AD #3896 – Foreign Plants in Trouble in China; EU Sales Fall 18%, EVs Plummet 44%, Tesla Drops 43%; ACEA Calls for Immediate Emission Relief

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

U.S. RATE CUT COULD ACCELERATE CAR SALES
We start out today’s report with good news for the American market. The U.S. Federal Reserve cut its prime interest rate by half a percentage point and automakers, car dealers and car buyers are rejoicing. This is going to make buying a new car more affordable for more consumers. It’s also going to help those with lower credit scores qualify for a loan, and will make it cheaper for car dealers to floorplan their inventory. The new prime rate is now just under 5% and many economists expect the Fed to follow up with further rate cuts if the inflation rate remains stable.

EU SALES FALL 18%, EVs PLUMMET 44%
Meanwhile, in the EU, things are going from bad to worse. New car registrations dropped significantly last month, falling more than 18%. Sales were down for almost every automaker and in almost every country, selling a bit over 643,000 vehicles. And when you include the Scandinavian countries and the UK, total sales came to almost 756,000 units, down 16.5%. EVs fell an alarming 44%. Their market share is now down to 14.4% compared to 21% a year ago. PHEVs fell by more than 22%. And for some brands, it was a disaster. Fiat was down almost 50%. Tesla was down 43%. The only brands that saw sales go up were Volvo, Lexus and Skoda. And sales of hybrids continue to make gains, up 6.6%.

ACEA CALLS FOR IMMEDIATE CO2 EMISSION RELIEF
Not surprisingly, the ACEA, which represents Europe’s automakers, is calling for urgent action from governments across the continent. It’s calling for an immediate relief from CO2 targets slated for 2025. With EV sales plunging, automakers will not meet those emission targets and face billions of euros in fines. It says the law’s inability to adjust to real-world developments is going to damage the industry.

STELLANTIS FAILS TO SELL CHINA PLANT
Now let’s move over to China where foreign automakers are stuck in a downward spiral they can’t seem to get out of. Stellantis can’t find anyone to buy its empty assembly plant in southern China. Bloomberg reports that this is the third time Stellantis has tried to sell the plant at auction but can’t find any buyers, despite asking only $174 million. The original investment in the plant was around $700 million. It was built in 2012 with the capacity to make 144,000 vehicles and 220,000 engines a year. But in China these days no one is interested in a plant tooled to make internal combustion engines.

VW CLOSES CHINA PLANT
And Volkswagen is getting ready to close the first or possibly several assembly plants in China. That plant, in Nanjing, is a joint-venture facility with SAIC and is capable of making 360,000 cars a year. VW is also conducting a strategic review of the Skoda brand, suggesting it could exit the Chinese market. We think General Motors will also announce at least one plant closing in China before long, as foreign automakers are facing up to the reality that they’re never going to regain the market share that they’ve lost. And this could be the beginning of the Great Shake Out that everyone’s been anticipating. One thing’s for sure, as foreign automakers close plants and possibly drop brands, it’s only going to make the Chinese auto industry even stronger. There’s too much overcapacity in China, which is a key reason for the price war there. As foreigners cut back, the situation is only going to improve.

WAYMO & HYUNDAI TEAM UP ON AVS
Waymo has found another partner for its self-driving vehicles. This time it’s Hyundai. According to Korean newspaper Electronic Times, the two companies have met more than three times to discuss equipping Ioniq 5’s with Waymo’s sixth-gen autonomous system. They would replace the vehicles Waymo is developing with Chinese brand Zeekr, which is owned by Geely. In a statement to Reuters, Waymo disputed the report and says it’s working to validate its technology into Zeekr vehicles and it will introduce them into its fleet when they’re ready. Zeekr also said there’s been no change in its partnership with Waymo. And Hyundai reiterated its plan to sell its own self-driving platform to other companies. But by teaming up with Hyundai, the vehicles wouldn’t be subject to new tariffs the U.S. has imposed on Chinese made vehicles.

 

ZF TURBOCHARGES FUEL CELLS, SORTA
The supplier ZF is using its knowledge of turbochargers to improve fuel cells. Last year it unveiled the Fuel Cell Air Compressor, which uses turbo technology to deliver air more efficiently to the fuel cell stack. And now it’s showing the Hydrogen Recirculation Blower, which also uses turbo tech and is meant to be combined with the compressor to improve the efficiency of fuel cells even more. The blower features an electric motor that can spin up to 100,000 RPM to separate water and air from unused hydrogen on the anode side of the stack and then send that hydrogen back into the system. ZF didn’t say what kind of improvements it could make, but says it will also extend the life of a fuel cell.

FORD & ZF DEVELOP EV DRIVE FOR BIG RIGS
Speaking of ZF, it revealed that it’s going to supply Ford with electric drives for heavy-duty commercial trucks that Ford sells mostly in Europe. The new F-Line that was first shown off late last year will be available with ZF’s CeTrax 2 dual drive unit, which takes the place of a conventional transmission, so it can be built on the same line as an ICE truck. And the supplier will also provide drive variants for upcoming models from Ford. And I have to admit, I didn’t know that Ford sold trucks like this in Europe, but it has a long history and it’s designing and developing the trucks itself. The new F-Line will likely be built by Ford Otosan in Turkey, where it also builds the larger F-Max, which was the design inspiration for this new truck.

CHINESE PICKUP TRUCK HEADED TO EUROPE
The Maxus brand, which falls under the SAIC umbrella, plans on exploding into Europe next year and could start with a pickup truck. It wants to have 10 models by the end of 2025 and showed off the eTerron 9, which is the same as a model it’s going to sell in China, called the Interstellar X. It’s roughly in between the size of an F-150 and Ranger and will have a combined 354 kW or about 475 horsepower from an electric motor on the front and rear axles. No word on any of the other models Maxus plans on offering in Europe yet.

VW SUSPENDS ID.4 PRODUCTION IN U.S.
Volkswagen is recalling nearly 100,000 ID.4 electric models in the U.S. over faulty door handles. It doesn’t have a fix for the problem yet, so the company is suspending production of the model at its plant in Chattanooga, Tennessee. VW will furlough 200 workers at the plant, and issued a stop-sale as well. Water can seep into the door handles and cause a glitch with the circuit board that can open the door, even while in motion. VW says it hopes to have a fix by early next year, which seems like an awfully long time. But the ID.4 is a slow seller, averaging less than 2,000 cars a month in the second quarter, so it might not be a huge impact. However, there could be something else going on here too. With VW’s contract negotiations with the UAW kicking off this week, halting production and laying off workers gives it a good bargaining chip with the union.

We’ve got a great Autoline After Hours coming up later today with Bob Lutz, one of the most colorful and outspoken auto executives in the history of the industry. One thing we want to do is get him to rate the performance of GM’s Mary Barra, Ford’s Jim Farley and Carlos Tavares at Stellantis. Jack Keebler from Keebler Auto will also be in the show. So join John and Gary for what should be a memorable time.

But that’s a wrap for this show. I hope to see you later today.