'Disruptor' EV maker Tesla is always watched closely by industry observers and that was reflected with the popularity on just-auto this week of an update of its new factory in China.
As we noted in our report of progress of its new car plant, currently under construction in Shanghai, this will be the company's first overseas full production plant [the Netherlands factory which completes cars for Europe to dodge EU import tariffs is only a final assembly operation]. Tesla has said it has earmarked CNY50bn (US$7bn) in China with an immediate target of bringing online an initial 250,000 units a year of production capacity by the end of 2019. Construction of the main part of the plant, which is located in the Lingang district of Shanghai, has been completed, the company said. This included the body shop, paint shop and final assembly lines. The company confirmed the first cars are scheduled to roll off the production line by the end of 2019 with the first model expected to be the Model 3. Tesla's global vice-president Tao Lin said the company broke ground on the plant, just six months after signing contracts with the Shanghai municipal government in July 2018, which she said reflected the efficiency of doing business in the Lingang Special Area – which is dedicated to high-end manufacturing such as electronics and biomedicines.
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This has me wondering if Tesla might eventually do a Volvo – get the plant producing world-saleable cars and then factor it in as part of a global production system? There is the little matter of tariffs on US-bound cars but Volvo is shipping Chinese made S90s and XC60s to Europe – by train! – and schlepping back, the same way, XC90s produced in Sweden and V-Series models built in Belgium. Might that succeed a pesky little final assembly operation in Amsterdam should the business case be made?
Done your iOS 13.1.2 update yet? I love how Apple rolls out a major update and then, almost immediately, come the minor updates as glitches are identified and fixed. Ping, little red dot, 13.1, then 13.1.1 and now I have 13.1.2. But mock ye not, just as we have got used to pretty seamless over-the-air updates for our various devices, now the carmakers have caught on. Gone are the days of paying through the nose for a CD of an already-outdated annual map update when it can now happen overnight via a wireless connection – without you even being aware of it until you search for a street on a new estate.
Cue Tesla again which has rolled out what it said was its biggest software update ever. Software Version 10.0 is claimed to raise the bar with a self-driving feature, entertainment services like Netflix and Hulu, new navigation features and in-car karaoke [no thanks]. The software upgrade has been made available OTA and will roll out to the Model S, Model X and Model 3 cars. It's like buying a new iPad, going to set it up with your Apple ID, and immediately having the latest OS downloaded and installed regardless of what the Chinese factory put on.
The Smart Summon self-driving feature will allow Tesla customers to enable their car to navigate a parking lot and come to them or their destination of choice, without a driver and as long as their car is within the customers' line of sight. Tesla said those using Smart Summon must remain responsible for the car and monitor it and its surroundings at all times. Tesla cars can also now connect to Netflix, YouTube, and Hulu or Hulu + Live TV accounts to watch content 'right from your car while parked'. For China-based customers, Tesla will be launching with iQiyi and Tencent Video access, and said "we expect to add more global streaming and entertainment services over time". Additionally, all customers will have access to Tesla tutorial videos to learn more about their vehicle. Tesla has also added a 'Car-aoke' feature it proudly claimed lets you sing your heart out with friends on a road trip – or by yourself. Caraoke comes with a "massive library of music and song lyrics, with support for multiple languages". New 'I'm Feeling Lucky' and 'I'm Feeling Hungry' navigation features will lead the driver to a local restaurant or point of interest that's within the Tesla's range. In testing, Tesla said "we've been taken to hole-in-the-wall restaurants, gourmet meals, national parks, city landmarks and more". Tesla has also improved its maps so that search results will be sorted based on distance to each destination.
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By GlobalDataNew tech always attracts readers to just-auto and we've been over to see Jaguar Land Rover's gleaming new design centre in nearby Gaydon, after the British firm invited us to an exhibition of its latest vehicles and technologies. Front and centre was the new 2020 Land Rover Defender. This model is the reinvention of an icon that went largely unchanged during its near-70-year production run but, while its background might be steeped in heritage, the replacement still manages to break new ground. In a room devoted to the new Defender's materials and construction sat a display featuring paint samples and a few pieces of seemingly unremarkable plastic. However, closer inspection led by engineers from Land Rover's colours and materials team revealed that this plastic was actually essential to achieving some of the new Defender's most eye-catching finishes.
The plastic was, in fact, a multi-layer polyurethane-based wrap that Land Rover applies on the production line. The 2020 Defender is the first-ever production vehicle to feature this technology – dubbed a Satin Protective Film – from the factory, and its use reflects Land Rover's expectation that Defenders will be used in tougher conditions than other models in its range. It's only available on models finished in Indus Silver, Gondwana Stone and Pangea Green and serves a number of functional purposes.
One of Europe's iconic car brands will go out of business in the next three years. Discuss. That was according to a new automotive survey. More than half of respondents to The Innovation Race – a Protolabs report that explores the challenges and opportunities for Europe's car makers – expected a big name to fall victim to the unprecedented period of change currently being seen across the globe. Stricter environmental regulation in the coming 12 months was deemed to be the most pressing short-term concern (55%), whilst 52% thought a new entrant would disrupt the market with a revolutionary new kind of vehicle over the next three years.
The survey, which interviewed over 300 senior managers from car makers and major suppliers including BMW, Daimler, JLR, Magneti Marelli, Volkswagen and Williams F1, also highlighted the move to the next industrial revolution, with 71% indicating that they needed to adopt Industry 4.0 or digital processes in order to survive. "There appears to be a perfect storm developing in the automotive sector, with trade wars, Brexit and the race to electrification creating a time of extreme change for the car brands and supply chain," said Bjoern Klaas, vice president and managing director of Protolabs Europe, which claims to be the world's fastest digital manufacturer of custom prototypes and low volume production parts. "With so many challenges to face, it is imperative that the industry continues to invest in R&D and its collective ability to bring innovation to market quickly. And with this report highlighting the unprecedented change expected within the next three years, it's almost a case of innovate to survive and then thrive." He added: "Nearly 70% of people said they felt under the most pressure of their entire career to innovate, with two thirds agreeing that without a strong R&D function the business would cease to exist. "That's a very powerful message to send out and underlines what we are seeing with our own business, as demand continues to rise for our service that gives companies the capability to develop new parts within 15 days. Speed to market is absolutely crucial in automotive."
Innovation was a core theme throughout the survey and it revealed a mixed picture when it comes to how prepared companies were in meeting this agenda. On a positive note, 69% said they were satisfied they could scale up a new innovation, with three quarters indicating that they were set up to include customer insight in the early stage of the design process. However, almost half of firms were less confident in discontinuing an unsuccessful product without suffering a negative impact, while 40% felt their innovation strategy was not as aligned as it should be with the corporate vision. Bjoern said: "There is a real willingness to innovate, that's clear to see. The issue now is that there are so many changes taking place in the automotive sector that even the biggest names are struggling to keep up or are confident they have all the answers."
Ford, like GM sadly, has not been doing so well in some markets outside North Amercia. Exhibit A: China. We learned this week the blue oval is stepping up its new model launch programme in China to help reverse its sharp decline in recent years in the world's largest vehicle market. Anning Chen, who was appointed Ford China president last November, said the Changan-Ford joint venture planned to launch 18 new models by the end of 2021 to better meet the requirements of its customers in an increasingly competitive market. By the end of 2021, five new energy models will also have been launched. In addition, by the end of 2019, all new Changan Ford models will be connected and equipped with the SYNC+ infotainment system customised for Chinese users, using Baidu's AI technology.
Most new Changan Ford models will also be equipped with the US automaker's trademarked Co-Pilot360 set of advanced driver-assist technology. Some of these features are defined as SAE Level 2 automated driving. C-V2X equipped cars will also be produced in 2021, making China the first Ford market across the world to produce such vehicles. Chen said the aim was to return Changan-Ford to being one of the country's leading automotive joint ventures within three years with Ford and Changan Auto stepping up collaboration to localise more models, including producing Lincoln vehicles by the end of 2019. Changan-Ford also plans to establish a new research centre to help design cars that better meet the requirements of Chinese buyers. Ford's sales in China, vehicle from its Chinese joint ventures and imports, fell by 37% to 752,243 units in 2018 from almost 1.2m in 2017. This was followed by a 36% year on year drop to 136,279 units in the first quarter of 2019 and a 22% drop to 154,042 units in the second quarter.
Exhibit B: India. We learned this week Ford and Mahindra have confirmed a new joint venture in India. This was the second time in six months the Detroit automaker has handed control of most of its operations in a once-promising emerging market to a local partner and follows the March 2019 decision (Exhibit C) to end the Russian passenger car making joint venture with Sollers to focus on the still-profitable Transit commercial van JV. Ford had announced in January it was putting that business under review as part of a broader restructuring of its loss-making Europe region.
Now it's India's turn and this new JV follows the steady development of a strategic alliance the pair first announced back in September 2017. At that time, areas of potential cooperation included: mobility, connected vehicles, electrification, product development, sourcing and commercial efficiencies, distribution within India plus improving Ford's reach in the country and global emerging markets while also beefing up Mahindra's presence outside India. Teams from both companies were to collaborate and work together for a period of up to three years with any further strategic cooperation to be decided at the end of that period. In March 2018, Ford and Mahindra said they would jointly develop new SUVs and a small electric vehicle as part of several new initiatives. They signed five new memoranda of understanding (MoU) that further strengthened the strategic alliance and accelerated the development of new products for consumers in India and emerging markets. That was followed by an October 2018 announcement Mahindra would supply Bharat Stage VI (BS-VI) compliant petrol engines to widen Ford's India range and the two companies would jointly develop connected vehicles.
Ford is, however, the minority shareholder with a 49% stake while Mahindra has control with 51% of the new JV valued at INR1,925 crores (a crore is INR10m; hence total value of US$275m). The JV would develop, market and distribute Ford brand vehicles in India and Ford brand and Mahindra brand vehicles in "high-growth emerging markets around the world". Ford would transfer its India operations to the joint venture, including personnel and assembly plants in Chennai and Sanand but would keep the engine plant in Sanand plus back office operations such as its Global Business Services unit, credit and smart mobility. The JV will be operationally managed by Mahindra, and its governance will be equally composed of representatives of Mahindra and Ford." The parties stressed that, while the JV would be responsible for growing the Ford brand in India and exporting its products globally, Ford would continue to own its brand and distribute its branded vehicles through the current India dealer network. Mahindra would continue to own its brand and operate its own independent dealer network in India. The joint venture expects to introduce three new utility vehicles under the Ford brand, beginning with a new midsize sports utility vehicle that will have a common Mahindra product platform and powertrain. Ford and Mahindra will also collaborate to develop EVs for emerging markets.
Finally, the latest on Brexit. The UK government this week submitted proposals to Brussels for new arrangements over the UK's withdrawal from the EU trade bloc on 31 October. They were described as a 'final' offer by UK government sources but there was thought to be willingness to negotiate on the UK side. Time, however, was short, with a meeting of EU ministers – which could potentially agree a new Brexit withdrawal agreement or 'deal' on the EU side – scheduled for 11 October. Any new withdrawal agreement also has to be ratified by the UK's lawmakers and that has proved problematic so far.
Have a nice weekend.
Graeme Roberts, Deputy Editor, just-auto.com
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