AD #2324 – GM Drops Monthly Sales Stats, Scott Pruitt Sets Off a Firestorm, JLR Looks to the USA

On today’s show…the EPA set off a firestorm even though no one knows what it’s going to do…did Tesla pull a fast one to make it look like Model 3 production is ramping up fast?…and General Motors decides it’s going to quit reporting monthly sales numbers. All that and more coming right up on Autoline Daily.

This is Autoline Daily the show for enthusiasts of the automotive industry.

SCOTT PRUITT SETS OFF A FIRESTORM
Yesterday, Scott Pruitt, the head of the U.S. EPA, announced that the current regulations for fuel economy and greenhouse gas emissions are not appropriate and need to be revised. Well that set off a firestorm, with environmentalists and Democrats attacking Pruitt, and some, like the NADA and Auto Alliance praised the EPA. Most automakers kept a low profile, except Ford, which stated it did not want to see the standards weakened.

LEGAL BATTLE WITH CALIFORNIA LIKELY
Also, Scott Pruitt said the EPA will review whether California should be granted a waiver to set its own emission standard. That will likely set off a legal battle that could well be determined by the Supreme Court. Automakers want one national standard because trying to build different cars for different states would be a logistical nightmare.

THE STANDARDS KEEP GETTING STRICTER
Here’s our Autoline Insight. The current standards were written in 2011 and 2012, when the price of oil was nearly double what it is today. And everyone was sure it was going higher. So an aggressive target was set at 54.5 miles per gallon. Automakers agreed to that target provided there was a mid-term review by April, 2018 to make sure it was still reasonable. But in January, 2017 the Obama Administration did not want to leave that review to the Trump Administration, and declared that the standards were appropriate. Automakers felt betrayed by that decision, and asked the new Administration to reinstate the review so that their voice could be heard. Keep in mind that the standards will keep getting stricter until 2022. The argument is about where they go in 2023, 2024 and 2025. As written, that’s when the standards really ramp up.

JUST MOVE THE GOALPOSTS TO 2030
But here’s the most important thing to keep in mind. Scott Pruitt and the EPA have not given out any details of what the new standards will be. So everyone is getting pretty mad without knowing exactly what’s going to happen. Here’s Autoline’s position. Instead of a target for 2025, we say move it back 5 years to 2030. That would give automakers another design cycle, which would help them a lot. And we would still get to the same goal. In this case, a little common sense could go a long way.   

Could Jaguar start making cars in the U.S.? That’s coming up next.

JLR LOOKS TO THE USA
Jaguar Land Rover has assembly plants in England, Brazil, China, India and Slovakia. But one day it would like to have one in the U.S. CEO Ralf Speth tells WardsAuto they could justify one if it hits an unspecified sales target. Last year JLR sold over 144,000 vehicles in the U.S., which was an 8.8% increase and the biggest volume jump of any automaker. Without sighting specifics, Speth says the company would have to hit a certain volume of vehicles and cultivate some dominant models to justify local production.

BEWARE OF THE TESLA BURST
Tesla has been in a mad scramble to boost production of the Model 3. Elon Musk promised the factory would be churning out 2,500 Model 3’s a week, and if Tesla misses that target, investors could pummel the stock. But some analysts are warning that Tesla may have produced a short burst of production to make it look like it hit Elon’s goal. Brian Johnson at Barclays warns that Tesla may have scheduled downtime to stockpile batteries, all in a ploy to boost production for the last week of March. Tesla should release its official numbers sometime later this month.

WE GOT TOOK!
We got took, hook, line and sinker! We ran a story yesterday about a 3D printer that fits on the back of your motorcycle. Well, it was an April Fool’s joke. We’re the fools in this one and we tip our hat to the folks at BMW Motorrad for pulling this one over.

General Motors is making a huge mistake and we’ll tell you why after this.

MICHIGAN TO MAKE 3D MAPS WITH STATE VEHICLES
The state of Michigan is starting a pilot program to use state-owned cars and trucks to provide real time 3D mapping of roads. The state is working with the supplier company Continental to help create more accurate maps for Level 4 and 5 autonomous driving. The program will start out small scale, with two state officials collecting data everywhere they drive. But if that test works out, the state will attach “machine vision devices” to snow plows, police cars and other government vehicles to map changing road conditions, like potholes, cracks and lane markings, which will be used to make up-to-date 3D maps for self-driving cars.

GM DROPS MONTHLY SALES STATS
Later today automakers will report their sales in the U.S. market for March. But General Motors says this is the last time it will report monthly sales. Going forward, GM says it will only report sales on a quarterly basis. It says that there is too much fluctuation and seasonal variation on a monthly basis that can skew the numbers. Here’s our Autoline Insight. Basically, GM is right. There is a lot of statistical noise in the monthly numbers. Even we try to give a three-month running average when we make a point about something occurring in the market. Even so, monthly sales are a critical data point to keep up to speed with what’s happening in the marketplace. No doubt in a short amount of time, all other automakers are going to follow GM. And that will make it a lot harder to figure out what’s really going on in the automotive industry.

But that wraps up today’s report, thanks for watching and please join us again tomorrow.