Forbes reports GM is creating a China Science Lab at its Shanghai manufacturing facilities where development work will take place on advanced vehicle technologies. GM won’t disclose the extent of its investment in the lab, but has said it will hire 100 employees from China and abroad to form the initial staff. John Du, the former manager of Intel’s China Research Center, will supervise work at the new lab, which will focus on “advanced engine technology, battery cells, safety research, driverless vehicles and light materials.” Which begs the question, has anyone told the Michigan Economic Development Corporation about this? Seriously, this seems like exactly the kind of high tech, green-jobs opportunity that Michigan’s politicians are constantly giving GM massive tax breaks for. Not to mention the raft of federal incentives, bailouts and green car-development initiatives. But, as GM’s Alan Taub puts it, “China has begun emerging as a world class research hub for automotive technology.” That and China has begun emerging as the only thing keeping GM going. Er, except for our federal incentives, bailouts and green car-development initiatives.
If there’s a better symbol of OEM brain drain than Mike Donoughe, I’m not aware of it (but let me know in the comments). Eighteen months ago he was Chrysler’s “star engineer” tasked with leading development of much-needed Sebring/Avenger replacements. He left ChryCo in what appeared to be a clash with senior management, and we’re still waiting for new models to take the place of the gruesome twosome. His next stop was Tesla where he became the head of manufacturing and engineering in July 2008. Within months Donoughe had survived a vicious purge (by txt!), and probably began planning his exit. Having announced his plans to leave Tesla for product development firm St. Clair Consortium, Donoughe is leaving another OEM just as they appear to need him most.
Geography aside, Eugene, Oregon, is about as far away from Detroit as you can get. The biggest industry in that sleepy town on the banks of the Willamette is education, not auto manufacturing. You’re more likely to see dreadlocks at a typical Eugene business than a hard hat. In fact, perhaps the only thing Eugene and Detroit have in common is a decaying urban core, although in Eugene that core is spanned by about six city blocks. With today’s launch of the Arcimoto Pulse, however, Eugene took what local politicians describe as a first step towards challenging to Detroit’s automaking dominance. And if they are to be believed, and Arcimoto’s three-wheeled Pulse EV is the future of the American mobility, suffice it to say that nobody saw it coming.
I think the competitors like BMW have spent a fortune to pick up the market share they picked up (through leasing). … We’re not going to go in and offer giveaway leases with a premium brand.
Cadillac sales boss Ed Peper in a Wall Street Journal piece detailing Cadillac’s inability to sell (and now, lease) its vehicles. “Our business used to be about 65% leasing,” one Cadillac dealer explains. “We’re currently running at about 5% lease [and] we are continuing to lose people who we used to be able to go from one Cadillac lease to the next.” Despite the Beemer-bashing, Peper says Cadillac is looking at increasing lease percentages by “getting more aggressive with leasing each month.” After all, it’s not that Cadillac doesn’t want to lease. The problem is that GM doesn’t have a captive lender anymore who is willing to subsidize the leases that Cadillac’s business depends on.
The Michigan Economic Development Corporation has announced a ten-year, $20.6m tax break package that will keep the headquarters of Hummer in Detroit after the brand is sold to Chinese firm Sichuan Tenzhong. The Detroit News reports that Hummer will employ 100 workers at its headquarters post-sale, and plans to invest $9.4m over the next five years and hire an additional 200 employees. Negotiations between GM and Sichuan Tenzhong are ongoing. In other Hummer news, a study in the Journal of Consumer Research [via Science Daily] seeks to understand the mentality of the now-rare Hummer driver. And it turns out that, at least in the minds of Hummer drivers, giant SUVs are patriotic.
The House has authorized a new package of industry aid in the form of research and development funds for advanced technology vehicles. H.R. 3246 still needs to be funded, but authorization is for up to $2.9b over the next five years. The AP reports that the bill would fund research on “technologies such as batteries for hybrid vehicles, electric cars, hydrogen fuel cells and infrastructure for the electric grid.” Notice something strange there? President Obama had previously moved to cut funding of hydrogen research, a move that DOE spokesfolks at the time explained by gently reminding that “the probability of deploying hydrogen fuel-cell vehicles in the next 10 to 20 years is low.”
Economics professors Burton Abrams and George Parsons sum up the Cash for Clunkers tragedy wonderfully in their essay Is CARS a Clunker? [PDF available here]. “Concentrated benefits create vocal advocates, while diffused costs produce silent, apathetic opponents,” they conclude after showing that the costs of crushing clunkers outweighed the benefits by about $2,000 per vehicle. But reality is even worse. As economists, Abrams and Parsons break everything into dollars and cents. That’s their job. But one look at the CARS.gov list [PDF] of vehicles “traded in” shows that, for car aficionados anyway, the true cost of Cash for Clunkers is almost impossible to boil down to mere money. Did you know some fool “traded in” an Aston DB7 Volante? An M3? A TVR? A grip of Ur-Quattros? Three Laforzas? I didn’t even know what a Laforza is. Now I don’t want to get all Hemmings on you, but this stuff is more than just heritage: these vehicles are wonderfully bad decisions waiting to happen. Literally thousands of young men are currently trolling their local Craigslist for out-of-reach vehicles at prices that would make anyone who knew better run away screaming. Thanks to Cash for Clunkers they’ll never understand the agony and the ecstasy of trying to keep an Aston running on elbow grease, generic parts and a Nietzschian will to awesome. And that’s the real tragedy.
Elon Musk and Martin Eberhard, two of the co-founders of Tesla announced today that they have resolved their dispute.
Tesla Motors statement announcing that the firm’s feuding founders have decided to play nice with each other instead of suing each other. “Without Martin’s indispensable efforts, Tesla Motors would not be here today,” says Elon. “As a co-founder of the company, Elon’s contributions to Tesla have been extraordinary,” says Martin. Aren’t they adorable?
Retool this! Fisker will use the majority of its Advanced Technologies Vehicle Manufacturing Loan Program (ATVML) loan towards developing its next generation of plug-in, range-extended hybrids, according to the company’s press release [via Yahoo]. Preliminarily dubbed Project NINA, Fisker’s next vehicle range will be “affordable and fuel-efficient” vehicles with a similar drivetrain to its Karma sibling. Unfortunately, Fisker’s idea of affordable is $39,999 “after tax credit.” Sound familiar? Some portion of the AVTML money will go towards wrapping up Karma development, but it’s clear that Project NINA is the new priority. “Inspired by the ship belonging to explorer Christopher Columbus,” Fisker’s release intones, Project NINA “is symbolic of the automobile industry’s transition from old world to new.” Which is oddly appropriate. If it weren’t for state funding, that voyage would never have taken place either. [Thanks for the tips!]
If there’s one thing that can be counted on in the world of investment, it’s that someone is bound to copy Warren Buffett’s latest move. The Oracle of Omaha has reportedly made a billion bucks in less than a year on his $230 mil investment in BYD, and that firm’s soaring stock price has other investors taking notice. Bloomberg reports that Goldman Sachs is looking at buying $250 mil worth of convertible bonds and warrants in Geely, in hopes of repeating Buffett’s success. With major global automakers (specifically GM, VW and Toyota) solidifying their dominance of the Chinese domestic market, Chinese automakers see the low-cost segments in other markets as their opportunity for growth, and Geely is no exception. The firm hopes to boost overseas sales to 66 percent of its annual sales by 2015, a goal that justifies its current pursuit of the Volvo brand (update from Thor Johnsen coming soon). Though a name-brand backer like Goldman could help Geely break into foreign markets, there are challenges aplenty for the planned investment.
We will only do a hybrid if that is what is required to maintain the vehicle. I think we have a pretty good plan right now that probably will not require a hybrid in the near term . . . I don’t believe that we need to do a six-cylinder engine in a Corvette at this time.
GM’s Tom Stephens, promising Automotive News [sub] that new efficiency standards won’t tame Chevy’s little red love machine. Incidentally, GM has already developed a hybrid ‘vette. In theory.
If you go on advertising alone, it’s easy to think every 2010 Ford Taurus is an EcoBoosted, twin-turbo wonder. And while the SHO dominates public perception of the new Taurus, its $37,170 base price is a good reminder that SHO-boaters will be paying halo model money to get what the TV ads are dangling in America’s face. But as new Tauruses once again become part of the automotive landscape, another reality is bound to hit intrigued observers: it’s damn hard to tell a $37k+ SHO from a $25k+ SE model. Car and Driver claims that’s because Ford’s clinics revealed “there was no consensus on the level of pizazz the SHO should wield,” so they went with a sleeper. Or, “the cautious side of conservative,” to borrow a phrase. And then they changed their minds.
The UAW’s Voluntary Employee Beneficiary Association funds were originally negotiated with each of the Detroit automakers, creating three separate funds to handle obligations for each of the OEM’s unionized workforces. But the turmoil of the bailout has left the VEBA funds gasping for cash. With the manufacturers unable to meet their VEBA obligations in cash, the union was forced to take significant stakes in GM and Chrysler instead. Now, the WSJ reports that the three VEBA funds will be unified into a single administrative body. Each automaker will have a separate account within the overall VEBA structure, but the unification should help keep down administrative costs. Still, the fact that significant amounts of Chrysler and GM equity will be held by the same body raises some important concerns.
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