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July 22, 2022

US H1 sales analysis, cutting weight, Hyundai EV plans – the week

Graeme Roberts reviews the week's analysis, interviews and news

GM regained US market leadership from Toyota, Hyundai distanced itself from Honda, Tesla’s Premiums broke records and Pickups finally beat Cars. This week we had had first half 2022 analysis from Augusto Amorim, analyst at GlobalData unit LMC Automotive. Amid so much disruption, how did sales fare in the first half of the year?

A 10% reduction in vehicle weight can result in a 7% improvement in fuel economy. We just published a round-up of how some automakers have shed weight from their latest models. For some time, the automotive industry has been under pressure to change the way it designs and builds vehicles, due to factors such as the increasing impact of passenger and pedestrian safety requirements and the competitive intensity caused by globalisation and manufacturing in low-cost economies. Governmental pressure worldwide to reduce CO2 emissions has also prompted automakers and their supply base to develop automotive technology to meet those strict emission limits. Consequently, more and more vehicles are incorporating components aimed at a mass reduction, parts consolidation to reduce assembly costs and more efficient recycling. The automakers’ need to improve overall fuel economy in vehicles has led to the trend toward minimising vehicle weight using a blend of high-strength steel and aluminium.

Hyundai Motor Group made a major statement of intent at the recent Busan International Motor Show when it unveiled the Ioniq 6, its second model based on its electric-global modular platform (E-GMP) – a purpose-designed platform for its new generation of electric vehicles. The Ioniq 6 arrived a little more than a year after the company launched the Ioniq 5 SUV, its first E-GMP model, which marked the beginning of the company’s transition to zero-emission vehicles. Hyundai also said it would launch a high-performance version of the Ioniq 5 under its high-performance N brand in 2023. It also unveiled two high-performance concepts under the N brands – the RN22e high-performance version of the Ioniq 6 and the N Vision 74 – a hybrid vehicle combining EV technology with an advanced hydrogen fuel cell system. Earlier this year HMG announced a stepped up strategy to gain a lead on its main rivals in the fast-growing global EV market, targeting annual sales of 3.23 million battery powered vehicles per year by 2030 under the Hyundai, Kia and Genesis brands, or 40% of the group’s expected global vehicle sales. Hyundai Motor alone is targeting 1.87 million EV sales annually by then, helped by the launch of 17 new models including 11 under the Hyundai brand and further six under the Genesis luxury brand. This presumably includes the Ioniq 6. The company said it would spend KRW20trn (US$15bn) by 2030 to achieve its electrification targets and a further KRW12trn on strengthening its software capabilities, with a particularly focus on artificial intelligence (AI) and autonomous driving technologies. This seems a little short given the scale of the task, however.

Becoming ever more embedded into its Alliance with Renault and Nissan has helped Mitsubishi weather recent storms. Is the worst now behind it?, we asked this week. One of the largest issues facing Mitsubishi Motors Corporation has been its size relative to competitors and indeed, to its Alliance partners. Pricing power is another ongoing challenge, even though for years, one model, the former Outlander PHEV, was a trailblazer for high-volume and presumably matching margins. Many other non-premium makes have since copied MMC’s innovative ways but the Japanese firm was left behind due mainly to the sheer age of this and other models. That remains an issue; something it has in common with Nissan. You need only look at the brand’s sales across Europe for the evidence of what happens when there is no fresh product: for H1, Mitsubishi dropped to 30th place with just 30,092 registrations (source: ACEA). On a brighter note, the brand’s US performance wasn’t too bad during the first half, the total being 48,272 compared to 53,377 for the same period of 2021.

US-based Urbix is a clean graphite processor with plans to establish a footing in Europe. To learn more about its ambitions, the wider EV supply chain and the idea of some OEMs taking mining in-house, we spoke to Nico Cuevas, Chairman and CEO of Urbix Inc.

After a run of strong quarter-on-quarter growth to revenues on ramped up production, Tesla has reported a 9.7% drop in Q2 revenues over Q1. The decline reflected supply shortages, most notably pandemic-related disruption to operations at its Shanghai plant. However, at $16.9bn, revenues were still 42% ahead of last year. Many analysts also noted that Tesla price increases have protected Tesla’s profits to leave them above expectations (operating income at $2.5bn in Q2; compares with $3.6bn in Q1 and $1.3bn in Q2 2021). In recent comments to media, Tesla founder Elon Musk has defended increases to Tesla list prices saying that they will come down when cost pressures for the company subside. In a statement to investors, Tesla said it continued to significant progress across the business during the second quarter of 2022 despite challenges such as limited production and shutdowns in Shanghai for the majority of the quarter.

Many readers will have perhaps been introduced to the Toyota Crown by hailing a taxi in Tokyo or Hong Kong. Or will remember when the nameplate – different version, same name – was the flagship of the automaker’s range in many markets. Now Toyota has unveiled a new sleek new Crown flagship range, again to be sold in major markets worldwide, including the US where it will go on sale next year. In Japan the Crown is a key part of the automaker’s DNA and has been a key part of corporate life since the first model was launched in 1955. Toyota has so far released details of the Crown Crossover, which goes on sale in Japan next autumn at prices ranging between JPY4.35m and JPY6.40m (US$31,500-$46,340). This variant comes with two types of hybrid powertrains, using 2.4-litre turbo and 2.5-litre petrol engines, fitted to a newly designed platform with lightweight, high rigidity bodies. The other variants will go on sale in Japan in 2023. Previous Crowns over the years have been sold in sedan, coupe, estate car and pickup truck forms so the crossover is a new development. There was also that separate, smaller fleet model sold as a custom built taxi.

Stellantis has terminated a local joint venture with China’s GAC Group. The company said a lack of progress in the previously announced plan for Stellantis to take a majority share in the JV led to the decision. The China joint venture produces and distributes Jeep products in China. Stellantis said it intends to cooperate with GAC Group in an orderly termination of the joint venture formed in March 2010, which has been loss-making in recent years, and will recognize a non-cash impairment charge of approximately EUR297 million in its first half 2022 results. (Anyone remember the original Beijing Jeep JV building the Cherokee formed by AMC years ago before absorption into Chrysler and then DaimlerChrysler? That eventially morphed into today’s successful Beijing Benz JV between Mercedes and BAIC.)

Two Ford Motor Company senior managers – Hau Thai-Tang and Frederiek Toney – have announced they will retire later this year while Dave Bozeman is joining the company to help advance the Ford+ plan after successful tenures at Amazon, Caterpillar and Harley-Davidson. Thai-Tang, the chief industrial platform officer, plans to retire on 1 October after a 34-year career with the company overseeing development of multiple vehicles, and helped guide the automaker through the COVID-19 crisis and a series of global supply chain challenges. Toney latterly ran the customer service division, modernising and growing key businesses like customer services, parts and accessories.

The Hyundai brand is growing share in Europe, boosted by recently introduced and well received electric models. Electric vehicles now comprise 16% of the brand’s European sales. In the first half of the year, Hyundai Motor achieved a record-breaking 4.7% market share across Europe, up 1% compared to last year. The company also sold 263,005 units in the EU, EFTA and UK in the first half of 2022, an 8.2% increase over the same period in 2021. Hyundai said it has one of strongest zero-emission vehicle line-ups, with EVs making up 16% of sales.

China’s Contemporary Amperex Technology (CATL) plans to invest in an electric vehicle (EV) battery plant in Mexico to supply US based automakers, according to widespread reports this week. The world’s largest EV battery manufacturer has been slow to respond to the expansion of its main rivals in fast growing North America where LG Energy Solution, SK On, Samsung SDI and Panasonic have announced major strategic partnerships and investments over the last year. Bloomberg said CATL had earmarked US$5bn to build a plant in Mexico to supply Tesla and Ford with Ciudad Juarez in Chihuahua and Saltillo in Coahuila the main potential locations. A plant in Ciudad Juarez would have easy access to the new Tesla factory in Texas. Earlier this year, CATL received approval to produce battery cells in Thuringia, Germany, bringing its investment in that country to EUR1.8bn.

Have a nice weekend.

Graeme Roberts, Deputy Editor, Just Auto

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