It’s Volkswagen’s Power Day so try not to act too excited, Mercedes is cutting down on trims, and Jeep has given me a good laugh. All that and more in The Morning Shift for March 15, 2021.
1st Gear: Power Day
Volkswagen as of late has been doing its best imitation of Tesla, and that continues today with Power Day, its version of Tesla’s Battery Day. The imitation has actually gotten more explicit, as Volkswagen says it will have six “gigafactories” in Europe by 2030.
“Together with partners, we want to have a total of six cell factories up and running in Europe by 2030 thus guaranteeing security of supply”, explains [Thomas Schmall, Volkswagen Group Board Member for Technology]. The new factories are expected to produce cells with a total energy value of 240 GWh per year by the time they are finally completed. Volkswagen is therefore actively contributing to meet the targets of the European Union’s Green Deal. The first two factories will operate in the Swedish city of Skellefteå and in Salzgitter. In response to increased demand, Volkswagen has decided to refocus the previous plan in relation to cell production and concentrate production of its premium cells in the Swedish gigafactory “Northvolt Ett” in Skellefteå in collaboration with Northvolt. The production of these cells is set to commence in 2023 and will be expanded gradually to an annual capacity of up to 40 GWh.
The gigafactory currently operated by Volkswagen in Salzgitter will produce the unified cell for the high-volume segment from 2025 and develop innovations in process, design and chemistry. Production capacity of up to 40 GWh per year is also planned for Salzgitter. This refocusing will deliver enhanced economies of scale and reduce the complexity of production. Both gigafactories will be powered with electricity from renewable energy sources. Potential sites and partners are currently being considered for the other factories.
Reminder: a “gigafactory” is just a “factory.”
“We aim to reduce the cost and complexity of the battery and at the same time increase its range and performance”, says Thomas Schmall, Volkswagen Group Board Member for Technology. “This will finally make e-mobility affordable and the dominant drive technology.” Aside from the planned in-house production, significant cost benefits are expected primarily thanks to the new unified cell. It is set to be launched as of 2023 and will be installed across brands in up to 80 percent of all electric vehicles in the Group in 2030. Further savings will be delivered by optimising the cell type, deploying innovative production methods as well as consistent recycling. Volkswagen is thus aiming to gradually reduce battery costs in the entry-level segment by up to 50 percent and in the volume segment by up to 30 percent. “We will use our economies of scale to the benefit of our customers when it comes to the battery too. On average, we will drive down the cost of battery systems to significantly below €100 per kilowatt hour. This will finally make e-mobility affordable and the dominant drive technology”, says Thomas Schmall.
You can watch VW’s Power Day presentation below.
2nd Gear: Not At All Related (Actually Completely Related): VW Wants To Slash Up To 4,000 Jobs
VW is staffing up the parts of the company that have to do with EVs but cutting thousands of positions in general, as it tries to remake itself.
From Reuters:
Two company sources told Reuters 3,000-4,000 positions would be cut in connection with the programme to be implemented at the six German plants of the main VW brand, which now employ about 120,000 people.
Handelsblatt newspaper, which earlier reported on the plan, had said the company would cut up to 5,000 jobs.
Volkswagen declined to comment on the cost, which will depend on how many employees accept the offer. One source estimated it at close to 500 million euros ($598 million).
As the 83-year old automaker tries to become more of a tech company modelled on Tesla (TSLA.O), Volkswagen said it was raising the training budget by 40 million euros to 200 million.
Volkswagen said it was also extending a hiring freeze until the end of 2021. It had previously only been in place until the first quarter. External hires can only be made in areas like electric cars, digitalisation and battery cell development.
It is hard to understate how vast a transformation EVs are for the biggest automakers like VW and GM, and still somewhat unbelievable that it’s happening at all.
3rd Gear: Mercedes Is Simplifying Its U.S. Offerings
If you want to buy a Mercedes in the year 2021, you have a triple-digit number of options, because of the number of trim levels for each model. It’s all very complicated. Well, Mercedes says it’s going to do something about that.
From Automotive News:
When the 2021 Mercedes S-Class goes on sale in the U.S. this summer, it will be offered in just three trims — Luxury Line, AMG Line and Executive Line — vs. nine major packages available with the current-generation model.
Overall, the new S-Class will have 86 percent fewer configurations, Mercedes said. Several options previously available a la carte will be bundled into the three new trim lines.
[...]
“It simplifies the ordering of vehicles for the dealer and customer, and should help our supply chain,” [Mercedes-Benz USA sales chief Adam Chamberlain] said.
Mercedes will go even deeper in slimming down the lineup. The brand plans to jettison seven car models from the U.S. market, former Mercedes-Benz USA CEO Nicholas Speeks told dealers last summer.
According to people familiar with the plans, those under consideration include the coupe and convertible versions of the S-, C- and E-Class nameplates, as well as the CLS coupe and one of the brand’s GT models.
I have been sort of waiting to see when the Germans would withdraw cars like the coupe version of the C-Class from America or even something like the BMW 3 Series period. It seems like the time is nigh.
4th Gear: Geely Will Spend Billions On An EV Plant In China
This is not at all surprising, as demand for EVs in China and elsewhere is expected to skyrocket over the next decade.
From Bloomberg:
Chinese carmaker Zhejiang Geely Holding Group Co. is doubling down on electric vehicles, outlaying almost $5 billion to build a new battery plant in the nation’s south.
Geely unit Geely Technology Group Co. said on Monday it had signed an agreement with local authorities to invest 30 billion yuan ($4.6 billion) to construct a factory in the city of Ganzhou in Jiangxi province, according to a statement on the company’s official Wechat account. The plant will have an annual capacity of 42 gigawatt-hours.
Carmakers and battery producers are increasing their investments in the component that accounts for around 30% of an EV’s total cost. With annual sales of new energy vehicles in China expected to more than quadruple to 6 million units by 2025, demand for batteries is expected to soar.
5th Gear: Jeep Must Be Kidding
Automotive News has a quite hilarious story on Jeep bringing the Gladiator to Japan. For some reason, Jeep thinks this will work.
Few and far between on this country’s byways, pickups seem absolutely anathema to Japanese tastes. But Jeep wants to jolt the status quo with its Gladiator. Jeep plans to introduce the Wrangler-based truck to Japan toward the end of this year, becoming what is believed to be the first U.S. brand in recent memory to directly import that most American of American vehicle types.
Jeep is counting on the Gladiator to help lift sales in this country to new heights. Targeting its eighth-straight year of record sales in Japan this year, Jeep wants to sell more than 20,000 vehicles annually in this notoriously finicky market in 2023, up from just more than 5,000 in 2013.
To get there, Jeep is expanding its dealer network and its offerings. Thus, enter the Gladiator.
I am aware that American automakers’ strategy in East Asia is marketing their big dumb cars as upmarket luxury items. That’s Jeep’s strategy here with the Gladiator, too! But, please, there is about a two percent chance of this working. The Gladiator hasn’t even done all that well in America.
Pontus Haggstrom, CEO of FCA Japan, doesn’t expect Jeep’s Gladiator experiment to trigger a pickup boom anytime soon in Japan. For the most part, not even Japanese brands compete in the segment.
But Jeep’s gambit comes as U.S. brands rethink Asian appetites for bed-in-back vehicles in other markets, most notably China. Increasingly, they trade on upmarket allure over workaday utility.
Thank you, Jeep, I needed this today.
Reverse: The Eisenhower Tunnel
I actually drove through this tunnel on my recent sojourn back east. It arrives somewhat startlingly after you’ve gone up and down the Rockies so much, though at that point in the drive a tunnel begins to feel inevitable. There’s no way that the interstate builders managed to find a path around every giant mountain, it seems.
Neutral: How Are You?
I spent part of the weekend watching the Woody Allen documentary on HBO. My god.