Almost 20 years after Volkswagen introduced the Phaeton to a resounding “huh?” of the buying public, VW is once again doubling down on premium models offering higher profit margins than bargain products. All this and more in The morning shift for April 6, 2022.
1st gear: Must be fun being an Audi executive right now
I’m going to start with a somewhat long and boring aside. In 1965 Ford introduced a car called LTD. It was a liar’s car, a sham clearly visible from the name — it was “limited” to what? How many Fords could build?
The car was a basic, low-priced Ford sedan, but with all the features and trim of a more expensive luxury model. You have the quality of something more expensive, without having to pay extra for brand recognition. It was a success and a huge win for Ford executives.
The problem was that Ford was already selling a more expensive luxury model based on the base Ford sedan: that was what Mercury was for, and from 1965 with the LTD it no longer had a reason to exist. As Curbside classic pointed out, the LTD gave Mercury his death sentence.
That is to say, a low-cost brand within a large multi-brand car company can always reap gains going upmarket, but that never really makes sense for high-end brands already in the company’s portfolio.
That being said, VW doubles the premium, as the FinancialTimes reports:
Volkswagen, the ‘people’s car’ pioneer that embodied the auto industry’s obsession with expansion, will phase out dozens of combustion engine models by the end of the decade and sell fewer cars globally. ‘together to focus on producing more cost-effective premium vehicles.
“The key objective is not growth,” said Arno Antlitz, chief financial officer, reversing the position taken by former VW executives.
“We are [more focused] quality and margins, rather than volume and market share. VW, he said, would reduce its range of petrol and diesel cars – which includes at least 100 models from several brands – by 60% in Europe over the next eight years.
VW’s new strategy is a sign of profound changes in the wider automotive industry, which for decades has tried to increase its profits by selling more cars every year, even if it required steep discounts.
The FT points out that VW is just following what other automakers are doing as part of a larger industry trend. It’s just that the other automakers that make this pivot don’t literally have “people’s car” as their name. As lower-priced Chinese cars continue to enter VW’s European home market, I wouldn’t be surprised to see yet another VW pivot to affordability.
2nd Gear: Rivian says it delivered 1,227 vehicles this quarter
Rivian says it built 2,553 vehicles in the first quarter of this year and delivered 1,227. If you add last year’s numbers, that’s a total of 3,568 Rivians, per Reuters.
Rivian says he wants to make 25,000 vehicles a year, but he’s optimistic about it.
If you yourself have had a long and winding road while waiting for your very own Rivian to be delivered, feel free to email us your story at tips at jalopnik dot com.
3rd gear: the US government needs 100,000 electric vehicle chargers and only has 1,100
A new government report looked at two things: how many electric cars the government says it wants to have and how many chargers it has for them. Turns out there’s a pretty big gap between the two, because Reuters reports:
The U.S. government may need more than 100,000 charging stations to support widespread use of electric vehicles, a government watchdog said during a congressional hearing on Tuesday.
The Government Accountability Office (GAO) said in its testimony that as of March, federal agencies had about 1,100 charging stations. President Joe Biden signed an executive order in December directing the U.S. government to end purchases of gasoline-powered vehicles by 2035.
I’m sure it can’t be that hard to build, uh, 100,000 electric vehicle charging stations, right?
4th gear: Tesla and BMW factories in China continue
It’s a bad time to build cars in China, because Reuters reports that shutdowns continue at Tesla and BMW:
Tesla Inc.The closure of the factory. spanned at least 12 days, much-needed semiconductors are piling up at manufacturers amid a shortage of truck drivers, and bankers camp out in their offices as Shanghai’s Covid-19 lockdown disrupts companies in the Chinese financial center.
Cases are at an all-time high in the city, now the epicenter of China’s worst outbreak since the start of the pandemic, and the lockdown has been extended indefinitely. As the country sticks to its rigid Covid-Zero containment playbook, President Xi Jinping’s demand to limit the economic consequences is becoming increasingly difficult to achieve in the face of the highly transmissible variant of omicron.
Meanwhile, BWM saw production in the northern Chinese city of Shenyang halted for two weeks after the industrial hub was shut down last month in a bid to limit the spread of Covid-19.
The German automaker has suspended production at its two factories in Liaoning province since March 24, after the municipal government imposed stricter checks on residents from March 22, according to a Beijing-based spokesperson. .
It’s a reminder that when Tesla was faced with the prospect of Covid lockdowns in California in 2020, Elon Musk said “no” and hundreds of people fell ill.
5th Gear: Hey car makers, you remembered those fire-prone LG batteries, right?
Because NHTSA asks about it, like Reuters reports:
United States National Highway Safety Administration said on Tuesday it was opening a review to ensure that all defective batteries produced by LG Energy Solution had been recalled by automakers.
The auto safety agency noted that Mercedes-Benz, Chrysler-parent Stellantis, General Motors and Hyundai Motor Co. have issued recalls since 2020 due to internal failures of high-voltage vehicle batteries that pose fire hazards.
NHTSA said the equipment request covers 138,324 vehicles and will contact LG “and other companies that may have purchased the same or similar equipment from LG, notify them of this defect in all vehicles they have manufactured and will ensure that thorough safety recalls are carried out as appropriate.”
I’m both thrilled and amazed that NHTSA under Biden actually seems to be doing something. That hasn’t always been the case with NHTSA..
Back: The first private communications satellite, Intelstat 1, goes into orbit
From Encyclopedia Brittanica:
On April 6, 1965, the first Intelsat satellite, Early Bird (also called Intelsat 1), Was launched; it was designed ad built by Rosenthe Hughes Aircraft Company team. Early Bird was the first operational commercial satellite providing regular and diffusion services between North America and Europe. Early Bird was followed by Intelsat 2B and 2D, launched in 1967 and covering the the Pacific Ocean region, and Intelsat 3 F-3, launched in 1969 and covering the Indian Ocean Region. Intelsat’s satellites in geostationary orbit provided near-global coverage, Arthur C. Clarke had considered 24 years earlier. Nineteen days after Intelsat 3 F-3 was placed over the Indian Ocean, the first human landing on the Moon on July 20, 1969, was broadcast live via the global Intelsat satellite network to over 600 million television the viewers.
Neutral: How is your Volkswagen?
Mine is doing very well and may soon return to the Finger Lakes.