AD #2836 – Failing Rental Co’s Will Hurt Sales; New Police Chevy Tahoe; Lordstown Partners w/ Elaphe on Hub Motors

This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.

U.S. POLLUTION LEVELS SEE BIG DROP
Have we ever breathed such clean air in our lives? With most industry closed and traffic at levels most of us have never seen in our lifetimes, air quality has improved dramatically. Some of the most polluted cities in the world, especially in India and China have seen the biggest improvements. In the U.S., NOAA or the National Oceanographic and Atmospheric Administration, says urban air pollution, including NOx, VOCs and green-house gasses dropped dramatically. One NOAA researcher says these reductions could be permanent if half of the U.S. car fleet was electric and more people started working from home. Don’t hold your breath waiting for half the U.S. car fleet to be electric. Even if half of all new car sales were EVs starting today, it would take until 2055 until half the fleet was electric. But we do think that a lot more people will choose to work from home and we have a lot more about that coming up later in the show.

AUTO INDUSTRY RELIES ON RENTAL FLEET SALES
The drop in travel is really hurting the daily rental companies, and Hertz looks like it’s teetering on the brink. It warned investors that it may not survive in a year. Billionaire investor Carl Icahn owns 40% of the company stock and it seems unlikely he would just walk away from that investment. But if the rental car business is not going to recover anytime soon, he may have to. Here’s our Autoline Insight. The daily rental companies actually make their money by selling cars, not by renting them. The rental fees just pay for depreciation and maintenance. But used car prices have collapsed and that’s really hurting all the rental companies. This is setting off alarm bells in the auto industry. In the U.S. market alone, the daily rental companies buy almost 2 million vehicles a year.

TRAFFIC STARTS TO PICK BACK UP
But you better breathe all that clean air while you can because traffic levels are starting to go up again. The Associated Press reports that traffic in the U.S. was up 60% last week compared to the lowest levels of the pandemic crisis. Even so, traffic is still about half of what it would normally be. Interestingly, the AP found that there is little difference in the miles travelled in states that implemented tight lockdown procedures versus those that were not so strict or have already started to open up.

ELON MUSK TALKED WITH TEXAS GOVERNOR ABOUT MOVING
Sure looks like Elon Musk is serious about moving Tesla’s operations out of California. Reuters reports that Musk and Texas Governor Greg Abbott spoke this past weekend about Tesla moving to the Lone Star State. Abbott acknowledged the conversation and did not provide details but did say that Musk is “…genuinely interested in Texas and genuinely frustrated with California.” He also said that Texas would be the perfect fit for Tesla. Musk’s threat came after officials in the county where its Fremont, California plant is located said it had to remain closed due to the coronavirus. But Musk ignored those lockdown measures, filed a lawsuit, opened the plant anyway and dared officials to arrest him. Instead, those officials allowed Tesla to reopen its plant. As we reported yesterday, there was no way they could keep Tesla closed at the same time every other automaker in the U.S. is starting to resume production.

TOYOTA CUTS TRAVEL AND MEETING TIME
Akio Toyoda says he’s learned a lot about having employees work from home, and it’s really opened his eyes to new possibilities. He says he’s spending 30% less time in meetings and has cut his paperwork in half. And if you know anything about meetings in big corporations, there’s always pre-meetings to prepare for the meetings and then follow-up meetings after the big meeting. Akio says they’d be working off information that was a couple of weeks old, but now he just gets on a video conference without any prep work and makes decisions right there and then. Bloomberg reports that Akio is even questioning Toyota’s practice of what it calls Genchi Genbutsu, which roughly translates to “go see for yourself.” The idea is that if you see it with your own eyes you can solve problems faster. But that involves a lot of travel and Toyota cut all travel for its employees by 80% this year due to the pandemic.

DESIGNERS STRAYING FROM THEIR SIGNATURE STYLE
Akio isn’t the only one thinking this way. I just interviewed Tom Kearns, the head of design for Kia Motor America, and asked him how his design staff is getting things done while working from home. Take a look.

Tom Kearns, Head of Design, Kia Motor America
I’ve got to say it was a little awkward at first but I must say in the past couple of weeks we’ve really sort of got into a groove. And I have to say some of the designers have blossomed in their creativity while being at home. I don’t know what it is. Maybe it’s just being around their pets or their family or what it is, but some of their best work I’ve seen actually has sprouted up recently.

John McElroy, Autoline
You know it’s funny you mention that. We had an interview with Ralph Gilles at FCA and he was saying the exact same thing. What are you seeing specifically when you look at the sketches or the work that they’re submitting? What’s really standing out in you mind?

Tom Kearns
Well, maybe it’s just the new environment. You know a lot of designers have their signature style. Sometimes in the business we say everyone has got one design. So you kind of expect each designer, once you give them a design brief, you know what to expect. But recently, I don’t know what it is, but some of the designers have come up with things that I’ve never seen them come up with before. I can’t really put my finger on it, I wish I could. But maybe there’s something to be learned from this situation on how we work in the future.

John McElroy
I hear a lot of people talking about that. Like you say, if you’re a clay modeler no, you’re sitting home and not doing much work wise. But I’ve talked to other industry execs and they say they’re amazed by how much work is actually getting done by people at home. So maybe we will change going forward.

Tom Kearns
I think especially in our creative business, we really have to think about what we can do to keep the environment and the surroundings for those creative type people fresh and let them free wheel a little bit more.

NEW CHEVROLET TAHOE FOR LAW ENFORCEMENT
Chevrolet recently revealed the new Tahoe and now it’s showing off the law enforcement version. There’s only two pictures to show, so we’ll make the highlights quick. It comes in two packages, one for high-speed pursuit and the other for off-road. Both are powered by a 5.3L V8 with a 10-speed transmission. Upgrades included a stiffer suspension setup, lower ride height, larger Brembo front brakes, heavy-duty rear diff and special Bridgestone tires that reduce stopping distance by 11 feet from 62 MPH. You’ll start seeing cops in the new Tahoes early next year.

LOTUS EVIJA AERO MAKES OTHER SPORTS CARS LOOK LIKE KITES
Lotus went into more detail about the aerodynamics of its all-electric hypercar, called the Evija. The overall focus is downforce and to get as much as possible from the car, which is made from a single piece of carbon fiber. Rather than try to direct air around the car, Lotus sucks it in to maximize downforce, then vents it out the rear through Venturi tunnels. Active aero comes in the form of an adjustable rear wing, which also features an F1-style Drag Reduction System. Lotus says the Evija will be the lightest EV hypercar and have a battery pack mid-mounted behind the seats. While it did not reveal the drag or downforce numbers, when asked to compare the Evija to a regular sports car, Lotus’ chief aerodynamicist says, “It’s like comparing a fighter jet to a child’s kite.”

LORDSTOWN PARTNERS WITH ELAPHE FOR IN-WHEEL HUB MOTORS
We have more information about the in-wheel hub motors that will power Lordstown’s electric pickup truck, the Endurance. They’re being developed by a company called Elaphe, who will also help support and manage the 20,000 square foot production line required to make the motors at Lordtown’s plant in Ohio. That means the hub motors will be put together by Lordstown employees rather than having them supplied. And to give a better idea when we’ll actually see an Endurance rolling down the road, that production line won’t be making motors for beta and pre-production vehicles for another 6 months and won’t hit full production capacity for another 9 months.

A CAR SHOW FOR DIECAST MODELS
They say that the difference between men and boys is the price of their toys. Well, here’s a chance for enthusiasts to show off their real toys. The Isolation Island Concours D’elegance is a Facebook car show for diecast and resin model cars. There are a number of classes a vehicle can be entered into and the model can’t have cost more than $350. There’s even actual Concours judges, like former Autoline guests Ralph Gilles and Bill Warner, who rate the entries based on 4 to 6 pictures and a story of the vehicle provided by the owner. Winners are also given real trophies at award presentations. If you’re interested about learning more or maybe even submitting a car yourself, we’ll provide a link in the transcript or description box below.

Don’t forget to join us for Autoline After Hours tomorrow when Paul Eichenberg will be our special guest. Jamie Butters from Automotive News will be there too. So join me and Gary for some of the best insights into the automotive industry.

And that brings us to the end of today’s report, thanks.