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Big Picture: GM has high hopes for a redesigned Chevy Volt; Smith Electric Vehicles shuts down production

General Motors would like to pick up steam on sales of its plug-in hybrid Chevrolet Volt. To get there, GM will be selling two versions of the redesigned 2016 Volt. One will be a lower-priced version with a smaller battery pack and shorter driving range. That will be carried overseas through GM’s Opel division in Europe. The next versions of the Volt will go into production in about 16 months at the automaker’s Detroit-Hamtramck plant. That plant will get a $384 million investment that will be aimed toward the Volt and a new flagship Cadillac sedan and a redesigned Buick LaCrosse.

GM would like to reduce product cost and make the Volt more profitable, and expects to achieve necessary cost reductions in the 2016 model. The automaker would also like to see stronger sales results without investing so much on incentives. The Chevrolet brand reported selling just 58,158 units since the Volt was launched nearly 40 months ago.

And in other clean transportation news……

More bad news on the EV startup front: Smith Electric Vehicles, based on Kansas City, Mo., has temporarily stopped plant operations. The company is best known for its Smith electric delivery truck, and says that it’s not shutting down operations for good. CEO Bryan Hansel says manufacturing the vehicles has yet to become profitable; he says suppliers and investors have been informed that it’s a temporary shut down and is part of the company’s plan to scale up production and sell enough of them to turn a profit.
Tesla Motors is setting up a new finance arm to entice companies to lease the Model S as one of their fleet vehicles. Small and medium-sized businesses will be able to calculate the leasing cost on Tesla’s website will offer them an attractive value proposition. The new Tesla Finance unit offers leases through partner banks with a guaranteed resale value. Tesla is also getting ready to start selling cars in China this month. Tesla CEO Elon Musk will be delivering a few of the first ones to customers. He’ll also be meeting with representatives from China Petroleum & Chemical (also known as Sinopec) this month about constructing charging units in the refiner’s nationwide network of service stations. The charging network is expected to start in Beijing and then roll out to surrounding areas.
CleanFUEL USA has rolled out the propane autogas industry’s first complete fuel network management system for electronic dispensers. Using CleanFUEL eCONNECT, fleet managers can economically monitor and control fuel inventories faster and easier than ever before with real-time data insight, flexible report storage, and remote access capabilities.
The Environmental Protection Agency may continue to be sympathetic to the biofuels industry; EPA Administrator Gina McCarthy recently spoke to the issue at North American Agricultural Journalists meeting in Washington DC. McCarthy expects the EPA’s final rule to be different than the proposed version released in late 2013. After reviewing more than 200,000 on the Renewable Fuel Standard proposal, EPA is looking more closely at the realities of the fuel market, with one of them being the realities of the fuel blend wall. The agency expense more legal challenges for any RFS standards. “We need to be able to justify it in court, McCarthy said.
Tesla Motors has taken a swing at “lemon law king” attorney Vince Megna’s lawsuit against the electric vehicle maker. While insisting that it doesn’t believe in automotive “lemon laws,” the company says there are several good reasons to be skeptical about the lawsuit and denied some of the claims. Megna made a big splash on the internet with a Youtube video on behalf of client Dr. Robert Montgomery of Franklin, Wis.; Montgomery stated in the filing that he had a number of problems (such as a malfunctioning door handles) with his Tesla Model S that led to it being pulled of the road for 66 days. He wants Tesla to buy it back under a law that take affect after the vehicle is pulled off the road at least 30 days during its first year of life.

New Jersey’s Tesla decision a watershed for dealer franchise vs. OEM corporate stores

“This [the ban on Tesla] is a disturbing trend and deals a big blow to the future of automotive retailing. It also pushes the US behind the rest of the world. So far the resistance to Tesla and any kind of progressive thinking in auto sales had been relegated to the southern states. New Jersey’s decision could now influence states such as New York and Massachusetts, which have so far been more supportive of Tesla.” – Kumar Saha, senior industry analyst with Frost & Sullivan’s Automotive and Transportation research group.

On March 11, New Jersey Gov. Chris Christie’s cabinet members and appointees voted to block Tesla from direct sales. The administration ruled in favor of a state requirement that new cars must be sold through licensed franchises from a rule proposed last October by the New Jersey Motor Vehicle Commission; that happened around the same time Tesla opened two of its own stores in the state. Tesla CEO Elon Musk took a shot at Gov. Christie, accusing the expected 2016 Republican presidential candidate of making a “backroom deal” to keep Tesla out of the state. Musk put more pressure on Christie, whose administration has been taking heat for alleged bullying of opponents – the most notable event occurring last year when former high-ranking officials faced potential criminal charges after ordering lanes approaching the George Washington Bridge be closed, creating a traffic nightmare.

This dramatic decision by New Jersey follows several state-by-state battles in the direct OEM sales versus state franchise law battle. Auto dealers in Ohio, New York, Minnesota, and Georgia have fought Tesla. Texas dealers successfully backed a law setting the nation’s toughest restrictions on Tesla. Arizona, Colorado and Virginia also imposed limits.

In New Jersey, the New Jersey Coalition of Auto Retailers spent more than $155,000 on lobbying last year. Gov. Christie received about $65,000 in campaign contributions from people associated with the auto industry during last year’s primary and general election campaigns.

There’s a lot at stake in how these lawsuits and lobbying ventures play out. The legal history of state franchise laws protecting dealers are not too clear – that varies by industry with many retail sales transactions being conducted in corporate stores without any franchised operators in these branded networks. The state franchise laws are about a century old now, and other automakers have taken on the fight of breaking them long before Tesla Motors. Dealer networks have been very successful at lobbying in state legislatures and winning court battles.

Ford Motor Co. and General Motors Co. attempted to operate a few company-owned stores in the late 1990s and early 2000s as internet sales became more economically viable. Dealers won that battle – today you can shop for, and spec out, cars on OEM websites, but you have to buy or lease them through a dealership. Truecar.com experienced a similar experience after its 2011 Superbowl commercial promising the best local market price from dealer in their area. Dealers in several states attacked Truecar for allegedly violating laws regulating auto brokering, price advertising, and other legal issues. The onslaught hurt Truecar’s finances, as about 2,600 dealers bailed out of Truecar; it forced the company to spend much of the year overhauling its relations with dealers.

As Frost & Sullivan analyst Kumar Saha said, automotive retailing is changing fast. Dealers may be winning some of the state legal battles with Tesla, but may be losing a lot more business in the future as the business model changes.

Big Picture: Gobble, gobble….. A few clean transportation items before you leave for the holidays

As you break for a long holiday weekend, here are a few happenings to read about…..

Things seem to be wrapping up for Fisker Automotive. Hybrid Technology Holdings, a Hong Kong-based investor group led by billionaire Richard Li, is buying the company’s assets for $25 million. That means the US Dept. of Energy will be losing about $139 on Fisker; the DOE will be overall be recovering about $53 million from its original $192 million disbursement.

Tesla Motors has lost it marketing leader – George Blankenship, who played a key role in setting up Apple’s retail stores and brought much of it over to Tesla, left the electric carmaker last month. As everyone knows by now, it’s a sensitive time for Tesla as NHTSA has decided to recall most of the Model S units for investigation and Tesla is working on overdrive to expand stores in North America, Europe, and Asia. Blankenship has been vague on his Linkedin page about why he’s leaving; he’s now 60 and is officially taking on the role of “Director of Smiles for the Blankenship Family.”

But there is some good news for Tesla. The automaker won a near-perfect score for its Model S, as it displaced the Chevy Volt at the top of Consumer Report’s annual vehicle owner satisfaction survey. It’s the best score the magazine has seen in years – 99 out of 100 points.

The Nissan Leaf is paying off for the automaker, according to Jose Munoz, Nissan’s senior VP of sales and marketing for the Americas. The Leaf is not the top reason customers are referred to the Nissan brand, he said, and the vehicle is now profitable.

Green Truck Summit is getting some ink – it will be March 4-5 in conjunction with The Work Truck Show 2014 in Indianapolis. It will offer attendees more than 20 educational sessions and a chassis OEM forum moderated by Indianapolis Mayor Gregory Ballard.

Luxury SUV buyers and non-luxury car shoppers are most likely to consider buying alternative fuel vehicles including EVs, hybrids, hydrogen-power, or CNG-powered vehicles. That comes from a Phoenix Marketing International study. About 50% of the survey respondents were neutral to alternative fuel vehicles, while the two aforementioned categories have the highest percentages of “very” or “extremely” to purchase an alt-fuel vehicle.

UPS was among the award winners at the NGV Achievement Award. United Parcel Service and Mike Scarpino, regional manager for DOE Clean Cities Coalition, were among the recipients of 2013 NGV Achievement Award held Nov. 20 in Atlanta. UPS was recognized for 25 years of exemplary NGV industry leadership. Eleven recipients were recognized during the gala and reception dinner at NGV America’s 2013 North American NGV Conference and Expo. Richard Kolodziej, president of NGVAmerica, was given a lifetime achievement award.

The cap and trade market is getting some play in California. California companies paid about $297 million for carbon allowances on the state’s carbon auction. On Nov. 19, California’s fifth auction took place, where companies such as Exxon Mobil and Dow Chemical paid $11.48 per allowance to release one metric ton of carbon as early as this year. That was a lower price than a previous sale in August, when it sold for $12.22 per metric ton. All together, the five auction events have raised $1.4 billion.

For those interested in real-time traffic data being readily available….. INRIX, Inc. introduced INRIX XD™ Incidents, which correlates real-time traffic flow data with information from nearly 400 public and private sources including media partners, departments of transportation, emergency responders, and community reports via mobile, and in-vehicle applications, as well as social networks like Twitter. The service offer traffic intelligence that reports more accidents, road closures, and other incidents across significantly more roads in more countries and at much greater speed than ever before.

The latest on hydrogen fuel cell vehicles and infrastructure

Tesla CEO Elon Musk got a lot more media coverage for calling fuel cell technologies “bullsh#t” –except when used in a rocket. Hydrogen fuel cell vehicles don’t come anywhere near the energy density of the lithium-ion battery pack located inside the Tesla Model S, he said.

So what’s the latest on hydrogen fuel cell vehicles?

The infrastructure is very thin – the US Dept. of Energy says there are only 10 hydrogen stations in the US, most all of it in California. California did approve a funding plan that will be bringing 100 hydrogen stations to the state. Europe is ahead of the US on the infrastructure, especially in Italy, Germany, and Belgium.
Hydrogen fuel cell electric vehicles are being included in the zero emission vehicle policies adopted by California, Connecticut, Maryland, Massachusetts, New York, Rhode Island, Oregon, and Vermont.
Hyundai wants to beat competitors by bringing the first of its fuel cell models to US dealer showrooms in early 2014. The volume of these cars will be limited, with total worldwide sales to reach about 1,000 over the next three years, the company said.
Toyota will be putting a fuel cell vehicle into limited production by 2015. Honda says it will be rolling out a replacement to its FCX Clarity fuel cell car. General Motors, which has been testing out its Chevrolet Equinox fuel cell SUV in Project Driveway, will begin production of its own hydrogen vehicle later in this decade. There’s no word yet on what Mercedes will be doing next with its F-Cell, which like the FCX Clarity, has met with very limited sales so far in California.
Fuel cell vehicles are in the midst of ramping up to commercialization, according to Navigant Research. The challenge is reaching sufficient volume to bring down system and plant costs. This is where technology partnerships that we’re starting to see between automakers comes to play. Fuel cell bus deployments are gaining in volume, as are fuel cell scooters and forklifts, which are being carefully monitored by automakers who are rolling out hydrogen fuel cell cars.
Home energy stations, such as one that can generate hydrogen from natural gas, are being tested out by Honda.
The value of hydrogen fuel cell vehicles are being recognized by automakers and advocacy/support groups for a few reasons: you can fill the tank in just a few minutes; they’re zero emission, clean vehicles; hydrogen can be extracted from a number of natural sources; the price for manufacturing these cars is coming down quite a bit; they’re fun to drive, as people participating in Project Driveway or driving a fuel cell vehicle at a car show will tell you.