Eye Catcher Update 05.01.2020

News from the electric vehicle world continues to fill EVTN’s in-basket. Here are just a few of the matters that have caught my eye over the past couple of weeks.

Emission tax credits:

Much hullabaloo has been generated by Tesla short sellers and haters about Tesla’s first-ever first quarter (2020) profits coming from emission tax credits, $354 million in emission credits resulting in Tesla’s $16 million in GAAP net income.

Emission tax credits, established in the US by the Clean Air Act of 1977 and also adopted by the European Union and expanded since, rewards companies with low production and product emissions and penalizes those that have total carbon emissions that exceed the established regulatory limits or “carbon caps”. Companies with low emissions can bank their credits and sell them to companies who are over the limits. This is designed to create powerful motivation for excessive polluters to comply with the law and avoid having to pay fines or spend money foolishly to buy emission credits from low emission companies.

Tesla, as an electric vehicle producer has no problem banking emission tax credits. Other companies, notably auto companies such as GM and FCA (Tesla’s competitors) need credits so they buy them from Tesla (and presumably others). FCA has an agreement to buy $2 Billion dollars of credits from Tesla over the next three years! That $2 Billion will pay for the majority of Tesla’s new Berlin Germany Giga factory that will build vehicles that compete with FCA’s products in Europe. GM’s arrangements with Tesla have not been publicized.

The irony is that some people are criticizing Tesla for taking this easy money that falls right to their bottom line. If building electric vehicles is your business strategy, why shouldn’t Tesla reap the benefits of its strategy? How dumb is it that FCA and GM pay their competitor this money? $2 billion could pay a substantial part of a new vehicle development program or install a lot of pollution control equipment on cars and trucks and production plants.

And, while the current US government is busy loosening environmental controls and regulations, in Europe and China such controls are even getting stricter. It is extremely likely that these recently loosened US regulations will quickly reverse direction with a new Washington administration. Carry on Tesla – – profit from your competitors’ years of mismanagement while you grow your business and electric vehicle market dominance.

VW’s CEO envies Tesla’s lead in vehicle software:

Automotive News Europe, 4/29/20 notes VW CEO Herbert Diess’ recent comments regarding Tesla:

“What worries me the most are Tesla’s capabilities in assistance systems…..Tesla is the only automaker with a software system that is constantly learning…….500,000 Teslas function as a neural network that continuously collects data and offers the customer a new driving experience every 14 days, with improved features……No other car manufacturer can do that today.”

Diess later commented: “…….that the integration of powerful new software into new models is a much higher hurdle for VW than electrifying its fleet.”

Diess admired Tesla’s over-the-air (OTA) software updates that among other things have been used to extend the mileage range of its vehicles. He said: “Small improvements such as that make a big impression on buyers…….customers love it”.”

I don’t need to say any more. In my judgement Diess (an open Elon Musk admirer) is a very smart, charismatic, and capable CEO – – also incredibly open and frank. He is a winner. The question is: can he very quickly remake VW into a winner?

Hyundai 2020 Sonata Hybrid solar roof:

Hyundai’s 2020 Sonata Hybrid has a solar roof! It’s not much, YET. And, it’s not the first on a production EV as a solar roof is also offered on Toyota’s Prius Prime. Hyundai’s solar roof may give an owner a “free” 700 miles a year and can be used to charge either the vehicle’s main drive battery or its auxiliary 12 volt accessory battery. Look for others to copy this innovation. Tesla – where are you?

The University of Georgia’s electric bus program:

The University of Georgia has found that by switching its campus bus fleet from diesel to electric Proterra busses, it has reduced daily operational costs per bus by $95 a day! With a goal of 33 busses by 2021, that will be over $1 Million per year saved. What organization can ignore those savings? On top of that, net greenhouse gas emissions are reduced by 70% by dumping the diesels. America, are you listening?

Chicago wakes up to the growth of electric vehicles:

Chicago has a new “Electric Vehicle Supply Equipment Ready” law going into effect this coming Fall that requires property owners to dedicate more parking spaces for electric vehicle charging/parking. The ordinance also specifies that each parking space have dedicated vehicle charging equipment installed and operable. While this new law doesn’t go far enough with its number of required spaces and charging equipment, it is a step in the right direction and one that needs to be copied in every American town and city.

A billion-dollar Chinese bailout!

China’s NIO, Inc, a Tesla wannabe, is getting a huge $1 Billion bailout from the Chinese government to avoid bankruptcy. What struck me in the report was that by the end of 2019 NIO had sales of 32,000 vehicles but lost $4.2 Billion – that’s a $131,250 loss per vehicle sold. Surely a world record per vehicle loss!

Keep your eye on Xpeng:

China’s Xpeng or Xiaopeng Motors is far and away the major threat to Tesla – – in China and no doubt soon-to-come, around the globe. They have been producing their G3 CUV model since 2018 (sales through end of 2019 roughly 17,000 vehicles) and just this week introduced their new and very advanced P7 four-door sedan, similar to a Tesla Model 3. From my initial impressions, this P7 is a sophisticated and ultracool product, with a reported 438 mile range (exceeding any Tesla model’s) and featuring complete control of the vehicle by voice if desired. Its “autopilot” capabilities under its “XPILOT3.0” seem to be very advanced and similar to Tesla’s – operating from 12 ultrasonic sensors, 5 millimeter-wave radars, and 14 cameras. See Robert Llewellyn’s 4/27/2020 Fully Charged interview with Dr. Brian Gu, President of Xpeng Motors here:

link

Two further observations re Xpeng:

Tesla is complaining that one or more of its ex-employees and an ex-Apple employee stole its Autopilot code secrets and conveyed them to Xpeng. No significant court action yet – – but stay tuned.

Xpeng’s P7 and all of Tesla’s vehicles are what the “cars-of-the-future” will be. However they are here now, while for the most part the rest of the US automotive industry and many European manufacturers continue to pump out gas and diesel guzzlers and are at least five years away (if ever) from producing these sophisticated computer-on-wheels cars.

Tesla – always one step ahead:

You have to get up awfully early to beat Elon Musk! With COVID-19 slowing car sales in China and around the world, Tesla just conducted a livestream on China’s Taobao shopping platform designed to showcase its products, sign up people for test drives, and take orders on-line! This one-hour show attracted close to 4 million viewers!

Look for US and other vehicle manufacturers to follow this sales model as the COVID-19 pandemic and its slow recovery aftermath restrict old sales processes. This places a huge burden on traditional US automakers to innovate and develop and/or streamline their on-line sales and product configuration and ordering systems. Yet another software issue for them. As if that’s all they have to do!

Image courtesy of Pixabay

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