Category Archives: Automotive

Can car-loving Los Angeles be the model for driving lower carbon?

189440-049-A9F1124DEarlier this month I was a guest of the UK’s Department of International Trade on a low-carbon vehicle trade mission to California and Mexico.

With several days in LA to start the trip, the city of dreams inevitably set the tone. It’s hard not be smacked around the face by this extraordinary place. The real positivity, the relentless politeness, the universally terrible coffee, the ubiquitous fast food, the homelessness, the vast wealth spilling over the Hollywood hills. But most of all the traffic. The extraordinary levels of it, spread uniformly across the expanse of this vast urban sprawl.

la-me-traffic-los-angeles-20170220This is a city with no centre. Arteries don’t run into and out of a metropolitan heart as they do in older cities. LA is a giant grid which people criss-cross 24/7: more than in probably any other western city the population works around the clock, servicing everything from the entertainment business to the fast food industry. Property prices and wealth inequality mean that people often live a very long way from where they work – even for relatively low-paid jobs they commute, say, 30 miles, and they drive it, which can take a couple of hours. Hardly anyone uses what public transport there is. The nearest anyone from the professional classes gets to public transport is Uber. It’s a default option which only adds to the traffic: effectively a single-occupant car, usually with a large internal combustion engine. Uber and Lyft are simply increasing the car dependency.

So in spite of California’s environmental commitments LA is very definitely not the cool low-carbon city of electric vehicle advocates it’s sometimes painted as. Yes, there are plenty of Tesla’s Model S around (although few Model Xs, and I saw just one Model 3) and a good sprinkling of Chevvy Bolts. But pure EVs and hybrids like Toyota’s Prius are vastly outnumbered by giant gasoline-driven SUVs, ancient V8s, V12-touting Lamborghinis and Rolls-Royces, let alone the humdrum everyday transport of ordinary folk: if you want to spot Hyundais, this is the place to come. LA is a city in love with the motor car. Any car.

IMG_6168It’s simply not realistic to change this mindset. This isn’t Silicon Valley, where utopian business ideas are dreamt up in people’s garages and grow into multi-billion-dollar global disruptives. Currently LA is really the old model, a glittering outpost of Detroit. We visited the LA motor show and its eco off-shoot, Automobility LA, and they echoed echoed this: the latter was, at best, work in progress, the former much like any other motor show (but with more old-school gas-guzzling models). Where were the disruptors? Lucid? Faraday? Nio? Fisker?

The major car manufacturers don’t want the mindset changed – yet. They know that their existing business model is approaching the end of its life, but it’s fine while it still works and until legislation necessitates the change; mass market demand only ever comes into the equation late on. Meantime the carmakers don’t provide attractive low-carbon options. Why should they? EVs are expensive to engineer, mean disruption to manufacturing and retail processes, and offer reduced margins.

2017-11-29-PHOTO-00000023It’s in this context that those involved in the low-carbon trade mission can be a factor – smaller companies and start-ups, technologists and innovators, suppliers and integrators. While the major carmakers have a vested interest in slowing things down, these other businesses can be catalysts, forcing change from the bottom up.

Los Angeles can play a big part in this. It’s a bridge straddling the lets-change-the-world optimism of Silicon Valley, San Diego’s low-carbon commitment and the pragmatic ability of Baja Mexico to productionise low-carbon tech. And it’s got a huge potential customer base, vast wealth and international influence.

los-angeles-mobility-planLA is also quite possibly the model for a major modern city struggling to eschew old ways and acquire new, more sustainable habits. Yes, it’s more extreme than New York, Paris or London, but most of the problems are the basically the same: too much road traffic, unattractive public transport, very little low-carbon choice. If LA can do it then so can others. We should all keep watching.

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Dyson’s ambitious British EV project relies on Asia – and the US for now

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Sir James Dyson’s announcement of his electric vehicle ambitions has been news across the world.

There’s been a surprising amount of antipathy among the public, mostly in his UK homeland. Perhaps that’s because his name is associated with vacuum cleaners.

Elsewhere, especially in the USA – which likes a start-up, preferably from a California garage – it’s being seen as a credible venture. Especially as it’s being supported by a £2bn war chest. That’s 80% of the £2.5bn investment plan already announced – a huge commitment. Forbes, the Wall Street Journal and Bloomberg have all covered the story in a positive light. So has the FT.

Nevertheless, bringing a car to market by 2020 or even 2021 is extremely ambitious – that’s why Dyson has been keen to stress that the company has been at work on the project for years, and that it’s been in his mind for two decades. But this is a time for ambition, and once he has a product he can unleash a big advantage: growth in demand for Dyson’s consumer products, especially in Asia, which will drive the global EV market, has quadrupled group turnover in the past decade. If that brand traction can be coupled with product containing unique and relevant features – Sir James is betting on solid-state batteries for a start – Dyson has the capability of market success even if turning a profit will take many years.

image001-3Asia is key, so expect to see the vehicles being manufactured there. That may mean partnerships with Chinese businesses, which would reduce the huge financial risk. What that in turn means for the brand – British, daring, challenging, idiosyncratic, innovative – is another question.

But this news adds to the rapidly swelling tide of EV commitment and interest. It’s good for all of us in the EV business. We wish Sir James and his venture the best of British luck.

Automotive News Europe Congress: why brand, Barcelona and Amazon matter

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The big issues facing the automotive industry were all there at last week’s 20th Automotive News Europe Congress Barcelona. But the order of importance is shifting.

Connectivity was the headline act. LYNK & CO’s Alain Visser made sure of that with a punchy presentation to open the event (see previous blog piece, LYNK & CO goes back to the future). Integrated mobility, and how connectivity can facilitate its provision, was a strong support act. Electrification in the form of plug-in vehicles was pushed from centre stage though: as Luca de Meo, President of event host SEAT said, EVs won’t take over until the range is better, charging takes the same time as filling a fuel tank, and the cost of ownership is reduced. And autonomy? That was just a cameo. Toyota’s Executive VP Didier Leroy, the most senior non-Japanese in Toyota Motor Corporation, said autonomous vehicles will become a norm only when an accident-free society has been achieved.

But above all these came the overriding matter of brand. Why? As everyone agreed, the carmakers are under threat. They don’t want to become merely the hardware supplier in a society where the experience and the service are what consumers engage with and what creates affinity and loyalty. If they do, cars will be reduced to mere commodities.

So brands are more important than ever. Luca de Meo said as much in his event-closing presentation, declaring, “Brands have not disappeared – they are levers to respond to different customer demands and needs.”

This was fitting – he made a powerful and effective figurehead for the SEAT brand. He’s an appealing character, with a relaxed, modern delivery and a smartly pragmatic approach. He recognises SEAT’s weaknesses and limitations, acknowledging that if it were not for VW Group parentage the Spanish company wouldn’t have a future. Even with that ownership SEAT is anchored insecurely, positioned somewhere adrift Skoda and acting as a feeder for the other group brands.

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So, to give SEAT relevance, as well as pushing the inevitable SUVs he’s investing in the brand by understanding where its roots are and strengthening them. And not just its national roots. Where others are developing homogenised brands – Skoda isn’t Czech any more, and LYNK & CO emanates not from China or Sweden so much as cyberspace – de Meo is going in the other direction, reconnecting SEAT to its home city of Barcelona.

This is smart thinking, and not just because Barcelona is emerging as one of the world’s leading smart cities. A strong brand has to reflect a company’s culture, and Barcelona – a city renowned for independent thinking, creativity and a life-affirming sense of well-being – lends an authenticity the company has lacked in recent years, when it’s aspired to being a “fun” brand, an antidote to the rest of the VW Group, without substance.

Didier Leroy shared top billing with de Meo at the Congress. He was the only other speaker given slots on both days, and although he’s from a very different background and operates within a polar opposite culture he was a deeply impressive conduit for the Toyota brand. He gave persuasively different perspectives on Toyota’s perceived weaknesses – a corporate reticence, a go-it-alone mentality, a stubborn adherence to hybrid technology – and did it with humility, humour and effortless authority.

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Leroy didn’t understate the challenges facing the industry: he compared the extent to which Toyota is having to reinvent itself to what it faced when it went from making looms to producing cars in the 1930s. But he left the listener feeling that the business is as focused on the challenges, the real issues and the real way forward as any can be. He’s the public face the brand has never had.

In spite of the way Hyundai and Kia have been transformed by a car designer, Peter Schreyer, the appointment of Volvo designer Thomas Ingenlath as CEO of its newly reoriented Polestar EV offshoot and the ongoing use of Land Rover/Range Rover design boss Gerry McGovern as its brand face (“I am the custodian of the brand”, he said in his Congress presentation), this may be a moment when the executive-as-articulator-of-the-brand role swings back from car designer to boardroom leader.

Leroy made an interesting point that, contrary to the assertion that OEMs must not become just the hardware providers, in reality some may well have to. It’s just that Toyota won’t be one of them. So what are the non-carmaker business models he and his OEM counterparts are studying as they look out to the nearing horizon? Uber? Google? No – it’s Amazon.

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For OEMs that ecosystem has to have the provision of services at its heart, which requires a brand extension job. When consumers rent a car they choose a category and, possibly, a rental company. So if the OEMs want customers to choose their products in an emerging landscape where short-term use and sharing are the norm they will have to build and offer the service direct as well as through partners.

And that means investing in technical services and connectivity, which is why the latter is currently a bigger issue than electrification and automation. Customer engagement and ultimately profitability could well be defined by it, and strong brands will be the foundation of it.

Lynk & Co goes back to the future

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The best-received presentation at last week’s Automotive News Europe Congress in Barcelona was by Alain Visser, Senior VP of LYNK & CO, Volvo’s sister brand conceived to meet new customer needs. It was rightly scheduled to kick off the event, underpinning the ongoing theme of inevitable change facing the industry, and was delivered with a delicious non-corporate directness.

The car industry business model is, as Visser commented, essentially the same as it was 100 years ago – build cars, sell them, build more. For all their technical wizardry, the carmakers are not innovative. They’re driven by volumes, legislation and necessity. As Visser also said, there’s plenty of discussion about new business models at events like the Congress, “But boardroom talk is only about tech – not services, customers, brands.”

When Volvo’s parent, Geely, asked him to set up LYNK he rightly questioned whether the world needs yet another car brand, and said he’d get on board only if he could do things differently: the customer of today has nothing to do with the customer a century ago.

The LYNK business model is driven by several key changes in consumer behavior. There’s the move away from ownership, not just to leasing but to sharing. Young people are engaging with and shaping trends, and spending their money on social experiences, not cars. And customers expect services to come to them and to be able to transact online. Visser claimed that research shows that people would rather visit the dentist than a car dealer.

So the philosophy behind LYNK’s offering is to start with the customer experience and work back. Three values therefore lie at the heart of the brand, positioning it as lifestyle rather than automotive. Connectivity is to LYNK what safety is to Volvo – think gigabytes, not bhp. Sharing – if people share their homes as on Airbnb model, why not their cars? A subscription model – LYNK sees itself as the Netflix of the car industry.

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To deliver these the business will have wholly-owned outlets located where people are and will allow end-to-end online purchasing. There will be a single set of prices, and no haggling. There will be a lean product range. LYNK will “kill traditional marketing”.

Yet this brave new world is essentially the same as one launched over 20 years ago, only without the benefit of an online world. I was part of the team which launched Daewoo in the UK in 1995. Like Visser, we knew there was no point launching just another car company. Like him we agreed to do it only if we could do it differently, focusing on the service rather than the vehicles. Like LYNK we tore up the distribution rulebook and set up direct outlets where people went – retail parks, supermarkets. Customers were advised, not sold to, and their kids could use play areas while they had a free coffee and got the information they needed from interactive touch-screen pods. There was no haggling and no commission. The result? Daewoo achieved record share for a new entrant in the UK market and became a benchmark for service across all retail sectors.

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The fact that, over two decades later, the LYNK pitch is seen as revolutionary, when it’s merely addressing inevitable shifts in customer dynamics, tells us how conservative the automotive industry is. It’s also ironic that tech, identified by Visser as a stale driver of boardroom decision-making, should now in its digital form in vabe the driver of change: connectivity, social media, virtual showrooms and sharing platforms. So the LYNK proposition is perhaps more interesting for the issues it raises about the industry.

LYNK illustrates the need to not only change but to hedge – no one knows precisely how the complex matrix of connectivity, mobility, electrification, urbanization and environmental imperatives will play out. But Geely – with Volvo as the traditional core brand, LYNK as the first-move disruptor and now Polestar as an EV-only brand – has a hedging model other OEMs might note. Yes, Geely has the advantage of being smaller, more agile. But, as Visser said, the likes of General Motors have a massive advantage in spite of their bulk – it’s far easier for a GM to add connectivity than it is for an Apple to become a carmaker.

LYNK’s lean product offer is another issue. If this helps makes LYNK a profitable success then it threatens to take the car retail business in the opposite direction from the premiumisation model where vast product ranges with endless specification options promise a near-personalised product with dramatic up-sell margins. Great brands are simple, and if simplicity becomes a driver of consumer engagement then LYNK can play a bigger part in setting the new paradigm.

Will it succeed? Some say LYNK’s first car, the 01, could and should look more interesting. The fact is that it’s neither fish nor foul – LYNK’s own hedge is to launch with a car which was conceived to take either an internal combustion engine or an electric/hybrid powertrain. So it hasn’t been able to reinvent the form of the traditional car around batteries and motors in the same as it’s trying to reinvent its consumption.

0_lynkco_shanghaiBut that, as the LYNK & CO website says, is “Almost beside the point.” The service is the product.

Armed with the power of an internet-enabled world and a customer base nurtured by Apple – unlike the fax and Nokia world of the 1990s Daewoo inhabited – LYNK can certainly make a mark. It has the remarkable opportunity to be a first-mover while being far from ahead of its time. We won’t all be driving LYNK cars – customer inertia and passive loyalty to existing, conservative but powerfully crafted brands will see to that.

But one of those brands is Volvo, and success for the LYNK will surely be serving as a bellwether and feeder for its well-established and relatively agile stablemate. If it does that, and grabs a good share of online voice and a slice of China’s growing aspirational middle class market it will have served Geely – and the automotive industry – very well indeed.

Automotive News Europe Congress – how are the industry’s leaders facing up to unprecedented change?

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Four weeks today I’ll be at the Automotive News Europe Congress in Barcelona. It always attracts senior executives from across an ever-broadening industry, and now is a better time than ever to be part of it – the industry is on the cusp of dramatic structural and cultural upheaval.

POSCO_main_1300x550_170407The excellent speaker line-up reflects those changes. With SEAT, Lamborghini and Italdesign all on the speaker’s podium, VW Group is somewhat over-represented – that’s because SEAT’s the Host Sponsor, but it also means we get to hang out in Barcelona. And the line-up does reflect many of the changes facing the industry.

This is what I want to hear from them.

Luca de Meo – President, SEAT:

How is he intending to give Spain’s national brand sustainable relevance? They tried to become an Alfa-Romeo-esque sport-driven brand, and now they’re committing heavily to SUVs, but so has most of the competition already. Aren’t SEAT’s differentiators of small/compact cars and a weighting towards southern Europe also its weaknesses? How will SEAT integrate the VW brand’s surging EV technology into its own offering? And what’s the dynamic within the bulging VW group brand portfolio, especially the no-longer budget Skoda brand? As keynote speaker, de Meo’s positive claims for SEAT will be under close scrutiny.

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Brigitte Courtehoux – Head of Mobility Services, PSA:

More than one OEM has now publicly stated that they’re transitioning from manufacturer and retailer to mobility provider, but what’s the substance behind this? Nissan and Volvo have extensive ongoing consumer trials of autonomous vehicles; what is PSA doing? How is it approaching the potentially seismic consumer shift from purchase and conventional leasing to flexible and ultra short-term leasing, on-demand usage, and personal mobility platforms encompassing public transport, Uber and growing non-driver urban populations? And where does the Opel brand fit into this scenario?

Jim Farley – Executive Vice President, Global Markets, Ford:

With Mark Fields having vacated the top seat at Ford Motor Co this is interesting timing. Ford has lacked focus globally since Alan Mulally departed in 2014. In Europe the company has made money when others haven’t, and GM Europe has thrown in the towel. But Ford is still part of that squeezed middle – mainstream brands which cannot become premium but are not value brands or challengers. What is the global vision? The company could – should – be leading the world in mobility, just as it did with the Model T a century ago. And what is its future in a fracturing Europe? With profits in the region down could it even follow GM to the exit door? Farley, newly promoted to a global role but with European oversight, is touted as a future global Ford chief so his view will be fascinating.

Didier Leroy – Executive VP, Chief Competitive Officer & President, Business Planning & Operation, Toyota Motor:

Toyota’s first foreign executive VP, Leroy provides a uniquely European focus for the Japanese giant. From a European point of view Toyota is nowhere near its global standing – 10th in volume terms, behind Skoda – and Lexus has simply never taken off. Globally it has never owned the EV and hybrid territory the way it should have done as the pioneer, which has clouded its brand purpose and allowed the likes of Skoda, Hyundai and Kia to steal hard-earned European market share, and the current uncertain next-generation technology strategy isn’t helping. Now there’s a global profits crisis, so how will this affect Europe operations? The man with the longest job title in the industry in uniquely placed to make the company’s case.

Hakan Samuelsson – President & CEO, Volvo Car:

As a challenger brand Volvo has the agility to reinvent itself and shift to meet changing market needs. And, sure enough, it has just announced that it will stop making diesels altogether, admitting that meeting emissions targets is too expensive. Other than VW’s virtue-out-of-necessity move to EVs, the bigger players have too much invested in existing technologies to be as bold, but Volvo’s move to EV and hybrid power brings the tipping point into view. The company is also at the forefront of automation, with its brand imperative of safety meaning that Volvo automation systems will effectively become the industry benchmark. Can this small OEM be the catalyst to both the demise of the internal combustion engine and the mass adoption of automated cars?

Alain Visser – Senior VP, LYNK & CO:

As the face of LYNK & CO, Alain Visser is fronting a company embodying many of the challengers facing existing OEMs. It’s not only offering cars designed for electric powertrains and connectivity, it’s challenging the whole existing business model by designing one around emerging market expectations. Direct, online sales, fixed pricing, home delivery and a subscription model for the app generation. “The word doesn’t need another car brand,”, Visser said. No existing OEM would establish itself now using the archaic distribution models they’re tied to, but LYNK & CO is part of Geely and was dreamed up at Volvo labs, so can the company make it work and head off the Teslas, Ubers and as-yet-unknown disruptors who come in totally fresh, with no automotive background?

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Hildegard Wortmann – Senior VP, Brand, BMW:

For me BMW is in some ways the most interesting OEM represented in the speaker line-up. Recently replaced by a resurgent Mercedes as the number one premium brand globally, it has lost its way a little: a commoditised 3-Series, bland and questionable styling, not enough true SUVs, an i-Series low-emissions sub-brand which has stagnated with just two, polarised products book-ending a product void. And now it faces a fundamental challenge to its very purpose – the Ultimate Driving Machine – in the shape of automated mobility. What will BMW’s place be in the future automotive landscape, and how will it get there? As the brand chief, Wortmann should provide a clear insight.

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I’m a little biased as I worked with ANE for several years in the 2000s, partly on this event, but for me the Congress is the best automotive trade event in Europe. Readers wanting to register can get a €100 discount by visiting the link below and quoting the code LONGSHORE. It can be used for either the Congress/Rising Stars combo or the Congress only.

Hope to see you there.

https://www.regonline.com/registration/Checkin.aspx?EventID=1934274