AD #3292 – China Hits Peak ICE; European OEMs Hurt By Ukraine War; Hummer EV Orders Higher Than Expected

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

CHINA HITS PEAK ICE
Sales of cars and trucks with internal combustion engines will hit their peak in China this year or next, and will only go down after that. That’s according to an academic with the Chinese Academy of Sciences. Even more, he says sales of new energy vehicles, or NEVs, will match ICE sales in 2030. NEVs include BEVs and PHEVs. Last year, about 25.5 million light cars and trucks were sold in China and 3.5 million of them were NEVs. That means by 2030, about 12 million electrics and plug-ins a year will be sold in China or about 4 times more than last year. And if China is hitting peak ICE now, that means Europe will not be too far behind, and it will probably happen in the United States well before this decade is out.

EUROPEAN OEMs HURT BY UKRAINE WAR
Like the old song said, “War, what is it good for? Absolutely nothing.” And this war in Ukraine is especially not good for European automakers. LMC Automotive says about 19 manufacturing plants in 6 European countries are losing production because they can’t get parts out of Ukraine, mainly wiring harnesses. VW, BMW, Mercedes, Porsche, Audi, Ford of Europe and Volvo have all reduced production because of this. And it’s hitting the supplier industry too. At least 20 suppliers, including Aptiv, Yazaki, Bosch, and Gentherm have had to shut plants in Ukraine. LMC says all these companies are scrambling to find workarounds and that the shortfall should start to ease up in about a month.

SUPPLIERS SHUT DOWN IN SHANGHAI
Yesterday we told you how Tesla had to shut its plant in Shanghai because of Covid restrictions. And how GM has its Shanghai workers sleeping at its assembly plant. Well, now suppliers are shutting down too. Aptiv and Thyssenkrupp both closed their plants in the city. And Bosch says its plant in Shanghai is working with a skeleton crew. I tell you, this industry just can’t get a break. If it’s not the global Covid pandemic, it’s the global chip shortage, and if it’s not that, it’s war in Ukraine. And if it’s not that it’s an earthquake in Japan, or a giant ship getting stuck in the Suez Canal. I don’t want to say things can’t get worse than this, because I don’t want to jinx the situation.

VINFAST BUILDING PLANT IN NORTH CAROLINA
Vinfast, the Vietnamese automaker, sure is moving fast. It announced plans to build an assembly and battery plant in North Carolina that will be able to build 150,000 electric SUVs a year. Construction on the plant starts this year and it is scheduled to start production in 2024. The models include the VF 9, which is an 8-passenger model and the VF 8, which seats 5. North Carolina claims that plant will generate 7,500 jobs, but that undoubtedly includes the ripple effect that automotive factory jobs generate. The general rule of thumb is that one factory job creates 7 other jobs, mostly from suppliers. So that suggests the employment in the plant itself will be a little over 1,000 people. Vinfast, which became a car company in 2017, is on an aggressive growth strategy. It hopes to build nearly 1 million vehicles a year globally by 2026.

U.S. INVENTORY LEVELS UP A BIT
Automakers in the US will report their March sales on Friday, and we expect the numbers to look miserable thanks to high gasoline prices, rising interest rates and high levels of inflation. One slight glimmer of hope is that inventory levels are looking a little bit better. Wards Intelligence reports that inventory levels are about 12% better than they were in February, when automakers only had 24 days’ worth of inventory. As of now they have 26 days. Still not good, but a little bit better than before.

HYUNDAI INVESTIGATES E-FUEL
Could synthetic fuel save the IC engine? That’s kind of a Hail Mary pass that oil companies and some automakers are praying for. Now Hyundai is joining in on the effort. It’s partnering with the oil company Aramco and the King Abdullah University of Science and Technology in Saudi Arabia to test and develop e-fuels. Over the next two years, they’ll test e-fuel in a hybrid car equipped with an ultra-lean burn engine and compare how much it reduces greenhouse gas emissions compared to regular fuel. E-fuels are created from green hydrogen which is produced by water electrolysis using renewable energy, and carbon dioxide. Hyundai says e-fuels can lower lifecycle emissions by 80% compared to conventional fuel. But other powertrain executives at car companies that we’ve talked to say that e-fuels will take too long to get to the market and will cost too much to prevent a wholesale conversion to electric vehicles.

HUMMER EV ORDERS HIGHER THAN EXPECTED
That new Hummer EV is turning out to be more popular than GM expected. The company says it has 65,000 reservations combined for both the pickup and SUV, with the majority being for the pickup since it was available to order first. That’s far higher than GM expected. And it says the conversion rate from reservations to orders is also much higher than it expected. To keep up with demand, GM says it’s doing what it can to expedite production to get the vehicles delivered on time. Anyone who ordered it early is doing OK. The pickup version is going to customers now. But GM says it won’t be able to fulfill new orders until 2024. And the SUV won’t be available until next year.

LOTUS ELETRE UNVEILED
meet the Lotus Eletre which was unveiled in London to much fanfare yesterday. But even though Lotus celebrates its British heritage, much of the Eletre was developed in China and that’s where it will be built. That’s because Lotus is now part of Chinese automakers Geely. The specs on the first SUV from Lotus are pretty impressive. 600 horsepower. 0 to 62 miles an hour in under three seconds. A 100-kilowatt hour battery pack that delivers a maximum range of 373 miles. An 80% recharge in 20 minutes. Lotus claims this will be the first production car in the world that comes with Lidar, but we think that makes Lotus the third or fourth car company to make that claim. No word yet on how much the Eletre will cost but you can be sure it’s going to be well north of $100,000.

CHINESE EV STARTUPS FLOOD OF NEW MODELS
Chinese EV startups are really ramping up their new model introductions. NIO is coming out with the ET7 and ET5 SUVs. Li Auto will launch the L9. XPeng is coming out with the G9, NETA has its own model S, and Leapmotor has the CO1. All of these new models will be reaching showrooms by the end of next month. And that makes us wonder how Tesla will respond. Elon Musk says it makes no sense for Tesla to intro new models since they’re selling everything they can make right now. But that kind of reminds us of what happened to Henry Ford. He refused to make anything but the Model T because he could sell everyone he made. Meanwhile, General Motors came out with all kinds of different models under different brands. And by the time Henry finally agreed to stop making the T and come out with the Model A, it was too late. Ford lost its number one position in the world and never got it back.

And that brings us to the end of today’s newscast. Thanks for watching, and if you haven’t done so yet, we encourage you to subscribe to our YouTube channel.