Toronto, Ontario — June 25, 2018 — In this weeks AV Report: Tesla’s Model 3 arrives in Canada in bulk, GM pushes back on EVs, the importance of subscription services to repair, and much, much more!
Canadian collisions centres may experience a boom in the number of Tesla’s coming through the door. Auto and electric vehicle blogs in Canada have been buzzing over the past two weeks as it become clear Tesla was shipping mass numbers of the new Model 3 to this country. Clients who had put a deposit down on one of the new cars were invited to events at Tesla stores. Hundreds of people received a new cars.
Blogs hosted pictures of parking lots filled with new Tesla’s waiting to be delivered. It seems Toronto is getting at least a thousand of the cars. One auto blog speculated that Tesla wanted to stretch out deliveries of its new Model 3 in the U.S. as long as possible. The company hopes to slow deliveries of its 200,000th car in the US in Q3. By doing so the company extends a phase-out of a $7,500 federal tax credit for U.S. buyers. As a result huge batches of the new Tesla’s have been sent to Canadian owners. The boom of deliveries of Tesla’s to Canada is an example of Tesla pulling a sort-of regulatory abitrage pn EV subsidy regulations in the U.S. and Canada to maximize the benefit to consumers. Which is smart.
However, those who had put a deposit down could on a Model 3 were only able to take delivery of a premium model. Elon Musk had promised to provide a mass market electric vehicle that was affordable. This is what the Model 3 was supposed to be. But now the Tesla founder seems to be backing away from that promise. The cars arriving in stores are a more expensive version. As well, Musk recently said he’ll have to sell a $78,000 Model 3 rather than the $35,000 version he promised when he first announced the current project.
Considering that Tesla is not profitable and hugely in debt, some wonder if it’ll survive. It has to begin generating cash before it hits a financial wall. But that seems to be a problem.
Musk seems to give up on the promise of providing a $35,000 EV, apparently. According to one media report, “A $78,000 version will enrage the nearly 500,000 Tesla fans who each ponied up a $1,000 deposit on what they expected to be a $35,000 version. Tesla, already at risk of falling behind in the EV revolution it helped trigger, will cede the market for affordable EVs to the many automakers that already have reasonably priced EVs on the road, including a $36,620 Chevrolet EV that has been a popular and critical success.”
Indeed, this past week, General Motors updated media on its plans for the all-electric Chevrolet Volt. The company’s sustainability report said the company will launch more than 20 new zero-emissions vehicles in global markets by 2023. That is, Tesla is about to a have a mass-produced and affordable competitor on the market. His market dominance may be about to end as GM brings a low-price EV to the market. Elon doesn’t seem yet to be able to manufacture a Tesla for the low price he promised. If GM floods the market with a functional, low-priced Evs, Tesla may have a tough time ever becoming profitable. This current period could be looked back upon someday as that time when GM changed the course of the modern auto industry by knocking Elon out of the car game.
Other interesting AV news from the GM event: The company will also put its Super Cruise technology, a hands-free driver assistance feature for the freeway, an all Cadillac vehicles starting in 2020. Super Cruise will begin appearing on other GM vehicles after 2020. The 2018 CT6 luxury sedan is currently the only vehicle with Super Cruise.
A J.D. Power survey of new-vehicle finds that the overall quality of the vehicles produced by the OEMs is at a record high. According to the press release one of the reasons for the good marks: Automakers finally began cleaning up bugs with infotainment systems. According to a report, “Touch-screen infotainment systems such as radios, cellular phone connections and navigation remained the category with the highest number of problems this year, but J.D. Power said it improved for the third straight year. The progress was led by fewer problems with voice recognition systems.” But a vice-president at J.D. Powers also cautioned that OEMs must begin to, “… rein in rising problems with new driver-assist systems such as collision avoidance and lane-keeping.” The exec was quoted in a statement as saying, “Avoiding problems with safety and driver assistance technology is critical. Otherwise automakers will not easily overcome consumer resistance to fully automated cars.” https://bit.ly/2M7XKDf
Ford is going all-in on the whole “OEM-as-mobility-provider” concept. A story in the auto press notes, “Last month, Ford stunned the automotive world when it officially stated that it would be abandoning all of its traditional sedans and hatchbacks for the North American market.” The company is expected now to focus on its, “… extremely profitable line of trucks and SUV and a heavy investment in more forward-looking mobility solutions like connected cars and smart cities.” Let the future world of OEMs-as-mobility-providers begin. The rise of AI and advanced “vision” systems like LIDAR are allowing cars to pilot themselves automatically. Cities will begin to build digital infrastructure like sensors into the urban environment. Cars and bikes and infrastructure will begin to “see” each other, detect where things are. The number of the pedestrians and cyclists killed on city streets will find some kind of solution. The idea of single-ownership of a car will fade. Many will begin to access vehicles through monthly subscriptions. These subscription services (like Maven) would allow users to order different types of AVs to where ever they are. The subscriptions could expand to include public transportation and bike access as well.
An interesting article on a new subscription service from BMW appeared in the press this past week. According to the story, BMW is set to offer a program called “Access by BMW.” The subscription service will offer a form of mobility-as-a-service. For $2,000 per month a client would have access to a range of 5 Series and X5 vehicles. For $3,700 a month you get access to the M performance versions of vehicles. Maintenance and insurance come together in one package. Which is really interesting. According to the article. “… the maintenance aspect can’t be overlooked. The success — and ‘learnings’ of these business models — are important en route to autonomous cars and their fleets… Today, there is a tacit struggle between OEMs, owner-operators (i.e. consumers) and third parties over the billions of dollars at stake maintaining and repairing complex products…. The move toward subscription service models by BMW and others is an example of this battle playing out. To be successful with these offerings, the OEMs will need to find ways to lower the cost of maintenance.” The story goes on to say, “Subscription services by auto manufacturers illustrate the new importance of maintenance, repair and operation (MRO). What’s at stake for the auto industry?… When thinking about the future role of MRO in automotive, vehicle subscription services become an important marker for where the industry is headed… In this new model, OEMs gain control over the entire vehicle lifecycle from design to sales and service networks… In turn, traditional dealerships may be relegated to showrooms as extensions of the OEM or completely absorbed altogether…. As this network takes shape, OEMs will need to extend their systems and vehicle configuration knowledge to the point of service to optimize vehicle maintenance. The knowledge they will gain about this lifecycle by first offering subscription services will be a prerequisite for managing autonomous fleets in the future…” According to the story Volvo, Lincoln, Cadillac and Porsche have similar programs. https://bit.ly/2t5Dbzu
