Auto File-Blocking China’s robot drivers

China Evergrande New Energy Vehicle

06/08/2024 16:00

Aug 6 - 
By Nick Carey, European Autos Correspondent 
    
Greetings from London! 

It’s been a rollercoaster start to the week, with markets down
sharply on Monday, then bouncing back, then falling again - all
triggered by fears a weak U.S. jobs report meant a recession.  

Fears over the state of the U.S. economy will foster concern
over the health of the U.S. auto sector, where high interest
rates have continued to weigh on sales. July sales were expected
to rise slightly, thanks partly to pent-up demand after a
cyberattack hit June sales, but dipped instead. 

As J.D. Power predicted in its sales forecast, vehicle
inventories at the end of July were up a hefty 32.5% versus July
2023, while the discounts U.S. dealers hand to consumers to move
new cars off lots pushed car prices down 2.6% in July, meaning
lower profit margins for dealers and automakers.  

U.S. auto sales remain well above recession levels. But after
the last couple of days investors will nervously await August
numbers and the impact of pre-Labor Day sales to see if broader
market fears are justified.  

Which brings us to today’s Auto File… 
    * Growing fight over self-driving data  

    * Musk’s civil war prediction 

    * Lucid gets fresh Saudi cash 

 
    U.S. targets Chinese autonomous software
  
          
The national security fight over data in autonomous vehicle
technology and connected vehicles just ramped up a notch. 

As my colleague David Shepardson reports here, within weeks the
U.S. Commerce Department should propose banning Chinese software
in vehicles with Level 3 automation and above in the United
States. The proposed ban would also affect connected vehicles
and vehicles with Chinese-developed advanced wireless
communications abilities modules. 

This fight has been building for some time and concerns over
access to the vast amounts of sensitive data from AVs and
connect cars are not just limited to the United States and its
allies.  

Back in 2021, Tesla was forced to set up local car data storage
in China to address government concerns over how it handles data
collected by vehicle cameras and sensors. National security
concerns even led to employees being told not to park their
Teslas at some Chinese government offices.  

The automaker’s plans to harness that data for better
self-driving algorithms now rely on building a data center in
China. 

Three years later, U.S. concerns over the data collected by
self-driving cars have been simmering away, with a bipartisan
group of lawmakers raising the alarm over the issue last
November.  

After voicing its own national security concerns and acting
accordingly three years ago, China’s government now urges the
United States to create a level playing field, saying “only fair
competition can bring technological progress.” 
 
Recommended reading: 
    * Luxury vehicle makers’ bleak summer 

    * China’s bumpy ride  

    * Carry trade aftershocks  

 
    Musk’s week: from China sales to a UK civil war 

Even without his decision to wade into spreading far-right
violence in Britain with a tweet saying: “Civil war is
inevitable,” this was a busy week for Elon Musk and Tesla, the
automaker he runs. 

After months of sliding sales, Tesla saw sales of its
Chinese-made EVs rise 15.3% in July versus the same month in
2023, according to Chinese industry data. And in a fresh bid to
gain regulatory approval to sell insurance products, the
automaker also registered an insurance broking firm in China at
the end of July. 

That, and an announcement that a U.S. regulator was seeking more
information about a fatal accident involving one of the
automaker’s electric Cybertruck pickup trucks, would have been
busy enough for most rivals. 

But Musk’s post predicting civil war in Britain – from an
executive whose forecasts about Tesla’s own technological
advances have frequently fallen short – brought criticism from
British Prime Minister Keir Starmer’s office.  

Musk’s initial tweet was in reaction to a post blaming mass
migration and open borders for the disorder in Britain.
Unabashed by the government’s reaction, Musk followed that up by
criticizing Starmer for saying mosques required special
protection.     

As far-right rioters are unlikely to buy a Tesla, it is hard to
see what the company so closely associated with Musk stands to
gain from such confrontations. His behavior has already
apparently put off some would-be U.S. Tesla buyers, but it
remains to be seen whether any of this can dent his seemingly
invincible popularity among retail investors.  
 
    Fresh Saudi oil money for Lucid  

U.S. EV maker Lucid got some welcome cash this week with an
injection of up to $1.5 billion from its main shareholder, Saudi
Arabia's Public Investment Fund (PIF). 

This comes just over a year after the PIF bankrolled most of a
$3 billion stock offering for Lucid, giving investors confidence
that the Saudis have not given up on the EV maker despite the
vast sums it burns for every car that it sells.  

As has been mentioned in the Auto File before, it takes years
and many billions of dollars to manage scale production. A good
many EV makers, among them Fisker, have already fallen by the
wayside as they failed to raise enough cash to seal the deal. 

Like Rivian, which recently got a boost with an investment of up
to $5 billion from Volkswagen, Lucid can still raise money,
which it will use to ramp up production of a new SUV.  
 
    Truckmakers bet on hydrogen combustion engines  

To adapt a quote from Mark Twain, reports of the death of the
combustion engine have been greatly exaggerated, especially as
major truckmakers are investing in engines to run on hydrogen
instead of diesel in the race to develop zero-emission
vehicles. 

As my colleague Christina Amann reports here, the vast
investments truckmakers are making in hydrogen fuel cell models
will take years to pay off.  

So, in tandem, truckmakers are also working on hydrogen
combustion engines as a cost-saving way to bring models to
market faster and make use of existing manufacturing supply
chains and provide a technology that customers are more familiar
with. 

Truckmakers are wrestling to cut the emissions that hydrogen
combustion engines produce and to shrink the pressurized tanks
needed for the highly flammable gas. But some like MAN are
already working on test fleets for customers. 
 
    Fast Laps 

Premium German automaker Audi's new electric car series
developed in China for the local market will not sport its
four-ring logo, sources tell Reuters, because of "brand image
consideration" as the models will be co-developed with Chinese
partner SAIC . 

    Canadian labor union Unifor has called on the government to
impose tariffs on all Chinese-made EVs, batteries and other
components to bring the country more in line with tariffs
already proposed by the United States. 

    General Motors is revamping its performance review process
for U.S. salaried employees to offer better bonuses for high
performers and pressure low-performers to shape up or get out,
as the automaker seeks to attract and retain the talent
necessary for the transition to EVs. 

    China Evergrande's EV group says a Chinese court has ruled
that two of its subsidiaries should enter bankruptcy and be
restructured, which could hurt ongoing talks between liquidators
of Evergrande Group, the world's most indebted property
developer, and interest from potential buyers of a stake in the
EV company. 

Britain's auto industry body the Society of Motor Manufacturers
and Traders has cut its forecast for new car sales in 2024,
saying weak demand from consumers for EVs remains an overriding
concern. 

Kenya's Mobius Motors, maker of rugged, low-priced SUVs designed
for Africa's roads, has decided to call it quits, citing
financial challenges. According to a shareholder source, tax
hikes in the East African country effectively killed the
company’s business model. 

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 (Reporting by Nick Carey; Editing by Mark Potter)