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Mercedes Benz and Chery Automotive reached an agreement in the trademark dispute lodged (EV News Week 12) by Chery in March 2017. According to a joint press release, the companies agreed to the following settlement with regards to using the EQ designation for electric vehicles in China:
Chery will focus on using the designations eQ and eQ1, as well as further numerical continuations thereof, while Daimler will focus on use in their electric Mercedes-Benz products with the designations EQC and any other alphabetical supplements. Daimler will use the EQ Power designation for Plug-In Hybrids and meanwhile Chery will also use eQ TEC to nominate their car electrification system.
Chery has already been using the eQ and eQ1 brand names in China since year 2014 and Daimler has now also granted them the possibility to use this name family in countries outside of China. Daimler established the EQ brand family for electrically driven Mercedes-Benz vehicles almost simultaneously in countries outside of China and Chery has granted the company the possibility to also use this in China now.
We reported in March that BMW was considering Mini as an EV only brand, with the Mini being its answer to Tesla and Chevrolet‘s mass market cars, the Model 3 and Bolt EV. At the time BMW CEO, Harald Krüger was quoted that the company is considering manufacturing facilities for the Mini in Germany, the Netherlands, and the UK. Reuters this week reported that unconfirmed sources indicated that the UK would be the winner in the race for producing a fully electric Mini. The BMW plant in Oxford is responsible for 60% of the Groups compact cars, but in the aftermath of BREXIT, the German automaker established the Netherlands as an alternative manufacturing base. The report indicates that the final desition will be announced at the Frankfurt Auto Show in September.
As the June EV sales data are being released, we have been able to create half year reports for the key markets. Most of the of the key markets are showing exceptional growth in the first half of 2017. The increased sales are helped with the release of a slew of new models. As many as 20 new models have entered the Chinese EV market since June 2016 while most European markets saw ten or more new models. Some of the highlights are:
Germany – Year on Year growth of 104% or 11,000 units
France – Year on Year growth of 1.4% or 260 units
Netherlands – Year on Year growth of -14.2% or shrinking with 656 units
Nissan announced that the new Nissan Leaf would be released on the 6th of September. New EV model releases have become as anticipated and high profile as smart phone releases some years back. With the date nearing Nissan has been releasing teasers about the long awaited new Nissan Leaf. The latest teaser revealed that the Leaf would have an e-Pedal, or for the novice, just one pedal to accelerate and break. Breaking is done by taking your foot off the pedal, activating regenerative breaking. The technology was first used in the Tesla Model S and then in the BMW i3 in 2014. Previous teasers indicated that the Leaf would have some autopilot functionality.
The Swedish carmaker, Volvo, and the Chinese company, Geely is fostering deeper relationships in the worlds largest market for electric vehicles. In a press release by Volvo this week it was revealed that the companies would establish a new joint venture technology company to share existing and future technologies. We have seen this cooperative trend in China for the last couple of months, which is a departure from previous JVs between international and Chinese companies. In the past international automakers were forced by law to enter into JVs with Chinee companies to be able to sell their vehicles, which lead to mostly older generation models being dished up to the Chinese consumer as the international partners tried to protect their IP.
The JV company will be owned 50/50 by Geely and Volvo with its HQ in China and a subsidiary in Gothenburg, Sweden. The Memorandum of Understanding agreed to on the 20th of July between Volvo, Geely and newly formed LYNK & CO determined that the companies will share vehicle architecture and engine technologies via cross licensing arrangements of technologies managed by the new joint venture. The IP for the technology will remain with the company that developed it, but the technology itself will be available for use by Volvo, Geely Auto, and LYNK & CO, via license agreements. Volvo Cars and Geely already share technology, most notably the Compact Modular Architecture (CMA) which is being used by Volvo Cars for its soon-to-be-announced smaller range of 40 series cars and by LYNK & CO.
Separately, it is also announced that Volvo will acquire a minority shareholding in LYNK & CO.
By unpacking press statements from the world’s top luxury carmakers, BMW and Daimler, over the last eight months it is clear that the Daimler EV strategy will trump that of BMW over the next decade. Up to now, BMW has led the race between the two companies in the EV sector, but the German automaker is failing to capitalize on its position. BMW was first to market with a pure electric vehicle, the BMW i3, which success even surprised itself. This week BMW released its sales data for the first quarter 2017, showing that EVs now constitute 3% of its total sales as EV sales jumped 50%. The Chairman of the Board, Mr. Harald Kruger was quoted saying “We are therefore well on course to delivering more than 100,000 electrified vehicles for the first time in 2017”. The news from the top seems very bullish on face-value but therein lies the problem. BMWs management has been flip-flopping on finding a consensus view on where they see electric vehicles in the future. This week’s news from BMW is in stark contrast from news only six months earlier when the Board grappled with if it should pursue EVs at all.
In September 2016 Reuters reported that the executive of BMW would not attend the 2016 Paris Auto Show as it grappled with its electric car strategy. At the time the company lost momentum against Mercedes and VW who is chasing Tesla. The lack of momentum caused the head of the BMW i8 project to jump ship to Future Mobility, taking most of the core team with him. The executive team remained split on the future of electric vehicles and investing in what is initially a loss making exercise. The top executive team traditionally attend the Paris Auto Show, which is one of the most prestigious events in the industry, highlighting the significance of the board’s action.
The pro-EV block prevailed but despite BMW reaffirming its strategy to pursue the development of electric vehicles the company remained downbeat on the sector. BMW’s Chief Financial Officer, Frederick Eichner, was quoted by Bloomberg saying “We’ve learned that people aren’t prepared to pay a higher price for an electric vehicle. I don’t see some kind of disruptive element coming from electric cars that would prompt sales to go up quickly in the next five to six years.” So its seems that BMW changed its wait-and-see approach to a go-it-slow approach and remained cautious when it came to investing aggressively in the new technology. Where at first the company was a leader in developing the new proprietary technology it now joined most of the other laggards in producing PHEV variants of existing models, with no clarity on when BEV models will be available and how many.
In early March 2017, Mr. Harald Krüger was quoted by Reuters as saying “The fully electric drivetrain will be integrated into our core brands. To achieve this, we are now gearing our architectures toward combustion engines and pure battery electric drivetrains,” as the company plans to include EV manufacturing in its mass production line. Currently, the company’s electric vehicles are assembled at its low-volume plant in Leipzig. BMW will also expand the capacity of its PHEV drivetrain plant in Thailand and fund the cost of the investment in its electric vehicle infrastructure through a production increase in its profitable SUV segment. To ramp up production to meet expected demand for the new Mini Countryman PHEV the company is considering manufacturing facilities for the Mini in Germany, the Netherlands, and the UK. The company also announced that it would start producing its iNext autonomous brand at its Dingolfing plant form 2021. Other models expected from the German automaker is the i8 Roadster PHEV (2018), a BEV Mini (2019), and a BEV X3 (2020). BMW‘s long-term electric vehicle strategy is to have EV’s contribute to between 15% and 25% of its sales by 2025.
Daimler, on the other hand, had the foresight at the start of the cycle to be an early investor in Tesla. The company invested $50 million in the Series E round in May 2009, and have been hailed by Elon Musk for saving the company from bankruptcy in the early years. Unfortunately, Daimler failed to follow the same daring approach it invested in in its own business model and fell behind BMW and Tesla.
Daimler’s passive stance changed in July 2016 when its CEO, Dieter Zetsche acknowledged the technology’s importance and expected an increase in EVs market share of the total vehicle market. The German automaker shifted its strategy to accelerate its efforts to stay abreast of its competitors, Tesla and BMW‘s push to ramp up production in the luxury electric vehicle segment. Within a short space of time, the company announced a massive $11Bln investment to support its electric vehicle strategy up to 2025, unveiled its new all-electric car brand, the EQ (Electric Intelligence) and unveiled a fully electric semi-truck. The EQ brand will develop a host of EV related services and products, not just cars, such as charging stations and battery packs. The first vehicle to come from the brand is targeted at the highly popular SUV segment, a clever move to differentiate the brand in this hotly contested sector. The EQ SUV is said to have a battery capacity of 70kWh providing a range of over 250miles powering two electric motors providing 300kW of power. The production version is expected to be launched in 2018.
In early April 2017 Daimler announced that it would accelerate its $11 billion investment in electric vehicles by bringing it forward with three years from 2025, to 2022. Reuters reported that the automaker’s aggressive stance are the result of it not being able to cut fleet emissions of 123gm CO2/km from 2015 to 2016 in Europe. Europe has set a very stringent target of 95gm CO2/km by 2020. Daimler’s own target for 2020 is 100gm CO2. The German automaker cites the popularity of SUV’s as the reason for it not cutting its emissions for the first time since 2007. Daimler’s success in the SUV segment helped it to regain its dominance over archrival BMW for the first time since 2005.
In May 2017 Automotive News interviewed Mercedes-Benz head of production and supply chain management, Markus Schaefer. When asked how the company is preparing to assemble the EQ brand Mr. Schaefer responded – “We believe the EQ family will represent 15 to 25 percent of our sales in 2025, but at the end of the day, no one can say with certainty how high the share will be. Therefore, we need maximum flexibility, meaning we will integrate the EQ models into the same assembly line as the combustion engine models they will potentially replace. Preparations are on schedule, so our plants should be capable of operating at stable output levels whatever the EV take rates may be. But in order to facilitate this greater flexibility, we also had to adapt our manufacturing.” The capacity to mass produce EVs efficiently through the full-flex plant manufacturing strategy is set to help the company recover the massive investment it will make to get ahead in the EV sector.
Daimler is also investing heavily in charging infrastructure in Europe to facilitate the adoption of electric vehicles. The final proof of Daimler’s strategy will be the early release of a full electric SUV. 2018 is certainly going to be an exciting year for the electric vehicle market.
Note to data: The BMW i3 is listed as a BEV but includes sales for the BMW i3REx, a range-extended vehicle, a PHEV.
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Geely’s London Taxi Company (LTC) this week opened a dedicated 20,000 unit per year electric vehicle plant in the UK, bringing Geely‘s investment in the company to £325 million. The plant located in Antsy, Coventry is the first all-new vehicle manufacturing facility constructed in the UK for the last 10-years. The investment by Geely, the second investment from China in the UK sector over the last two weeks, will create more than 1,000 jobs, of which 230 will be engineering jobs. A couple of weeks back Shanghai-listed Far East Smarter Energy Group announced an investment in UK-based Detroit Electric for the manufacturing of the SP:01 EV, creating 400 jobs.
The taxi EV to be manufactured at the plant underwent stringent testing, including being exposed to extreme weather conditions while covering over 500,000 km / 310,000 miles. The London Taxi Company‘s research and development team of around 200 people, based at Antsy, have been developing the company’s lightweight EV platform. The platform together with Volvo’s electric car powertrain provides the basis for an ultra low emission commercial vehicle. The working relationship with Volvo, another Geely-owned company, provides further technical expertise to the LTC team. The commercial launch of the taxi is in the 4th quarter 2017 for the UK market and 2018 for the international market.
London Taxi Company announced further that it would manufacturer a second vehicle at its new electric vehicle manufacturing facility. The company will produce a new range-extended Light Commercial Vehicle (LCV) EV for the international market, competing with the highly successful Renault Kangoo and Nissan e-NV200. Geely invested £30 million in research and development to bring the new LCV to market.
NextEV gets support for its autonomous car the NIO EVE. Baidu Inc, the Chinese search engine this week led an investment round estimated at $600 million into NextEV. Baidu, looking for new growth areas, created a $3 billion investment fund, Baidu Capital, found the fast-growing electric vehicle market attractive at a time when the vehicle and the internet are moving closer to each other. NextEV raised $500 million in 2016 from investors such as Tencent, who is also invested in Future Mobility, Hillhouse Capital, who also invested in UBER, Sequoia Capital and Joy Capital.
A trademark complaint in China filed by Chery Auto will hamper Mercedes-Benz new electric vehicle brand EQ‘s international aspirations. The Chery eQ, one of the most popular EV micro car’s in China over the last two years share too much similarity for the German automaker to be allowed to use the name in the worlds’ largest electric vehicle market. The Chery eQ sold around 25,000 units since it’s launch in 2015, making it one of the top 10 electric vehicles in the country. Mercedes-Benz launched the EQ brand at the Paris Auto Show in late 2016 to house all its electric vehicle products and services. One can only wonder how a large corporate could have let that one slide! The EQ brand stands for “Electric Intelligence” and is the spearhead for Daimler’s efforts to have electric vehicles represent between 15% and 25% of its global sales.
Mahindra and Mahindra Ltd is eyeing both luxury electric vehicles comparable to Tesla under the Pininfarina brand and mass market vehicles. Mahindra’s MD, Mr. Pawan Goenka made the comments in an interview with the Indian publication Live Mint. According to Mr. Goenka, he does not foresee the Indian Government to go the subsidy route. It is, therefore, necessary for EV prices to come down between Rs40,000-50,000 (around $750) for it to make financial sense. He admitted that the company is currently losing money on EV’s but that Mahindra is in it for the long haul, and will remain committed to the sector. Mahindra is targeting the Asean (Association of Southeast Asian Nations) markets for its EV business.
BMW is shedding some lite on its short-term electric vehicle strategy, according to Reuters, citing CEO Harald Krüger. The German automaker hinted that the Mini could be the BMW mass-market electric car, competing with the Tesla Model 3 and Chevrolet Bolt, as the company targets over 100,000 EV sales for 2017, up from 62,000 in 2016. Read our full blog on the press release here.