by Jon LeSage, editor and publisher, Green Auto Market
Here’s my take on the 10 most significant and interesting occurrences during the past week…….
CAR Management Briefing Seminars in Traverse City: While a huge storm postponed the start of CAR Management Briefing Seminars last week in Traverse City, Mich., things got underway later that day for the 50th annual thought leadership event. Here are some of the highlights from what’s considered to be the most important annual conference for automotive executives…….
- The practicality of US and California fuel efficiency and emissions rules set off a heated debate in Traverse City. Automakers are struggling to meet California’s demand to see 15% of new vehicle sales be zero emission vehicles (ZEVs) by 2025, according to executives of two major automotive lobby groups. Diarmuid O’Connell, vice president of business development at Tesla Motors, made the opposite argument. California and the nine other states that have adopted the ZEV policy should make the rules tougher. Tesla profits from selling the ZEV credits to other automakers who aren’t hitting those targets.
- Chris Grundler, director of the EPA’s Office of Transportation and Air Quality (and featured in the photo above), said that the federal agency has not already set in stone the 4 mpg mandate for corporate average fuel economy. That will be determined by April 2018 after a review in 2017 and 2018. Issues such as fuel process and acceptance of new technologies will be reviewed; and the EPA administrator will make the final decision and will for the next president, Gundler said.
- Ford Motor Co. was the winner of the 3rd annual Altair Enlighten Award for its use of various lightweighting materials in the 2015 Ford F-150. The award is given out by Altair and the Center for Automotive Research (CAR) and was created to acknowledge innovation in vehicle weight reduction. Ford was named the winner for taking 700 pounds off of the Ford F-150 while improving its performance, safety, and fuel efficiency.
- China is seeing the manufacturing of a high volume of electric vehicles – 84,700 battery electric and plug-in hybrid electric vehicles last year; and up 83,100 units in the first six months of 2015, according to Yonghe Huang, director of policy research at the China Automotive Technology Center. Challenges prevail, including a lack of public charging stations, a limited number of garages for parking the cars, and not enough demand to sell all these electric vehicles. Air pollution in its major, developing cities and abundant government incentives are spurring the production volumes. Automakers are skeptical about whether all of this will work as sales have been soft; even Tesla Motors has been struggling to get the ball rolling, as indicated by its recent Chinese management turnover right after sales objectives were not met.
- Using modular parts is dramatically reducing costs for batteries, motors, and other components in General Motors’ six electrified cars, said Pam Fletcher, GM’s executive chief engineer for electrified vehicles, during one of the management briefing seminars. All of these vehicles – the Chevrolet Bolt, Volt, Spark EV and Malibu Hybrid and the Cadillac ELR and CT6 PHEV – share powertrain components and technologies, Fletcher said. For example, the gasoline-electric powertrain in the upcoming Chevrolet Malibu Hybrid is nearly identical to that of the 2016 Chevrolet Volt. Editor’s Note: Ramping up to reach economies of scale and bring down production costs, leveraging its marketing muscle, and retailing through its dealer networks are other benefits that GM holds over small, startup electric vehicle manufacturers.
- Tesla guards against hackers: Cybersecurity researchers found they could take control of a Tesla Model S in a test project in one of six ways that need to be corrected. Tesla sent out a software patch to address the security flaws and protect Model S owners and the general public from hackers. Cybersecurity firm Lookout and technology company Cloudflare decided to hack a Tesla car because the company has a reputation for understanding software that is better than that of most automakers, they said. Tesla chief technology officer JB Straubel appeared at the Def Con annual hacker convention last week in Las Vegas to thank the researchers who uncovered vulnerabilities in Model S electric car software. Straubel also announced a hike in Tesla’s hacking bounty to $10,000.
- EV sales in July: Tesla Model S was the clear leader in plug-in sales during the month of July, while the Chevrolet Volt increased to the second position and the Nissan Leaf fell back to No. 3. The BMW i3 had a strong month with a 70% sales increase over June and about 157% higher than a year earlier. Overall, U.S. plug-in sales were down 13.5% from the previous month and 21.4% from a year ago. Editor’s Note: See this week’s feature, “Sales are soft, but OEMs aren’t giving up on zero emission vehicles” for analysis of what’s ahead for green car sales.
- Stop-start technologies seeing major growth: Chicago-based research firm Navigant Consulting predicts that 35% of new vehicles sold in North America will have stop-start systems, up from 10% this year. It’s part of automakers moving forward on hitting the federal government’s 54.5 mpg by 2025 target. The stop-start system shuts off the vehicle’s engine when it comes to a stop, and then restarts the engine when the driver takes his or her foot off the brake.
- Mike Calise leading Car Charging Group: Car Charging Group, Inc., a publicly traded supplier of electric vehicle charging services, has named Mike Calise as CEO; Michael Farkas will continue to service as board chairman and Chief Visionary Officer. Calise most recently served as Head of North America EV Solutions at Schneider Electric; prior to that, he was founder of EVadvise, a consulting firm focused on mass scale electric vehicle infrastructure, where he developed the EV Charging infrastructure technology plan for Marin Transportation Authority’s countywide charger deployment as well as others.
- Clean Power Plan increases goals: The Obama Administration has released the final version of the Clean Power Plan, which raised the bar on cutting carbon pollution from electric power plants to 32% from the initial 30% target. There has been some increased flexibility in the new plan – they must comply by 2022 instead of 2020 and the emissions reductions are phased in on a “gradual glide path” to 2030. The final Clean Power Plan also gives states more flexibility to meet the ambitious carbon standards: they must comply by 2022 instead of 2020 and the emission reductions are phased in on a “gradual glide path” to 2030. On Friday, 365 companies and investors including General Mills, Mars, Nestle, Staples, Unilever and VF Corporation sent letters voicing their support for the plan and encouraged states to release “timely finalization” of state implementation plans to meet the new standards. The National Association of Manufacturers said the rule will threaten manufacturers’ competitiveness and drive up electricity costs.
- What EV owners think: Ford Motor Co. recently surveyed 10,000 electric vehicle (EV) owners in the US to gain understanding of their perceptions. Overall, EV owners love their vehicles and smart phone applications; 83% will consider, or already have installed, solar power to charge their vehicles at home to reduce emissions and save money; 92% of battery electric and 94% of plug-in hybrid drivers plan to purchase another EV in the future; EV owners use smart phone apps regularly and want to see vehicle health alerts, public charging station locators, charging time indicators, and reserving and paying for charging functions. About half of plug-in hybrid drivers and more than a quarter of battery electric drivers are using conventional outlets (120/110 volt) to charge at home; 88% of EV drivers would like to have a fast charger installed at their home.
- Propane seeing a strong year: Sales of propane-powered fleet vehicles, and the propane needed to run them, are taking off this year. Propane prices are at a 13 year low and are 75% cheaper than diesel, along with bringing environmental gains of 12% less carbon dioxide than gasoline. The price differential is driven by a glut of propane coming from shale wells, with much of that coming out of the Marcellus field. ICF International Inc., a Fairfax, Virginia, consulting firm, expects U.S. sales of propane-powered vehicles to reach 20,000 units this year, a 35% jump over 2014, and slightly higher than what’s expected to be seen in fleet purchases of natural gas vehicles this year.
- Tesla quarterly earnings good or bad?: During its quarterly earnings call last week, Tesla Motors said that its energy storage products are taking off in customer orders while the company also downsized its prediction for electric car sales this year – from 55,000 to around 50,000. CEO Elon Musk thinks it will be “quite a challenging production ramp” to deliver a realistic number of soon-to-be launched Model X units at the quality level the company wants to meet. The company reported $1.2 billion in Q2 revenue, up from $857.5 million a year ago. Fortune analyst John Kell thinks it’s all much worse than Tesla reported. Kell wrote that Tesla is losing more than $4,000 on every Model S it sells. The analysis goes to Tesla burning through $359 million in cash last quarter. Tesla had just $1.15 billion on hand as of June 30, down from $2.67 billion a year earlier. Tesla reported that the $359 million was spent on expanding capacity at its Fremont, Calif., plant to make room for the Model X; and for construction costs at the Gigafactory in Nevada.
- Hyundai and Kia jumping into electrified sector: Hyundai will be expanding its green car offerings through its Hyundai and Kia brands. Along with the Tucson hydrogen model, Hyundai and Kia may be launching four hybrid models, two plug-in hybrids, and one battery electric car between the 2016 and 2018 model years, according to sources familiar with the company. The hybrids may be built on the compact-car platform that will be used in the next-generation Hyundai Elantra and Kia Forte. The hybrids would be powered by a direct-injected 1.6L gasoline engine paired with an electric motor. The Kia might end up being designed as a crossover, and the Hyundai as a liftback sedan similar to the Chevrolet Volt.
