EV’s don’t save the climate – far from it

“They should all buy an old Defender instead – no car is more sustainable given none has even close to the same lifetime,” laughed the guy next to me at a dinner party quite a few years back. Electric mobility was still young and our discussion had been on Tesla and the future of EV’s in general. In my first post for the year I promised to write less about EV’s going forward as this isn’t the main point of interest for you, dear readers. I will stay true to that promise but before closing out, I actually feel the need to set the record straight on a few things related to electric mobility and sustainable transportation, that somehow never make it into the headlines. All that glitters is not gold, a saying that is definitely applicable to EV’s, but where hard facts are often surprisingly difficult to come by. I’ve tried and suggest we look behind the glossy ads at some facts on electric cars before moving on to happier topics!

The older a car is, the more sustainable it becomes, so this is unwise…

Let me start by saying that I have nothing against EV’s. It’s an interesting technology with far greater efficiency than traditional petrol (3x) and diesel (2x) engines. The immediate and permanent torque is a thrill everytime you experience it, and battery research is progressing fast, with the first solid state batteries perhaps hitting production in 3-4 years. This would be a further boost to the whole EV market given the far greater efficiency and shorter charging times. That’s all great. The issue however is that EV’s are marketed in ads with blue skies and green pastures as the clean alternative to petrol cars. Unfortunately, that’s not true – and quite far from it.

Polestar, Volvo’s EV company, did something very unusual a few weeks ago. They came out and told the world how many kilometres the electrical Polestar 2 needs to be driven to achieve a CO2 advantage over a regular, petrol XC40. The issue comes from the fact that whereas the two cars are similar in construction, producing the battery pack in an EV is a real CO2 bomb. The Swedish Environmental Agency has calculated that a mid-sized car battery pack, such as the one you find in a Polestar 2, causes around 17.5 tons of CO2 emissions during its production, which, as Volvo reported, is equivalent to roughly 78.000 kms in a petrol XC40. So in other words, only from then onwards are you actively contributing to lower CO2 emissions. In a Tesla or other EV with a larger battery pack, the number is even higher. Conservatively assuming 100.000 kms and looking quickly at the 165 Model S currently for sale in Switzerland, only 20% have more than that on the clock, meaning 80% are in other words still in “CO2 deficit” as compared to traditional cars. By the time most of them reach the required mileage, they will have changed owners once or twice.

A Model S battery pack with a total of 15 modules

So far, this is all based on the assumption that the electricity you charge your EV with is clean, so that no further emissions are caused once the car hits the road. That of course depends on where you live. Here in Switzerland where roughly 60% of energy comes from water and around 30% from nuclear (with in other words less than 10% coming from renewables), it usually is. The same is generally true for the Nordics and France, a champion of nuclear power (71% of the energy mix) and renewables (23%). In the US, more than 50% of electricity still comes from fossil fuels and in Germany, while the mix includes a whopping 46% of renewables, there is also close to 40% of coal and natural gas (and where exploration of the latter is currently causing a little-discussed environmental catastrophy in Siberia…). The reason for this is Germany’s decision to close nuclear plants, something many other European countries have decided to do as well in the coming years. In some rather large countries therefore, being sure the electricity that goes into your EV is clean is not a given, and will be conditional on your country investing a heck of a lot in renewables over the coming years. Germany’s “Energiewende” has so far cost north of EUR 500bn and has still not managed to lower total emissions, so this will take time – and money.

This would be a really clean, but not very efficient, energy source…

Next to emissions there is also the really dark part of the story, namely metals and other materials of the battery pack. In terms of environmental concerns the two really problematic ones are graphite and cobalt. 54 kgs of graphite go into every Tesla Model S, typically produced in China, but no one can tell you the environmental impact of its production as there are no conclusive studies on this. That itself is rather noteworthy, but those having looked at it all seem to agree that it’s a pretty dirty business with significant emissions of various bad stuff. As for cobalt, we all have a few grams of it in our mobile phones, but in a typical EV there is 5-10 kgs. Looking just at Tesla’s production of around 500.000 EV’s in 2020, that’s a whopping 2.500-5.000 tonnes of cobalt for the cars built in 2020 alone, usually originating in Congo, one of Africa’s poorest countries that makes up 60% of global cobalt production, with Chinese mining companies being the largest operators. The human cost of these mines has been highlighted many times, as has the pollution of water systems, displacement of villages and miserable working conditions. It’s a very sad story, unlikely to change in the short term.

A cobalt digger in Congo, Not a picture you will see in an EV brochure (Source: Washington Post).

Traditional cars pollute and our efforts should no doubt focus on reducing all types of emissions (CO2 and other) of the transportation sector. EV’s are however not the simple solution they are portrayed to be. As per today, from an environmental point of view, a large majority of EV drivers would have done the planet a greater service had they bought a conventional, used car, and that will remain the case for quite some time. As the world moves towards more renewables, electric mobility will improve on the whole, but without fundamental progress to our battery technology, some serious issues will remain. Therefore, as an example, it’s a bit sad how little alternative, clean technogies such as fuel cell / hydrogen cars are discussed.

Until we get there, don’t buy the old Defender my table neighbour suggested, as that generation of diesel engines is quite a dirty bunch. Do however by yourself a relatively modern used car and for some of the money you save, a good bike for shorter transport. It will both be better for the planet than a new EV, and also contribute to your fitness while saving you quite a lot of money!

12 things to expect – or not – in 2021

So here we are, in the new year 2021, and no doubt all of us hope it will be a more positive one than 2020! In the car world there will certainly be lots going on, notably in terms of new sportscar launches, a few of which I highlighted in an earlier post you can read here. With a highly interesting 2021 line-up in F1 (see my latest post on that here for more details), there will hopefully be no lack of excitement there either!

To start off the year in style, I’ve compiled a list of things that can be expected – or not – in 2021. 12 to be more exact, each one corresponding to the first letter of the 12 months. This is not a prediction that they will happen in that particular month, or indeed that they will happen at all, so don’t take it too seriously!

January – as in jolly bloody happy that the new year has begun and with hopes that it will be an easier one than the last one, and that all of us get the opportunity to take our very personal dream roadtrips!

February – as in F1, and a new season that looks very exciting although it won’t start until March. Following Red Bull’s decision mid-December to replace Alex Albon with Sergio Perez, I would claim that 1) the three top teams (assuming here Ferrari finds its way again) have very competitive line-ups and that 2) the teams just behind have at least one top driver. For memory, assuming Lewis Hamilton does finally sign up for the new year, Mercedes will have him and Valtteri, Red Bull will have Max Verstappen and Sergio Perez, and Ferrari obviously Charles Leclerc and Carlos Sainz Jr. And then right behind, McLaren has Daniel Ricciardo, Renault has the returning Fernando Alonso, and Racing Point (Aston Martin from next year) Seb Vettel, really hoping he can return to form. Let the races begin!

They will both be wearing different colors next year!

March – as in motor engines, and most probably the continued growth of electrical. The question is how far and how fast? On the bright side, in Germany in 2020 when the market as a whole was down 22% in new sales, electrical and hybrid cars grew their market share more than four times, and experts now speak of 2020 as the year of the electrical breakthrough. On the less positive side, looking for example at the Ionity charging network across Europe, it’s still many miles away from what Tesla offers, meaning European electrical cars (not hybrids) are still mostly charged at home and thereby reserved for shorter trips. All in all, even though I was negative on Tesla in Europe a while ago (see here), there’s no doubt electrical cars as such will continue to grow, the question is how much and how fast.

No cylinders here…

April – as in autonomous driving, which arguably doesn’t add to the thrill of driving but does add to the safety – although as some incidents notably with Tesla have helped us realize, staying awake and looking at the road ahead is still to be recommended. That’s anyway what you still need to do in many countries, even touching the wheel from time to time, as technology once again is far ahead of legislation. Don’t expect that gap to close in 2021.

Not to be recommended – yet

May – as in Maserati MC20 and all the other great sports cars coming to market, some of which I mentioned in the post referenced above. This is a segment where electricity is setting in big time, with the MC20 as one of few exceptions. You have to wonder how long we will still have alternatives, to electric power, especially of the 8- and 12 cylinder kind!

It may be one of the last of its kind

June – as in Japanese automakers and the question whether I’m the only one feeling that it’s time for them to hit us with something a bit more interesting than what’s been the case in the last years? This is the country that used to give us cool Skylines, supercar beauties like the NSX and more recently the Nürburgring record setting Nissan GT-R. That’s 10 years ago now, and this year, Nissan launched a new GT-R that looks exactly like the old one. And as for the NSX’s replacement, firstly it was delayed for an eternity and when it then came, it didn’t blow anyone out of his seat. Not much else has happened except a few more wings on the latest Type R hot hatch, that may be excellent but that just by its looks scares away any sane person over 30. C’mon Japan, give us something to drool about again!

I’ll have the one on the left please

July – as in jailtime, which is what you will spend in some countries if you’re caught speeding heavily. This isn’t new, but what is, and what’s currently being implemented in a number of countries, is measuring your speed over a distance. That’s a real bummer that takes the fun away quickly – and makes it expensive. In Italy where they use a system called Tutor, they at least have the decency of telling you in advance, which is obviously what you do if you’re more interested in lowering speeds and less in filling the state reserves. That will surely not be the case everywhere…

This is a bad sign

August – as in Aston Martin, where ex AMG-boss Tobias Moers will by August have been behind the wheel for a year. Moers has ambitious plans and a solid financial base, notably from chairman and 17% owner Lawrence Stroll, and also a solid collaboration with Mercedes-Benz which own a further 20% in the company. Moers wishes to see a more engineering-led Aston going forward and has in a rare interview also said that he wishes Aston to work more with the Mercedes engineers in Germany, and derive more engines from AMG. We all wish them viel Glück!

A lot of Aston’s future is riding on the DBX

September – as in solid state, and generally what I believe will be required to really give electric mobility the final push it needs, i.e. a significant advance in battery technology. As opposed to lithium, solid state batteries use solid electrodes and electrolyte, and other materials are mostly ceramics. They’re already used in for example pacemakers, they are extremely long-lived, and they’re much quicker to charge than lithium batteries. So where’s the catch? Well, they aren’t cheap… Prices will of couse drop going forward (although probably not as early as 2021), and this is perhaps the big leap electric cars are waiting for.

It’s always blue when it’s about EV’s…

October – as in obesity, something most of the so beloved SUV’s suffer from. And more generally, even a normal sedan is several hundred kilos heavier today than it was just 15-20 years ago. Arguably a lot of this is linked to much improved safety, but we’ve reached a stage where trimming the weight is less important as you can just mask it by increasing the turbo pressure such as to take out more power. Will we see a change to the “more weight therefore more power” equation soon, and a return to something like the Lotus concept that I explored through my friend Erik back in October (see here)? It would definitely be benefitting consumption! And by the way, since the post, Erik has gone off and bought himself an Elise that I’ll hopefully be exploring this spring.

November – as in Nikola, the biggest corporate scandal in 2020 after Wirecard. For those of you who’ve missed it, Nikola is a producer of electric trucks in the US, founded by Trevor Milton and built on a lease model with very nice cash proceeds – on paper. Because as it emerged, everything was on paper, including the trucks themselves that don’t exist yet. Unfortunately investors – including a small company called General Motors – forgot to do their due diligence around Milton and his background, which would have revealed a history of smaller or larger corporate scandals, generous spending of company proceeds etc. The company is still listed but unless you’re a distressed investor, stay away, and also, whether you’re buying a stock or a car, always do your own research and don’t trust anyone – including GM…

Never believe a truck salesman…

December – as darn, there goes another year! What will have changed? Will Japan have presented a supercar project? Will Aston be back on solid footing? Will Lewis have claimed his 8th title, and will more automakers have seen the Lotus logic of more for less? But even more important than all this, will we finally be rid of this bloody virus? We’ll know in 12 months!

What to consider when buying your dream car

When I sold my Triumph TR4 this autumn after ten years and re-invested the money in my deal-of-the-century BMW 650i, quite a few people came to me both questioning my choice, but also asking for tips of things to think about when buying the dream car with a big D. Based on my experience over the years, I therefore decided to put together a few points in this regard that make up this week’s post.

My choice of switching from an oldtimer to a modern car, as mentioned in my previous post that you can read here, was basically a practical consideration based on how little I was using the TR4, that fact that I neither have unlimited space nor an unlimited budget, and a realization that our needs have changed. This is not to say you shouldn’t realize your oldtimer dream, but whether it’s an oldtimer or a modern car you’re dreaming about, there are some basic things to bear in mind.

Age is just a number – or is it?

The car’s age is obviously an indirect function of what your dream car is, but the point here is just to think about the implications the age will have on your ability to use it. To come back to my TR4, the longest trip I did in ten years was with my wife to Lausanne and back, around 600 kms. It was a great trip without any issues, but when we came back home I wasn’t really longing to go any further and I left the car standing for 3 weeks.  If you’re more hardcore or more passionate this will sound ridiculous, but at least for some of us it’s relevant and something you should consider before deciding.

…when life was more hardcore than today…

Other aspects of old vs newer include some of the things we are so used to in modern cars that we don’t even think about them. Take for example the isolation of the convertible top – there is a very big difference between a 50-year old car and a new one in this regard. Connectivity is another one of those things – if you love connecting your phone, remember that Bluetooth is a recent invention. And remember that speaker systems have evolved. Unless you want to listen to the engine all the time, make sure you’re happy with the sound, because drilling holes in the door panels of your new companion is perhaps not what you dream about.

The art of lobbying

The dream car your mind is set on is not necessarily the dream of your partner or other family members, and this is where some convincing and lobbying comes into play. Believe me, that’s a far better way to go than to start by buying the car and putting your partner before a fait accompli. I’ve tried and it’s nothing I would recommend.  I’ll never forget the day we returned from holidays and whilst I brought in the luggage, my wife listened to the answering machine where a car dealer I had just made a deal with but not yet told her about called to confirm it. Somehow, I hadn’t found the right moment… She eventually came around, but I won’t try that again. Your family doesn’t need to be as enthusiastic as you, but it’s good if they’re in on the project and don’t hate your dream car – you risk becoming very lonely otherwise. Furthermore, if it’s a two-seater, that obviously means any children have to stay home. If it’s a convertible, it won’t necessarily be very comfortable in the back seat with the hood off. And so on.

The thrill of maintaining

All cars break down. To a certain extent this can be avoided by going through all the checks at the time of buying, but stuff happens. It probably happens more with oldtimers than with modern cars, but there’s more stuff that can break in modern cars, so all things considered, it may well come out the same. Also, if you believe like I did that oldtimer mechanics are good-hearted guys in it for the passion and not for the money, think again…

Many oldtimer garages still look the same, but prices have gone up…

Whether old or new, there is obviously a cost associated with your dream vehicle, and that cost will depend heavily on both the car’s age, its condition and its complexity. Looking at oldtimers, my TR4 was a relatively safe bet given it was a no-frills car with a four-cylinder engine originating from a tractor (it sounded great but revving wasn’t its thing…). A 12-cylinder E-type or an Aston Martin V8 are a completely different story, as friends of mine have experienced over the last years. I’ve now replaced my TR4 with a modern, 8-cylinder double-turbo 650i and when the guarantee expires, I’m potentially up for much heftier bills than with the TR4, but I like to think that at least I’m aware of it. You should be so as well, and you should set a projected budget aside. If you’re insecure, speak to a specialized garage or a car club who will be able to guide you. Please remember this. I know a frightening number of intelligent people who somehow managed to forget all about it until the day the bill is delivered…

Is depreciaton a friend or foe?

With the exception of a small number of collectible cars that gain in value from day one, as a rule of thumb nothing depreciates as quickly and heavily as luxury cars and as a general rule, the more they cost as new, the more they will loose. After a period of typically 6-10 years, values then stabilize at a fraction of the initial price, and this is when it gets interesting. Allow me to take my 650i as an example. 6 years ago when it was new it cost CHF 175’ with options. 50.000 kms later I paid CHF 36’. That’s a nice little depreciation of 80% or if you prefer, 2.8 CHF per km. Even if Elon gets his way, the whole world turns electric in five years and my resale value goes to zero, I’ll never be close to that depreciation. Also, and this was important to me, a great advantage of buying a heavily depreciated luxury car is that it was built at the time to cost CHF 175’, not CHF 36’ or anything in between. That shows in every single detail, and it’s a very nice feeling.

If this is you’re thing, depreciation runs in the 100.000’s the first years…

That’s one side of the coin, but there is of course also a reason for the heavy depreciation, and that’s the maintenance cost. Having said that, I’m a very strong believer in the market being very far from perfect in this regard, meaning that if you do your research, you can to a certain extent “beat” it. As a rule of thumb, never ever be in a hurry. There are of course situations where it’s warranted to act quickly but generally, there will always be good cars around. Take your time, do your checks, look into the history, speak to experts, call the car club etc. The more you know, the more likely you are to buy the right car, and the better prepared you’ll be.

When I set eyes on a 6-series, it was these type of considerations that led me to opt for the updated 450 hp V8 rather than the pre-2013 408 hp version. The extra power was nice but above all, a bit of research showed that the previous engine had a history of engine failures that can become very expensive. This was not at all reflected in market prices however. I knew which options were important to me, and also that I wanted a fully serviced one-owner car. When that car in the right colour scheme then appeared back in August, I was able to act quickly. Of course things can still happen and I certainly don’t want to sound like a know-it-all in this regard, but I’d like to think that knowledge and some experience have at least lowered the risk.

NEVER go for “almost” right

Finally, perhaps the most important point of all. Coming back to the point of not being in a hurry, never – ever – go for the car that almost has it all. If you want a manual 996, don’t buy the Tiptronic thinking you’ll get used to it, wait for the right one to come around – it will. Don’t buy a blue car if you want a black because it’s almost as nice and after all it was cheaper. You risk thinking about it every time you walk up to the car. If you dream of the 8-cylinder, don’t by the 6-cylinder version. And so on. If you’re realizing a childhood dream, you want reality to be as close to that dream as possible an “almost” won’t cut it. When the right car comes along, you’ll be glad you waited!

So there we go. Not by any means a complete guide, but hopefully a few points that can help guide you in your quest for the dream car! Good luck!

Digital driving!

When you write about cars every week and spend a fair amount of time in between thinking about them (which is certainly my case, and given you’re a reader of this blog, may also be yours), it’s sometimes easy to forget the somewhat bigger picture and general trends in the automobile industry. Right now, that bigger picture is changing quite a bit in a variety of ways that will hopefully make our beloved cars better going forward. This week we’ll be looking at some of the major areas of development in this regard and take the two cars that got me thinking about this as examples.

On one hand that’s the grand daddy of luxury limousines in its newest iteration: the Mercedes S-class. It can already be ordered and will be seen on our streets soon. Under a relatively conservatively-styled body, this is a car that takes the luxury automobile concept to a whole new level in terms of technology, as we’ll see further below.

Small exterior changes, quite a revolution underneath

Vastly different to the S-class is the new, all-electric Hummer EV. That’s right, an electric Hummer truck, set to come to market late in 2021. Obviously the truck segment (or pick-ups as we like to call them in Europe) isn’t a big thing on this side of the Atlantic, but it’s the largest market segment in the US where over 3 million new trucks were sold in 2019. None of those were obviously electric, and at present electric cars have less than a 2% overall market share in the US, but that’s precisely what makes it interesting.

Coming to market in 2021, the first electrical truck will be a Hummer!

The Hummer EV along with Tesla’s Cybertruck and other electrical trucks in planning both from Ford and smaller, relatively unknown brands, bring electrification to the largest car segment in the US. Trucks are not much of a thrill to drive today, but when the Hummer and Cybertruck hit us with their more than 1000 hp and 3 seconds to 100 km/h, that is set to improve dramatically. A truck is not without advantages, notably the space for gear they offer, their towing ability etc. That also means there’s lots of room for battery packs, and the Hummer is said to have a range of 350 miles, the Cybertruck of around 500 miles. I could go on, but you get the message. If electrification is to take off in the US anytime soon, this is the segment where it could well happen. And since many truck drivers still think only golf carts can be electric, it’s significant that it’s Hummer, the most macho brand of them all, that leads the way.

The interior is apparently fully vegan, the roof can be removed and stored in the frunk.

Moving beyond the increasingly electrified engines, let’s have a look at what the new S-class offers in terms of both interior comfort and technology. Starting with the dashboard, it has the same screen-based interior as we’re increasingly seeing in many cars and where Tesla is no longer very special in this regard. Gauge clusters are long gone and the S-class now has a 3-dimensional screen, meaning you see your instruments “in depth”. Mercedes also deals with the fingerprint problem with a new voice command system said to be so good that you practically don’t need to touch anything to access most functions. This is clearly something that will come in other cars before long. It’s probably a good thing, but it supposes you’re willing to have a dialogue with your car. Oh, and I almost forgot: the new Burmester 3-D sound system reflects bass tones through movements in your seat. That’s perhaps not something we’ll see in a Skoda Octavia next year…

Less than 10 years ago, this is very far from what an S-class would look like…

Next to the increasingly communicative interior there are nowadays cameras all around, and no doubt they will continue to make inroads into the whole driving experience in the coming years. There’s the practical usage which allows us to replace our rear-view mirrors (both centre and door-mounted) with an always fully visible camera picture. There’s the cameras inside the car that recognize you and automatically sets the car to your profile, as the new S-class does. There’s of course the cameras assisting navigation with augmented reality, meaning you can basically drive looking at the screen in front of you rather than out the window, and that if you still manage to get lost, you should probably consider the train instead. There’s various other features such as 3-D screens and augmented reality head-up displays, both featured in the S-class, and there’s of course the surround cameras which let you admire your car from outside whilst sitting in it. The Hummer EV takes that concept even further with cameras under the car to assist the off-road driving. So cameras all over, enhancing both the comfort and the safety. Some of them will become mandatory, others will remain more nice to have, but we will definitely see even more of them.

The main difficulty will probably be keeping an eye on it all…

Linked to cameras and safety are also the constantly evolving self-driving and self-parking systems. Increasingly these now reach a level where car technology is ahead of legislation in a number of markets and the full self-driving features of cars like the S-class, Teslas and others may not be used in full. There’s still a big question mark around when that will be the case, also since anything other than European harmonization in this regard would be very hard to manage. Be careful what you wish for though as there is a serious danger that when the legislator catches up, that’s also when big brother will take full control of your car – and speed.

The last and to me quite surprising new development worth mentioning is one that has come with increasingly advanced suspension technologies. Many will have seen the “dancing GLE” by now, which thanks to its independent wheels and active suspension can perform a dance with each wheel moving independently. More relevant is no doubt that these systems also give SUV’s and trucks like the Hummer vastly increased terrain capabilities by allowing for individual control of each wheel.

With increasingly congested cities, a few degrees make a big difference!

Interestingly, this theme of 4-wheel steering is also picked up by the S-class, which allows a rear axle steering angle of up to 10 degrees against the front wheels up to a speed of 60 km/h, and above it steering in the same direction as the front wheels such as to increase stability. Mercedes claims this notably cuts a car’s turning circle by on average 2 metres and gives the new S-class a smaller circle than a regular A-class. Some of you may remember the 90’s Honda Prelude that introduced 4WS in a mass-produced car. The concept never took off then, and it was obviously a far less advanced technology than what we have today. This time it could be a different story, especially in the segments of bigger sedans, hatchbacks and SUV’s.

So there we are: increasingly electrified and camera-equipped cars that we interact with differently, probably also verbally, and that almost unassisted take us first where we want to go, and then also into that tight parking space. The electrification trend runs in parallel to this and will in increasingly be seen in trucks and other cars, both as full EV’s like the Hummer but also as various hybrid systems, of which the S-class features some. It’s amazing to see how quickly technology has developed in just the last 5-10 years, and it’s fascinating to think of where we may be in another 10!

The Wright brothers patented the first flying car in 1841 – perhaps the time has come?

13 Fords for 1 Tesla

So it’s time to talk about Tesla. Again. I did so addressing its shaky finances in 2019, and I wrote about a first glance of the Model 3 in Q4 2018. As in 2019, the reason this time is mainly financial. This is obviously a car blog, not a financial one, but then again, under all the bells and whistles, Tesla is a car company. And in that sense, when its stock price values it at $300bn or 13 times Ford as it did earlier in July at a stock price of around $1750 per share, you should notice (it’s come back to $1417 at the time of writing, so we’re probably down to something like 11-12 times Ford now). The first reflex is of course to think something major has happened, but that’s not the case. Tesla’s more than tripled stock price since it dip under $400 earlier this year could be called the definition of momentum for future financial text books. Congratulations to all that were part of the ride. I wasn’t.

I’ll happily spare you all the explanations of why the stock has rallied and in any case, the stock price is a poor reflection of a company’s quality. You could probably argue that it’s especially poor in the case of Tesla. Not that things haven’t improved for the California-based car maker. They just turned in their fourth quarterly profit in a row, including $104m in the very lacklustre second quarter 2020. That said, on one hand profits are rather modest and on the other they’re always a bit clouded, including various subsidies and tax breaks. But the trend looks positive, better than in the poor scale of the diagram below.

Courtesy of theverge.com

Tesla is also delivering more cars. Elon Musk has set his target at 500.000 cars in 2020 which doesn’t seem fully unrealistic as Tesla has delivered more than 100.000 cars per quarter in the last quarters. It’s not all rosy though, as the Model 3 now makes up over 80% of all deliveries. Total deliveries of Models S and X have fallen from 28.000 in Q4 -17 to 12.000 in Q1 -20, i.e. less than 10% of all deliveries. This basically means that going forward (and until the cyber truck, that however looks to be a few years away), Tesla profits are riding on the Model 3 and the new Model Y.

There are however problems as well. Quite a lot of them. One is the EV market in total which both in Europe and the US is growing but is still very small. In Europe’s leading car market Germany, EV’s now make up around 3.7% of new car sales. In the US where EV’s is basically synonymous with Tesla, the share is below 3% in all states but California and Washington DC. In most of them, it’s below 1%.

Source: https://evadoption.com/

Another problem for Tesla is that the big car brands have woken up and as the EV market grows, competition will only intensify. Were the big guys late to the game, as is so often claimed? Not sure if you look at the above stats of the total EV market. They’re anyway here now and you can already see the effects in Germany where Tesla’s trend is negative since a while back. 4367 Model 3’s were sold in the first six months of 2020, but VW and Renault sold more than 7.000 each of the E-Golf and the Zoe, and the Model 3 will probably also be overtaken by the VW E-Up and the Audi E-tron still this year. An E-Golf or a Zoe are not comparable to the Model 3, but neither is an E-tron – in the other direction. The EV mass market will no doubt be in Zoe land, but the premium market will increasingly move from Tesla towards Audi, Mercedes and other large brands. This is not a big surprise. Tesla was never a premium product in quality – only in pricing.

The Model Y – the latest interpretation of basically the same concept.

This brings us back to the stock price, because of course, Tesla doesn’t need to dominate the world. It’s already turning a small profit on the current production of around 400.000 cars per year, and if it can increase that by a few ‘000s, it would look pretty good. That would however also be necessary for coming necessary capital expenditure. In any case, it’s not enough to put a value on the company at 13 times Ford, who by the way sold 1.13 million cars worldwide in Q1 -20, a 20% drop on the previous quarter.

I have no clue where Tesla’s stock price is going next, but personally I stay away from emotionally driven companies, and this is a prime one in that regard. It may be useful to remember that in the dot.com boom and bust 20 years ago, a young online retailer called Amazon lost 94% of its share value before it turned things around and moved to dominate the world. That’s not something Tesla will ever repeat, but irrespective of the stock price, I wish Tesla all the best and think it’s amazing what they’ve managed to achieve. My guess is however that when we look back at this in five years, if Tesla is still around, it will be selling almost all its cars in the US where the EV market share will still be in single-digit territory.

Two great visionaries, but at least with Tesla, Elon won’t overtake Jeff.

Will AMG save A(ston) M(artin)?

If Aston Martin were a cat, it would slowly but surely run out of lives. The car maker that has spoiled us with some of the most beautiful sports cars through history has declared bankruptcy no less than seven times. In 2018, an IPO was supposed to solve its financial problems but in the two years since, Aston has missed more earnings estimates than its had bankruptcies, leading to a stock price declining by 90%, The Gaydon-based company lost GBP 104m in 2019 and a further GBP 120m in Q1 2020, and now has total debt of around GBP 1bn. But as has emerged over the last weeks, there may be hope for Aston – yet again.

Not a very successful IPO…

That hope has three names. The first is Tobias Moers, the long-time and very successful AMG boss that will take over the helm at Aston after Andy Palmer’s five-year reign. Moers is credited with having taken AMG from a tuner among many to a very profitable division of Daimler, even if it’s been at the cost of some AMG brand dilution. That is also something Aston and Andy Palmer know something about, as under Palmer’s reign, the Aston symbol has through licensing deals appeared on everything from clothes to boats. To his credit is having kept Aston’s outgoing models running longer than anyone thought, but also having launched three new cars in as many years – the new Vantage, the DB11 and the DBS.

Moers has a reputation of being a real petrol head – and a man many are afraid of…

The second name that bodes well for Aston is its new shareholder and financier Lawrence Stroll, who has already injected GBP 540m in the company for a controlling stake. Stroll’s F1 team Racing Point will be renamed Aston Martin next year, it is Stroll who appointed Moers, no doubt also with the thought of developing the existing collaboration with Mercedes further, and Stroll certainly has a role in getting Aston’s other new major shareholder aboard, Mercedes F1 boss Toto Wolff. So for the future of F1 it looks quite solid – but what about the road cars?

It’s not just the colour that is debatable…

The volume car in the current line-up is of course the Vantage. The problem is that it doesn’t sell very well. Its looks have been debated and whatever you think of it, no one thinks it looks better than the car it replaces. That shows in the sales numbers and puts even more importance on the new DBX SUV being a success. It seems to be a car that has a lot going for it and it’s certainly in a segment that is growing strongly, so time will tell. Most people – me excluded – also seem to think it looks quite good, which would be a first among luxury SUV’s (see my thoughts on that topic here).

There is some irony in that just as was the case with Porsche 15 years ago, if Aston is to be saved, it’s by an SUV …

Can Moers as Aston’s new boss, Stroll as its new shareholder and an intensified collaboration with Mercedes, for example in Mercedes using Aston’s newly developed V6 engine, save Aston Martin, and is it then time to buy the stock? This isn’t the place for stock tips but the downside is obviously limited, and what should also be said is that neither Mercedes nor Lawrence Stroll have become successful by losing money, so there is indeed hope. Time will tell.

In other news it should be noted that a very strange F1 season started on Sunday with the Austrian GP. Face masks everywhere, obviously no audience, and overall quite a strange feeling. The race itself was also strange, with Bottas (Mercedes) winning ahead of Leclerc (Ferrari) and Lando Norris (McLaren), no doubt the surprise of the day but the result of no less than 9 cars retiring, and Hamilton (Mercedes) being penalized for having put Albon (Red Bull) in the sand. You would think the teams would have had enough time in the last months to solve really all technical issues, but apparently that’s not the case… Sebastian Vettel (Ferrari) started outside of the top 10 and spun himself to the very end of the field after half the race, before finishing in 10th place. As we learnt last week Ferrari didn’t even offer him a contract for 2021 and as per the time of writing, no one else has either. I stand by my assessment from earlier this year (see here) that Vettel will leave F1 after the season.

The silver arrows are black this year, but can be expected to be at the front of the field.

The return of the car

The world has been in lock down and in a way, so has this blog. Luckily not because of Covid, rather due to a lot of other things going on. But as the world slowly returns to some kind of normal it’s time to take up writing again, and I’ll do so with a bold prediction: one of the winners of this pandemic in the area of transportation will be the car.

Before the pandemic (in something that now feels like ages ago but is less then six months in the past) we spent Christmas and New Year’s in Australia, where I took the above picture. This relatively brutal work of art in downtown Sydney seemed like a good illustration of the state of the petrol car in late 2019: unpopular, out of fashion and blamed for many of the wrongs in the world. At the time I thought I would use it as illustration to a post on whether our beloved cars were truly becoming a thing of the past. But as we’ve all come to learn over the last weeks, things can change very quickly and quite dramatically, and today I’m quite convinced that it’s the demise of the car rather than the car itself that will soon be forgotten.

Irrespective of whether you’ve spent the last weeks under a severe lock down or under a policy of greater openness, one of the things most of us come out of this crisis with is a feeling of discomfort around mass transportation. We still know surprisingly little about the virus and all the ways it can infect us, but it seems pretty clear that it’s quite contagious, and logic therefore tells us to avoid places with limited air supply for longer periods of time. That rules out certain types of transportation, and also forces us to rethink our travels, both professional and private. 10-hour flight to Asia with 300 others in a cramped cabin? Not if I don’t have to. And given the social distancing measures airlines will be forced to take will undoubtedly reduce the number of passengers, this will lead to higher ticket prices. It therefore seems safe to assume that long-distance travel will diminish.

…and to think this could have been only three months ago… What were they (we) thinking??

However, all problems are not solved just because we avoid flying to other continents. A cruise ship in the Mediterranean is not very far away but proved to be one of the worst Covid traps at the beginning of the pandemic, and the pre-Covid, increasingly popular trend of long train travel suffers from some of the same issues. At least in the short term, the trend is towards vacation in your home country. Here in Switzerland, AirBnB stats tell us that whereas foreign bookings are down 90% for this summer, domestic bookings are very much up.

If we don’t want to fly or take the train, the remaining options have two or four wheels. And whereas the former can be an alternative for commuting, any form of bike is quite lousy for transporting children, dogs and luggage. That’s of course where the car comes in. You could argue this will only be a short term change in habits until we have a vaccine. I wouldn’t agree. Firstly, we don’t know if and when that will be. Secondly, I believe much in our lives has been altered beyond Covid. Thirdly, this is most probably not the last virus pandemic we will see. Therefore, at least in the mid-term, the trend towards more vacation at home is probably here to stay, as is the wish to get there with as little infection risk as possible.

The automotive sector is among the most severely hit following Covid, and that may well be justified. 35 million Americans have lost their job in the last six weeks and they certainly won’t line up to buy a new car, which also goes for many people in other countries whose income is now less secure than it used to be. Logically therefore, this also means that the whole electrification trend will stall somewhat, as will the political bashing of petrol cars, as politics is now about social distancing rather than fuel emissions. We will thus be left with our existing, conventional cars for longer.

Electrification is however not the only area where car technology is developing fast. In the coming 5-10 years, car manufacturing will come to look very different to today, as I’ll come back to in a later post. That could truly revolutionise many aspects of cars and car brands as we know them today, including the cost of manufacturing, and might in the end change the whole concept of personal transportation. But with the long bills we’ll all have to pay for this crisis, both on a personal and a public level, I’m willing to bet you that we won’t be driving in Elon’s high-speed tunnels or fly in our private air planes in the foreseeable future – it feels much more likely that we’ll still be driving cars, hopefully still with some thrill of driving!

How Mercedes ruined the E-class

Ok, time for some serious Mercedes-bashing. Long-time readers of this blog know that I’m a Mercedes driver for family purposes since many years, currently so in the form of a 2013 E 63 AMG Estate, so as a loyal customer I feel I’m entitled to some bashing, especially after some quite serious disappointments on various drives with the new E-class (well, it’s been around since 2017, but that’s still new in my book). The conclusion is quite simply that in a few crucial aspects, Mercedes have built a worse car than its predecessor. Here’s my take on why:

Looks: I guess this one’s debatable but I still haven’t found anyone who finds the new E-class particularly beautiful. The design is kind of uninspired, lacking distinctive features, angles and curves. Now you may claim it’s not the only one (A6 anybody?), but that doesn’t make it any better. The higher in the model range you go, the more obvious it becomes. The new E 63 quite simply doesn’t look the part.

Thankfully there are still four pipes, because otherwise it would be really hard telling the difference to an E220….

Interior quality: the new dashboard has a nice, floating look, with much more choice of materials and looks than the old one (not to mention the dozens of available interior light colours…). The problem is that most of these materials look kind of – cheap. The first person to say so in this family was actually not me but my 19-year old daughter. The quality-feel is also so-so, and not on par with the very solid interior in my 2013 car. Finally some plastic parts that I guess Mercedes doesn’t think you’ll pay attention to, for example the lower parts of the doors and the rear part of the centre armrest, are more reminiscent of the plastic in an old Hyundai than a Merc.

Luggage space: if like us you have two children and a dog cage, there’s basically no other estate that does the trick – the sloping roof line of an A6 or a 5-series make it hopeless to load bulky items like a cage, and still have enough luggage space. Now that the E-class also has a sloping roof line, the cage still fits, but you lose some space vs the old model. It’s still bigger than a 5-series, but in absolute terms it’s a step backwards. And let’s be honest: for many of us, luggage space was a critical factor in opting for an E-class rather than a 5-series.

Back seat: incredible but yes, in the car we’ve all ridden as a taxi, they’ve actually managed to mess up the back seat. It took me three dealers to get confirmation of something that was very obvious as soon as you sat down, but the new E-class has a shorter rear seat bank, meaning you sit with your legs in a steeper angle and lack thigh support. On an 8-hour vacation drive through Europe, that will make quite a difference.

Infotainment: saving the best for last, it’s no secret that for some reason I fail to understand, Mercedes until recently have been far behind competitors in infotainment solutions. Earlier this year the supposedly market-leading MBUX system was launched and is now featured in various models from the A-class to the new GLE and GLS. The problem is, with the E-class having been launched in 2017, you still have the older system (as you do, by the way, if you spend EUR 200.000 on the new G63 which only preceded MBUX by a few months), and will do so until the first face lift sometime next year. This means the screens lack touch functionality. Instead, Mercedes offers you the option to operate them in three ways: over small pads on the steering wheel, on a pad on the centre console, or on a small wheel below that same pad. Having driven a couple of cars a few hours each, I can only say that this remains quite confusing and very counter-intuitive. I felt myself constantly reaching for the screen, then remembering, then going to the control on the steering wheel, then not finding the right menu, then going back to the centre console etc. I guess you figure it out with time, but it’s simply not good. On a brand level, it’s also quite incomprehensible that you get the latest system in an entry A-class but not in top of the line cars until three years later!

U can’t touch this

The E-class is still a great car – but it’s not as great a car as it used to be. Most people probably won’t care and just order a new one when the lease runs out, but given you’re nerdy enough to read this blog, chances are that like me, you do care. You don’t need to agree with me though, and if you don’t, feel free to say so!

The E-tron – impressive or not?

The E-tron is becoming an increasingly frequent sight on the streets of Zurich and elsewhere. I had the opportunity to study the car in detail at the recent Geneva Salon (check out my video here) and found it a bit difficult to get my mind around: sure, impressive in build quality and good-looking, but that has nothing to do with it being electric and everything to do with it being an Audi. But for the rest?

If you’re a bit cynical, but only a bit, you could say it’s taken Germany’s leading car manufacturers (Mercedes will join the electric SUV party in the coming months with the EQC, a car very similar to the E-tron) seven years since Tesla’s first Model S, and four years since the Model X, to bring out alternatives in the form of cars with less range, less room and, especially critical, far less charging points at present.

Starting with the range, Audi claim an optimal value (also called WLTP range) of 417 km, but are honest with the fact that it’s a distance you’ll only achieve with the AC turned off and ideally neither passengers, nor speed. A more realistic range – in optimal conditions, meaning neither too hot, nor too cold – is, according to multiple tests, somewhere around 300-350 km, and in winter, you can deduct around 30%, bringing you down to as little as 200-250 km per charge. This still supposes driving very legally. The Model X in its latest configuration has an unrealistic WLTP range of 505 km, probably meaning around 400 km in reality, and thus 300 km in winter. Not great, but around 1/3 better.

A short range means you will be charging quite often. Audi will tell you that the E-tron has the mechanical ability to charge up to 350 Kwh, which is more than twice as fast as a Tesla Supercharger (150 Kwh). That’s however in the future, as such chargers are not around yet. Audi is a member of Ionity, a collaboration of leading European car manufacturers currently building charging stations with charging power of up to 150 Kwh across Europe, power-wise on par with Tesla’s supercharger. But in all of Europe, there’s currently not more than 20 such stations. That leaves you with the other 90.000 or so charging stations which are part of the European electric car “roaming” network and that E-tron owners can use (against payment by an E-tron credit card), but the vast majority of those have a charging power of 22 Kwh at most, in many cases even less. Charging an E-tron to 80% at a rate of 22 Kwh means three hours charging time. Taking as example a 600 km holiday drive from Zurich to the French Riviera, there are seven Tesla supercharging stations along the way. With an E-tron, it would mean at least one three-hour stop, and thus more than 2 hours longer travel time – for a six-hour drive.

In terms of interior space, the advantage of Tesla’s swollen egg form is that it offers lots of room, and that its luggage compartments back and front are both roomier, as is the passenger space. An Audi Q7 is much roomier than an E-tron, which more resembles a Q5 space-wise.

So where does this leave us? If space, range and charging times are all irrelevant, then the E-tron is probably the better car – as it should be, given Audi is an established, leading manufacturer and not a Californian startup. But all else is not equal, meaning it’s taken Germany’s leading car brands more than five years to bring out a car that is only almost on par with Tesla, but with a charging network that is comparable to what Tesla offered more than five years ago. That is not very impressive, to say the least.

How near the brink is Tesla?

Elon Musk was full of praise for Tesla at the launch event of the Model Y last week, starting off with a (not very new) perspective of where Tesla and electric cars stood 10-11 years ago when Tesla built their first car, as compared to today. At the time the world was obviously in the midst of the financial crisis, when some rather large car makers in the US went bankrupt and had to be rescued. Given Tesla’s Q4 -18 and 2018 full year numbers are known, I believe it’s justified to have a closer look at to what extent Tesla in 2019 is comparable to some of those companies in 2008. Unfortunately, this is not that far-fetched if you listen less to Elon and look more at hard numbers.

The Model Y, completing the slightly imperfect S-3(E)-X-Y range

Tesla had current assets of USD 8.3bn at the end of 2018, of which USD 3.8bn in cash. With liabilities at 10bn, the working capital ratio is a negative -1.7bn. The current ratio, i.e. assets over liabilities, comes out at 0.84, and the so called quick ratio, i.e. cash over liabilities, at 0.46. However in Q1 -19, Tesla made a 0.9bn bond payment, thereby bringing the two above ratios to 0.74 and 0.39 respectively. This is where it gets interesting to look at a company like General Motors during the financial crisis, when at the time of bankruptcy the two ratios stood at 0.6 and 0.3. As a further comparison, today the average for the car industry is at 1.36 and 1.2. An established company such as BMW comes in at 1.18 and 0.96, a “new” car brand such as Chinese Geely, at 1.09 and 0.94. There are thus many billions between the car industry at large and Tesla’s current numbers.

It’s also important to remember that a part of Tesla’s cash position is for cars not yet delivered (down payments etc.), and thus not cash in the proper sense. Finally, car sales are still the only meaningful income for the company, with energy sales making up only around 0.3bn per quarter.

SEC darling Elon Musk

Tesla is currently cutting costs by closing its re-sellers and moving to online sales, but savings achieved there will mainly go to reduce prices in the US, where state subsidies to electric cars are about to end. So when Elon announces the launch of the Model Y (and if you want to move directly to the actual showing of the model Y, you can skip a lot of bla-bla to around 27.30 minutes in to the video), completing the slightly imperfect S-E(3)-X-Y range, one can’t help but wonder where the development money will come from. Or will Tesla’s model range effectively end with the slightly less subtle S-E(3)-X?

Petrol- or Mobility- Head

The other day I saw the new BMW 850M on the street, which I thought was interesting at best. The lines, creases and folds make it a good looking and aggressive car but, sadly, I must admit it did not get me that excited. Adrian van Hooydonk, head of design at BWM said “The 8 opens a new chapter in BMW’s design language.” But what about the heritage? I remember back when the (old) 8 series came out in the early 1990s…. From a design point of view, it was an evolution of the 635CSI and the pillar-less windows still make it extremely cool looking, even by today’s standards. It seems the new car is just an aggressive wrapping of metal around current (and future) legislation? Change the badge and it can be anything…. Kia? Toyota? Cherry Automotive?

BMW 850M

Enough about design, what about the engineering aspect?  Ah yes, a hand-me-down 4.4L twin turbo V8 that is used in most of the sporty BMW models…. The original 850 had a naturally aspirated V12 …. Did you read that correctly?  A VEE TWELVE!  An engine bespoke to the flagship model.  The 4.4L TT V8 is powerful and I am sure the new BMW will be quick.  And I am also sure that it will be filled with tech such as autonomous driving aids, connectivity, and interior lighting that can reflect your current mood.…. But I do not care about that.  That sounds more like an IT geek’s wet dream than that of a petrol head. 

BMW 850 CSI

I am not having a go specifically at BMW, as most major car makers today think efficiency, economies of scale and profits, but it struck me for the first time: is a modern petrol head a mobility head? Do they care more about the mobility and tech than the engineering?  Is it only horsepower and 0-100 times and aggressive lines that make a car cool?  As amazing as the new BMW 8 series is, I cannot help feeling that this will be the dream of the IT department rather than someone who is really into cars, engineering and driving.  Am I wrong? Old? Outdated?

I would much rather have an 850 CSI with a V12 up front, manual transmission and rear wheel drive!

Infotainment confusion

There was a time when an infotainment system was something you ticked in the options list when ordering your car without thinking much about it. Whether it was called iDrive (BMW), Comand (MB) or something else, systems were rather similar – and rather limited in their capabilities.

This all changed with Tesla’s giant screen and new standard for in-car entertainment, and it has kept (and will keep) changing ever since. At the same time, manufacturers’ understandable wish to bring the latest to market has also created different standards between brands, but actually also between similar models of the same manufacturer, that you’d better be aware of;

  • Buy a new Audi Q8 (left) and you’ll get two very fancy touch screens on the center console, handling almost all in-car functions at the price of a lot of fatty fingerprints. Buy a new Q7 (right) and you will still get the old-looking navigation screen on the dashboard, and traditional controls for seat heating and ventilation. It’s not a wild guess that the A7 will get the dual screens in the next facelift, but it’s not yet the case.

  • In Stuttgart it’s even more confusing: buy the brand new Mercedes GLE (left) and you will get the new, double 12-inch screens with touchscreen functionality through the MBUX software. Buy the new E-class (right) and the screens will look exactly the same but will not yet have MBUX and thus no touch functionality.

Speaking of MBUX (and the latest BMW iDrive), this latest update also gives you the option to talk to your car, starting with the catchy phrase “Hey Mercedes/BMW”. I’ll let you judge for yourself if that’s a drawback or not…

So in other words, if you’re in the market for a new or recent pre-owned car, this has implications. As a seller in 3-4 years of your 2018 Q7, you’ll most probably be punished financially for having a car with that old-looking, single screen. But as a buyer, you will have a great negotiating position already today if you prefer physical, non-fatty buttons that you can locate with your fingers without looking away from the road, and you buy a car for driving rather than talking to it.