China approves Geely subsidiary’s EV production plan

Bloomberg News | March 7, 2017

China approved the electric vehicle production plan of a company owned by Zhejiang Geely Holding Group Co., under a special program originally conceived to encourage technology startups to develop EVs.

Ninghai Zhidou Electric Vehicles Co. received permission from the National Development and Reform Commission to invest in a new assembly plant to produce 40,000 electric cars a year, according to the agency’s website.

A total of 880 million yuan ($128 million) will be invested in the plant in Lanzhou in northwestern China, part of parent Geely’s plan to develop EVs, said spokesman Yang Sumi.

“It’s an experiment and Chinese companies use such investments to learn from the market,” said Bill Russo, managing director of Gao Feng Advisory Co. “In an era of disruption, it’s best to move quickly and learn rather than try to make a perfect plan and never actually get it done.”

The Geely subsidiary is the 11th company to get approval to produce EVs under a program started in 2015 to encourage new participants in the EV industry.

Geely, of Hangzhou, owns Volvo Car Corp. and is introducing an upscale brand called Lynk & CO. The company has said it wants 90 percent of its deliveries by 2020 to be generated by sales of conventional hybrids, plug-in hybrids and battery-electric vehicles.

All companies that have received permission under the National Development and Reform Commission program so far are owned by automakers, parts manufacturers and companies in auto-related fields. Technology firms such as LeEco, NextEV Inc. and Singulato Motors have yet to make the list, despite raising billions from investors with ambitions to become China’s next Tesla Inc.

Your future driving experience: Q&A with auto expert, Bill Russo

DRIVE:  Nissan Intelligent Mobility for your ride

Click here to view the original DRIVE publication

Few observers of the evolution of the automotive scene have had a better vantage point than Bill Russo. With more than 30 years in the industry — half of that time as an auto executive with experience in China and Asia — Russo nowadays heads up the Automotive practice for Gao Feng Greater China, working as the company’s senior representative in Shanghai. We spoke with Bill recently for our third installment of our Q&A series to get his take on the impact of autonomous driving and the emergence of smart vehicles on the roads.

Q: How will the driving experience change in the Autonomous Age?

A: The potential is there for a complete redefinition of what we mean by transportation, both in terms of comfort and convenience. With the advent of autonomous driving, we’re talking about a transition from a device where we really had to focus on the road — because we were the brains of the car — to where we can focus on other things. That is time given back to us that will allow us to do other things because we won’t have to monitor what’s going on with the vehicle itself.


Q: Thinking back to how the public reacted to other major technology shifts in transportation, such as trains or commercial aviation – To what extent were these shifts driven by the user-convenience factor?

A: When you look back in history, the greatest inventions by humans — the wheel, the bicycle, the steam ship, the train, the airplane — they all exist to give us the ability to travel over increasingly greater distances. Over time, each invention added more convenience and more new features to make the experience of mobility much more enjoyable and less painless. And as each of these solutions became commercially viable and affordable, they did so by offering users a benefit versus whatever preceding form of transportation they had favored up to that point―a benefit for which they were willing to pay.


Q: How important was the pace of technological progress?

A: It’s not about creating a technology for the sake of having the technology; it’s about providing a more comfortable and convenient way for people to travel the distances that we travel each day. They have to provide a tangible benefit for people to be willing to pay and use the new mode of transport. For example, trains reduced the amount of time that it took to travel across the country from months to days. The commercial airplane reduces that same time to a matter of hours. We can circle the world in a jet in little more than a day. Not so long ago, in historical terms, that journey took people years in a boat and they may not even have lived to tell the story.


Q: Where do cars fit in the historical narrative?

A: The car became a primary means for the average person to satisfy their daily needs for mobility. We’ve designed city and transportation networks that were basically designed for vehicular transportation. In the 21st century, we’re seeing a phenomenon — particularly in emerging markets in Asia — where there are now very densely populated urban centers. That urbanized context is not really well suited for the car that we know today. Today’s cars are designed really for highway transportation. So in an increasingly urbanized world, we’re going to experience the next evolution of convenience and mobility which I think will be an autonomous mobility solution.


Q: Will perceptions of autonomous driving vary by country due to local conditions?

A: Absolutely. First of all, comfort and convenience are solutions to mobility “pain points” and the degree to which people experience pain points varies greatly based upon where they live. Mobility pain is much higher in densely populated cities, like New York or Paris or Delhi — and virtually all major cities in China. A city like Beijing experiences gridlock several times a day. And the driving experience in a highly urbanized country like China can be horrific. You can spend an hour going less than 10 miles in a car. So the joy of being behind the wheel and driving is not really there. It’s a big difference from the driving experience of getting out on the open highway. New forms of electric and autonomous mobility―like the advent of on-demand mobility where a user pays only for the time they are in the car, rather than owning it 24/7 and using it only seldom — will be a common solution to address the mobility pain points in many places.


Q: What does it mean when we have autonomous vehicles on the road that are designed from a user-centric perspective
 as opposed to the current driver-centric mindset?

A: With autonomous cars, we will be able to transform travel time into productive time — especially for longer distance commutes. There’s the potential to participate in the digital ecosystem, offering users in autonomous cars access to services and content that they can consume while mobile. Convenience services could include infotainment or watching news or doing emails and conference calls. The car thus becomes a connected rolling space that transports us to places where we live, work, and play.


Q: As autonomous technology removes the drudgery of mundane tasks associated with driving, how does that reshape how we relate to vehicles?

A: Vehicles will have the intelligence to diagnose the situations that they’re in and make the more complex decisions that human beings today make. That not only reduces the pain points of driving, it also is going to make the overall experience more convenient, safer, and enjoyable for the occupants.


With autonomous driving, we’re arriving at a point where we can define a new paradigm that refocuses how the passenger conducts and uses their transportation time. Observing what happens outside of the car, for instance, moves from being a requirement to a choice. You don’t have to look outside the window any longer. You can — if that’s what you want to do. But you really don’t have to concern yourself with what you see outside. It’s like being an airline passenger looking out the window. You can look out the window but do you really need to?


Think about the “cockpit” space that’s now allocated in vehicles for the purpose of giving drivers information they need to make decisions. You can repurpose all of that from a driver-passenger perspective to a connected user perspective. You will be able to provide people display space that allows them a more productive use of information that they may need to go about their day. While the purpose of the car doesn’t change — it’s still a transportation system — this new concept of how to offer a convenience-oriented autonomous vehicle to the occupant(s) is different.

For more stories, please visit our page on Medium.com, https://medium.com/drive-publication

About Nissan Motor Co., Ltd. 
Nissan is a global full-line vehicle manufacturer that sells more than 60 models under the Nissan, Infiniti and Datsun brands. In fiscal year 2015, the company sold more than 5.4 million vehicles globally, generating revenue of 12.2 trillion yen. Nissan engineers, manufactures and markets the world’s best-selling all-electric vehicle in history, the Nissan LEAF. Nissan’s global headquarters in Yokohama, Japan manages operations in six regions: ASEAN & Oceania; Africa, Middle East & India; China; Europe; Latin America and North America. Nissan has been partnered with French manufacturer Renault since 1999 and Mitsubishi Motors since 2016 under the Renault-Nissan Alliance.

China’s Answer to Tesla Is Hopeful Entrant to Global Car Market

The New York Times, January 26, 2017

Lu Qun, chairman of Qiantu Motor, in Beijing in December.

by Michael Schuman

BEIJING — On a windswept lot near Beijing’s main airport, Lu Qun talks up the electric sports car he hopes will transform him into China’s Elon Musk.

“This is a real performance car,” the entrepreneur boasted of his sleek, gray-and-black Qiantu K50. “It’s fun. You can feel the quality. You’ll love driving this car.”

For Mr. Lu, 48, the roadster is his best chance to make it big. After a lifetime of obscurity creating vehicles for other companies, the bespectacled engineer is betting that the rise of electric cars will propel his company — and his country — into the automotive spotlight.

“Traditional auto manufacturers are constrained by their old models,” he said. “We can see things with fresh eyes.”

Across China, government officials, corporate executives, private investors and newcomers like Mr. Lu are in a headlong rush to develop a domestic electric car industry. The country’s goal, like Mr. Lu’s, is to capitalize on the transition to electric to turbocharge the country’s lagging automobile sector to become a major competitor to the United States, Japan and Germany.

That has been a goal of China’s industrial planners for decades, as the government has lavished resources on building homegrown automakers and discriminated against foreign players.

But so far, that effort has failed.

Local manufacturers have lacked the brands, technology and managerial heft to outmaneuver their established rivals, either at home or abroad. Chinese consumers have preferred more reliable Buicks, Volkswagens and Toyotas to the often substandard offerings from domestic manufacturers, while little-known Chinese models have struggled to gain traction overseas.

Electric vehicles could offer a second chance — one China’s policy makers do not intend to miss.

They targeted electric cars for special support in an industrial policy called “Made in China 2025,” which aims to foster upgraded, technologically advanced manufacturing. By 2020, Beijing expects its automakers to be able to churn out two million electric and hybrid vehicles annually — six times the number produced in 2015.

This time, China’s carmakers may be better positioned. Since electric vehicles are a relatively new business for all players, Chinese manufacturers and international rivals are largely starting from the same point.

“There is a smaller gap between where China is today and the rest of the world” in electric cars, said Bill Russo, managing director at Gao Feng Advisory, a Shanghai consultancy, and a former Chrysler executive. “There is room for newer start-up companies to dream big in China.”

Mr. Lu is one of those dreamers.

Fascinated by cars since he was a boy, he studied automotive engineering at Beijing’s prestigious Tsinghua University. Upon graduating in 1990, he joined the research and development team at the China-based joint venture of Jeep, then a division of Chrysler.

During his time there, which included two years in Detroit, Mr. Lu came to feel such overseas operations had limited prospects in China — the ventures’ partners would try to balance their interests, and so were slow to develop strategies and make decisions.

So in 2003, he and nine colleagues started CH-Auto Technology Corporation as a specialty research and design shop for the local car industry. Since then, the firm has designed vehicles for some of China’s biggest automakers.

Mr. Lu decided to start manufacturing his own vehicles because of the shift to electric. Since producing electric cars requires new parts and technologies, he believed a small entrant could better compete with these new vehicles than traditional automakers.

“Electric vehicles won’t just replace cars with conventional engines, but they will bring a huge change to the entire car industry,” Mr. Lu said. “We wanted to be part of this revolution.”

The result is the K50. Designed at his research center, the two-seater has a light, carbon fiber exterior and a console stuffed with touch screens. Rows of batteries propel the roadster to a top speed of about 120 miles per hour and carry it as far as 200 miles on a single charge.

No longer content to watch others produce his designs, Mr. Lu is currently constructing a $300 million factory in Suzhou, a city near Shanghai, to manufacture 50,000 cars a year. In all, he expects to invest as much as $1.4 billion into his venture over five years.

He did not specify what the car would sell for, but Mr. Lu intends to price the K50 at the top of the market when it goes on sale this year.

That sets CH-Auto on a collision course with the industry’s flagship: Tesla.

Elon Musk’s company already has an edge. While Mr. Lu is building his business from scratch, Tesla has been established in China since 2013. CH-Auto will have to persuade wealthy customers to plunk down a large sum on an unfamiliar brand — Qiantu — over Mr. Musk’s recognizable models.

Mr. Lu nevertheless remains confident. He argues the sporty K50 will appeal to a more leisure-oriented driver than Tesla’s cars. As a logo, the company has chosen the dragonfly, because its managers believe the speedy, nimble insect has similar attributes to his electric car. To market it, Mr. Lu is considering opening showrooms in major Chinese cities, backed by a platform to sell online.

Elon Musk “is someone I can learn from,” he said. “Tesla has huge symbolic significance because it is the first company to make people believe a business model solely around electric vehicles is possible.”

But, he added, “we are not looking to create the Chinese Tesla.”

When it comes to competing with Tesla, Mr. Lu can count on ample help from the Chinese government.

To bring down costs and spur demand, the state has unleashed a torrent of cash. It has offered subsidies to manufacturers and tax breaks for buyers, and plowed investments into charging stations to make electric cars more practical.

In all, UBS Securities estimates that the government spent $13 billion promoting electric vehicles in 2015 alone. So far, Mr. Lu has financed the K50 through loans and injections of fresh capital, but says he “won’t refuse” government subsidies if they become available.

Some analysts fear the state’s largess could prove as much bane as boon.

China may be recreating the waste and excess in electric cars that has plagued other state-targeted sectors, like steel and renewable energy, without spurring the technological innovation the economy needs to compete. And even though China’s car market is the world’s biggest, it is still unlikely to absorb all of the electric vehicle projects underway today.

“They are fueling overcapacity, with a lot of wasted money, and I’m doubtful that in the end you’ll have a successful electric car industry,” says Crystal Chang, a lecturer at the University of California, Berkeley who studies China’s auto industry policies.

Significant sums have already been squandered. In September, the Finance Ministry fined five companies for defrauding the government of $150 million by fabricating sales of electric vehicles to obtain more subsidies, and several companies have failed to make an impression.

Mr. Lu is certain, however, that the K50 stands out in a crowded field. The car has already gotten some advance buzz; a review on one popular Chinese website praised its design as “beautiful” and “avant-garde” and its body as “very muscular.”

“A big advantage they have is their knowledge of what it takes to build a quality vehicle,” said Jack Perkowski, managing partner of the Beijing-based consulting firm JFP Holdings and a veteran of China’s car sector. “They have a better chance than many others because of that.”

Mr. Lu is counting on it.

“There are a lot of electric vehicle companies and hot projects attracting a lot of money,” he said. “Not every company and not every car will be successful.”

Perspectives on the Future of Mobility and Autonomous Driving

by Bill Russo

I recently attended the Consumer Electronics Show in Las Vegas, where traditional automakers, suppliers and several technology firms were showcasing their vision of the future of mobility.  Of particular interest were the many demonstrations and announcements related to autonomous vehicles.  Early forms of this technology are finding their way into commercial applications in the form of “assisted driving” features which incorporate cameras and radar/lidar to provide the car an extra set of eyes to sense its surroundings and inform the driver of risks.  Rapid advancement of technologies needed to fully automate the driving process is also evident, indicating that robotic forms of transportation will be possible within at least 2 industry product cycles (5-10 years).

The following is a Q&A which offers a perspective on the future of mobility and the design and function of autonomous vehicles.

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  1. The Autonomous Driving (AD) era will allow for an entirely new driving experience for drivers and passengers.  How much of an impact will AD technology have on the comfort and convenience of driving?

Autonomous Driving will completely redefine the comfort and convenience of transportation.  In our current paradigm, comfort is designed around the driver and occupants in an externally focused manner:  with eyes to the road.  The space around the front seat occupants – both driver and passenger – is oriented to the information needed to manually drive the car to its destination. Autonomous vehicles will experience fewer accidents, over 95% of which are attributable to human error.  Cars can therefore be lighter, with less structure without compromising occupant safety.  Traffic jams will be less common since autonomous vehicles will be able to leverage vehicle-to infrastructure and vehicle-to-vehicle connectivity in order to avoid congestion and smooth the flow of traffic.

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  1. When you look back at the public’s embrace of big technology shifts – trains or commercial aviation for instance – to what extent was that shift motivated by the convenience of the new mode of transportation?

Convenience always shapes our choices when it comes to transportation.  Human beings are inherently explorers and some of history’s greatest inventions – wheels, bicycles, steamships, trains, cars, and airplanes – have allowed us to be mobile over greater and greater distances.  Over time, each of these inventions added more and more convenience-oriented features to make the experience of mobility more “painless”.  Mobility devices are themselves a convenience which allow us to get where we want to be without walking.  All forms of public and privately-owned transportation are solving this basic problem of minimizing our travel time.  Each solution became commercially viable by offering a benefit versus other forms of transportation that some people were willing to pay to either use or own.  For example, trains reduce travel time across a country from months to days, and commercial aviation reduced this to hours.  We can now circle the world by jet in a little more than a day, a journey the first explorers could not complete in several years, if they lived to tell the tale.   In recent history, owing to the invention of the internal combustion engine powered car (Carl Benz in 1886), and the moving assembly line (Henry Ford in 1908) the car became the primary means for the average person to satisfy their daily commuting needs.  In the increasingly urbanized world of the 21st century, we will experience the next evolution in convenient human mobility:  personalized, autonomous mobility on-demand.

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  1. What are some ways in which the Advanced Driver Assistance Systems (ADAS) technology already in the market, like cruise control, is increasing comfort and convenience for drivers and passengers?

Such technologies act as “support” systems for drivers which allow more tasks to be “delegated” to the car.  For example,  cruise control allows a driver to focus less on maintaining a constant speed and thereby improves the driving experience.  Routine or mundane tasks like parking or adjusting speeds while driving on highways are already becoming mainstream.  Lane departure warning, parking assistance, and cruise control are features that allow the driver to focus less on routine tasks and focus on the actual experience of driving.  Over time, the number of tasks that can be handled by the “smart car” will increase in order to reduce “pain points” of driving and making the overall experience more convenient, safer and therefore more enjoyable for the occupant.

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  1. In addition to the advantages of existing ADAS and autonomous driving technologies, what are consumers most focused on when it comes to comfort and convenience of fully autonomous vehicles?

With Autonomous driving, a new paradigm can be established to re-focus the passenger on how to productively use their transportation time.  Observing the outside of the car moves from a requirement to a choice – especially for the user of a mobility service.  Space that is allocated to providing driver information can be repurposed from a driver-passenger perspective to a “connected user” perspective.  Beyond mobility, a fully autonomous vehicle’s key benefit will be the experience it gives to the user, and the primary benefit which comes from delegating the task of driving to the car is PRODUCTIVE TIME.  As such, while the purpose of the car as a transportation device has not changed, the very concept of how to treat and offer convenience-oriented features to the occupant is different:  the autonomous vehicle is built with a “user-centric” mindset, as opposed to a “driver-centric” mindset.

An autonomous car, especially one used in longer-distance (>10km) commuting distances will need to be able to transform travel time into productive time through convenient services which may include infotainment (watching news/video, gaming), online communication (social networking, e-mail, conference calls), or online-to-offline services (discounts or promotions based on mobility patterns).  In the world of personalized, autonomous mobility on-demand, the car essentially becomes a connected rolling space that transports us between the places we live, work, and play.

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  1. What Autonomous Driving feature will consumers be most surprised by and also what core functionally will they gravitate to most?

For people born in the late 20th century, it will be difficult to reimagine this new form of mobility.  Most of us from this period see a car through a nostalgic lens:  our most prized possession outside of our home, and the one that we can take with us to showcase our lifestyle and aspirations.  For many, this will never change.

However, mobility is being revolutionized by digital technology.  The rapid emergence of ride-hailing services such as Uber, Lyft, Ola, and Didi Chuxing are transforming the car into a transportation service device.  It is in this mode that we can see a great fit for autonomous forms of mobility – as the operators of such services will benefit from not having to incur the cost of a driver, along with the lower maintenance and repair cost of autonomous vehicles.  Users of such services expect to be driven and are not seeking the driving experience in any case.

The most surprising aspect of this type of vehicle will be that it affords its users the opportunity to turn inward and use their time productively.  Future cars used for short commuting will be smaller and occupy less physical space:  they simply pick people up and drop them off and do this with minimal “extras”.  These will be summoned by an app on a mobile device.  Longer commuting will be done in autonomous vehicles which have spaces designed to address the productivity needs of the occupants:  with connectivity and consumption of content at the core.  Such cars may be booked or offered through a “subscription model” to give the users some flexibility in the service offering.  The shift in this paradigm will surprise people the most since these vehicles will be designed from a pure passenger experience perspective which will include how to entertain or delight the user during the journey.

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  1. Self-parking, one of the earlier semiautonomous features, is now found on many mainstream models and widely used by drivers. Do you think the public will adopt more complex autonomous features or a fully autonomous vehicle in the same manner?

The commercialization path for more complex and fully autonomous driving will be very different than what we seen so far.  In the current owner/driver-centric business paradigm, new features have to be sold to customers who accept the value proposition of the technology and are willing to pay for it.  Early-stage technologies typically come with a heavy price premium and are typically introduced to “premium” brands where customers are less price sensitive.  However, barring regulatory intervention, this will likely limit adoption of technologies including electric and autonomous vehicles as there are cheaper alternatives (conventional engines and human drivers).

The game-changer for both electric and autonomous vehicles comes from the convergence of On-Demand Mobility (ODM) with electric and autonomous vehicles.  ODM players, such as Uber and Lyft are highly investing in autonomous vehicles as a means of lowering their operating costs and unlocking the potential to participate in the Digital ecosystem through offering the users of its services access to content and O2O services.  This will create a new pathway to commercializing and scaling up the autonomous driving technology in a way that has not been seen before:  as we have seen with other “smart devices”, hardware innovation is backed by the digital ecosystem and thereby eventually becomes mainstream for everyone.

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  1. Since road conditions vary globally, will perceptions of comfort and convenience vary by country? For example, will it permeate places like Amsterdam where many travel by bicycle or public transportation already?

Comfort and convenience are solutions to mobility “pain points”, and the degree to which people experience these pain points varies greatly based on where we live.

Mobility pain is much higher in densely populated urban cities like New York, London, Paris, New Delhi, Mexico City and virtually all major cities in China.  The driving experience in highly urbanized countries like China can be horrific.  Cities like Beijing experience gridlock conditions at several times during a day, and suffer from severe environmental impact from the tailpipe and other emissions.  Electric and autonomous mobility on demand would be a welcome solution to address these mobility pain points.

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  1. From a societal perspective, how will AD technology change the way individuals get to and from their various destinations?

Adoption of autonomous driving technology will improve flow of traffic, reduce accidents and improve the quality of life in an increasingly urbanized world.  Scaling up this technology through the convergence of ODM with electric and autonomous vehicles in these cities will accelerate a transition from a transportation model where we own an under-utilized asset that is used 1-2 hours per day to a model where autonomous cars, directed by a smart-city transportation grid, are deployed on demand to where they are needed.  This is a far more efficient system where we will witness a shift from ownership of hardware toward paying for the utility that is derived from the hardware.

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  1. When it comes to commuting, how will AD technology ease the problem of extensive traffic jams in cities like Beijing or Los Angeles?

Autonomous vehicles deployed by on-demand mobility services fleets will be able to communicate with each other, and will be directed to and from users and their destinations by a Smart City transportation network.  These cars will be highly utilized assets, which minimizes the amount of city space which needs to be allocated for parking lots for cars which sit idle for more than 22 hours a day.  Cars can be routed around the traffic, minimizing the traffic jams that define the life of residents of cities like Los Angeles and Shanghai.  Smart, connected, and autonomous mobility devices backed by advanced algorithms used to govern the mobility patterns will improve the livability of cities in an increasingly urbanized world.

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  1. Besides the impact AD will have on productivity, how else will it improve lives for people outside of transportation?

Autonomous driving will have a tremendous impact on our environmental footprint.  The technologies required to power and govern a network of personalized, electric and autonomous mobility on demand (A-MOD) have the potential to transform the lives of people all over the world.  For example, these increasingly electric-powered vehicles will be also be part of the energy storage grid, we could very well moderate energy consumption and potentially shrink our carbon footprint.  Transportation innovation has reshaped the history of mankind, and the transportation revolution of the next decade will set the course and has the potential to improve the lives of all generations to follow.

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Bill Russo is the Managing Director and Automotive Practice Leader at Gao Feng Advisory Company, based in Shanghai.  He has 30 years of automotive industry experience and has lives and worked in China since 2004.  He was formerly the leader of Chrysler Group’s business in North East Asia.

Trump Attacks BMW and Mercedes, but Auto Industry Is a Complex Target

The New York Times, January 16, 2017

A BMW at the New York International Auto Show in 2016. After praising German manufacturing prowess in an interview with Bild, President-elect Donald J. Trump threatened to impose a 35 percent tariff on every car that BMW imported to the United States.

BEIJING — In his latest criticism of what he sees as unfair trade, Donald J. Trump has taken aim at German cars. Why, the president-elect asked a German newspaper, do so many well-heeled drivers in New York drive a Mercedes-Benz, while Germans buy so few Chevrolets?

Mr. Trump’s question could set the stage for action by his incoming administration against the likes of Mercedes-Benz and BMW, which he criticized for its plans to build a new plant in Mexico. But the president-elect’s musing shows an incomplete understanding of how globalized the auto industry has become since Ronald Reagan went after Toyota and Honda in the 1980s.

That Mercedes-Benz in New York, for example, may have been made in Tuscaloosa, Ala., depending on the model. BMW has a plant in South Carolina that exports 70 percent of the vehicles made there, it says. And Germans might not buy many Chevrolets, which are no longer sold in Germany, but they buy plenty of Opels, which, like Chevy, is owned by General Motors.

Mr. Trump has criticized other companies and industries for moving production out of the United States at the expense of American jobs, such as appliance makers and pharmaceutical companies. But the vehicle industry in general — and particularly foreign automakers, his new target — illustrate how difficult it can be to parse American from international when criticizing global trade.

BMW and Mercedes-Benz — as well as the Japanese carmakers Honda, Nissan and Toyota — employ thousands of factory workers in Alabama, South Carolina, Texas and other states. G.M. gets more than a quarter of its auto-related sales outside North America, while Ford gets a third. Chrysler was bought by Fiat of Italy. Cars of all types increasingly have Chinese parts.

Nevertheless, Mr. Trump has been making a series of ever-broader demands that the auto industry manufacture in the United States to sell in the United States.

The president-elect’s latest comments came on Sunday in excerpts from an interview with the German tabloid newspaper Bild. After praising German manufacturing prowess, Mr. Trump threatened to impose a 35 percent tariff — he called it a “tax” — on every car that BMW imported to the United States. BMW should build the factory in the United States, Mr. Trump said, where it would benefit from his plans to slash corporate taxes.

Car exports are the lifeblood of the German economy, and the United States is one of the most important markets. New trade barriers would be a serious threat to German growth and could sour relations with one of the United States’ most important allies.

“We take his comments seriously,” Matthias Wissmann, president of the German Association of the Auto Industry, said in a statement. “Restrictions in the Nafta zone would put a real damper on the economy.”

In a post on Twitter on Sunday, Mr. Trump laid out his expectations for the auto industry: “Car companies and others, if they want to do business in our country, have to start making things here again. WIN!”

The main question lies in what Mr. Trump and his trade advisers decide to do once in office, auto industry officials and trade experts said. Measures to force manufacturers to shift assembly to United States factories and to use more American-made parts could drive up prices for American car buyers and make American vehicles less competitive in world markets.

“The people who lose are the core Trump supporters, who end up buying more expensive products,” said Bill Russo, a former chief executive of Chrysler China who is now the managing director for the automotive industry at Gao Feng Advisory Company, a Chinese consulting firm.

The German carmakers are hoping that, once Mr. Trump takes office, they will be able to convince him that tariffs on vehicle imports would hurt the American economy and get him to modify his views.

“We should seek a dialogue with Trump,” Clemens Fuest, president of the Ifo Institute, a research organization in Munich, said in an email. But Mr. Fuest also expressed concern that differences over trade could escalate.

“There is a danger that his policy fails and that he subsequently starts looking for scapegoats,” Mr. Fuest said. “One such scapegoat could be the German economy.”

In some respects, Mr. Trump has a point. The United States has been more open to imports than other large automotive markets, with the result that cars shipped in from abroad represent a considerably larger share of the American market than of markets elsewhere.

European governments have effectively limited imports by putting pressure on vehicle manufacturers not to close high-cost factories or to lay off workers. The Chinese government requires foreign automakers to partner with local manufacturers and sometimes requires them to transfer technology to Chinese companies.

Still, tailoring measures against the auto industry to create jobs in the United States could be difficult. For example, BMW’s Mexico plant would produce 3 Series sedans, which are currently made only in Germany and China. Most likely, the plant in Mexico would take jobs from the factories in Germany and China and create demand for components imported from the United States.

BMW is “very much at home in the U.S.A.,” Glenn Schmidt, a BMW spokesman, said in an email. Mercedes-Benz declined to comment.

The BMW factory site in San Luis Potosí, Mexico, is already swarming with construction workers rushing to make a 2019 deadline to begin production. There is little chance BMW will change its plans and move the assembly lines to the United States.

Mr. Trump’s comments hark back to the 1980s, when the Reagan administration criticized Japan for what it called unfair trade policies in the auto business. That compelled the Japanese government to set annual limits on the number of cars shipped to the United States.

Although President George Bush allowed Japan to drop the limits soon after taking office in 1989, the fights of the 1980s taught the global industry a valuable lesson: Made in America can be a good thing. Japanese and European automakers built assembly plants in the United States, taking the edge off political battles while creating tens of thousands of jobs in the country. Building plants in the United States helped in other areas as well, such as improving the foreign automakers’ logistics and moderating the impact from turbulence in currency markets.

BMW’s largest factory anywhere in the world is in Spartanburg, S.C. It employs nearly 9,000 people and exports 70 percent of the vehicles it makes, BMW says. Daimler makes Mercedes-Benz S.U.V.s and C-Class cars in Tuscaloosa, Ala., and it is building a new factory in Charleston, S.C., to manufacture Sprinter vans, creating more than 1,000 jobs.

Daimler, which also builds Freightliner trucks in the United States, has 22 factories or research and development centers in the United States that employ 22,000 people.

Even Volkswagen has not given up on the United States despite an emissions scandal that has led to $20 billion in civil settlements and criminal penalties. The carmaker, which has long produced cars in Mexico, is expanding a factory in Chattanooga, Tenn., to manufacture a new full-size S.U.V.

G.M. and Ford, meanwhile, saw big opportunities in places like China, where rapid economic development meant more people could afford cars.

A tough stance on autos from Mr. Trump may not have the same impact as that of President Reagan. Since the 1980s, automakers have made fewer of their own parts, buying them instead from hundreds of parts suppliers based all over the globe. That means an American car assembled in the United States could still have large chunks that are manufactured abroad.

Chinese manufacturers dominate the market for replacement parts in the United States, often undercutting prices for parts from the automakers by half or more. Tariffs on Chinese parts would end up being paid by Americans who took their cars in for repairs.

“U.S. consumers are paying a good price for their aftermarket parts,” because of Chinese providers, said Yale Zhang, the managing director of Automotive Foresight, a Shanghai-based consulting firm.

Global automakers’ assembly plants have been rapidly shifting orders from parts factories in the Midwest to plants in China in the last few years. But that trend could stop or reverse if Mr. Trump imposes sizable tariffs on those imports, Mr. Zhang said.

For any move Mr. Trump makes, the devil is in the details. Options include tariffs on imported cars and possibly car parts. He could also prompt a rewrite of the American tax code so that imports — but not exports — are taxed, a move known as border adjustment.

The architect of the Reagan administration’s restrictions on Japanese car imports and of a Reagan-era law that temporarily reduced taxes on exporters was Robert E. Lighthizer. Mr. Lighthizer was deputy United States trade representative at the time. He is now Mr. Trump’s choice to become the United States’ top trade negotiator.

China pushes for homegrown driverless cars

The Detroit News, January 7, 2017

Baidu Inc. and state-owned Beijing Automotive Group Co.’s collaboration on telematics and autonomous driving is almost ready for its coming-out moment, as industry and government join hands for a self-driving vehicle push within China.

A BAIC-built model equipped with Baidu tech will debut in April at the Shanghai auto show, BAIC Chairman Xu Heyi said in interview Friday at the trade show CES 2017 in Las Vegas. The two companies also plan to conduct road testing of a car that will be autonomous in limited environments by the end of this year.

China has set a goal for 10 percent to 20 percent of vehicles to be highly autonomous by 2025 in the world’s biggest auto market, and for 10 percent of cars to be fully self-driving in 2030. State broadcaster China Central Television began airing a five-part series this month on one of its prime time programs to highlight the country’s efforts in autonomous vehicles and related technology.

“It’s a smart move for both to team up,”said Bill Russo, managing director of Gao Feng Advisory Co. “BAIC can bring manufacturing and Baidu can bring technology capability to solve mobility problems.”

The cooperation with BAIC is Baidu’s most comprehensive, though the internet giant also is working with other automakers on joint development of self-driving cars, Baidu President Zhang Yaqin said Friday. The Beijing-based company is close to setting up a new research center near Seattle that will focus on artificial intelligence and cloud computing and security, he said.

Baidu formed a self-driving car team in Silicon Valley in April that it said would employ more than 100 researchers and engineers by the end of last year. It’s partnered with chip maker Nvidia Corp., has been testing its autonomous vehicles in eastern Chinese cities including Wuhu and Shanghai and earned a permit from California to test in the state last year.

BAIC, owned by the local government of Beijing, has made progress of its own. The automaker whose joint-venture partners include Daimler AG and Hyundai Motor Co. in April let customers ride in self-driving cars on a test track.

China is seeking to shed its image as a cheap manufacturer of products with little value-added content. The government is pushing its technology and manufacturing industries to create more sophisticated products and services in line with the global trend toward digitization and internet connectivity.

To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net.

Click here to read this story at detroitnews.com

 

Scientists: AI will free Beijing from traffic jams

Tech Wire Asia, September 20, 2016

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With a population of over 20 million, Beijing citizens face traffic congestion on a regular basis despite the government’s efforts to maintain a smooth traffic flow, such as tolls, car usage limitations, and public transport subsidies.

But top scientists believe that artificial intelligence (AI) could – and in the near future, will – solve this problem.

According to Sixth Tone, on Saturday, scientists said at a lecture at New York University’s Shanghai campus that autonomous vehicles will aide smoother traffic flow in less than a decade.

 Fei Yue Wang, director of the State Key Laboratory for Management and Control of Complex Systems, is certain that Beijing will no longer see traffic jams in five years’ time as they begin implementing AI in everyday tasks, including transportation, the article noted.

AI scientists are attempting to design self-driving cars that are able to drive smoothly and avoid sudden slowdowns and collisions that cause traffic congestion.

SEE ALSO: No more ‘carmageddon’: Can self-driving cars really end long city traffic jams?

According to Tsinghua University Professor Li Keqiang, the Ministry of Industry and Information Technology has outlined a plan that allows autonomous vehicles to access highways within three to five years, and city centers by 2025.

With today’s advancements in science and technology, this five-year prediction is certainly not impossible.

Bill Russo, automobile consultant from Gao Feng Advisory Company, said as it stands, full optimization of self-driving automotive technology is more a matter of regulation than science.

“Unlike other countries, China has the capacity to drive the market from the top down and create the right circumstances for self-driving cars,” Russo was quoted saying.

Therefore, the government needs to open more doors for self-driven and human-driven vehicles to operate side-by-side on roads, he said.

SEE ALSO: China’s Baidu gets California’s nod to test self-driving cars

Currently, self-driving cars are banned on public roads in China. Automobile players, however, view this restriction as a slowdown for the industry. Tech giants around the world like Google, Baidu and Alibaba, are already tapping into the automobile industry as their next business target.

As Forbes said last month, China “will be reluctant to forbid semi-autonomous cars completely.”

“The country has too much at stake, it has invested heavily in autonomous technology and urges its automakers and tech companies to develop autonomous cars,” it pointed out.

But after a number of fatal incidents, a ministry official in China recently said drivers could be held liable for accidents with advanced driver-assistance systems, a China Daily report said.

SEE ALSO: Singapore rolls out world’s first self-driving taxis, as Uber starts testing theirs

The report quoting China’s deputy head of Bureau of Work Safety Jin Xin said when fully autonomous vehicles hit the road, the manufacturer would become legally responsible for accidents.

But according to Yu Kai, founder of the Institute of Deep Learning – China’s first AI research and development center – the country’s automobile industry is anticipating the commercialization of autonomous vehicles as Chinese consumers are beginning to expect cars to be connected devices.

Yu also believes that self-driving cars could go on roads within 10 years.

“My focus is creating innovative technology to put in the car, to make the car independently intelligent.

“We are working with car manufacturers on how give their vehicles the ability to plan and make decisions, using a combination of sensors, processors, and algorithms,” Yu said, as quoted by Sixth Tone.

Click here to read this article at techwireasia.com

Bill Russo to Chair the Connected Mobility ROADSHOW Conference

Shanghai, China, December 1, 2016

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Bill Russo, the Managing Director and Automotive Practice leader at Gao Feng Advisory Company will  chair the Connected Mobility Roadshow conference in Shanghai – hosted by Messe Frankfurt.

The main players in the mobility industry are currently re-evaluating their positions, for connected mobility promises huge potential: by 2020, the market for interconnected cars is expected to have increased by 45% – ten times the growth of the general automobile market. It is estimated that in five years, three quarters of all new cars will be able to connect, and, from 2025, autonomic driving could be possible outside of protected areas.

Geely set to unveil mid-tier brand

China Daily, October 15, 2016

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A Geely Auto’s SUV model Emgrand GS is presented at the Auto China 2016 show in Beijing.
[Photo/ REUTERS]

Chinese billionaire Li Shufu will test whether there’s room for another global car brand by introducing a new marque next week, built on technology jointly developed by his two car companies, Geely Automobile Holdings Ltd and Volvo Cars.

The new brand, called Lynk & Co, will be unveiled on Oct 20 in Berlin and share its underpinnings with Volvo Cars models. Sales are slated to start in the second half of next year, with the first model likely being a sport utility vehicle, according to Geely Auto Chief Executive Officer Gui Shengyue, declining to provide more details ahead of the official announcement.

“The new brand carries great importance for Geely’s development,” Gui said in a telephone interview on Thursday. “We are currently competing against other local car brands, as well as high-end brands with Volvo Cars.” Lynk & Co will help Geely fight against other mass-market foreign brands, he said.

The new mid-tier brand comes about two years after Li killed three sub-brands and unified its models under the Geely nameplate. The new marque, to be produced in China but distributed globally, will allow Geely to compete in the lower end of the market while freeing Volvo Cars to focus on the premium end.

Even so, any new brand would have to fight for consumer acceptance in a market crowded with more than 100 passenger-vehicle nameplates. Geely’s Lynk & Co will join newcomers such as Borgward Group AG, a defunct German brand revived by Chinese State-owned BAIC Group, and a host of electric vehicle startups in trying to carve out a niche.

Geely has some advantages because the new brand would have access to a platform and technology from Volvo, and it may have better insight as a Chinese company in how to tap growth in faster-growing smaller cities, said Bill Russo, managing director of Gao Feng Advisory Co.

“The market is not asking for yet another brand, unless it brings a clear and unique proposition,” Russo said. “I assume Geely has learned a lot from its previous failed multi-brand strategy which they’re unlikely to repeat.”

Li purchased Volvo Cars from Ford Motor Co in 2010 for $1.5 billion and has rejuvenated the Swedish automaker with an $11 billion modernization and investment program. The company unveiled the XC90 in 2014, the first model wholly developed under Geely’s ownership, followed by the revamped S90 luxury sedan.

Bloomberg

Click here to read the article at China Daily

Volkswagen in Talks to Make Electric Cars in China

The Wall Street Journal, September 7, 2016

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A VW dealership in Louisville, Ky., in August. PHOTO: BLOOMBERG NEWS

German auto maker plans joint venture with state-run China Anhui Jianghuai Automobile

SHANGHAI— Volkswagen AG is exploring a joint venture to make electric cars in China with a state-run company, part of its aggressive push into electric-vehicle production as the auto maker works to resolve its emissions cheating scandal.

The German car maker signed a memorandum of cooperation with China Anhui Jianghuai Automobile Co. for a potential partnership, the companies said in separate statements. Jianghuai said the two will be equal owners of the joint venture, and hope to reach a formal agreement within five months.

“As we aim to be at the forefront of e-mobility, Volkswagen Group is looking forward to explore all options to set up a close and mutually beneficial partnership with JAC,” said Volkswagen CEO Matthias Müller. The company is targeting sales of a million electric vehicles a year world-wide by 2025.

Volkswagen, which derives more than a third of its global vehicle sales from China after three decades of operations there, currently has two car-making partners in the country: SAIC Motor Corp. in Shanghai and FAW Group Corp. in the northeast. Under government rules, foreign car makers must tie up with local partners to produce cars.

China limits foreign auto companies to two local partners to make gasoline-powered vehicles. While the limit doesn’t apply to electric cars, most foreign companies choose to produce alternative-energy vehicles with their existing partners. Officials at SAIC and FAW didn’t respond to requests for comment. Analysts say Volkswagen may be able to strike a more favorable deal with Jianghuai than its current partners.

“You may get a better agreement from a company who values your technology more. SAIC and FAW may already have [electric-vehicle] technologies and do not need VW as much as JAC,” said Bill Russo, a Shanghai-based managing director at consultancy Gao Feng Advisory Co.

General Motors Co. plans to launch about 10 alternative-energy cars with its Chinese partners, SAIC and Wuling, by 2020. Nissan Motor Co. and its partner, Dongfeng Motor Corp., launched an all-electric car in China in 2014.

Wednesday’s disclosure follows Volkswagen’s purchase of a 16.6% stake in U.S.-based heavy truck maker Navistar International Corp. this week. Jianghuai, of Hefei in east China’s Anhui province, is a major truck maker in China. It also builds conventional and electric cars. Earlier this year, Jianghuai signed a 10 billion yuan ($1.5 billion) agreement with NextEV Inc., an electric-car startup backed by Tencent Holdings Ltd. and Sequoia Capital, to develop electric vehicles.

China is going all in on alternative-energy vehicles, as it seeks to cut dependence on oil imports and reduce air pollution. Beijing also regards electric cars as a shortcut for its companies to reach the forefront of an evolving global auto industry.

Chinese governments at all levels last year spent a total of 90 billion yuan ($14 billion) in the sector, including direct cash subsidies for electric-vehicle makers and construction of public charging stations, says UBS Securities.

Sales of electric and hybrid cars and buses quadrupled in 2015 from the previous year to 331,000 vehicles. In the first seven months of this year, sales of such vehicles rose 23% to 207,000 units.

Volkswagen’s current strategy review calls for accelerating development of electric vehicles. Over the next decade, Volkswagen plans to develop around 30 new battery electric-car models, which could account for as much as 25% of the car maker’s total sales.

The company has said it expects to launch the first fully autonomous vehicles by the end of the decade.