AD #2607 – Mexico Tariffs Could Cost OEMs Billions, FCA/Renault Merger Facing Issues, Musk Touts Electric Pickup

This is Autoline Daily reporting on the global automotive industry.

FCA/RENAULT MERGER FACING ISSUES
The proposed merger of Fiat-Chrysler and Renault is running into some sticky issues. For one, the French government wants more, a lot more. Bloomberg reports it is demanding that the operational headquarters be headquartered in Paris. It wants a seat on the board of directors. And it wants a special dividend for Renault shareholders. Remember, it owns 15% of Renault. Meanwhile, the CEO of Nissan, Hiroto Saikawa, says that if Renault and FCA do merge, then that changes the structure of Renault, and that will require a fundamental review of the whole Alliance. Here’s our Autoline Insight: All this points out the problems with mergers and alliances. It sure is hard to get everyone to agree to anything, especially in a timely manner. And that sure can bog down the whole process when you’re trying to figure out who’s products, and platforms and powertrains to use.

MEXICO TARIFFS COULD COST OEMs BILLIONS
Last week, President Trump threatened to increase tariffs on goods coming in from Mexico, if it doesn’t stop illegal immigrants coming to the U.S. A 5% tariff would kick-in on June 10th, increase to 10% on July 1st and go all the way up to 25% by October, if the Administration doesn’t feel like Mexico is properly addressing the problem. But a new report from Deutsche Bank says that would hit the Detroit automakers hard and cost them billions of dollars. If the tariff goes up to 25%, it would cost GM $6.3 billion in annual profits, $4.8 billion for FCA and $3.3 billion for Ford. GM would have to raise the price of its cars by $2,400, FCA $2,200 and Ford $1,600. Including all car brands, the average price of cars would go up $1,300 for consumers. The report also said the tariffs could cut vehicle sales by 3 million units annually.

MUSK TOUTS ELECTRIC PICKUP
Elon Musk says Tesla’s pickup, whenever it comes out, will be a better truck than the Ford F-150 and a better sports car than the base Porsche 911. He wants the truck to be priced just under $50,000 and says it will deliver 400-500 miles of range, and 300,000 pounds of towing capacity–which would make it the towing champion of all pickups by a factor of ten. We don’t think he can deliver all this for under fifty-grand. Presumably he’s tossing out stats on an up-model version that’s going to cost a lot more than $50,000.

MITSU WANTS UK TO OFFER PHEV INCENTIVES
The U.K. government set up ambitious goals for reducing emissions, but last year it ended incentives for plug-in hybrid buyers and reduced them for EVs. It made the change because it felt the incentives had helped establish the market for plug-ins and it was time to focus on EVs. But now, only about 1% of new-car buyers are going for electrics. Mitsubishi says the U.K. would get closer to and meet some of its goals if it again started rewarding buyers of plug-in hybrid vehicles. A survey shows owners of the Outlander PHEV are able to drive in electric-only mode half the time. It also says plug-ins are a great way to help familiarize people with EVs and that a quarter of Outlander PHEV owners are most likely to consider a BEV for their next purchase.

VOLVO CRASH TESTS BIKE HELMETS
Volvo is partnering with POC, a Swedish company that makes sports and safety equipment, to crash test bike helmets against cars. As part of the test, crash test dummies wearing bike helmets are launched into different areas of the hood, at different speeds and angles, to measure the safety of the helmet. The companies say these tests will help improve the safety of bike helmets and are more protective in an accident involving a bike and a car. But why the heck is a car company crash testing bike helmets? Volvo’s brand reputation is built on safety, but nowadays all automakers have to meet the same safety standards. So tests like this are a way for Volvo to keep promoting its safety image.

WEEKEND RACE RESULTS
In racing news over the weekend, the rain-soaked and delayed Dual Number One at the Detroit Grand Prix was won by Josef Newgarden in his Chevrolet, just beating out Honda driver Alexander Rossi. And yesterday, Scott Dixon won Dual Two in his Honda. A shout out to rookie Marcus Ericsson for finishing second, his first podium. In NASCAR, Kyle Busch powered his Toyota to the first spot in the Pocono 400.

We’ve got a great Autoline After Hours this Thursday. It’s about the SAE’s Autodrive Challenge, where 8 universities are competing to develop autonomous cars. General Motors gave each team a Chevrolet Bolt EV, and we’ll show you how they’re getting converted to AVs and introduce you to some of the students who are doing it.

CAN AV INTERIORS LAST A MILLION MILES?
And speaking of After Hours, last week Jeff Stout from Yanfeng Interiors had some interesting insight into autonomous, ride-sharing vehicles. As you know, some experts are predicting these vehicles could be used up to a million miles or more. But can an interior last that long?

(The AAH preview is only available in the video version of today’s show.)

There’s more great insight about interiors in that show and you can watch it right now on our website or YouTube channel.

And that brings us to the end of today’s report. Thanks for watching.