Listen to “AD #3276 – GM Launching New Halo Brand in China; Does Tesla Hold Down Sales in China?; U.S. Developing VTOL Regs” on Spreaker.
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Runtime: 11:14
0:07 GM to Launch All-New Car Brand in China
1:05 GM Business in China Falling Fast
2:26 GM Locking Up Raw Materials for Batteries
3:36 China’s Top OEMs Outbuild Many Western OEMs
4:58 Does Tesla Deliberately Hold Down Sales in China?
5:58 True Car Offers Online Buying for Any Dealership
6:42 EPA Wants to Slash Heavy Truck Emissions
8:03 Hyundai & IVECO Explore Partnership
8:29 U.S. Working on VTOL Regs
9:16 Thanks to Nissan Ariya There’s Soup for You!
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GM TO LAUNCH ALL-NEW BRAND IN CHINA
General Motors is going to launch an all-new brand in China. The company put out a statement saying it will start selling upscale cars in China that are manufactured in the United States. And GM will wholly own the new company that will sell these vehicles, meaning it will do this without any Chinese partners. The new brand would be positioned above Cadillac and will sell vehicles currently not available in China. We think this has to be an all-electric brand if GM is going to wholly own it and would include vehicles like the Hummer EV and even the hand-built 2025 Cadillac Celestiq, which would probably not be branded as a Cadillac in China. But it could also include the Corvette, which GM does not sell in China. Gray-market ‘Vettes reportedly go for $280,000.
GM BUSINESS IN CHINA FALLING FAST
Here’s our Autoline Insight. GM’s sales and profits have dropped off alarmingly in China. In 2016 GM sold 3.9 million vehicles in China and made $1.9 billion in profit. Last year it sold 2.9 million vehicles and made a $1 billion profit. So sales are down by a million vehicles and profits have been cut in half. While Cadillac is doing well in China, Chevrolet is down dramatically and so is Baojun, which is GM’s home-grown Chinese brand. While Wuling is selling well, especially with its little $4,500 Mini EV, those cars don’t generate much profit. And GM only owns 44% of the Wuling joint venture, so it gets less than half of those meager profits. As China expert Michael Dunne of Zo-Zo Go has pointed out, Chinese automakers are elbowing foreign automakers out of the low-end and middle part of the market. And they’re doing it by offering very competitive cars at lower prices. A better strategy now is for foreign OEMs to move upscale, which explains GM’s move. Also, by making this a wholly-owned effort, General Motors will not have to share any of the profits with a partner.
| GM IN CHINA | ||
|---|---|---|
| SALES | PROFITS | |
| 2016 | 3.9 M | $1.9 B |
| 2021 | 2.9 M | $1.0 B |
| Source: GM Annual Reports | ||
GM LOCKS UP RAW MATERIALS FOR BATTERIES
Speaking of GM, it’s racing ahead to lock down North American sources for the raw materials needed for electric vehicles. It’s expanding a previous joint venture with South Korean chemical company, POSCO, to process cathode material, like nickel and lithium, for EV batteries. Now the two of them want to build a $400 million facility in Quebec. It would also create about 200 jobs to produce the cathode material, which would be used in the Hummer EV, Silverado EV and Cadillac Lyriq. That means a lot of the material will come to GM’s battery and vehicle manufacturing sites in the U.S., but Canada’s first full EV production plant in Ontario will launch later this year, so some supplies will likely go there too.
CHINA’S TOP OEMs OUTBUILD MANY WESTERN OEMs
China has 5 state-owned automakers that are growing into production powerhouses. In fact, they’re even bigger than several famous western car companies. Since these Chinese companies have joint ventures with foreign automakers they don’t have many car sales of their own. But we took a look at their production numbers and that really tells the story. SAIC, or the Shanghai Automotive Industry Company, has joint ventures with Volkswagen and General Motors. It made over 5.4 million cars last year. That makes it bigger than Honda. FAW, or First Auto Works, makes cars for VW, GM and Toyota. Last year it made 3.5 million vehicles, or nearly as many as Ford. Dongfeng, which is based in Wuhan, makes cars for Kia, Honda, Nissan, Peugeot and Renault. Last year it made over 2.9 million vehicles, which is more than BMW. And GAC, or Guangzhou, makes vehicles for Stellantis, Mitsubishi and Toyota. It made 2.1 million vehicles, making it bigger than Mercedes-Benz. And Changan, which makes cars for Ford and Mazda, is quickly closing the gap. It made just under 2 million vehicles.
| TOP CHINESE OEMS BY 2021 PRODUCTION | |||
|---|---|---|---|
| SAIC | 5.4 million | Honda | 4.1 million |
| FAW | 3.5 | Ford | 3.9 |
| Dongfeng | 2.9 | BMW | 2.5 |
| GAC | 2.1 | Mercedes | 2.0 |
| Changan | 1.9 | ||
| Source: company reports | |||
DOES TESLA DELIBERATELY HOLD DOWN SALES IN CHINA?
Speaking of China, Tesla made 56,500 cars there last month, but about 33,300 of them were exported, with most of those presumably going to Europe. But now that Giga Berlin is coming on stream, Tesla will probably not export as many cars out of China. It will probably start increasing sales there instead. And that makes us wonder if Tesla deliberately kept sales in China down to avoid too much scrutiny from the authorities? If Tesla devoted all its Chinese production to the Chinese market, it would far outsell all the Chinese EV companies that compete with it, that is to say, not including cheap, little electric city cars like Wuling’s Mini EV. While the Chinese government loves seeing Tesla generate so many exports, in today’s political climate it may not like the idea of an American company dominating one of its targeted industries.
TRUE CAR OFFERS ONLINE BUYING FOR ANY DEALERSHIP
Seems like everyone wants to start selling cars online, so True Car sees a real opportunity. It’s offering a new online buying service called True Car Plus. Here’s Mike Darrow, True Car’s President and CEO.
(Clip from video can only be viewed in the video version of today’s show.)
Customers will be able to shop, arrange for financing and even get home delivery. What makes this so interesting is that any dealer with any brand is welcome to sign up for the service. True Car ran a pilot of the service in Florida and is now ready to roll it out nationwide.
EPA WANTS TO SLASH HEAVY TRUCK EMISSIONS
The EPA wants to slash heavy-duty truck NOx emissions by as much as 60% by 2045. The new standards would go into effect starting in 2027. The EPA is also proposing to set stricter greenhouse gas emission standards for certain categories of commercial trucks. It estimates this will cost manufacturers $19 to $31 billion through 2045. However it will have a net benefit to society of up to $220 billion. The EPA says there will be up to 2,100 fewer premature deaths and 3.1 million fewer asthma cases thanks to improved air quality.
HYUNDAI & IVECO EXPLORE PARTNERSHIP
The Hyundai Group wants to be a leader in electric commercial vehicles and what are called PBVs or Purpose Built Vehicles, which include things like delivery vans. So, it announced a partnership with IVECO to explore possible collaborations on electric and fuel cell platforms as well as autonomous and connected technology. No word yet on when we could see something from the two companies.
U.S. WORKING ON VTOL REGS
Hyundai also wants to get into eVTOLs or electric vertical take off and landing aircraft. So does GM, Toyota, United Airlines, Stellantis and more. And now the U.S. Transportation Department says it will review safety work, including certification and validation, done by the FAA on eVTOLs or air taxis. Aircraft like these are going to require new regulation because they are planned to be used at low altitude in urban areas and don’t operate like normal planes. So, it could be a while before new rules are written. But when Morgan Stanley estimates the market could be worth $1 trillion by 2040, you can understand why there’s activity in the field.
THANKS TO NISSAN ARIYA THERE’S SOUP FOR YOU!
Nissan is having some fun showing off the features of its soon-to-launch electric crossover, the Ariya. It made a video of an electric food tray delivering bowls of ramen to customers in a restaurant. And thanks to its e-4ORCE all-wheel drive technology it doesn’t spill a drop. The e-4ORCE system in the Ariya manages power output and braking performance of the two electric motors to provide a smooth and stable ride. While you’re not going to learn anything more from a video like this, they can be great little marketing tools, especially on social media where they can rack up tons of views. It’s similar to several years ago when Nissan highlighted its autonomous technology with self-parking office chairs.
OUT OF PRISON & BACK ON AUTOLINE AFTER HOURS
You won’t want to miss Autoline After Hours this Thursday. Here is a picture of John and Brett Smith from the Center for Automotive Research with our special guest at a federal penitentiary. Our guest is Oliver Schmidt, who was smack dab in the middle of Volkswagen’s dieselgate. In fact, Oliver is one of the few VW executives to spend time behind bars, he was at a federal prison for 5 years for his role in the emissions scandal. Now he’s ready to talk about what went down and what it was like to spend time in a federal penitentiary. Brett Smith will also be on the show.. So join us for some of the best insights into what’s going on in this automotive industry.
But that’s it for today, thank you for watching.
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Seamus and Sean McElroy cover the latest news in the automotive industry for Autoline Daily.
