Tag Archives: Joe White

Tesla’s Loyalists

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By Gary S. Vasilash

Tom Libby, associate director and loyalty principal, S&P Global Mobility, thinks that what are ordinarily considered “conventional” or “traditional” automakers have a problem. This isn’t a problem that happened yesterday or last week. It is a problem that has been there for a few years now. A problem that execs at those companies talk about a lot and have made efforts—and for a long time these efforts were not much beyond lip-service—to address it. A problem that is now garnering sufficient attention, though results will vary.

The problem is Tesla.

Tesla vis-à-vis owner loyalty.

Libby charts owner loyalty to a brand. With regard to luxury brands including BMW, Mercedes, Audi, Lexus and Tesla, owner loyalty has been declining. Yet Tesla’s decline still puts it in a position that is much higher than the others. People who buy a Tesla often by another Tesla. The same isn’t as much the case with others. Tesla even takes market share from a number of mainstream brands, as well.

The loyalty rate for the Tesla Model 3 this past March was 76.6%, the sort of figure that program managers at other OEMs wish they had.

Libby says, however, that the Porsche Taycan, which has been available on the market for a few years and the Mercedes EQS, a new entrant, are gaining loyalty.

But if you take into account all of the other models being offered by other OEMs—remember: both luxury badges and well as mainstream—then the dominance of Tesla is rather astonishing.

A question that arises is whether, as other OEMs come out with more-compelling EVs (e.g., while the Cadillac LYRIQ has much to be said for it, remember that GM also foisted things like the Spark EV on the market as though it had relevance when things like the Model S and Model X were on offer: not that there was cross-shopping between those two Teslas and the tiny Chevy, but keep in mind that people were aware of what was being put out there by whom, so Tesla gained share of mind) whether Tesla’s loyal following will peel off.

Let’s face it: there is something to be said about gravity.

You can see the conversation with Libby on this edition of “Autoline After Hours” with “Autoline’s” John McElroy, Joe White of Reuters and me here.

Talking Tech With NVIDIA

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By Gary S. Vasilash

NVIDIA is a company that was once familiar primarily to gamers because of the GPU chips that it had developed that made rendering both fast and highly detailed.

Now NVIDIA is as familiar to those in the auto world, as it is working with Jaguar Land Rover, Mercedes, Volvo and more.

Lucid Motors is using NVIDIA tech in its Air. BYD has announced it is working with the company, as well.

NVIDIA developing maps for autonomous driving operations. (Image: NVIDIA)

What’s interesting is that these companies are using NVIDIA tech to build systems that provide the characteristics that they are looking for to make their vehicles distinctive.

NVIDIA is not merely producing processors that have massive processing capability—the Jetson Orion operates at up to 275 TOPS—that’s trillion operations per second—but it is developing software that will help facilitate autonomous driving operations.

The company has developed a mapping system that not only features information collected by specific vehicles, but which takes in crowdsourced information so that there is an accurate representation of what is going on: say a construction zone has popped up since that information was collected. The system has it.

On this edition of “Autoline After Hours” NVIDIA vice president of Automotive Danny Shapiro discusses what the company is doing and how it is doing it.

Arguably NVIDIA is at the forefront of developing the technology that will change transportation in many ways.

He talks with “Autoline’s” John McElroy, Joe White of Reuters and me.

And during the second half of the show McElroy, White and I discuss a variety of topics, including the opening of the Tesla plant in Berlin, the speculation that Porsche might build the long-rumored Apple car, the announced range of the Ford F-150 Lighting, and a variety of other subjects.

And you can see it all here.

LMC’s Schuster on the State of the Industry

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By Gary S. Vasilash

There is pent-up demand. People are driving more. But. . .there are not enough vehicles out there to fulfill demand. There is that chip shortage accounting for the vast majority of vehicles not being on lots (an impact on the order of 85-90% of missing vehicles). According to Jeff Schuster, president of Global Forecasting, LMC Automotive, inventories will improve. Which will help that situation. Somewhat.

Because there is that other big issue that those who are in the market for a new vehicle: cost. (Latest average transaction price according to KBB: $46,404).

Schuster suggests that if prices stay elevated—and for the foreseeable future there doesn’t seem to be any driver for why prices would decrease—there are going to be plenty of people who are sitting on the sidelines, not going out and buying new vehicles.

So on the one hand, while OEMs and dealers are making profits by producing and selling high-ticket vehicles rather than more conventional family haulers (i.e., if there is a limited number of chips, then they get installed in the more-profitable vehicles); on the other hand there are people who can’t afford to buy something that has a price tag more analogous to luxury vehicles, so they are likely to figure out the ways and means to get transportation at a more affordable rate.

But here’s something to consider: What if an OEM decides that there could be an opportunity to sell entry-level vehicles, vehicles that have slim margins, but vehicles that could sell in large numbers? Schuster says this is not entirely outside the realm of possibility.

And what if said OEM happens to be one that isn’t particularly familiar to U.S. buyers: as in a Chinese company coming in with low-end vehicles? Schuster says that this is a possibility—yes, even despite the currently existing 27.5% tariff that is tagged onto vehicles imported to the U.S. from China. Apparently there is a lot of capacity to build vehicles in China, and so there could be an interest in keeping those plants running.

EVs? There will be more of them. (Which, Schuster notes, is something that isn’t going to reduce the price paid by consumers as they tend to be more expensive than comparable ICE-powered vehicles.)

Tesla? Yes, it will continue to grow. Schuster says that while it is ahead of other global automakers in terms of tech—a cycle or two ahead of others—LMC analysts anticipate that it will begin to lose some of its dominance in the EV space because of the other OEMs entering it.

Jeff Schuster has a whole lot more of interest to say about the state of the auto market today and in the near future on this edition of “Autoline After Hours.” He talks with “Autoline’s” John McElroy, Reuters’ Global Automotive Correspondent and me.

And you can see it here.

Thinking About Buying a New Vehicle? Think Hard

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. . .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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Arrival: The Cleverest EV Company on the Planet?

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Making electric commercial vehicles seems to be what several companies are doing. But the approach of this U.K.-based company is unlike what those other companies are doing.

By Gary S. Vasilash

One of the more interesting companies in the electric vehicle space is Arrival, a firm that was founded in London in 2015, where it has its HQ, and which has also established a North American HQ in Charlotte, North Carolina.

Arrival is in the business of developing electric vehicles.

Arrival Automotive CEO Mike Ableson. (Image: Arrival)

Initially a bus (start of production: Q4, 2021). Then a commercial van with a payload up to 4,400 pounds (start of production: Q3, 2022). Then a larger van with a payload up to 8,800 pounds (start of production: Q3, 2022). And eventually a small consumer vehicle (start of production: Q3, 2023).

Here’s one thing that makes these vehicles notable: There is a modular structure so the vehicles can be tailored to the specific user and application. While “special builds” generally drive costs, starting with this design approach helps minimize that.

Here’s one thing that makes the Arrival approach notable: Rather than building these vehicles in conventional automotive assembly facilities that have a stamping plant and paint shop, as Mike Ableson, CEO of Arrival Automotive (and 35-year vet of GM, where his last position was vice president of EV Infrastructure, with a variety of advanced technology, strategy and engineering positions before that), points out on this edition of “Autoline After Hours,” the Arrival approach, known as “microfactories,” is predicated on establishing a manufacturing facility within what would ordinarily be considered a warehouse.

This is low-volume, regional manufacturing.

It will put its first U.S. microfactory, which will start producing buses later this year, in York County, South Carolina. There will be a second in West Charlotte, North Carolina, where as many as 10,000 electric delivery vans will be built, with production starting in the third quarter of 2022. It has another microfactory in Bicester, UK.

The vehicles have proprietary composite body panels so there is no stamping plant needed. The colors are molded in the material so there is no paint shop. The factory utilizes robotic transport vehicles that move from cell to cell so there are no traditional assembly lines. The assembly is done with mechanical fasteners and adhesives so welding equipment isn’t required.

Ableson points out that batteries are a big cost component of all electric vehicles. He also notes that essentially all OEMs are faced with the same type of battery costs. So, he explains, that the way to keep costs down is not only in establishing production capabilities, but also in designing and engineering the vehicles is such a way that they can minimize overall cost.

The company uses the term “radical impact” in relation to what it is doing.

Arguably, if they pull off what they are undertaking, that won’t just be corporate rhetoric but a true statement.

Ableson talks on the show with Joe White of Reuters, Mike Austin of Hemmings and me.

Then White, Austin and I discuss a variety of other subjects, most of which have to do with vehicle electrification claims and efforts being undertaken by companies including Honda, Volkswagen, Ford and General Motors.

And you can see it all here.