AD #3501 – 3 Million Americans Pay Cash for Cars; BMW Dodges Environmental Lawsuit; Looming Shortfall of EV Materials

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

BMW DODGES ENVIRONMENTAL LAWSUIT
BMW just dodged a bullet. The environmental group, Environmental Action Germany, filed a lawsuit against BMW trying to force it to stop selling combustion engine vehicles by 2030. The environmentalists argued that people’s right to property, health and life were being threatened by BMW producing vehicles that emit greenhouse gasses. But a German court rejected the lawsuit and said the automaker was not encroaching on their rights. The environmental group plans to appeal the decision. Last year, a similar lawsuit against Mercedes was also thrown out by a German court. But we expect to see more of this kind of legal action and not just in Germany.  

POLESTAR, RIVIAN SAY AUTO INDUSTRY MISSING CLIMATE GOALS
It’s not just environmentalists who say the auto industry is dragging its feet when it comes to meeting climate goals. Polestar and Rivian say the same thing. The two EV makers commissioned a study by the consulting firm Kearney and it found that the industry will miss the Intergovernmental Panel on Climate Change’s goal to stay below a 1.5-degree Celsius temperature increase by 2050, And it will exceed that goal by at least 75%. The IPCC says that all greenhouse gas emissions need to be reduced 43% by 2030, but the auto industry won’t even meet that 2035. It says the industry can get back on track by doing three things: speed up the transition to electric cars, increase renewable energy in power grids and it needs to reduce greenhouse gas emissions up and down its supply chains.

LOOMING SHORTFALL OF EV MATERIALS
The auto industry is in a headlong rush to make EVs. But can it really get all the raw materials and minerals it needs to make them? A report from the investment firm UP.Partners does not paint a pretty picture. It says demand may not rocket up like some people think, but even more, EV production will fall far short. According to its research, EV battery demand will be ten times higher or more by 2030, but supply won’t be able to keep up. And that means higher prices for electric vehicles. On top of tight supplies and high prices, a lack of charging infrastructure and an overloaded grid, will turn people off to EVs, and that will further hurt production. However, UP.Partners does offer a way out of its doom-and-gloom forecast. And that’s if the government and auto industry come together to fix these issues.

MERCEDES JOINS THE EV VAN RACE
Mercedes revealed the new version of the electric Sprinter. It comes in two body sizes and lengths and offers three battery sizes, 56, 81 or 113 kWh. And the batteries are LFP or lithium iron phosphate. It has a range up to 400 kilometers or just under 250 miles based on the WLTP cycle. One eAxle in two outputs is available, 100 and 150 kW. The new eSprinterl is designed in three modules to boost synergies in production and economies of scale. The front module includes all high-voltage components and can be combined with all eSprinter variants, regardless of wheelbase or battery size. The module for the battery is located in the underbody to increase space. And the rear module, features the eAxle with electric motor. Mercedes is also expanding production of the eSprinter. It’s currently made in Dusseldorf and in the future will be built at another factory in Germany as well as Mercedes’ plant in Charleston, South Carolina. The market launch of the new eSprinter will start in the U.S. and Canada in the second half of this year and will launch in Europe by the end of 2023.

MUSTANG DARK HORSE GETS UPGRADED INTERIOR
Ford calls the Mustang Dark Horse the “pinnacle” of 5.0L V8 performance, so it said it had to pick materials, colors, patterns and finishes that match its track-focused look and style. Its most striking feature is an anodized blue titanium shift knob, which is hollow in the middle so it doesn’t get as hot on a sunny day. Or there’s anodized silver paddle shifters for customers who want the automatic transmission. The Dark Horse also gets its own unique blue stitching and material surfacing, a flat bottomed and suede wrapped steering wheel and optional RECARO seats with blue side bolstering. Sales in the U.S. kick off this summer.

BMW UPDATES X5 & X6
BMW revealed the new X5 and X6. In our opinion they look more upscale with smoothed out body surfacing and a subdued version of its twin kidney grille. Under the hood are updated 6- and 8-cylinder engines, which all come with some form of electrification. The turbocharged inline 6-cylinder produces 375 horsepower, which is 40 more than before, and is paired with 48-volt mild-hybrid or plug-in hybrid technology. The X5 plug-in also features a 194-horsepower electric motor, which is 83 more than the previous version, and a nearly 25% larger battery with 25.7 kWh of usable space that provides an estimated 40 miles of range. The new V8 for M models is a turbocharged 4.4L unit that makes 523 horsepower, enough for a 0-60 time of about 4.2 seconds. The interior features a number of upgrades as well but is highlighted by two large screens brought together into one giant curved display. Production of both the X5 and X6 kicks off this April. The X5’s starting price is between roughly $66,000 and a little over $90-grand, while the X6 starts at about $75-grand and goes up to $94,500.

SHYFT GROUP LAUNCHES CLASS 3, 4, 5 EV VANS
A little over a year ago EV startups were racking up massive stock market gains. Today, they’re all struggling to meet production and the value of their stocks has plummeted. Too many of them tried to grow too fast. That’s why we’re impressed with the Shyft Group, which is going into production with its Class 3, 4 and 5 electric vans called Blue Arc. Instead of taking a “build it and they will come” approach like all the other startups, Shyft first got orders for its vans, and then got ready to build them. The investment in its plant is small, only $16 million, so it should be profitable almost immediately. That plant will make 3,000 vans a year and Shyft already has orders for 2,000 of them. Small numbers to be sure. But “start small, move fast and then grow big” is a strategy that we think will win out in the long run.

3 MILLION AMERICANS PAY CASH FOR CARS
Well, here’s an interesting side effect of higher interest rates that we were not aware of. A record number of car buyers are now paying cash to buy a new car. Pre-Covid, about 13% of car buyers paid cash for a car, but now that’s up to 21%. That means about 3 million people will pay cash for their car in the US market this year. That’s according to Charlie Chesbrough, the senior economist at Cox Automotive. He says that as interest rates on car loans hit 8 to 9%, a lot of people decided they could save a lot of money by paying cash instead of taking out a loan. Keep in mind that the average car today costs about $50,000, so that’s a lot of cash to lay out. Sky high prices have forced a lot of households out of the new car market, so the ones that are left are higher income people. Charlie Chesbrough dropped that gem on Autoline After Hours last week, and you can watch the entire episode on our website and YouTube channel.

CHINA’S EV JUGGERNAUT
Speaking of After Hours, tomorrow’s show is going to be about China’s EV juggernaut and its goal of global domination. Right now China seems to have an insurmountable lead, and despite efforts like the US’s Inflation Reduction Act, China’s EV dominance is only growing. We’ve got two China experts coming on the show tomorrow. Tu Le is with Sino Auto Insights and Michael Dunne is the head of Zo-Zo go. And they say the West better wake up to the threat that it faces. So join John and Gary when the action gets going tomorrow at 3 pm eastern time.

But that brings us to the end of today’s show. Thanks for tuning in.