Why Can’t We Be Friends: Automotive Partnerships Pick Up

The automotive landscape is in a pretty significant state of flux right now, with sales down, tariffs up, and a trade war looming around the corner. But, driven by the ever-increasing pressure to generate value for their shareholders, automakers can’t just sit back, shrug and say, “hey, shit happens, guys.” So what we’re seeing is a dramatic uptick in the number of partnerships between automakers and investment by automakers in technology companies. The largest of these is undoubtedly Nissan-Renault-Mitsubishi partnership, heralded by Carlos Ghosn, which is an alliance, but not a single company like the Volkswagen Automotive Group, which holds Audi, Porsche, Bugatti, Skoda and others. Just by cooperating, Nissan-Renault-Mitsubishi saved a collective $6.6 billion last year alone. This is by sharing development costs of new platforms, technologies, parts, components and by their increased purchasing power, being able to buy more in bulk at a cheaper price. The alliance is basically like a membership to automotive Costco. There's been talk about this alliance becoming a merger, but Ghosn squashed those rumours this week.

And when someone says their alliance saved them almost $7 billion in a year, people start paying attention, specifically that same Volkswagen Automotive Group announced a strategic alliance this week with Ford. The details of the Memorandum of Understanding signed are pretty vague, but it sounds from the statements made like it’s an awful lot like Nissan-Renault-Mitsubishi, where they will share development costs and technology, apparently primarily for commercial vehicles. I’d say this is a win for both companies since Ford has been ahead in the hybrid game for a while and Volkswagen’s infotainment system is one of the best I’ve used in a long time, but how necessary those are for commercial vehicles is another question. I’ll go ahead and take credit for the partnership since my household has been a Ford-VW garage since February.

Volkswagen isn’t stopping with Ford though. Through their Audi brand, they are partnering with Hyundai to co-develop fuel cell vehicles. Audi has apparently been tasked with developing fuel cells for the rest of the Volkswagen Automotive Group while VW works on battery cars. Audi will start working with Hyundai’s ix35 fuel cell SUV and the forthcoming Nexo and leverage collective R&D to take their fuel cell tech to the next level. The next level, of course, being a level at which someone might want to purchase a fuel cell vehicle, which I think is probably more a matter of fueling infrastructure than car quality or availability at this point. Regardless, the partnership should save both companies a lot.

But speaking of Volkswagen running the battery game, they announced this week that they have increased their stake in QuantumScape Corporation, forming a joint venture for the purpose of producing viable solid state batteries. The goal here is to put them in production vehicles by 2025. If that sounds familiar, it’s because Toyota is doing pretty much the same thing, but on their own. Future partnership incoming? As a refresher, solid state batteries, basically pack more power and energy storage capacity into smaller packages. They said that a solid state battery could increase the range of VW’s E-Golf from its current 186 miles on lithium ion batteries to a whopping 466 miles, which would beat basically every other car out there right now. Hell, that’s more range than my GTI gets on premium gas. I may be looking at the Golf GTE come 2026 or so!

Also in the Volkswagen Automotive Group, Porsche has bought a minority stake in Rimac, makers of two electric super car models, one of which was crashed by Richard Hammond on a hill climb attempt last year. As is the case with most partnerships entered into voluntarily, both companies stand to benefit, with Porsche tapping into Rimac’s experience with electric super cars for their upcoming Taycan and future electric cars, and Rimac getting access to Porsche’s suppliers and potentially greater savings on parts from increased purchasing power.

And you know what stands out to me about these partnerships? They’re all international. Every single one. To me they show the great potential for progress when companies work together, share technology and help one another out, rather than operating in silos, shutting out the competition. The market is tough right now, and if companies are going to survive, they have to work together. And the result for us petrolheads? More choices, lower costs and better, more developed options. If only more people believed in tearing down walls, huh?

Authored by
Devlin Riggs

Headlines for the Week of March 5th, 2018

The Year of the ...Truck?

After a wild Detroit Auto Show when all three big American brands showed off their fancy, shiny new pickups, and on the heels of a market clamoring for bigger, butcher, gas-guzzlier vehicles, 2018 was decreed the year of the truck. So how are we looking two months in? Like maybe declaring what year this was in January was a little premature. Pickup sales were down a whopping 15% in February over 2017, which itself was not a great year for motor vehicle sales. Analysts are chalking it up to a “continued softening of the market,” which is a polite way of saying nobody is really buying cars right now. I think the best way to drive sales though, is to probably start accusing buyers of softening the market, to which all the super insecure guys will probably respond “No, you're a soft market! I'm hard all the time. Gimme that truck!"

Detroit Auto Show to Move to Fall

Speaking of the Detroit Auto Show, it usually kicks off the year every January, a time where it has to compete for attention with the Consumer Electronics Show, which is increasingly a car show as cars are increasingly consumer electronics. The idea has apparently been presented to move the North American International Auto Show in Detroit to October, when there’s less competition and the weather isn’t so shitty in Michigan and carmakers can do some things outside of Cobo Hall. The problem is, the show takes a whopping three months to set up, and there are events in the hall during those months, so the show would have to scale back on the extravagance or find another time altogether. Given that automakers have started sitting out some shows, and many didn’t come or brought a reduced presence to Detroit this year, not to mention the political pressure a trade war might bring, moving might not be the answer to the Detroit Show’s problems. 

Michigan Forgives Where Illinois Doesn’t

Also in Michigan, the state has forgiven $637 million in fees owed by drivers so the people in debt can get their licenses back. Those extra fees were a part of a scheme from the governor in 2003 to plug a budget hole by tacking on extra fees for traffic tickets committed by people with more than 7 points on their licenses. Of course, it’s not good to get any points, and perhaps if you’re such a bad driver that you rack up so many citations that your license gets revoked, maybe you shouldn’t get it back. But your tickets shouldn’t drive you into poverty such that you can’t afford to get it back. There are some stipulations regarding who can get their licenses back when, but most of the fees are being waived as long as drivers do it quickly. How many people are we talking? About 300,000 people have had their licenses suspended because of unpaid fees. That’s about half the population of the city of Detroit. To their credit, Michigan saw the error of their ways, unlike Illinois, but I can’t imagine I’d be too happy with them if I’ve had my license suspended for the past 15 freaking years, forgiveness or not.

Tesla Fined for Pollution

Tesla, makers of the clean-running, no carbon emissions electric cars for rich people, have been fined for air pollution. Specifically related to the excess nitrogen oxide pollution from the company’s Fremont manufacturing facility, not from the vehicles themselves. Tesla says the emissions were the result of some malfunctioning equipment that has since been resolved, but nevertheless, they have settled the case with California, part of which entails the installation of solar panels on the roof to further drive down the facility’s dependence on fossil fuels. As far as fines go, $140K and a promise to be more energy independent are getting off pretty easy.

Goodyear’s Green Tires

Goodyear is also getting in on the green bandwagon and has unveiled some new tires that are truly ridiculous and have no hope of ever seeing production, but are a neat idea and interesting to look at nonetheless. Basically, it’s an airless tire, which we’ve seen many concepts of previously, made of recycled tires, that features a healthy moss growing between its rigid rubber structures. The moss takes carbon dioxide and generates oxygen from it, and the moss is fed water by the tire, which soaks up some moisture and routes it to the plant. They said it could take as much as 4,000 tons of carbon dioxide out of the air and add as much as 3,000 tons of oxygen. That is, if everyone in a city the size of Paris wanted to drive around with fuzzy green wheels on our cars, which I’m not entirely against! Goodyear also showed off some new tires specifically designed for EVs since apparently traditional tires wear out 30% faster on electric vehicles because of both the weight and force of instant torque just shredding rubber. The new design has a bigger contact patch with the road for more grip and also generates less noise, which is great because EVs are already so quiet, tires do tend to be the loudest thing on them apart from wind, which I doubt Goodyear can do much about. These will be on the road in Europe next year, and they feature a light baby blue paint because that somehow became the official color of hybrids and efficiency.

Ride Hailing Wages In Dispute

A study released by MIT’s Center for Energy and Environmental Policy Research or, as nobody calls it, CEEPR, compared a survey of 1,100 drivers for Uber and Lyft with what they called “detailed vehicle cost information” and found that the median profit for drivers came out to around $3.37 per hour before taxes. It said that as many as 74% of drivers are earning less than the minimum wage their states mandated, all of which means that most people driving for these ride hailing services would be living in poverty. Uber and Lyft were quick to dismiss the study as using shoddy and/or inconsistent data and much of it was self-reported by drivers, who are incentivized to paint a bleak picture of their earnings so the companies will raise their pay rate. The disputes were so strong that one of the paper’s lead authors actually came out and said that he agreed that some of the information could be misleading and that they’d rerun the numbers to try to improve the validity of the study. Either way, ride hailing drivers probably don’t make too much money and MIT students probably don’t have enough oversight in their research.

Audi Debuts (Not Terrible) Flying Car Concept

Flying cars. We’ve all been here before, but Audi has partnered with Airbus and Italdesign to unveil a concept that’s actually not too incredibly terrible. Instead of the tried and dumb design of a car-and-plane-in-one package that is what we commonly think of as a flying car, the Pop.Up Next concept utilizes a three-part system comprised of a passenger pod, a skateboard-like road-going electric vehicle platform that the pod can sit on, and an eight-rotor quad copter-like flying unit that the pod can hang from. The concept video, which looks really neat, shows that Audi knows that only super duper rich white people are going to use this thing, and it’s designed as a sort of taxicab supplement, where you can hop in a pod with the flying unit attached once you get out of your first class or chartered flight, then fly across the city to a lot where the skateboard-EV units are located and the flying unit will land your pod on the wheeled vehicle, sending you on your way to your final destination while the flying pod autonomously flies back to the airport or to a charging station somewhere.

As far as flying car concepts go, this is one of the most well thought out versions, but there are just so many hurdles to get over before these things can ever actually be realized. But the fact that these are fully autonomous gives this a leg up because then you don’t have to license drivers as private pilots, which, given the skill level of most drivers, always seemed like a long shot.

Anything Audi Does Dutch Can Do Better

The Dutch have come along and laughed at Audi’s pitiful attempt at a complicated-ass flying car and said, “No, you krauts, this is how we will get all the rich white peoples' money!” And they tore the cover off the Pal-V Liberty, which is also a flying car, but one of those car-and-plane-in-one package. Except it’s more of a car and a gyro copter, which permits a shorter take-off and landing, which is handy since I don’t think many people have their own runway. What’s different about this is that they say it’s fully road- and air-legal and can be purchased right now, making it what they call the world’s first production flying car. How much does the exclusivity of owning such a thing run? Well, their cheapest bargain basement Liberty Sport model, which comes with flying lessons since a pilot’s license is required, starts at just $368,000, or the price of a really quite nice, large Midwestern home. But can your home fly at 112 miles per hour and get 31 miles per gallon? I didn’t think so. Peasant. 

Renault’s EZ-Go Needs Customers to EZ-Come

Renault, meanwhile, is keeping its autonomous taxi plans completely grounded, but has also unveiled a pretty interesting concept called the EZ-GO. It’s all-electric and features level 4 autonomy as well as an interior that is basically just some benches and a lot of windows. It opens in a sort of clam shell way that would probably be terrible in rain but at least looks neat, and has a flat loading floor to haul wheelchair-bound passengers, which is a nice touch. They foresee this as a solution to ride sharing and ride hailing that cuts out the driver and use of a personal vehicle, which is to say a shared taxi, and are hoping to have operational prototypes on the road in the next four years. Parent company Nissan also owns a stake in a media company, which just so happens to be interested in providing content for passengers to view while riding in the EZ-GO. There were no suggestions on how much rides might cost, but if I’m a captive audience being forced to watch some commercials during my ride, it better be cheap or free.

Mercedes Puts Real Projectors in Your Projectors

Another neat concept shown at the Geneva Motor Show this week was Mercedes’ new projector headlight system. Now, projector headlights have been around for a long time. They use parabolic glass or plastic to project the output of your headlights further. But this is a bit different. Called the “million-pixel” headlight, these will actually project images onto the road ahead of you, warning of upcoming peril, or providing driving tips, or doing neat things like displaying the dimensions of your car to see if you’ll be able to fit in a parallel parking spot (in which, of course, the car will park for you). It can also detect faces and windshields and automatically dim pixels to not blind pedestrians or other drivers, which is a fantastic feature for all the old-ass Mercedes owners who constantly drive around with their brights on. I don’t think it will help them turn off their turn signals or stop mistaking the gas for the brake though. 

Pre-Production Honda CB750 Sets Record

Photo from AutoWeek

In motorcycle news, the Honda CB750 is one of the best selling motorcycles of all time. Well, that’s not the news, actually. It’s old news because they haven’t made the CB750 for decades. But when it came out, it was one of the first bikes to use a four cylinder motor and was pretty powerful. In fact, it’s referred to as the first Universal Japanese Motorcycle, which is sort of a term that covers a bunch of similar Japanese bikes to have similar specs and come out in the 70s and 80s. But the CB750 was the first, and at auction this week, a pre-production model from 1968 built for promotional purposes, and one of two produced prior to the model’s actual release, sold for a record of nearly $264,000. These bikes are so ubiquitous that you can head to craigslist right now and find one for around a grand, so why the markup? There’s exclusivity in being one of the first of the first of a kind.

Elon Set to Make ELOT of Money

Photo from Elon Musk's Instagram

Elon Musk has maintained that he won’t take a salary from Tesla Motors as they ramp up production and start fulfilling the 500,000 reservations for their Model 3, but two of Tesla’s largest shareholders are much more generous to the CEO than he is to himself. They have proposed a vote on a compensation package valued at $2.6 billion, which represents about 5% of Tesla’s market valuation, which some have accurately called ludicrously high. They apparently see it as a showing of support for the guy who has, in their terms, produced some pretty incredible things for the company so far, and they’re not entirely wrong. What he has also done is consistently over-promise and under-deliver while allowing some shady business practices to go unchecked and discourage unionization to protect the workers affected by the shadiness. And here I thought the secret to getting rich was under-promising and over-delivering. Turns out I’ve been doing it wrong my whole life. 

Saudi Sells Billionaire’s Blingy Rides

My house is a nice house, but it only has a two car garage, which is still more garage than many people have, but I think a prerequisite for a next house would be space for a third car. I, however, am not a Saudi billionaire, and it’s a good thing, because my garage space would not remotely be enough to accommodate the car collections of these guys. I’m speaking specifically about Maan al-Senea, who is being detained right now due to debts owed by his company, appropriately called the Saad Group. He owes as much as $16 billion to creditors and in order to pay off some of his debt, the government of Saudi Arabia is selling some of his cars. How far will that go? Well, considering he and his company have 923 vehicles licensed to them, it turns out the sales can go pretty far! I honestly don’t know how you store almost a thousand cars. But I’d sure as hell like to give it a try someday. But, you know, without the billions in debt.

New Cars

Chevy Bolt Rear Seat Delete

I drive a hatchback, which I occasionally use to haul work-related things, and it’s great because I can just fold the back seat down and throw in all my camera gear or whatever I’m toting with me on any given day. Hatchbacks are great for this, but I don’t think I’d ever really consider using one as a commercial hauling vehicle, but Chevy has decided that some people do actually think that’s a good idea, and that the best way to accomplish this is to take their all-electric Chevy Bolt and throw out its back seat, giving you plenty of space to store...whatever it is you have to take to your job site. I should caveat this by saying that you won’t actually be able to order a Chevy Bolt Rear Seat Delete (as they’re calling the package) because it’s restricted to government or fleet orders and is available as a $350 add-on. Which, when you think about it makes sense, because only the government would find it rational to pay hundreds of dollars more to get less of something.

Mahindra Roxor

If you haven’t heard of Mahindra, I don’t blame you. They’re an Indian automobile manufacturer who produces quite a few vehicles, just none of which come to the States. They’ve also had a license to produce replicas of the old Willy's Jeep for some time, and now, for the first time, they’re going to start releasing those replicas for sale in the US, and they’ll be made in Michigan! Mechanically, they are extremely similar to the old CJ-model Jeeps (before it was called the Wrangler), but it uses a unique power plant; a small diesel and manual transmission. Unfortunately, safety standards have advanced a tad since the 1940s, so while these are remarkably similar to the old models, they are most definitely not road legal. So if you’re in the market for a fun trail vehicle or a little utility all-terrain vehicle like the Polaris Ranger but want some vintage style, this thing is for you. Oh, and it’s also $15,000 so you could buy one or just buy a used Wrangler for less money and be able to drive it on the road. Your choice.

Obituaries

Volkswagen Beetle

We learned this week that the plucky Volkswagen Beetle will be discontinued after the current generation, though we don’t know when that will be. As all Volkswagens start to move over to the fabulous MQB platform, the Beetle doesn’t really fit and, as Research & Development boss Frank Welsch said, there’s only so many times you can have a “new new new new Beetle.” As it leaves, the new I.D. Buzz, the retro-futuristic electric minibus will be taking its place as the nostalgic vehicle in the VW lineup, albeit with a decidedly modern flair and probably no vase for flowers tucked into the dash.

Also last week was the Geneva Motor Show in Switzerland, and I’ve talked in the last few weeks about how so many cars had been unveiled online before appearing at the actual show. It really kind of took the wind out of the sails for the whole thing, and I wasn’t expecting to have a whole lot of new material for my usual Rap-up. So instead, in last week's podcast, I put together a little diddy that sort of expresses how I feel about this year’s event. If you haven't listened already, check it out!

Authored by
Devlin Riggs