Thinking About Buying a New Vehicle? Think Hard

. . .because (a) you’re going to be spending more than you might think and (b) you may be buying something that you aren’t necessarily considering

By Gary S. Vasilash

If you’re thinking about buying a new car, ute or truck—and “new” may mean “new to you,” as in “used”—then you ought to hear what Charlie Chesbrough, senor economist and senior director of industry insights for Cox Automotive has to say about the current market conditions.

As Cox Automotive encompasses a variety of businesses that know more than a little something about, as they say, the conditions on the ground—as in Kelley Blue Book and Manheim Actions—Chesbrough’s observations and understanding are grounded in what’s really happening, not some theoretically calculations.

The fundamental thing is this: Although it might seem that COVID is behind us, that everything, with a few hitches here and there, is getting back to normal, that is far from being the case with regard to the availability of some things. Things like motor vehicles.

This is because COVID helped cause a semiconductor chip shortage. In part this came from everyone working or playing from home, which led to a sudden demand for PCs and PlayStations, both of which use silicon.

Because the auto companies faced shutdowns of their factories last year, they canceled their orders with the semiconductor providers, who then readily found anxious customers who were making things like PCs and PlayStations.

So the vehicle manufacturers had to go to the end of the line.

It is also worth noting that some of the chips that go into vehicles don’t have the types of margins that chips that go into other products do, so the semiconductor manufacturers realized that they’d do well by just serving the non-automotive customers fulsomely while providing the auto manufacturers—who are famously thrifty when it comes to paying suppliers—with a reduced number of chips.

This has led to two things, Chesbrough notes:

  1. Overall reduced number of available vehicles
  2. Overall increases in the prices being charged for vehicles—new and used

While the first part of the year seemed to be improving when it came to the availability of vehicles (relatively speaking—2020 was a horrible year for sales and 2021 was an improvement on that), things have gone south since then.

Chesbrough suggests that things won’t get back to what may be considered “normal” until sometime next year (if at all).

At present, OEMs are concentrating on putting chips in vehicles that are high-ticket items, which is good for returns, but which put many consumers in a bind (unless they are high-end buyers).

There are some companies, like Ford, which are recommending that people order vehicles, something common in Europe but not a practice that is at the basis of the auto market as it has developed in the U.S., which is all about moving the metal.

Chesbrough talks to Keith Naughton of Bloomberg, Joe White of Reuters and me on the show.

In addition to which, Naughton, White and I talk about Ford’s massive investments in electric vehicle/battery manufacturing capacity in Kentucky and Tennessee—and how Michigan didn’t even make a proposal for the investments, as well as about GM’s Investor Day presentations, which were clearly designed to make Wall Street look at GM more as a “tech company” with a wide range of product in the pipeline and technology and capacity that will make money sooner rather than later.

And you can see it all

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GM BrightDrop Announces EV600 Build

An approach to vehicle production at a fast rate: have someone else do it

By Gary S. Vasilash

General Motors is proud because in a rapidly changing industry, it shows that it can go fast.

“Getting our first electric vehicles on the streets in record time before another peak holiday shipping season is the best gift we could receive this year, especially when we consider the supply chain headwinds the world is facing right now,” said Travis Katz, BrightDrop president and CEO.

BrightDrop is the GM business that is developing products—such as electric delivery truck and associated material handling equipment—for companies like FedEx Express and Verizon.

The classification is “eLCV,” for “electric light delivery commercial vehicle.”

Katz is referring to the production of the EV600.

BrightDrop EV 600 (Image :General Motors)

From concept to development in 20 months.

Speaking of the build speed, Katz continued, “This is a strong statement to the market of how our unique operations setup, which marries the cutting-edge innovation, agility and focus of a technology startup with the scale and manufacturing might of a major automaker, can deliver real value to both customers and the planet.”

An interesting aspect of this.

The early builds of the EV600 were done for General Motors by automation supplier Kuka AG.

Perhaps that is the “unique operations setup.”

To be fair, GM will be building the EV600, the EV410 and possibly other vehicles at its CAMI Assembly Plant in Ingersoll, Ontario. The plant is currently being transformed for the production.

The first EV600 is expected to go off the line at CAMI in November 2022.

Or 13 months from now.

Euros to Make More EV Batteries

Mercedes joins Stellantis and TotalEnergies

By Gary S. Vasilash

If nothing else, you’ve got to give General Motors credit for naming the jv company it is running with LG Chem for electric vehicle battery development “Ultium,” because it sounds like something from the Marvel Universe, which isn’t an entirely bad thing when it comes to attracting younger buyers for the EVs GM will have in dealerships.

Contrast that name with a Europe-based battery company, one that had been established by Stellantis and TotalEnergies (the company that used to be simply named “Total” before it recognized the need to expand its portfolio beyond petroleum) and has now been joined by Mercedes-Benz:

Automotive Cells Company.

Hope no one stayed up too late at night trying to come up with that.

They should have had the packaging designers work on the name because it is suitably of-the-moment. (Image: ACC)

ACC is also being supported by the French, German and European authorities because they don’t want Europe to be left behind when it comes to battery tech.

The company is still young, having been established in August 2020. With the addition of Mercedes, the investment is on the order of seven billion euros. Each company has a one-third equity stake.

By 2030 it may be making 120 GWh’s worth of batteries.

Given that both Stellantis and Mercedes have aggressive EV plans, they’re going to need capacity.

Beyond the Bolt Battery Problem

Yes, it is an issue right now, but it has serious ramifications going forward

By Gary S. Vasilash

The facts of the situation is that General Motors is recalling all of the Chevrolet Bolts that the company has ever built. About 142,000. “Out of an abundance of caution.” There is a manufacturing defect in the batteries that could lead to fires. The batteries are produced for GM by LG Energy Solution.

GM is going to replace the batteries in the vehicles.

All in, the price is going to be on the order of $1.8-billion.

2022 Chevrolet Bolt EV connected to a DC fast charger during the final stage of production at the General Motors Orion Assembly Plant. (Photo by Steve Fecht for Chevrolet)

GM and LG are currently building two battery plants. But these plants are for a different type of battery—“Ultium” is the brand name—than the type of battery found in the Bolt EV and Bolt EUV. It doesn’t have a brand name.

The new GM EVs—which aren’t out yet—will  have the Ultium batteries, not the type found in the Bolt.

This doesn’t mean that there aren’t potential problems with the Ultium battery somewhere down the road. But it does mean that there aren’t issues for those new vehicles—e.g., Cadillac Lyriq, HUMMER EV—right out of the box.

What could be a real problem for GM—no matter how well the recall is handled—is that of the perception of potential consumers.

There needs to be a sell of the whole idea of an EV. This is not easy. Everyone driving today is at least passingly familiar with pulling into a gas station. But charging is something else entirely. First of all, everyone (I know I am using this broad brush broadly, but let’s face it: we live in a transportation environment that is predicated on petroleum) knows where gas stations are. How many people know where charging stations are? (Yes, most haven’t had a need to look for them, but I have, and they aren’t easy to find, even if you know where they are.) So some people are going to be off-put by that. And there are issues like the comfort of plugging in, and the time required to charge a vehicle. (“What if it is raining?”)

These are real challenges. Non-trivial challenges.

GM now has a group of people who are going to be all the more trepidatious to get an EV that it needs to convince to buy EVs. GM wants the EV to be a mass-market vehicle, not something driven just by the rich or enthusiastic.

All OEMs—with the probable exclusion of Tesla—are pretty much faced with the challenge of convincing people about buying EVs.

GM now has a particular problem as a result of this recall.

What to Know About Hydrogen Vehicles

Unless you drive a big rig or a locomotive, there probably isn’t a whole lot you need to know

By Gary S. Vasilash

According to the Alternative Fuels Data Center of the U.S. Department of Energy, “In mid-2020, there were about 43 retail stations available nationwide.” Those are retail stations where there is hydrogen refueling. The sentence went on, “mostly concentrated in California.”

The good news is that the AFDC accumulated more data on the retail hydrogen fueling infrastructure in the U.S. And what’s more, there is actually an increase in the number of stations.

But there is still that concentration in California.

The total is 49 retail stations.

Forty-eight of those are in California.

There is one in Hawaii.

Meanwhile, over in the European Union there are more stations, although the numbers from the ACEA don’t indicate whether these are retail-only or whether the number also includes private refueling stations.

When it comes to the EU Germany is almost like California.

That is, there are 83 hydrogen refueling stations there, which accounts for 66.9% of the total 124 stations in all of the EU.

All of this goes to the point that you are not likely to be rolling around in a hydrogen-powered vehicle any time soon—even if you live in California.

The infrastructure for refueling simply isn’t there.

Notes Charlie Freese, “It is a difficult infrastructure play if you have a station and are refueling one vehicle per week.”

In a record published earlier this year for the Department of Energy about plans for 111 new hydrogen refueling stations in California, “Hydrogen Fueling Stations Cost,” “Capital equipment cost estimates for 111 new fueling stations. . .varied between approximately $1,200 and $3,000 per kilogram hydrogen dispensed per day.”

According to Freese, you can think of a kilogram of hydrogen as a gallon of gasoline.

This is a fuel cell. Actually a HYDROTEC fuel cell module that contains fuel cells. (Image: Steve Fecht for General Motors)

Yes, a very difficult infrastructure play.

But Freese is a proponent of hydrogen. He is the executive director of General Motors’ global fuel cell business which uses the name HYDROTEC.

HYDROTEC fuel cell modules have a variety of applications in transportation—applications that you might not expect.

That is, it has announced activities with:

  • Liebherr-Aerospace: Yes, fuel cells for aircraft
  • Wabtec: A producer of locomotives
  • Navistar: Two HYDROTEC fuel cell cubes will be used to power Navistar’s International RH Series

Freese points out that there are extensive opportunities in applications like these because there is a lot that is “known”:

Planes fly on specific routes and land at airports. Locomotive routes are literally on rails. And trucking goes from the depot to the point of delivery—and at the point of delivery (e.g., a warehouse or factory) there are likely to be pieces of material handling equipment—powered by hydrogen.

For individual drivers where one might go is not known. So there can be refueling stations that accumulate proverbial—if not actual—cobwebs.

But for commercial transport, there is the opportunity to have a calculated number of fuel users, which is an absolute advantage.

On this edition of “Autoline After Hours” Freese talks with “Autoline’s” John McElroy, Lindsay Brooke of SAE’s Automotive Engineering and me on a variety of hydrogen-related subjects.

In addition to which, John, Lindsay and I talk about a variety of other subjects, including VW’s commitment to EVs, the European Commission’s tentative plan to stop sale of new vehicles powered with internal combustion engines in the region by 2035, the right to repair, and more.

Which you can see right here.

GM to Spend More Billions on EVs (and AVs)

Why spend $20 billion when you can spend $35 billion?

By Gary S. Vasilash

Yesterday General Motors announced that spending $20 billion between 2020 and 2025 on electric and autonomous vehicular tech, as it said it had intended to in March 2020, isn’t enough.

It announced that spending $27 billion during the same period, as it said it had intended to in November 2020, just doesn’t cut it.

So now GM says that it will spend $35 billion by 2025.

In other word, a 75% increase in spend from what it originally intended just 15 months ago.

Why?

Said Mary Barra, GM chair and CEO: “We are investing aggressively in a comprehensive and highly integrated plan to make sure that GM leads in all aspects of the transformation to a more sustainable future.

“GM is targeting annual global EV sales of more than 1 million by 2025, and we are increasing our investment to scale faster because we see momentum building in the United States for electrification, along with customer demand for our product portfolio.”

The Bolt EV is presently the GM electric vehicle. In the first quarter GM sold 9,025 of the compact electric vehicles.

Yes, that is a 53.7% increase over Q1 2020, but that was Q1 2020.

The increase in Corvette sales Q1 to Q1 was 73.1%. While only 6,611 of those vehicles were delivered, odds are GM makes more on each Corvette than Bolt.

GM does have more EVs coming, like the HUMMER EV pickup and the Cadillac LYRIQ crossover. And there will be an electric Silverado and other vehicles to boot.

GM will be building two EVs for Honda, one for Honda brand and one for Acura. And it is supplying Navistar with its HYDROTEC hydrogen power fuel cells for heavy trucks that are to be launched in 2024.

And while it doesn’t get a whole lot of attention compared to EVs, Cruise is continuing its efforts to achieve higher levels of autonomy. It has been given the go-ahead to provide a public service sans driver in California. It has been named the exclusive autonomous rideshare provider in the city of Dubai. It will be receiving Cruise Origin vehicles—jointly developed by GM and Honda, and scheduled for production in GM’s Factory ZERO Detroit-Hamtramck Assembly Center in 2023.

No question that GM is making a huge commitment.

A thought

Here’s something that needs to be taken into account. According to the U.S. Dept. of Energy, as of approximately right now there are 42,664 charging stations in the U.S. and 103,654 charging outlets available to the public.

People who live, say, in southeast Michigan tend to travel up I-75 to northwest Michigan every holiday in numbers that make a chain out of the vehicles, trailers, boats, etc. Somehow, unless there is access to chargers that are going to allow recharges in minutes, not large fractions of an hour (or more), it is going to take one EV-intensive holiday weekend to have some exceedingly sour people.

When people are used to spending a quick time at a gas station, sitting in a long line waiting for access to a plug may have a big effect on the overall acceptance of EVs.

Q1 Sales Surprises

Yes, customers are back. But some of what they’re buying is surprising.

By Gary S. Vasilash

Although it was April Fool’s Day when the first quarter 2021 numbers for U.S. sales were announced by OEMs, the smiles were real in offices across the land as the SAAR (seasonally adjusted annual rate) rose to approximately 16.5-million units, or about a 12% sales increase compared to Q1 2020, which, of course, contained the first month of the pandemic in America.

2021 Toyota Prius Prime. There was a 70.6% sales increase for the model in Q1 2021. Who saw that coming? (Image: Toyota)

This wasn’t supposed to happen

Plenty of people who seem to have a particular affection for liking the use of fossil fuel and has therefore been gloating over the fact that Toyota Prius sales have been dropping must have gotten a surprise. Despite that fact gasoline prices have been low for the past several months and still under $3.00 per gallon ($2.85 in the U.S. as of now, according to the Energy Information Agency), Prius sales rose 22.4% in Q1, to 14,050 units. (For a not apples-to-apples comparison: Chevy sold 7,089 Camaros during Q1.)

What is more striking is that all Toyota hybrids had a combined 152% increase, to 125,318 units. (“Thank you, RAV4,” they must be saying down in Plano.)

***

The Big Three?

Remember when that was General Motors, Ford and Chrysler?

GM is still big. Overall sales of 642,250 vehicles.

The other Two, however:

Ford, including Lincoln, had sales of 521,334.

FCA, including Chrysler, Jeep, Dodge, Fiat, Alfa Romeo, had sales of 469,651.

Toyota, including Lexus, 603,066. That’s a lot more than either Ford or FCA.

***

This wasn’t supposed to happen, 2

Everyone knows that (1) sedans are nearly dead in the market and (2) economical vehicles are so 2010.

Nissan, including Infiniti, had a good first quarter, with overall sales of 285,553 vehicles, which is a 10.8% increase over Q1 2020.

But there are two absolute standout vehicles in the Nissan lineup:

  • Versa: 22,394 vehicles, or an 83.9% increase
  • Sentra: 37,238 vehicles, or a 55.9% increase

Admittedly, crossovers like the Kicks (24,421 units) and the Rogue (86,720) were big contributors, the fact that the Versa and the Sentra did so well ought to make some analysts reconsider that whole “Cars are on life support” position.

***

This puts March 21 vs. March 20 in perspective

In March 2020 Hyundai delivered 35,118 vehicles.

In March 2021 Hyundai delivered 75,403 vehicles.

That is a 115% increase.

Still: Wear a mask.

On Peugeot’s New Logo

The first change for the French automaker since 2010

2021 is the year that automakers are changing logos, ostensibly to make them seem more relevant in a world of advancing technologies.

First there was Kia. It had its name spelled out with a font with awkwardly sized letter stems housed in an oval. It truly appeared as though it was something that would be affixed to a product in the Dollar Store rather than on some of the best-designed vehicles on the market. The new one is a digitally driven design with the sort of typographic flow that one would associate with advanced technology.

General Motors was not to be outdone (although arguably it was by Kia’s design), revealing a new badge that went from uppercase letters with a horizontal bar beneath them reversed out of a square blue background to two lowercase letters with the horizontal bar underlining over the “m” in a rounded square box (squircle?). While the previous badge was simply a statement of acryomic identity, the new version is meant to signify the electric future, as the shape of the “m” combined with the bar beneath it resembles an electric plug.

(Image: Peugeot)

Now Peugeot has made a change its logo. It is worth noting that Peugeot, which is 210 years old, first used a lion as part of its logo since 1847, so there is something to be said for consistency. (The original logo was used on steel products the company produced; it didn’t appear on a car until 1948, on a Peugeot 203.)

The new logo, designed by Peugeot Design Lab, a wholly owned operation within what is now part of Stellantis that designs everything from pepper mills to scooters, features a lion’s head within a badge form, with the name “Peugeot” in all caps, slightly curved to echo the curve at the top of the shield.

According to Matthias Hossann, Peugeot Design Director, “With over two centuries of history, Peugeot is a pioneer of mobility and a legendary brand for automobiles and bicycles. This emblem and this new brand identity are a link between our history and our vision for the future. This logo has been conceived, designed and developed in-house with the same stringent requirements that we apply to every detail of our vehicles: the quality of materials, the quality of execution and the quality of the finish.”

Although Peugeot is in the process, like seemingly all automakers, electrifying everything, notably this new logo doesn’t stress that change through some sort of potentially hokey maneuver like making the lion’s mane consist of lightning bolts.

More relevant to the purpose of a logo—to be widely seen and identified with a brand—is that the design team specifically worked on developing the marque such that it is optimized for digital use.

After all, where do you see more logos than in digital spaces nowadays?

For the Want of a Chip

GM announces more downtime at assembly plants

The GM Fairfax Assembly & Stamping plant produces the Chevy Malibu and Cadillac XT4. CAMI produces the Chevy Equinox. At the San Luis Potosi plant it’s the Equinox, Chevy Trax and GMC Terrain.

Today all three of these plants, which have been on downtime shifts, have had their downtime extended.

At San Luis Potosi through the end of March. At the other two assembly plants: “to at least mid-April.”

Why?

The shortage of semiconductors.

GM is using its available chips for its “most popular and in-demand products”—like, not surprisingly, full-size trucks and SUVs.

This is completely understandable. Well, the selection of what to build is, at least.

GM has some of the best people in any industry when it comes to dealing with suppliers. While the pandemic certainly caused a shift in priorities not only when it came to vehicle purchases but also the demand for silicon-based products for those suddenly working and learning from home, it seems as though when it comes to traditional sourced components GM (and other OEMs) are masterful.

But it seems that when it come to silicon and having to compete with consumer electronics manufacturers it is an entirely new challenge.–gsv

Why 2021 May Be the Year EVs Really Started to Matter

No, this is not predicated on some prognostication wrapped in a Tweet by Elon Musk, nor by the potential that Syd Mead fans may actually get their Cybertruck before the end of 2021.

No, this is not predicated on Joe Biden’s plan recommendation to transform the government’ fleet of ~650,000 vehicles from gasoline and diesel to electric as part of the “Buy American” initiative.

Merchants Fleet has ordered 12,600 BrightDrop EV600s, an all-new, electric light commercial vehicle purpose-built for the delivery of goods and services over long ranges. (Image: GM)

No, this is not even predicated on GM CEO Mary Barra’s statement last week that the vehicle manufacturer intends to become completely (i.e., product and process) carbon-neutral by 2040, including an “aspiration” to eliminate tailpipe emissions by 2035.

No, this is because of three other data points that all came out on the same day this week, all of which indicate that electric vehicles are taking on some significant substance.

1

BrightDrop Gets Second Order

BrightDrop, the company that GM recently established for business deliveries that is predicated on EVs and logistics software, has obtained an order for 12,600 BrightDrop EV600s, from Merchants Fleet, a company that describes itself as “the nation’s fastest growing fleet management company.” Deliveries of the EV600, a light commercial vehicle with some 600 cubic feet of cargo capacity and a range of up to 250 miles, are to start in 2023. The first customer for the trucks is FedEx. The importance of cargo vehicles for EVs can’t be overstated. Not only has Amazon invested a few hundred million in Rivian, but it has ordered 100,000 electric trucks, with deliveries starting later this year.

2

Edmunds Declares “Pivotal Year”

“After years of speculation and empty promises, 2021 is actually shaping up to be a pivotal year for growth in the EV sector. We’re not only about to see a massive leap in the number of EVs available in the market; we’re also going to see a more diverse lineup of electric vehicles that better reflect current consumer preferences.” That’s Jessica Caldwell, Edmunds’ executive director of insights. While the projected growth of EV retail sales is still small—according to Edmunds, they were 1.9% in 2020 and are expected to reach just 2.5% of the market in 2021—the firm anticipates that the greater number of available products in 2021, 30 vehicles including 13 SUVs and six trucks, should start making a big difference.

3

EY Sees “Massive Evolution” in Transport

“Electrifying transport is critical for Europe to meet its tough emissions targets and create a decarbonized future. Transitioning fleet first will pave the way and generate new commercial opportunities, including vehicle-to-grid and electric vehicle charging solutions among others. In order to achieve this, a fleet-centric approach is needed across both government and industry, which aims to remove barriers in areas including common standards and investment,” says Serge Colle, EY Global Power & Utilities Leader. While he is specifically talking about Europe, where the CO2 emissions standards are demanding and becoming more so, the focus on fleets (think things like EV600) is key because as EY research indicates: “the lessons learned from accelerating fleet electrification such as the development of sustainable business models that support charging infrastructure investment and integration of smart charging capability, will enable the wider secondary and passenger vehicle market to transition quicker.” First the fleet. Then the driveway.–gsv