According to a series of in-depth reports by NPR’s Marketplace, three factors are shaping the future of the economy: new technology, globalization, and corporate profit. While auto sales are coming close to a record high in the U.S. (which surprised market analysts), that may be a temporary blip. Foreign automakers have 19 assembly plants in the U.S., but General Motors is closing four American plants and Ford is going through a major reorganization. Even so, U.S. auto plants have the capacity to make three million more cars that they can sell. Analysts think that this year’s strong sales come from higher fleet sales, lower unemployment, and Tesla’s rapid production ramp up. Shareholders are putting a great deal of pressure on automakers to lead the way in new products, advanced vehicle technology, and strong profit margins. Automakers have been taking big steps to change over their product lineups (less cars, more trucks and SUVs) and prepare for launching mobility services and a higher volume of electric vehicles. Here’s a look at some of the major events that have been shaping market dynamics in the U.S. and global automotive landscape — and its impact on green vehicle sales and adoption of new technology and mobility………….
Trade war with China: The Center for Automotive Research released a report warning that auto sales could plunge up to two million vehicles a year over the huge tariff increase launched by President Donald Trump. That could mean a loss of about 715,000 American jobs and a $62 billion hit on U.S. GDP. In September, Ford CEO James Hackett said at a Bloomberg conference in New York that steel and aluminum tariffs imposed by the Trump administration had cost the company about $1 billion. On Nov. 27, Trump publicly chastised GM CEO Mary Barra over her decision to close four plants in the US because of sagging demand for sedans (that includes ending production of the Chevrolet Volt). That came from his emphasis on keeping U.S. manufacturing alive and well, and keeping Americans working in the plants. The reality is that GM and other automakers have been investing heavily in global production and sales while staying as profitable as possible. The trade war with China hurts those strategies as China remains the largest auto market by far, including EV sales. On the bright side, a move three days ago by China to ease auto import tariffs are helping prices go down on imported models such as the Tesla Model 3.
Nissan loses its chief: Nissan Motor Co.’s former chairman Carlos Ghosn was arrested again by Japanese prosecutors under allegations of financial misconduct — adding 10 more days to his month-long stay in jail. The original arrest and Dec. 10 indictment came from allegations of Ghosn understating his income from Nissan by 4.8 billion yen ($43 million) over five years through March 2015; he was then re-arrested at that time for understating earnings through March 2018. Ghosn had been credited for leading the Nissan Renault alliance and championing the all-electric Nissan Leaf and its first-ever leadership in EV sales. The next generation Leaf is expected to be revealed next month at the 2019 Consumer Electronics Show in Las Vegas with a battery pack at around 60-kilowatt hours. The company will also be revealing its vision for an all-electric Infiniti crossover at the Detroit Auto Show. For now, the Nissan e-NV200 electric van is making its way to fleets, with its 40kWh battery that can go between 124-187 fully charged, depending on the payload being carried.
Musk forges through Tesla’s toughest year: Tesla CEO Elon Musk exercised his typical blunt and brutal style during a recent interview on “60 Minutes” — clarifying his jabs at the U.S. Securities and Exchange Commission. “I want to be clear: I do not respect the SEC,” he said to interviewer Lesley Stahl. Musk made a stock fraud settlement with the SEC in October that took away his chairman title (telecommunications exec Robyn Denholm was made Tesla chairwoman on Nov. 8). The SEC playing babysitter is “not realistic” because “I’m the largest shareholder in the company and I could call for a shareholder vote and get anything done that I want,” Musk said. The Tesla CEO had made a Twitter post about taking the company private to address financial turmoil coming from the cost of ramping up production of the Model 3. While the company’s stock and the chief’s reputation have gone up and down during 2018, its EV sales haven’t. The Model 3 had U.S. sales of 18,650 in November, a ten-fold increase over January’s sales of 1,875 units. It’s now listed in U.S. Top 10 sales for its sedan class. The Model S and Model X have also done well this year, competing with the Chevy Bolt and Volt in the top 5. The company has been invited by Ohio Governor John Kasich to consider buying a GM factory in the state the company will be shutting down next years. Musk is considering doing it to have the needed capacity to build its cars — and not have to use a tent to meet demand, as was the case this year at its Fremont, Calif., assembly plant.
A strong year for natural gas: Natural gas is taking off as a transportation fuel and as an energy source for power stations, with liquefied natural gas (LNG) playing a big role in it. Trump would like to see the U.S. be a major exporter of LNG, and competes with several other countries to take the lead. Renewable natural gas (RNG) is having a very good year as well and more compressed natural gas (CNG) stations have been built and opened this year. In its annual sustainability report, Waste Management said that growing its CNG truck fleet played a big role in reducing corporate emissions. Waste Management is playing a big role in making gains in recycling, renewable energy generation and carbon sequestration; it’s also part of the company producing its own RNG from waste materials.
SoftBank believes in mobility: SoftBank, the Japanese conglomerate that started out as a PC software company and now owns Sprint and a large Japanese mobile phone carrier, is making investments from its $100 billion tech investment pool, Vision Fund. Companies receiving financial backing from Vision Fund include Uber, WeWork, food delivery startup DoorDash, ParkJockey, Cambridge Mobile Telematics, and robot-pizza maker Zume. SoftBank’s focuses on autonomous driving, ride-hailing, on-demand delivery, and real estate.
Here’s a quick look at other significant events of the year:
- Alphabet Inc.’s Waymo division launched the first-ever commercial autonomous vehicle ride service in early December. That’s taking place in the Phoenix area with plans to spread out.
- Propane autogas had a strong year with school bus fleets embracing the clean fuel and bringing in more propane-powered buses and fueling stations. The west coast and northeast have been particularly strong markets. Overall, more than 13,000 propane-powered vehicles were sold in 2017 with this year looking good.
- At the LA Auto Show, a few competitors displayed concept cars that they hoped would light up affluent buyers who had been leaning toward Tesla. They included Audi, BMW, Volkswagen, and start-ups Rivian and Byton. Jaguar just put its I-Pace electric SUV on sale, and German automakers started ramping up production of Tesla-competitive models for distribution to dealerships starting next year.
- The bitcoin cryptocurrency, a form of electronic cash that became extremely important last year, has seen its price go from $16,960 in January to $4,078 on Dec. 20. Like EVs, and autonomous vehicles, it will take a few years for it to reach mass adoption.
- Tesla and GM are facing the end of federal tax credit incentives, and it looks like continuation won’t be supported in Washington. State rebates will become more important, and California Gov. Gavin Newsom is likely to support clean vehicle incentives when he takes office next month. Volkswagen’s Electrify America program is continuing to add EV chargers throughout the state, with the company announcing its second wave of projects in October.