its 65-year existence, though it got new life in May when the Chinese manufacturer Geely acquired a controlling stake. Now, Bloomberg says that electrification is in Lotus’s future.

From their report:

Lotus could be next on the list, providing essential engineering skills as Geely ramps up production at home and abroad. Under such a benign owner, quirky Lotus could thrive.

Lotus has a longstanding association with electric vehicles. The company built and helped engineer the very first Tesla, the Roadster, in 2008. The Roadster was based on Lotus’s groundbreaking Elise.

The reputation for great engineering and innovative design, as well as skill in using materials once considered exotic—aluminum, fiberglass, and carbon fiber—allowed Lotus to launch a consulting business. The company contracted with larger manufacturers to cut weight, tune suspensions, curb emissions, and improve aerodynamics. The aluminum chassis of the Aston Martin DB9, for instance, was substantially engineered by Lotus.

Chapman’s original credo—“To add speed, add lightness”—is now finding renewed relevance, even if his rule-flouting, risk-taking ways are no longer standard procedure.

Electric cars could be a fantastic opportunity. But, Gales said, it has to be a Lotus—lightweight and able to handle corners alongside any great sports car.

“In two or three years, battery cars will be much higher performing than they are currently because technology moves on,” he said. “It could be a really good thing to be the first one to do an electric car that doesn’t weigh two tons.”

Lotus could also re-issue classic models, or get into the business of restorations or certified old car sales, a lucrative sideline already plumbed by Jaguar Land Rover, Mercedes, Porsche, Ferrari, and other luxury carmakers.


That story is worth a read in full. Also, the last part is emphasis mine, because hell yes.

Geely, as you likely know, is now the parent company of Volvo, and they’ve orchestrated a huge turnaround there by letting the Swedes do their thing and writing checks to make it happen. With any luck, that is what will happen here too.


2nd Gear: Kia Owes Its Workers A Lot Of Money

Kia, which is the second-largest automaker in South Korea behind Hyundai (though they are owned by the same parent company), lost a major battle with its workers yesterday, with a court ordering it to pay around $375 million in back wages to its workers, after a long-running dispute centered on bonuses.


From Reuters:

Seoul Central District Court gave workers a major, if only partial, victory in their closely watched dispute with Kia, ordering the Hyundai Motor (005380.KS) affiliate to pay about 420 billion won in unpaid wages.

But Kia said the additional labour costs arising from the ruling would be more than double that amount, once all its workers’ wages were adjusted.

The payout, though significantly less than the roughly 1 trillion won demanded by workers in the six-year legal battle, is a blow to South Korean automakers just as they are battling a sales slump in China amid regional strategic tensions.


The workers in their claim said regular bonuses should be included as part of a base pay used to calculate overtime, compensation for unused annual leave, severance pay and other payments.

The case goes back to an original claim in 2011 of 659 billion won in unpaid wages. With interest it came to more than 1 trillion won.


3rd Gear: Volkswagen Thinks It Has Finally Figured Out America

Volkswagen, which has been extremely troubled in recent years, with, you know, Dieselgate, among other things, now says they plan a new push into the U.S. market, centered on, uh, SUVs.


At last, VW thinks it has the American market figured out. This is funny because as an “import” brand VW has been here longer than just about everyone, including major players like Toyota and Hyundai, yet it’s struggled to find dominant market share and make cars that resonate with American buyers since the days of the air-cooled Beetle.

Now, the plan is giant-ass SUVs. From Bloomberg:

“We have a plan to become successful here in the United States in the next years as a relevant volume player,” Herbert Diess, global head of the Volkswagen brand, told reporters at the company’s factory in Chattanooga, Tennessee. “We can’t win America over in two years’ time. It’s a 10-year plan, but we are committed.”

The German carmaker, which now sells three sport utility vehicles in the U.S. with this spring’s addition of the Atlas, plans to introduce a fourth utility model by 2020, said Hinrich Woebcken, Volkswagen of America’s chief executive officer. That’s part of its plan to ramp up to 19 total SUV or crossover models worldwide by that year, according to Diess. The goal is to eventually exceed 5 percent market share in the U.S., up from 1.9 percent this year through July.


Hey, it’s working for everyone else.

4th Gear: The UK Is Going To Need A Lot More Power To Power Electric Cars

Great Britain has said that they will ban the sale of cars that run on gasoline and diesel in the year 2040, which is very far away. Still, the power to run your car must come from somewhere, and, as Reuters reports, that’s going to mean that the country will have to generate a lot more electricity, in addition to building charging stations in a lot of places.


From Reuters:

Supporting millions more battery-powered vehicles over the next two decades is technically feasible, and if drivers can be persuaded to recharge them overnight - when spare power capacity is abundant - the huge infrastructure cost could be kept down.

Local networks particularly face problems, so the country will need a range of technologies for managing consumption to meet an estimated rise of up to 15 percent in overall demand and prevent spikes of up to 40 percent at peak times.

“It will be a challenge and a lot of investment is required - in generation capacity, strengthening the distribution grid and charging infrastructure,” said Johannes Wetzel, energy markets analyst at Wood Mackenzie.

In July, the government said it would ban the sale of new petrol and diesel cars and vans from 2040. The aim is to reduce air pollution, a source of growing public health concerns, and help Britain to cut carbon emissions by 80 percent by 2050 from 1990 levels - the target it has set itself.

Although some conventional cars will remain on the road, numbers of electric vehicles (EVs) could balloon to 20 million by 2040 from around 90,000 today, experts estimate. Charging them all will require additional electricity.

Britain already faces a power supply crunch in the early 2020s as old nuclear reactors come to the end of their lives and remaining coal-fired plants are phased out by 2025.

Four years ago, well before the conventional car ban was raised, the government said over 100 billion pounds ($130 billion) in investment would be needed to ensure clean, secure electricity supplies and to reduce demand.

That looks optimistic. The cost of Hinkley Point C alone, the only nuclear power station now under construction in Britain, is estimated at 19.6 billion pounds.


5th Gear: Subaru Thinks They’re Very Sophisticated

Subaru, which I mostly associate with suburban parents and traffic court regulars in WRX-es, says that rising sales is in part due to their ad campaigns, which eschew big events like the Super Bowl for other events, like the Puppy Bowl. Basically, it stays away from the big football ad pushes that you see from most other mainstream car companies. And it seems to work.


From Advertising Age:

Subaru is sticking to its targeted formula as it begins marketing the redesigned 2018 Crosstrek, which began entering the increasingly competitive subcompact crossover market in August. Two new emotional ads by Carmichael Lynch continue the long running “Love” campaign and feature tales about a dog’s loyalty and grandfather-grandson surfing adventure.

In a new digital twist, Subaru will run banner ads on Amazon that target people shopping for outdoor gear. People searching for propane stoves, for instance, will be served ads that recommend the Crosstrek, along with copy that says, “You found your ride. Now go find your adventure.”

“We don’t buy commercial time in the NFL or any other professional sport,” says Alan Bethke, senior vice president of marketing at Subaru of America. “Subaru is very clear of who we are,” he added. “We don’t use a shotgun approach to just try to say ‘If you are a football fan you are going to like Subaru.’ We think we can be more sophisticated than that.”

The results speak for themselves: Subaru of America sold 360,513 vehicles through July, up 8.7 percent from the same period a year earlier, as the overall U.S. market declined 2.9 percent, according to data compiled by Automotive News. August sales reports are due later today.

“Subaru has just gotten it right on a number of levels,” says Michelle Krebs, a senior analyst for AutoTrader. “Their product is right in the heart of what consumers are demanding right now, SUVs or cars that are SUV-like. They’ve also done a fabulous job of marketing those vehicles to resonate with an audience that doesn’t necessarily follow the traditional [path]. They are outdoorsy. They are dog lovers. So they are not necessarily into the NFL [and] sports and such.”


Reverse: When Airbags Became A Must

In December, 1991, President George H.W. Bush signed into law the Intermodal Surface Transportation Efficiency Act, the acronym for which is ISTEA, which is pronounced how you would expect (yes, as “ice tea,” which is now making me thirsty.) Among many other things, the law mandated that cars built after September 1, 1998, have airbags in both front seats. Those airbags in your car that was built after September 1, 1998? Thank George H.W. Bush.



Neutral: What Do You Plan To Do For Labor Day?

I’m going to watch a lot of professional tennis players hit tennis balls back and forth on hard courts at the USTA Billie Jean King National Tennis Center in Flushing Meadows, New York. It should be fun. You?