African children dying for our “green” energy revolution

On March 12, 2023March 23, 2023 By ChristofferIn ev's, News, OpinionLeave a comment

“A young woman named Priscille stood in one of the pits with a plastic bowl in her right hand. She rapidly scooped dirt and water with the bowl and flung it onto a sieve a few feet in front of her. Her motions were precise and symmetrical, as if she were a piece of machinery designed only for its purpose. After the sieve was filled with gray-colored mud and sand, Priscille yanked the sieve up and down until only the sand remained. That sand contained traces of cobalt, which she scooped with her plastic bowl into a pink raffia sack. I asked Priscille how long it took her to fill one sack with the sand. “If I work very hard for twelve hours, I can fill one sack each day,” she replied. At the end of the day, the women helped each other to haul their fifty-kilogram sacks about a kilometer to the front of the site where négociants purchased each from them for around $0.80. Priscille said that she had no family and lived in a small hut on her own. Her husband used to work at this site with her, but he died a year ago from a respiratory illness. They tried to have children, but she miscarried twice. “I thank God for taking my babies,” she said. “Here it is better not to be born.”

This terrifying quote is taken from Siddharth Kara’s book “Cobalt Red – how the blood of the Congo powers our lives” that you may remember me mentioning in the first post of the year, before it appeared but after Kara had appeared on Joe Rogan to talk about it. As a reminder, he has done what no EV buyer or Western politician promoting the “green energy revolution” has ever done, namely travelled to the Democratic Republic of the Congo (DRC) and at considerable risk to his own life, visited all the large cobalt mines around the country that together make up around 70% of the cobalt that powers the Western world’s electrification. That it doesn’t power the DRC itself or provide it with any riches is well illustrated not only by the $1-2 the diggers earn per day, but also by the fact that the country’s own electrification has so far reached less than 10% of the population. Not measured in EV’s, but in lightbulbs.

*When your family is starving, school is not an alternative*

The DRC is basically filled with all the minerals, metals and precious stones you can think of, yet its population is one of the world’s poorest. Over the last 150 years it’s been plundered more times than anyone can remember and when it wasn’t by Western colonialists, it was then just as effectively by one in the long line of ruthless dictators who enriched themselves on the back of an increasingly poor population. The latest robbery is for cobalt of which there is plenty in various parts of the country. Some of it can be found on the surface with a simple shovel, but most of the reserves require tunnels to be dug. A fair amount of such tunnels are artisanal, dug by simple workers with shovels, mostly so small that only young children fit in them. Artisanal tunnels crumble regularly, on average once a week somewhere in the country, thereby severely injuring the children or burying them alive. That’s right – 10-11-year old children are regularly buried alive at dozens of meters under ground in complete darkness. 80% of the mines are owned by Chinese operators who share the profits with the dictator in power at the time. Tax that would potentially support the development of local communities is however something they do all they can to avoid.

*If you ever felt your office was too small, this is the entrance ot his…*

When Priscille and the thousands of other diggers across the country have carried their heavy sacks to their “négociant” (the dealer who pays them), these are transported away for further refinement on enormous, diesel-powered trucks. The traffic to and from the main mines is so intense that there is often long colons of trucks blocking the roads for miles, together with the mine operations themselves contributing to the terrible air quality plaguing most of the primitive villages the diggers live in, and heavily polluting their waterways and lakes. This is a big problem given fish is an essential food for many. When the trucks reach their destination, their load is mixed with the load of all the other trucks and from that point on, there is no way of separating cobalt from one place from that of another. There is thus no way for any company to claim that their cobalt hasn’t been excavated without child labor. Then again, Kara didn’t find one single mine on his travels where hundreds of children were not heavily at work.

Mines do not appear out of nowhere. They have been developed by mining companies starting around 30 years ago and have seen an exponential growth in the last 10 years when the race for cobalt really got going. There used to be villages, jungle and forests where the mines are today, and the few people who live long enough to remember those days will tell you they were never rich, but they had a decent life. That changed when the miners came, chopped the trees, burnt the villages, polluted the local water and with time the air, and everything then got worse again when the Chinese mining companies took over. Today the same people struggle to survive in primitive sheds and have no other choice than to work in the mines. I guess someone who earns $1-2 a day is technically not a slave, but it’s a very subtle difference. Most don’t live beyond 30 years. And like Priscille, those without children will thank the God, many somehow still believe in, for that.

*There used to be villages and trees here*

Kara’s book appeared in January and is no literary masterpiece, but the fact that its contents hasn’t lead to an intense debate and calls for an immediate stop to this murderous practice, which indirectly is subsidized by Western governments through EV subsidies out of our tax money, says a lot about our society. Around 120 years ago, Belgian king Leopold II spread terror across all of central Africa, killing millions, at the time for rubber. Back then, Westerners could be forgiven for not knowing what was going on, given the lack of information. Today and especially after Siddharth Kara’s book, the information is there for anyone who is interested. This makes us all guilty because there is cobalt in pretty much every appliance you have at home, but the quantitiees are measured in grams and not in kg’s as in EV’s, where a large EV battery pack contains around 10 kgs of cobalt. There are currently around 16 million EV’s in the world and children are dying in the Congo every day for them to function. International climate agreement calls for that number to increase more than five-fold over the coming decades. Putting aside the simple fact that at no point in human history have we succeeded in doubling (much less increasing five-fold) the amount of any input material in a 10-year period, you wonder how many children are yet to die, buried alive, handicapped with crushed legs, or from the poisoned water and air, until the dime drops.

Since reading the book and realizing the full scale of the catastrophy, I’ve taken upon me to try to spread the word about it as suprisingly, its publication has not led to what should have been obvious calls for these inacceptable practices to be stopped immediately. Engaging on Twitter on the subject with so called environmentalists (not a practice I would recommend to anyone with heart problems) typically gives two types of reactions. The first is a pretty astounding level of whataboutism, along the lines of oil and natural gas excavation being terrible as well. I’m the first to agree it is, but to my knowledge children aren’t systematically killed on oil wells. The other is to refer to the constant progress made on batteries and that soon, these problems will be behind us – so let’s close our eyes until that’s the case? It’s true that batteries will evolve but it’s neither for next week, nor for next year. And yes, you can build EV batteries without using cobalt (Tesla does for a fair part of their cars), but that reduces the energy density (i.e. the range), the stability (notably increasing the fire risk) and the longevity. And what replaces the cobalt is mostly nickel, of which Russia is the world’s leading producer.

*You’ve seen it before, but this is a graph worth repeating*

Contrary to these people I think we need to act now, since what goes on in the DRC is far from acceptable in a world that at least on the face of it makes a lot of noise on equal opportunities for all and not just the few. Not a single phone and certainly not a single EV should be built until the mining companies in the DRC can clearly demonstrate that child labor and artisanal mining is a thing of the past, that workers are paid a decent salary (we’d still be well below $10 per hour here, so it wouldn’t kill them), that they’ve built schools for the diggers’ children, and that they’re taking serious action against the environmental catastrophies they continue to cause.

I’m far too old and cynical for actually thinking that will happen, but I do think it’s at least our duty to try. There’s a few hundred of you reading this blog every week and my ambition has always been to give you an enjoyable few minutes on your weekend, late night or pause in the working day. I fully realize reading the above hasn’t been enjoyable at all and for the first time, I will ask a favour of you. If each of you can share this post with 2-3 of your friends and ask them to do the same, then just maybe we can slowly make a change to this scandal. The children currently digging in the mining districts of the Congo are doomed anyway, but perhaps we can contribute to a better life for the next generation. It’s a small hope but if you don’t believe in that, it’s very difficult to believe in anything. Thank you!

Siddharth Kara’s book can be bought on Amazon here. Joe Rogan’s podcast witih him can be found here. If you’re new to the blog, you may want to read one of my previous posts on the topic of the unsustainability of EV’s that you’ll for example find here.

Recession? What recession?

On November 13, 2022November 13, 2022 By ChristofferIn News, Opinion1 Comment

If you’re a traditional investor in stocks and bonds, 2022 has most probably not been the best year you’ve ever had (because if it were, you’d already be out of the markets a long time ago…). Most portfolios are down on the year (even though the rally in the last one-two weeks have helped most out of the trough), and talk of recession, depression and even more massive inflation is plentiful. And yet, there are assets out there that not only hold their value, but actually continue to perform. Most relevant for this blog is obviously the fact that classic cars are very much part of this group!

The Hagerty indices are well known to classic car enthusiasts as benchmarks for various types of classic cars and thereby for investments in these. You should in my view take them with a pinch of salt since classic cars in various shapes or forms remain an illiquid asset class, and if things don’t trade very often and where objects (in this case cars) are not perfectly comparable, it’s difficult to draw any general conclusions. That said, numbers are based on sales prices that have been achieved, so it definitely has worth as a good indication. From that perspective, it’s interesting to see that Hagerty indices are generally up between 5 and 20% this year.

It’s furthermore no secret that in the whole era of zero interest rates which now seems to be behind us, if not for good then at least for quite a long time, classic and collectible cars outperformed most other types of collectibles, and never more so than when coming from the classic brands, i.e. the likes of Ferrari, Aston Martin and Porsche. In today’s world where talk of electrification is everywhere and every manufacturer has more or less advanced plans for a full range of EV’s, it’s easy to think that the big brands have their best days behind them, at least with regards to combusion engines. That my friends, is however completely wrong. Outside of headlines on EV’s and pastures green, the traditional luxury and sports car brands basically sell cars like never before.

In August, Lamborghini’s CEO Stephan Winkelmann (nope, not very Italian) was quoted as saying that Lambo continued to see strong demand which at that point would keep production at full speed for the coming 18 months. He did so on the back of a very strong first half of 2022, where Lambo sold more than 5000 cars. That is still 1500 cars less than Ferrari who posted 6700 sold cars in the same period, 23% more than in the same period a year earlier. Bentley had its best year ever in 2021 and looks set to continue to grow in 2022. And so on. The contrast to mainstream manufacturers couldn’t be bigger, given these on average lost 10% in sales in the first six months of 2022. So what’s going on?

*The new – and to me disappointing – Countach was sold out a long time ago*

It’s no secret that most of those buying new cars of the likes of Ferrari and Bentley have enough money not to worry about petrol prices going up 10 or 20%. And the number of such people keep increasing. In a study from this summer, McKinsey estimates that the number of people with a fortune between USD 1-30m will in the next five years increase by around 30% in Europe, the US and China. The same study estimates that the market for cars costing more than USD 500′ will grow by 14% per year until 2031, and that for cars costing USD 150′-500′ by 10%. Normal cars? Well, if you believe McKinsey, the sub-USD 150′ market, meaning the cars that make up more than 95% of the total market will grow by a far more modest 1% p.a, in the coming years.

McKinsey don’t necessarily have more of a crystal ball than you and I, so just like with the Hagerty indices, such predictions should be taken with a pinch of salt. The fact is though that luxury manufacturers are selling cars like never before, and more sold cars obviously means more profit. Porsche and Ferrari are the shining stars, with Porsche growing its earnings by 17-18% this year and Ferrari currently making a profit of about EUR 100.000 on every car produced. That’s a number that is almost hard to believe. Porsche was listed as a separate company in Frankfurt in September this year, and is at the time of writing up more than 20% since then. Ferrari was listed in New York in 2015 and is since then up 360%, roughly 25% p.a. Aston Martin on the other hand has lost more than 80% of its value since listing in 2018, and it’s not looking any brighter going forward, at least not right now.

*If the Purosangue is a success, it will boost Ferrari’s profit numbers even further*

Where does this leave us? As I’ve written about in the last two weeks, I’m convinced that conventional cars will be with us longer than politicans currently estimate. And unless we have a really terrible depression when cars will be the least of our worries, there will be enough rich people to fill the order books of the world’s luxury car brands, especially since these are now present not only in the sports car segment. The Cayenne and Macan make up almost half of Porsche’s profit, and Ferrari will have even more cars to earn a lot of money on with the Purosangue coming next year. So whether its classic, collectible cars as investments or shares of listed luxury auto makers, it certainly looks like there’s worse places to put your money. That’s obviously not more than my personal opinion, and not any form of advice or recommendation. As always, time will tell!

Populism is in, power is out!

On October 16, 2022October 16, 2022 By ChristofferIn Electrical vehicles, News, Opinion2 Comments

A few weeks ago the Swedish mobility agency in a public announcement told EV drivers that it would be wise if they walked or biked for shorter distances, rather than use their shiny new EV. That’s of course the car they’ve been more or less coerced into buying and replace their old combustion one with, and it’s at the time of year when in Sweden, neither a walk or a bike run is necessarily what you’re dreaming of. This is only one of many small outcomes of the energy crisis Europe is currently battling, or put differently, the crisis where European tax payers pick up the bill for decades of political energy policy mismanagement. This week’s post will be more about what goes into the tank than the car itself – but as we all know, no fuel no fun… Regular programming will resume next week.

*It’s a lovely season for a walk in Sweden…*

Russia’s barbaric onslaught on Ukraine which will hopefully by some divine justice have Putin and his closest gangsters burn in a warm place for very long, is a complete tragedy. We may complain about energy security and fuel prices, but let’s never forget that the Ukrainians are paying a far heavier price, currently without an end in sight. The Ukraine war has however also provided populist politicians the opportunity to put the blame for their own failures on the war and Putin. EU representatives in Brussels like to talk about how Putin has weaponized energy. The exiting Swedish PM speaks about “Putin prices” when defending any kind of spiraling energy prices, notably at the petrol station, although half the price is tax. And so on. Clearly the war has had devastating effects on Europe’s energy supply, but it’s only had so because of Europe’s careless and self-imposed reliance on Russian energy.

Going into the war, 40% of Germany’s natural gas came from Russia. Gas makes up around 25% of Germany’s total energy mix but far more in the all-important industrial mix, so putting it bluntly, Europe’s largest economy put the energy supply of its industry and thereby the security of the whole country in the hands of Putin the dictator. And by the time the now blown-up NordStream II pipeline was built in the second half of the 2010’s, Putin had already showed what he was made of by invading not only Crimea in 2014, but before that also by engaging in wars with Georgia and in Chechnya – twice. So it was, or at least should have been, in complete knowledge of the facts that then German chancellor Merkel took the decision to hand the keys to the German industrial kingdom to Vladimir Putin, with many other European countries doing more or less the same. You really can’t make it up.

*Russian-speaking ex-chancellor Merkel with her pal Putin.*

To get to the root of the problem we do however need to go back to 2011 when immediately following the tsunami-caused Fukushima disaster, Merkel decided to close down Germany’s nuclear plants. Fukushima is of course on the other side of the world seen from Germany and the accident had no relevance whatsoever to Germany’s nuclear security, given the only coast Germany has is to the North Sea which isn’t very prone to tsunamis, and in addition not where Germany’s nuclear plants are located. But hey, who cares about energy security when there is a chance to earn political points with the growing Green movement? Here in Switzerland our local politicians jumped on the train before it had even stopped at the station and decided to close down our local plants. Of course we continue to import nuclear power from neighboring France and could never have closed down our own plants without those imports, but that’s something we don’t really like to talk about.

Nuclear is also where Europe and the US meet in our respective crises, with US policy in the last decade being just as set on closing down nuclear as Europe. The problem is of course that in parallel both sides of the pond also wanted to close down fossil fuels, in other words leaving us with no weather independent source of base power. In the US this has translated to more black-outs last year than at any point in history, and fuel prices in California are now getting close to USD 7 per gallon, which still sounds like a steal seen from Europe but is a historical high from a US perspective. President Biden has consistently acted against any expanded production of both oil and natural gas, at the same time as depleting the strategic oil reserve and traveling to Saudi Arabia, trying to get the true democrats down there to increase production. In essence, the message to US oil companies is “guys, we really don’t like you and we’ll close down all your business in a few years, but until then, could you please invest a few billion and increase production?”.

Enough of the ranting, but the above needs to be said to put the current situation into context. For some strange reason though it usually isn’t, and I’m pretty convinced things will not get better unless those responsible are willing to stand up for mistakes made in past. Whether in the US or in Europe, we’re not in an energy crisis primarily because of Putin’s war in Ukraine or because the Saudis won’t increase production – we’re here because of naive, uninformed and populistic political policies that we as taxpayers are now paying for at the pump, by not using the EV that it was so important we buy, or by freezing in our homes.

The bad news is of course that this will not end anytime soon, but it’s at least good to see that a bit like a drunk waking up on the side of the road, European countries including Germany are now really scrambling for solutions and doing all they can to remedy the situation. Notably in terms of gas supply things are changing quickly, with a heavily reduced dependance on Russia that will go towards nil in 2023. That’s all great, but it only solves part of the problem. Through policies like the ones described above, most countries at present quite simply don’t have any reserve capacity for any type of energy. Building nuclear isn’t done in a couple of months, neither are necessary LNG terminals or for that matter little-discussed but very essential grid investments for renewables that are desperately lacking across Europe, and for which there risks not being any money left in the new recessionary environment we find ourselves in, coupled with increased defense budgets.

*This is an LNG terminal in Japan. Doesn’t look like something you build in a couple of weeks…*

What happens now is therefore a return to the old power sources we thought were closed down forever. Coal imports to Europe have increased by more than 30% in 2022 compared to previous years. In Poland natural forests are now being chopped for energy and people are burning garbage. In Sweden, the oil-fired power plants are back in action and in Denmark, neighbors steal each others’ wood pellets. Climate policy is out the window and we’d better all wish for a very sunny, windy and mild winter across both Europe and the US, which is not really what winter typically looks like. Otherwise, more or less power cuts could be on many countries’ agendas for the coming months. And even in the US, we can safely assume that oil production will increase when people really start freezing.

If electricity really is rationed, you can be pretty sure that EV charging will not go unaffected. The Swedish mobility agency may have been first, but a similar message will no doubt go out in other countries as well. EV charging will also continue to increase in price. How much depends on where you live and where you charge, but as a scary example there are charging stations in the UK where a 300 km charge now costs around £50, which is more expensive than fuel would be for a mid-sized car. And that’s assuming you find a station that works, which seems to be quite rare over there… If you need your car for your daily life and if you’re dependent on the public grid for charging, buying an EV right now is probably not the best idea.

Defeating Putin in Ukraine is of course more important than prices at the pump and would most probably help reduce the price of oil and gas, and thereby inflation. It’s interesting how politicians of all colors are now changing their tune with regards to nuclear and have a very hard time remembering where they stood on the issue until very recently. I had to rub my eyes hard this week when the climate activist Greta Thunberg joined the crowd, talking about Germany’s mistake in closing down its nuclear plants. Of course Greta as recently as 2019 was publicly against nuclear. The more things change they also stay the same though, because only two days later, ex-chancellor Merkel in only the second big interview since she left office said she doesn’t regret anything.

This may all be entertaining but it’s against a serious background where until there is at least more clarity on how our power supply and energy mix will look going forward, the safest option is no doubt to keep your combustion car, because whatever you pay at the pump, it’s still cheaper than buying an EV (and charging it). As we’ve looked at previously you won’t save the climate anyway by driving electric, and you may indeed want to decide yourself when to drive your car and when to bike or take a walk.

How not to lose 30% the first year!

On August 14, 2022August 14, 2022 By ChristofferIn News, Opinion2 Comments

There are many sayings along the same tune: full of joy you pick up your new car at the dealership, and by the time you reach the street, it’s lost 30% of its value. With very few exceptions that used to be the case for more or less all new cars, and depreciation would then continue to eat into the remaining value like rust does to an old 70’s Opel, until some day you reach a bottom where values stabilize and if you’re lucky, even start to rise. You could say that my modest garage consisting of my beloved BMW 650i convertible 2014 and my no less loved RR 5.0 SC 2015, both bought in the last two years, were very much purchased along that logic (and if I dare say, pretty much at the bottom).

At least in some cases, what used to be true isn’t anymore, and we can of course thank the moving parts of the global mess we currently find ourselves in for that. The combination of broken global supply chains, the European energy crisis and inflation are starting to change things. I’ve written previously about prices for used cars being on the rise especially in the US. That trend seems to be softening, although it’s a bit too early to say. It’s still the case that delivery times have in some cases gone bonkers, but here as well things are looking slightly better for most cars, as the stress on delivery chains of certain parts have improved slightly. You’ll still have to wait far longer than used to be the case though. But lately, and the topic of this week’s post, is what is perhaps another logical consequence of the current situation, namely that certain new cars barely lose any value during the first few years.

*The chip crisis is slowly easing, which is really good news for manufacturers!*

It’s still perfectly possible to lose lots of money when buying a new car. An old man’s sedan is for example an excellent way to go about it, especially if you order it in a color scheme that may seem fun at the time of ordering, but far less a week after the car being delivered. Large Mercedes coupés with big engines are also pretty hopeless. Actually, with everything everywhere being about EV’s and with prices at the pump going only in one direction, you’d be forgiven for thinking that buying anything with a big, thirsty engine would be just as good (or bad). That’s not the case though, at least not yet, and it’s also not the case that all EV’s hold their value in the same way the best ones do.

Given that, and if we except the small series hypercars that live in a world of their own price-wise, what should you be looking at if you want a cool, everyday car and prefer buying new, but want to minimize the initial value loss? I’ve taken a few examples below from the SUV world which continues to be the preferred car segment everywhere, and which is therefore a relatively safe bet in this regard.

*There’s three different body formats now, from 90 to 130 to choose from*

New Land Rover Defender

It was no easy task that Land Rover took on when they decided to build a new version of one of the most legendary cars of all times but in my view, they did an excellent job with the new Defender. I think it balances references to the original car with modern features in just about the right proportions, and apparently the market agrees – not only do you see a lot of new Defenders around, their resale values are excellent. In Europe, when the car was introduced in late 2019 in a version called the First Edition, these 2019 cars today trade only around 10% lower than their original price of around EUR 100.000, in spite of a minor upgrade having just taken place on the 2022 Defender. For now at least, the car that’ll take you anywhere seems to be a safe bet economically as well!

*The G63 could also take you most places – it’s just that it never does…*

Mercedes-Benz G63 AMG

If Land Rover’s task with the new Defender was daunting, arguably what Mercedes had to do to turn the G-wagon to a modern car (as much as possible) was no less so. It was a year earlier in 2018 that the new G was introduced, and still today you need to look twice to see the difference between old and new – at least from the side. Absurdly enough, the vast majority of new G’s are in the G63 AMG version, that an article I recently read described as “Kardashianesque”, a description as good as any. Few cars have the same street presence though, and 585 hp in car looking like a fridge will keep you laughing all the way to the petrol station. Provided you still see the road that is, because with its completely flat front window, the G63 kills bugs at a speed making you fear bug extinction. Still, should you for some reason want to sell your G63, you’ll be happy to learn that even cars from the first year with moderate km’s on the clock sell for within 10% of their price as new of around EUR 220.000.

*The only SUV that looks good in yellow – and many other colours!*

Lamborghini Urus

If 585 hp in an SUV isn’t enough for you, then Lamborghini are happy to give you another 65 hp, rounding it off to 650 from the Urus’s 4-litre, 8-cylindre engine. Its looks take more or less getting used to depending on your taste, but the Urus is one hell of a car and no doubt the SUV that drives the most like a sports car. And of course, being a Lambo, it delivers in terms of sound like few others. The Urus was also introduced in late 2018 and costs a bit more than EUR 300′ as new. 2-3 years later without too many kilometres on the clock you will have lost no more than 10%, and it will have been worth everyone of them!

Three examples out of a selection that could clearly have been wider and that illustrates that at least right now, you can buy at least some new cars and not lose much in terms of value even after 2-3 years. If you’re interested in any of these or for that matter other cars with a similar evolution, then the recommendation is of course to buy new, provided the car you’re after can be delivered within a reasonable timeframe. A discount that isn’t larger than 10% doesn’t compensate for neither the compromises in equipment you may have to make, nor for the typically much shorter guarantee you’ll have on the used car.

*The Model X hardly sells anymore in Europe, but has fantastic residuals!*

What about EV’s then? Isn’t that a safe bet when it comes to resale values? With everything happening in general in terms of clean energy, and in the EV market in particular with new models both from new and old brands, you’d certainly be forgiven for thinking so, but actually the picture is a mixed one. The champion in resale values is no doubt Tesla where the 10% value loss discussed above goes even further in terms of mileage or even age. Had you bought an Audi E-tron instead, perhaps convinced by the fact that in everything except for the range it’s a better car, well, then you would have lost almost 50% in the last 2-3 years (making the E-tron a really great bargain today!). Mercedes’ EQC EV SUV doesn’t fare much better, and there are other EV’s in both camps. At least for now therefore, value preservation seems to be more brand-related than depending on the drive train, and part of Tesla’s strong resale value probably also relates to the Apple-like image the brand has among many.

Where does that take us? Well, if you’re after a SUV and you’ve been looking at one of the three mentioned above, it looks like a relatively good investment even if you’re changing cars now and then. However, as the disclaimer says if you buy a financial product, “past performance is no guarantee for future returns”, which is of course especially true now with an energy crisis in Europe and a general trend towards electrification. Remember though that this will take time, and there will conventional cars around for many years to come. If you’re looking for an EV, the resale value and the range speak strongly for Tesla, but it will require you to compromise in build quality compared to some other EV’s, and the competition is no doubt heating up. Personally, I still think a good bargain beats anything presented here, and if I were after an EV, I think I’d go and look closely at that bargain Audi E-tron!

EV’s will never rule the world

On June 12, 2022June 12, 2022 By ChristofferIn Electrical vehicles, News, Opinion3 Comments

A few months ago, as spring was still losing the fight against the last efforts of winter, I attended a financial conference close to Zurich. That’s one of those events where asset managers meet up with investors to tell them why they are the best option to invest with, in whatever theme they feel is of most interest at the time. Not too long ago, these events still had some diversity to them, as you had the opportunity to speak to a great variety of managers on different strategies. Those days are gone. Today, everything, and I really mean everything, is around ESG (Environmental, Social & Governance) and impact. In a way that’s great – I’m absolutely convinced of companies needing to behave like good citizens, both towards their employees and the environment (which is what ESG is about), and if they can report some concrete metrics on that good behaviour (which impact is about), then all the better. What I don’t like is when the discussion gets stupid, because when it does, it also gets counter-productive. In this case, as you probably guessed already, it was about EV’s.

*Is everything really green in EV land? Eeh… no.*

One of the sessions I chose to attend was with a portfolio manager (PM) who started by presenting his team with their name, role and how they commuted to work. The options were bike, public transport or EV, and when someone asked about conventional cars, she was told that wasn’t allowed on the team. The PM thereafter spent whatever was left of his 20 minutes to talk in extremely broad, non-committing terms about how we were all going to die very soon unless we all invested through him in cool companies such as Tesla and solar panel manufacturers, rather than the terrible old dinosaur industrial companies, to which he gladly also counted traditional car manufacturers who now build EV’s – go figure. To conclude, he then looked at his client relations guy standing next to him and explained how he had convinced him to buy a Tesla, and how happy he was by now. Apparently the colleague wasn’t trusted with saying this himself.

In the context of what was supposed to be a serious, institutional investor conference, this was all a bit too much for me so I put up my hand, congratulated the client relations guy on his new car and said I hope firstly he didn’t have a car before, since replacing it with an EV in most cases and for a very long time will be detrimental to the environment and not positive from a total emission perspective, and secondly that I hope he drives a lot, since he’ll need around 100.000 km’s for his Model S to be “net positive” in total CO2 emissions compared to a conventional car. I added that I’d be interested in knowing where the solar panels of the mentioned company were produced. All this made the PM quite excited, and in a rather arrogant way (how dare you question the wisdom of EV’s??) told me that the 100.000 km number was absolutely not correct and based on “biased research by the petroleum industry”. He never gave a number himself. With regards to solar panels, he had to admit that a large part were still produced in China, but “not in the problematic parts”. Stupid me – I wasn’t aware there were parts in China which are not a Communist dictatorship…

It’s been a year and a half since I published one of my most read posts on EV’s and how they won’t save the climate (catch it here if you missed it). One of the main points in that post was on the “CO2 deficit” of EV’s, i.e. the very large amounts of CO2-emitting energy that goes into their battery production. This fact was validated by a study I learnt of recently, commissioned by VW in 2019 and done by the Austrian Joanneum Research Institute together with the German automobile club ADAC and the excellent German Economics Professor Hans-Werner Sinn.

*Given the above, it’s safe to say that almost no EV’s make sense from a CO2 emission perspective.*

With apologies for the bad quality (coming from the fact that I took a picture of the screen during a presentation by Prof. Sinn), it’s pretty easy to see why VW didn’t want a lot of publicity around the study’s results and instead chose to bury it in a basement somewhere before it was leaked to the public. You see, the results go against the complete electrification VW and all other car makers in the world are currently embarked on. The diagram is based on the total CO2 emissions of a car, so for an EV including the production of batteries, and the two lines depict on one hand an electric Golf and on the other the same car with a diesel engine. As the graph makes painfully clear, for a country with an electricity mix comparable to Germany and Austria (and there’s quite a few of those), the 100.000 km number the PM claimed was exaggerated is actually quite the opposite when compared to an economical diesel engine. If you go by the yellow vertical line that shows the average lifetime of a car in Germany, the EV simply never catches up.

Russia’s war in Ukraine has laid bare especially Europe’s dependency on Russian energy and is now talked about as something that will accelerate the transition to renewables, which on a global basis still make up less than 2% of the energy mix. This reasoning is often accompanied by statements of how solar panels and wind mills will continue to get cheaper according to a version of Moore’s law (which refers to how the number of transistors doubles every two years whilst prices of computers are cut in half). This is quite simply wrong.

Firstly, the material cost of notably metals that go into the production of all renewables has a worth that will always prevent the cost from going below a certain level. Most of those metals have price-wise been at a historical bottom during the last ten years or so, until very recently. If you combine that with a cost of financing that with interest rates at zero has been as low as it can get but is now moving up, everything points to renewables getting more expensive going forward, not the other way around. To which should then be added further issues such as notably the extraction of required metals from great countries like Russia, China and the Congo, the many tons of cement needed for the basements of wind mills and so on. That’s not good news for anyone, especially since the ESG-movement has been very good at preventing any form of investment in oil, gas, and even nuclear, a non-polluting and non-weather dependent form of energy. That’s obviously where it gets stupid.

*Coal is still the world’s largest energy source, and no country has more coal mines (and workers) than China*

Some countries have a better energy mix than Germany and Austria and with cleaner energy sources, the EV equation improves. There are also initiatives to recycle battery metals and even replace especially cobalt, and there’s obviously research into steady-state batteries and so on. That’s all great, but it won’t be here tomorrow or even in a few years, and the issue of scale is still huge. Quite simply, we are very far away from having the battery or other storage capacity required for an energy system based on renewables, and such a system would also by definition assume massive over-investment, such as to produce enough energy to store when the wind blows and the sun shines. I don’t know about you, but the more I look at wind and solar power, the more I’m convinced that this is not what our future will be built on. I am however as convinced that we will manage to solve the energy equation such as to reduce emissions, quite simply because human creativity is unbeatable at solving challenges, and emissions is a challenge we need to respond to. But we need to be smart about it.

*Stock performance YTD per 9 July. It was more fun investing in EV’s last year…* *Volvo Cars is included as owner of Polestar.*

We all suffer at the pump these days and as previously said, things won’t get better anytime soon (rather the contrary if you consider that China has basically been in lock down, i.e. not consuming a lot of anything, in the last months, but is now opening up). I fully understand if you choose to buy an EV, especially if you can produce your own energy through solar panels (preferrably not from China) or otherwise, but please don’t tell your friends how you are helping save the environment by doing so, because in most aspects, you’re not. For those without their own electricity production, unfortunately it can be expected that electricity prices move up as well. It seems the market is starting to realize that as well, as illustrated by the stock price performance of EV’s this year, as illustrated above. I haven’t checked on the recent performance of the funds managed by the PM I met at that conference but looking at the table, I think I have a pretty good idea!

Colourful car considerations…

On May 29, 2022May 29, 2022 By ChristofferIn News, OpinionLeave a comment

This week is about something every car has and is plain for everyone to see – the paint. Not very exciting you’ll tell me. Far more than you think is my answer! Car paint has far more nuances (pun very intended) than you think, be it between different types and different colours, but also between different manufacturers. The reason I came to think of it was that I recently saw a G63 (yet again…) in solid green – i.e. not metallic. This made me think of a whole lot of other recent cars from mostly German brands that also have solid colours,. Exploring what seems to be a new trend at least for exclusive cars revealed the whole world of car paint to me so for this week, here you go: the definite guide to everything you ever wanted to know (or not) about car paint.

*The 70’s were generally more colourful (in solid paint) than today!*

Putting some order in the car paint universe reveals that there are four base types of car paint:

Solid is to most of us the white, black or red we grew up with before metallics became popular. There were plenty of solids in the 70’s (including colours such as orange, yellow and bright green which today make a comeback), a few less in the 80’s and a decreasing number ever since, until recently. For most “standard” cars the only solid colours available, and thereby the only ones without an additional cost, are white or black. The big advantage with solids is that scratches or other types of damage are easier and cheaper to fix than for other types.
Metallic is what most modern cars have. The name comes from the production process where varying degrees (size and amount) of small metal particles are mixed into the paint, meaning some metallic colours will sparkle more than others. Metallic paints have a higher production cost than solids, explaining why they’re a (paying) option. Their big advantage is that they also have a deeper shine, and that small scratches are less visible. Large scratches are however more expensive and laborious to fix.
Pearlescent or mica paint is basically the same as metallic, but with ceramic instead of metal particles. This allows for a great variety of reflections and can make the paint look even more more exclusive than metallic. The downside, you guessed it, is again that it’s even more complicated to fix any damage.
Finally matte finishes have become popular in the last 10 years or so, but seem to have lost a bit of their appeal recently. To some they look cool, others hate them. Mostly matte cars come in black or grey, and it’s something manufacturers usually only offer for some top models given the application is even more complex than for metallic or mica paints. Also, the level of matte can vary from very matte to less so. Fixing damages is a nightmare.

*Mica colours have great depth and reflections*

That’s the basics of car paint but far from the whole story. If we start by looking at paint quality, there’s of course a big difference between a modern car manufacturer where it can be assumed that they know how to paint a car properly (you hear that, Tesla?) and where qulity therefore refers mainly to thickness of the paint, i.e. the number of paint coats applied. For classic cars, it’s a completely different and more complex story that’s probably worth a post on its own, so for now we’ll stick to our everyday cars. .

Some of you will know that I have a Range Rover and a BMW 650i in my garage, both 6-7 years old with quite a few km’s on them, and both without a single scratch mark in the paint. This was a very different story with the XC90 that preceeded the Range and the paint of which was extremely sensitive, i.e. thin, with the smallest touch leaving a mark. My wife drives a Mini and had her rear bumper repainted a while ago. Less than six months later, it looks like the old one with mini scratches, although she’s super careful. This is in other words an area where manufacturers can save money, and at least some of them do. If you ever wondered why the metallic paint costs less on a Dacia than on a BMW, here’s the answer (and yes, there may be small “brand premium” added to the price as well…). As a rule of thumb, more expensive cars will of course tend to have more better, meaning thicker and more resistant paint.

*“Grigio Telesio” definitely puts your Aventador in a different league!*

Coming back to the solids, you’ve probably also seen that there is a greater variety of them, especially for high-end models, not only the G63 but also for example on Audi RS’s, M5’s etc. There’s no real logic here however, with manufacturers choosing to make a greater variety of colours available for certain, but not all top models. For those where it’s the case, this then sounds like a good option to save some money on a car that is already expensive enough, also since there are really nice solids now. Unfortunately, that’s not quite how it works. Taking Mercedes as example, it’s still only black and white that are non-paying solids. All the other solid colours (and there’s quite a few available on the top models) go under the label “G Manufaktur”, which in this part of Europe means they cost an optional CHF/USD 5.000, roughly three times more than a “standard” metallic paint.

This sounded a bit outrageous so I called the Mercedes garage around the corner and asked for an explanation. They then told me that the “G Manufaktur” line has much more layers than a conventional solid, is produced in a whole different process and hereby offers both a deeper shine and more resistance. The same obviously goes for other manufacturers as well and explains the quite hefty extra 3.000-5.000 you to pay for them. Some will also offer the ceramic mica colours described above, which will also tend to be more expensive than metallic colours. That in turn explains why these are usually only available for the most expensive models. It’s obviously up to everyone whether it’s worth the money, but unless you’re part of the car-cleaning tribe and keep your automobile nice and shiny, you’re not going to enjoy the benefits.

In summary, there aren’t really any surprises – you get what you pay for, and the more expensive your car is, the more types and colour options you will typically have. A couple of points are however worth remembering. Firstly, the mica green that may look awfully cool right now may be less so in a couple of years. As mentioned we’ve been in a trend of matte colours the last years, but it seems to be fading and it’s uncertain how well it will stand the test of time. If resale value is of any concern to you, make sure you choose a colour that isn’t one you (and everyone else) will be tired of next year. As a rule of thumb, grey and black metallic are the colours which typically command the highest resale values. Silver will work as well, and for some cars, red and white. That nice, solid, multi-layered green however, will probably have far less candidates than the standard black or grey metallic, which from this perspective are the safest bets.

*Foiling can be in metallic as well – the Chinese love gold apparently.*

Before matte colours were widely available, cars tended to be foiled in matte. This is a nice alternative if you’re unsure about your colour or if you want one that is less standard, given the foiling can be removed at any time and thus has the additional benefit of protecting the paint benath it. It’s the same story here, you get what you pay for, but I dare say that if you consider a solid colour in the price range of 3.000-5.000, a really good foiling is a clear alternative. Today foiling can be done in any colour and type you can imagine, and the price will usually depend on the size of your car. So if you’ve always dreamed of a gold 911, this is probably the best alternative. As for me, I’m continuing to dream of the first car paint that is resistant to dirt – that would be a true revolution!

Robust management and struggling EV’s

On May 8, 2022May 8, 2022 By ChristofferIn News, OpinionLeave a comment

This week will be a small overview of various things happening in the car industry as well as around it, highlighting some current developments and issues and some others that may become important in the coming years. This will of course touch on EV’s that seem to become a crucial part of that future whichever way you turn, but we’ll actually start in the (still) conventional industry, up at Aston Martin’s HQ in Gaydon in the UK. That is where Tobias Moers, previous CEO of Mercedes-AMG, moved in two years ago, with a mission to improve profitability at Aston. He did, quicker than most expected, but in spite of that, last week he was forced to clean his desk.

I’ve touched upon Moers both in my post on AMG and in that on the Aston DBX last year. He was the boss of AMG between 2013 and 2020, leading Mercedes’s sub-brand in a short-term successful, but in my humble opinion a long-term somewhat risky brand dilution strategy, and was hired by Aston’s strong man Lawrence Stroll in 2020 (father of F1 driver Lance Stroll) to accelerate Aston’s turnaround. Moers said himself that he would never have taken the job hadn’t it been for Aston’s line-up, especially the DBX, and he started the transformational Project Horizon straight away, contributing to rapidly increasing profit numbers for Aston, to a large extent built on the DBX. There’s no doubt he greatly improved and streamlined Aston’s production processes, but in parallel he also became known for his “robust management style”, apparently contributing to many senior departures and a general bad climate in the Gaydon factory. This to me sounds very much like a cultural clash between German efficiency and British, well, uniqueness, but Moers is anyway now replaced by ex-Ferrari chief executive Amedeo Felisa as Aston prepares to launch a new range of sports cars, most of them electric.

That brings us to the latest from the EV world, and I believe what we’re witnessing right now and will continue to witness over the coming months and years, is the great pains associated with going from the production of a few hundred cars to true mass production. The two new EV brands mostly in the news and also those with the most exagerrated valuations (although those are far less exagerrated now than a few weeks ago) are no doubt Lucid Motors, the American luxury EV builder, and Rivian, the equally American EV pick-up builder. Starting with the latter, it recently had to increase the price of its R1T by up to 20% and halve its production target of 25′ cars this year. So far, around 900 Rivians have been built. Lucid on the other hand, saying it wants to get its first car “exactly right” has pushed back the production start several months.

There’s a few things here worth considering. No doubt part of the problems can be traced back to the global supply chain issues the world is currently experiencing, more on that later. That’s however far form the whole story, the most important component of which to my mind boils down to whether these new car builders can emulate the Tesla success story with the same kind of “mojo” that made Tesla what it is. I’m not saying they can’t, but it’s certainly not a given. Firstly, there are very few Elon Musks in the world. Secondly, it’s very easy to forget the production hell Tesla went through over close to ten years before starting to make money. At one point that production hell was so bad that dealers had to fit the wheels on the cars, just to give an example, and quality issues plagued the company on several occasions (and to be honest, still do).

*Personally I think it would be great if Rivian made it!*

That’s all changed now, but the change consists in a development which has made Tesla much more of a standardized car company, whether they like it or not. Which then of course brings us back to all the traditional carmakers who now all have a number of EV’s in their line-up. They were certainly neither first, nor very innovative, but they know how to build cars and have the production process not only under control, but perfected over decades. I’m sure we’ll have a new Tesla at some point. It may be a brand we’ve yet to hear of, or it may be Lucid and Rivian, but that’s far from certain. They probably have about 12 months to make or break it, and I wouldn’t put my oney on them making it.

Things would certainly become much easier for not only Lucid, Rivian and Tesla, but also for all other car makers in the world if the current supply chain disruptions were solved, or at least improving. Currently however, rather the contrary is the case. Many of you have probably already seen the below picture in various forms, showing all ships currently waiting to unload in China, mainly in locked-down Shanghai. The total number is over 500, and they’re not waiting because the port is full of ships leaving…

Shanghai is in a lockdown that doesn’t seem to end anytime soon, rather the contrary as imposing similar lockdown measures in Peking is now being discussed. We’re not going into Covid policies here, let’s just say that the combination of a zero Covid policy leading to most people not having antibodies in combination with clearly less efficient domestic vaccines (no Western vaccines are allowed in China) make even the current Omicron variant potentially quite dangerous. And “dangerous” in a country of 1.5bn in habitants could mean a few million deaths. The current situation will therefore not change soon, but at some point China will have to decide between an economic depression an relaxing measures. Not only car builders hope for the latter.

To conclude, let me share an interesting picture from Zeihan on Geopolitics (highly recommended for those with an interest in geopolitics!), showing the material consumption of EV’s vs conventional cars, as well as materials used in various energy sources. It’s no secret that EV’s require a greater quantity of most materials than conventional cars, quite a few of which are problematic, as highlighted in my post on why EV’s won’t save the world a bit more than a year ago. It’s also true that things are improving, which is great. I notably learnt from a trustworthy source last week that Tesla has now managed to eliminate cobalt in roughly half their batteries. Such and other improvements also mean EV’s make up the CO2 deficit from their production in fewer km’s which is also great – although that calculation never includes the fact that you’re building a whole new car often only to replace a still fully functional existing one, as I believe it should, given we still have no answer to what should happen to all the cars we plan on replacing with EV’s.

*These are not produced in your typical holiday destination…*

There will however always be more problematic materials needed in EV’s and renewable energy sources, and if we think about where these are produced, that puts Russia’s current invasion of Ukraine into perspective. We’re currently all dreaming of eliminating Russia as an energy supplier (and please, also as an aggressive invader of other countries!), and few people think of Saudi Arabia and Iran as other great countries to do business with, but as we electrify the world and need to get to the minerals mentioned above, we’ll have to deal with a far larger number of other not-so-great countries than we did in the oil days. These notably include Bolivia, Chile, Brazil, Mozambique, Guinea, Gabon, China, Congo and yes, Russia. That’s obviously not ideal in any way, but it’s the price to pay for a future based on windmills and solar panels!

Geopolitics all the way to the pump

On March 27, 2022March 27, 2022 By ChristofferIn News, OpinionLeave a comment

A man buys the daily paper at the same local news stand every morning. He glances quickly at the front page and then throws the paper away. One day the new stand owner asks him what he’s looking for. When the man replies it’s the obituaries, the stand owner tells him they’re not on the front page. The man replies: “the one I’m looking for will be”.

This week’s post will be a little different. For once we will not be dealing with the cars we love, but rather with what goes into the tank to make them run. This is of course linked to the terrible events happening only a few hundred kms from where you’re reading this if you’re in Europe, and the implications of which will in some areas will be much more far-reaching than I believe is currently realized. Next to cars one of my other big interests is geopolitics, a subject that has been almost forgotten over the last 30 years but which made a sudden re-appearance on the Eastern front a month ago. In the context of what’s currently happening, one of the most important side effects is playing out in the oil market and thereby to the fuel we put in our cars. This week therefore, geopolitics and cars come together to paint a picture that unfortunately, isn’t very bright.

*The oil price (here Brent) seems to be on a mission…*

Russia is a major producer of basically everything needed to make the modern world run: oil, natural gas, precious and industrial metals and, together with Ukraine, agricultural commodities. It also produces over half of the world’s ammonia (a derivative of natural gas) and Ukraine and Russia are the world’s second and third largest producers of potash. Both ammonia and potash are used for fertilizer production and have thus become crucial in feeding the world’s growing population. This war will therefore have major implications on the world’s food production, but this is ot the place to deal with those. It’s also no secret that Europe, and especially Germany, have built up a completely irresponsible dependence on Russia for its oil and gas-related energy supplies over the last decades, the downside of which has now become obvious. In parallel the US has developed into the world’s largest oil producer and is today self-sufficient, actually exporting a small part of what is being pumped and fracked. To protect that self-sufficiency, a US export ban on oil could well follow in the coming weeks, perhaps meaning that the effects of what follows below will be less severe for our American friends than for the rest of us.

Europe is currently doing what it can to move away from Russian oil imports, but the room for manoeuvre in the short-term is very limited. There is no over-supply of oil in the world today and basically only Saudi Arabia has any room to increase production by perhaps 1m barrels per day, but only maybe a year from now. The completely bizarre idea of starting importing from the dictatorships of Iran and Venezuela (in other words replacing one dictator by two others) is luckily completely unrealistic as both countries would need massive investments in their run-down production facilities before any exports could occur. This means Europe is stuck, which in a way of course goes completely in the direction of replacing oil with green energy that every European politician talks about. But with oil and gas making up more than half of the EU’s current energy consumption, this is not something that happens in a week, especially when like Germany, you’re set on closing down nuclear at the same time.

*How Russian gas flows to the EU – oil flows in much the same way*

Behind the US and Saudi Arabia, Russia is the world’s third largest oil producer and exports around 5 million barrels per day, roughly corresponding to 5% of the world’s daily consumption (but far more of the European consumption). Russian oil fields are mostly located in Western and Eastern Sibiria with the Western fields supplying Europe with oil and gas through two pipelines, as shown above. The Western fields are not connected to the Eastern which mainly supply China. This means oil cannot flow from West to East, for example to be sold on to China (the oils are also of different quality, complicating this further). At current oil prices, the total exports provide Russia with a daily inflow of more than $1bn. Since the start of the conflict a month ago, the EU has paid around EUR 20bn to Russia for oil and gas, neither of which are part of current sanctions. With the war being estimated to cost roughly $1bn per day, that goes a long way to financing the current atrocities.

There is another problem though, and it’s a big one: the Russians are not capable of operating their oil fileds themselves and haven’t done so since the collapse of the Soviet Union. Instead, all the fields have been operated by the Western oil companies which now, with the exception of French TotalEnergies (and we’ll see how long that lasts), have left. The Chinese are roughly as incapable as the Russians at operating oil fields so most probably, what will happen as a consequence of the sanctions and exit of Western companies is that production especially in Eastern Russia will diminish, and thereby also exports to China. That’s bad news for the Chinese economy but unfortunately, for the price we pay at the pump as well.

*Laying off 50′ workers in Russia isn’t the solution says Total. We’ll see how long that holds.*

President Putin is fully aware of the leverage towards Europe the Russian energy constitutes and no one should doubt that he’s also fully capable of turning off the pump altogether, especially if the war effort continues to go as badly as it currently does. Europe could also decide on an oil embargo which would probably be the moral thing to do, but for the reasons mentioned above, is far easier said than done. An embargo or turning off the pump would obviously hurt the Russian economy and thereby ordinary Russians, but as the true dictator he is, don’t expect Putin to care. Realistically therefore, the global oil supply will diminish by a few million barrels over the coming years, which most probably means prices at the pump will go higher. On Thursday this week, some of the world’s leading oil traders joined the ranks of many experts predicting oil barrels to double from here. In Europe it’s still taxes that make up around half of the price at the pump, and we’re already seeing politicians being pressed to reduce taxes or help struggling consumers through subsidies. How much will be done depends on where you are – and how far out the next election is…

It’s therefore fully understandable that many today consider trading in their beloved but perhaps not so economical car against something more efficient, perhaps even a hybrid or an EV. I’m not saying that’s wrong, but remember two things: firstly, your big-block has become far more difficult to trade in than only a few weeks ago, so do your maths to make sure the potential loss in resale value doesn’t exceed the potential fuel savings. Secondly, the supply of new cars is in complete crisis given the continuing disruptions in notably semiconductor and microchip deliveries from China, and many people will have the same idea as you right now. Economical used cars are therefore on the rise, and It could be long before you see your new car, whatever the dealer promises. Finally, anything with a battery is dependant on precisely the industrial metals that to a large extent also come out of Russia, and as a consequence of this whole mess, both these and electricity prices will increase. As so often, there’s no free lunch.

*They don’t have time to worry about prices at the pump*

The invasion of Ukraine is a terrible tragedy of a kind most of us Europeans thought we would never have to witness again. The fact that we have to pay more at the pump obviously quickly fades in comparison to the enormity of the war for Ukraine and its people. As everyone else I truly hope that this will be over sooner rather than later, but the path to that happening is currently difficult to see. And with regards to oil and other commodities, the lifting of sanctions not only rely on Russia going home, but on Putin stepping down or being removed from power. Although we all wish that would happen soon, or indeed to read the headline the man in the quote at the beginning of this post is looking for, that seems unlikely at this stage. So whilst we may swear at the price we pay at the pump, let’s not forget that at the same time, the Ukrainians have far worse things to swear about.

Havoc in the car market!

On February 20, 2022February 19, 2022 By ChristofferIn News, Opinion1 Comment

There are extraordinary things happening in the car market, and it’s currently reaching previously unseen proportions. At first glance it looks looks like a salesman’s dream, whether he/she sells new or used cars, thereby also meaning a buyer’s nightmare. However, as we know good things (from the seller’s perspective) tend not to last, and there’s reason to think it could get worse both for sellers and buyers before it gets better. Instead of making this any more cryptical, let’s look at what’s happening.

It all started with a certain virus from which large parts of the world are finally recovering and returning to some kind of normality. Removing face masks and being able to go dancing again isn’t the same however as all supply chain bottle necks caused by Covid restrictions disappearing overnight. This is especially true for China that continues to pursue a zero-Covid policy and in true dictatorship style doesn’t shrug at the idea of closing down a 15-million region cities at the sight of a few Covid cases. What is especially hurting the automobile sector is a global deficit of semi-conductors and micro-chips, causing severe production delays and stops, and in some cases even orders for new cars being refused.

*A small part of which there are many in modern cars…*

Looking at some concrete examples, if you’ve been seduced by the new G-Wagon but haven’t put in your order yet, that’s too bad. Mercedes-Benz announced a couple of weeks ago that they have stopped taking orders for the car as a shortage of certain parts has led to reduced production, meaning the order book is full until and including 2024. That’s a full three years from now! The G-Wagon is perhaps the most extreme example but far from the only car Mercedes has issues with. You’re thinking of going electric and buy a new EQS? You’ll get it in the spring of 2023 if you live in Germany (and probably no sooner in other regions). The same is true for many other EV’s. The nice guys at Volvo still send me post and when they did so a few weeks ago, it was to tell me that it would really be a good idea if I bought one of their cars on stock rather than order a new one (I did neither). And my new friend the Range Rover dealer congratulated me on having gotten my hands on such a fine example, as orders for the new model (which by the way looks sensational inside and out, more on that some time in the future) are piling up with year-long waiting times as a result.

*It could be a while until you see the beautiful new Range on the road!*

Car makers are of course not sitting with their arms crossed waiting for things to improve, quite the contrary. Larger groups are said to have taskforces scanning the market for every micro-chip they can get their hands on. Porsche is building dummy chips into some cars with a promise of replacing these with real micro-chips when they become available again (yes, you read that right). Peugeot is even installing analogue gauges rather than digital into the 308 as these don’t require micro-chips. Interestingly some brands seem less affected, especially BMW which still manages to deliver most models in three to five months, including EV’s. It would be really interesting to know how they manage that, but it’s probably an especially well-kept secret… On the whole however, factories have half-finished cars piling up and car dealerships do what they can, meaning selling off stock- and pre-owned cars.

For car buyers this is not very good news. Obviously cars on stock may not correspond to the spec you want, and the days you could walk into a dealership and get a 10% discount on a car in stock are long gone. The same goes for many used cars (but not all as we’ll see further below), with prices in the used car market sky-rocketing (coming back to that G-Wagon, many 1-2 year old G63’s with up to 20′ km on the clock now trade above their price as new). According to Labor Department data in the US, used car prices on average increased by 40% (!) in 2021. In Europe the same number is around 25%. The Dodge Grand Caravan (known partly as the Chrysler Grand Voyager in Europe) is in the lead with an average increase of 69%, but others include for example the Prius (+61%) and the Audi A6 (+54%, source Edmunds).

*The first time a Grand Caravan leads any type of ranking!*

Of course things will improve, but there’s reason to think they get worse before the get better. Dealers will run out of cars putting further upward pressure on used car prices, and delivery times could well increase further as there is no quick fix to the problem in sight. So what do you do if you need a car? Well, luckily there are always some segments in the used car world that are not part of the general price trend, and none more than 5-10 year-old luxury cars with big engines. This category obviously include some of the best cars ever built. The downside is obviously that the massive depreciation is on one hand explained by higher running costs and on the other by a view that they are “stranded assets” in the ongoing electrification of the car world. Petrol cars will however be around for many years still, and given life is far too short to drive a Priu… sorry, boring car, why not enjoy what is clearly the best opportunity in today’s market before it’s too late?

The perfect family car!

On October 24, 2021October 25, 2021 By ChristofferIn News, Opinion2 Comments

A few years ago, one of my close friends who is no longer with us but who I will always carry in dear memory and who was one hell of a sales guy, pitched his 911 (993) convertible to me as the perfect family car. His logic was that it was four-wheel drive, he had fitted a ski rack on the back (i.e. the hood), his children were small enough to fit in the back seats and he wasn’t much for carrying luggage, saying it was better to buy what you needed once you arrived. I have no idea whether the guy on the picture below follows the same logic, but when I saw this 911 last week it made me think back on the above, but also on what at least to me seems to be an eternal question, namely what the ideal family car really is?

*He doesn’t seem to have the family with him…*

Addressing the same question from another angle, I sold my 2017 XC90 last week, having owned it for two years. In many ways the XC90 can be claimed to be the perfect family car. Roomy, safe, comfortable, silent. Comes to that what the Geely money has allowed Volvo to do, namely create a really nice interior, install a hi-fi system from Bowers & Wilkins that kills it (if you’re in the market for an XC90, this is a must-have option!), and letting the designers build one of the best looking SUV’s out there, in my humble opinion. As someone who grew up in Sweden in the 80’s and 90’s with Volvos on every corner looking like they’d been drawn with a ruler, including on the inside, that’s quite a sensational development.

Unfortunately however, the Chinese money apparently ran out before Volvo got to the “fun to drive” part. The different driving settings are basically useless, the optional 4C air suspension seems to be missing any air whatsoever and shakes the car in its passengers even at small bumps, and whereas the four-cylinder T6 engine has enough power, it has the character – and sound – of a sewing machine. So yes – the XC90 is the ideal family car for the parent who’s into transporting both small and large children and lots of stuff, but not really for the one who as me, though that could be combined with at least a little thrill of driving.

*The perfect family car – but not for the car enthusiast…*

One reason I thought so is that before the XC90, long-time readers of this blog will remember that I had an AMG E63 Wagon from 2014, and that was a car that was splendid on achieving both of those, and was (and is) thereby descsribed by many as the perfect family car. Roomy, comfy and discrete enough to transport all your belongings together with grandma without her noticing anything, yet at the turn of a switch (or push of the right pedal), a beast that eats 911’s for breakfast and allows mum or dad to have a bit of fun when they’re on their own. And it does all this with a build quality that is Mercedes at its best – something I feel they’ve lost in the new E-class.

So why on earth did I replace? Well the problem is that to my mind the concept doesn’t hold up. To start with the fun to drive part, if you have more than one car, you will typically drive that when you’re alone. Whilst more fun to drive and definitely faster than most other Mercs, the E63 remains a 5-metre long, 2-ton heavy estate – that’s right, it’s made for transporting stuff, not racing around a track, and when you do so, most family members don’t want to feel like they’re being driven around a track. Secondly, although discrete, everyone who knows (and there is, as I discovered, quite a few who do) wants to race you. That’s fun at first, much less so in the long run. Finally, if you live in any other country than Germany, having 600 hp under the hood that you’re never able to exploit in full leads to a certain frustration and thereby, strange behaviour. I started realizing something was really wrong when I was engaging the launch control at the exit of toll stations in northern Italy. Pathetic is only the foreword.

*Perhaps not the ideal family car, but definitely the best E-class every built!*

Three examples, three different types of cars, in my view none of them ideal for the driving-inspired parent with family needs, seeking perfection. So if none of these, what is then the perfect family car? Let’s start with the build quality side of it. This isn’t specifically related to family cars, but it is related to any car claiming to be perfect. My remark would be that although Volvo and other brands, notably Asian, have come a very long way in terms of build quality, they’re not quite there yet. I saw Volvo as a leader in this regard and bought the car thinking they had, but was forced to note that in some areas, it isn’t yet the case, something that certainly goes for others as well. You may be able to live with this better than I could, but when shopping outside of the traditional premium brands (you know who they are) this is something to be aware of, and to be checked.

The next observation should be an obvious one, but looking at the current trend in car sales numbers, clearly it isn’t: for the fun-seeking perfectionist and all other things equal, an estate will always be superior to an SUV. On one hand this simply reflects the laws of physics: just like an electric car is glued to the road thanks to the low center of gravity, an estate is lower than an SUV. I truly don’t understand why you would buy, say a GLE 63 AMG rather than an E63 AMG, or a X5 M instead of an Alpina B5 Touring (given BMW refuses to build an M5 Touring). At a weight of 2.5 tons or more and the mentioned higher center of gravity, engineers will always be on the losing end in their fight against the forces of nature, trying to compensate what cannot be compensated and essentially ruin the good sides of an SUV (read comfort) withouth really improving the driving experience.

*Perhaps an extreme example, but you get the point…*

Given how few of us travel on snowy mountain roads with any regularity, that leaves practicality as the only additional argument for an SUV I can think of. Well, I had to lift my bags around 15cm higher to get them into the XC90 than into the E63, and the latter had a larger boot. The estate also doesn’t put dirty marks on your trousers when you get in and out of it. This is certainly not an argument against four-wheel drive which is one of the most underrated safety features of these last years and sure, if you live in a place where four-wheel drive isn’t enough and you need an SUV, you have my full understanding, but I would in that case prioritize comfort over driving thrills and try to maximize that (Range Rover anyone?). For the rest of us the praticality argument doesn’t really work, so assuming driving pleasure ranks higher on your agenda than showing off, an estate will be superior.

Ok, so a four-wheel drive estate from a traditional brand then. We can disregard Porsche who doesn’t really build one (the Panamera Touring is still a bit small), and as mentioned, the current E-class isn’t a favourite of mine. Sven, my co-writer on this blog, argues that an Audi RS6 is, perfect, ticking most boxes and being less “racy” than an E63. I would still claim others would love to race it though, as its fabulous looks send a clear message. And over in Munich, BMW for some strange don’t seem to identify the market opportunity I’m chasing here, since they refuse to give us a 5-series with anything more than the supercharged straight six in the 540i, which is a fine engine but not more. Alpina does though (I wrote about this wonderful in a recent post you can find here), in the form of the very understated B5 – is that the anwer?

*Perhaps the answer is to be found in Buchloe…*

I’m not going to waste more of your time since for the moment, I don’t have an answer. I do need a replacement for the XC90 though so I’m giving this quite a bit of thought right now. If you have any thoughts and ideas feel free to share them, they will be highly valued!

The DBX won’t save Aston Martin

On July 25, 2021July 25, 2021 By ChristofferIn News, Opinion4 Comments

Last week in my post on AMG, I wrote about the risk of diluting a brand when like Mercedes do with AMG, you start adding AMG badges to a large number of models in the line-up. In defence of Mercedes they build cars to make money and I strongly suspect they wouldn’t do this if it wasn’t good business. Also, they own all of AMG these days so they’re obviously free to use the brand how they wish even if as said, I think it risks scaring away some enthusiasts.

As I also mentioned last week, AMG have through the years done both engines and parts for a whole line of other manufacturers, and it’s one of these we’ll talk about today. Because if there’s a risk of brand value dilution within one group with too extensive use of a sub-brand, what about a brand that sells very pricey cars but where these no longer rely neither on their own engines, nor gearboxes, nor updated technology? I would claim this doesn’t sound like a recipe for success in the long term, but it is what Aston Martin offers today, including in the new SUV DBX, a car everyone says their future depends on. Aston’s new ex-AMG boss Tobias Moers has even said that he wouldn’t have taken the job as Aston CEO if the DBX hadn’t been in the line-up. I guess there’s a logic to that given everyone wants an SUV these days, but is the DBX a good enough SUV to motivate its price tag of around CHF 230.000-250.000 (roughly the same in EUR or USD), and is it still a real Aston Martin?

*Short overhangs helps making it a great drive – for an SUV.*

The first point to note is that the DBX is in no way a bad car. I seem to be one of the few who don’t like the looks of it so let’s pass on that, but the reviews, even the non-English ones, have generally been positive. With short overhangs and, well, being an Aston, it drives better than any other SUV and has a beautiful, hand-crafted interior that’s available in a multitude of trims and colours. Of course nothing less should be expected given the price tag, which puts it in the same segment as for example the Bentley Bentayga and various AMG SUV’s, from the G63 to the GLS-Maybach. Something like a fully equipped Cayenne Turbo or Maserati Levante is even cheaper as you’ll get one of those for around EUR 200.000 in top trim.

Aston these days fits Mercedes engines and so the DBX has the current, twin-turbo, 3.9 litre AMG engine, producing around 550 hp. That’s a brilliant power unit and one you find in all the AMG top models as well. What the AMG cars will also have is the latest version of Mercedes’s MBUX, the best infotainment unit in the industry. The DBX is however equipped with a screen that looks like a touch screen but isn’t, and behind it is Mercedes’s previous infotainment unit, the origins of which go back to 2014. That’s most probably older than your phone, and quite far from today’s standard. On the dash above the screen the DBX has large buttons to engage the different gears. I don’t know why Aston is so keen on these given they’re neither nice to look at, nor necessary. In the DBX they’re connected to a 9-gear box from, you guessed it, Mercedes. And that gearbox can be a bit laggy, especially if you use the paddles. And if you’ve sat in the car long enough to notice these things as I did last week (except the paddle slowness), you will probably also have realized that the beautifully handcrafted interior looks a bit too handcrafted in certain areas, with some parts not fitting exactly as they should. Tests have shown that when driving, it tends to squeek a bit here and there. That’s the DBX, and it costs a quarter of a million.

*Beautiful but squeeky materials, non-touchscreen tech from 2014, dash gear buttons*

I get that everyone doesn’t want a mass-produced Cayenne, one of the various Mercedes-AMG SUV’s, or feels too young for a Bentayga, but surely the solution can’t be to use the Aston brand to sell an inferior product? You’ll tell me the Bentayga is an Audi underneath and that’s true, but it motivates its price because the total package is superior to anything in the Audi line-up. You’ll remind me that I’ve just told you AMG is a diluted brand, but that doesn’t change the fact that the real AMG cars are the best of what Mercedes offers, which means some of the best in the market. You’ll tell me Porsche did the same thing as Aston do now when they launched the Cayenne, banking on 911 owners buying an SUV if Porsche built one. That’s also true, but it was almost 20 years ago and then even more than now, there were far more 911 owners around than DB9 drivers. The DBX may well drive better than a Cayenne on the margin but it’s a family SUV we’re talking about here and if that argument counted for anything, our streets wouldn’t be clogged with less well-handling, 500 hp SUV’s.

*If it’s really about cornering speeds, why does this thing keep selling like never before?*

Aston Martin has built some of the most beautiful sports cars in the world through the years. That’s where the brand value resides. That’s the kind of Aston most of us would love to have in our garage and where we wouldn’t care less about what type of infotainment solution it has (and that’s good, because the earlier ones were even more crappy), or if there’s a squeek here and there in the interior. The company jumped on the SUV bandwagon like everyone else but firstly, they were late to the party and secondly, where Bentley and Lamborghini have the full VW group behind them, including quality checks, Aston as an independent company at least for now has to content with what Mercedes is happy to sell them. On the whole, that makes the DBX an inferior product from a rational point of view, and that seems to be confirmed by sales numbers which have now been revised to roughly half of what they were pre-Covid (3000 for 2021). So far, around 2000 have been sold. Living in Zurich, a city that is like a rolling automobile exhibition, I’ve so far only seen two or three.

I don’t think the DBX will save Aston Martin, but that doesn’t mean Tobias Moers won’t. A man with his background can teach Aston a lot on everything from efficiency (he claims to already having reduced the number of work stations from over 70 to around 20…) to quality thinking, the DBX platform can obviously be re-used for future models, and Moers has all the connections needed within AMG to make sure that with time, Aston will benefit not only from the latest engines. That however takes us back to where we started this because when he’s done, Aston will have become yet another AMG outlet – albeit under a different logo.

Can E-fuels save traditional mobility?

On May 30, 2021May 30, 2021 By ChristofferIn Electrical vehicles, News, Opinion1 Comment

Readers of this blog know of my scepticism towards EV’s, not as a concept but as a solution to climate-related issues. I wrote about this in a recent post you can find here, so I won’t repeat myself. To be fair, things are moving in the right direction at least with regards to some of the issues raised, as I also highlighted in my recent post about Mercedes’s new EQS (see here). It does however remain the case that even if EV manufacturers become climate-neutral in their production, as long as the country they produce in is not 100% based on green energy, what they achieve is basically nothing put pushing the dirty energy consumption on to the next guy.

*Even the steel is said to be climate neutral in a few years in the production of the EQS and other MB EV’s*

There is however another BIG issue around EV’s that no one seems really keen to talk about, namely what on earth we’re supposed to do with the millions of fully functional cars we currently have on our streets, if the plan is to roll out EV’s for all? Don’t laugh, the question risks becoming very real as various European governments start fixing end dates for the sale of new combustion engines. A logical next step is then to start discussing bans on existing cars. But what is the plan for millions of existing and fully functional cars, and even more, what is the carbon footprint of destroying millions of existing cars and building new EV’s? Funnily, this is an aspect that is completely absent from the discussion.

I’m of an optimistic nature so I’d like to think that realism will prevail in the end – a realism that for me needs to be based on a future for traditional mobility – especially (and I’m finally getting to the topic of this week’s post), since traditional mobility doesn’t necessarily mean traditional fuels going forward. The development of so called e-fuels is progressing rapidly, and this week we’ll look at whether they are the solution that will allow for a more reasonable solution to the issue of traditional, personal mobility.

*A new 12-cylinder will never be built, but it would be nice if we could still save the old ones!*

Electrofuels, also called e-fuels or synthetic fuels, are produced exclusively from renewable energy. Without going into the technical details, in the case of car fuel it means producing hydrogen from clean energy, to which CO2, extracted from other sources, is added. The result is emission-free hydrocarbon, and the resulting synthetic fuels are no technically different to conventional fuels. They can thus power the same cars without modifications and also use the existing fueling infrastructure. A further big advantage is that e-fuels don’t compete with food production, a big problem for example with ethanol production that isn’t very compatible with the world’s need to feed another 3bn people until 2050, using less resources. Disadvantages? Unfortunately, there are a few, and they’re rather big.

Firstly, e-fuels don’t solve the issue of clean energy going to its use as long as the full economy doesn’t use clean energy, as you’re basically just pushing the emission onto someone else. As we’ll see below the clean energy used for e-fuels is produced very far away and thus not cannibalizing on anything else, but this is not a viable, long-term concep. Secondly, e-fuels offer far less efficiency than electricity, as long as electricity production is local. This is however an important point given that, as noted, most countries are still not 100% green in their energy production. So either you push the emission problem onto the next user as noted above, or, and this is not unrealistic, we’ll start importing for example solar energy from a sunny place such as the Middle East. If that becomes the case, then hydrogen all of a sudden becomes very competitive in terms of efficiency as it can be transported much more easily. Thirdly and lastly, as you will have guessed, the production process for e-fuels is far from cheap, and it will still take time and probably also some further technological innovations to solve both the cost and thereby also the required scale issue.

*Wind turbines of Project Haru Oni off Chile’s coast*

A number of automakers are looking into e-fuels as an alternative or complement to EV’s, none more than Porsche which currently runs a project called Haru Oni off the coast of Chile (where it’s very windy). They do so together with notably Siemens, and the logic for Porsche is that because of the points above and others, conventional electricity alone will not be enough to move to a clean car fleet fast enough, in view of other – rising – electricity needs in the world. The project is still in its early days but by removing CO2 out of the air through wind power and combining it with hydrogen, it aims to produced 130.000 litres of fuel next year, and 550 million litres in 2026. As a reference, around 23bn litres of fuel were consumed in Germany last year so although a lot, it would take many more such installations to get anywhere near the volume required to make this a viable alternative on a larger scale. The cost so far remains a mystery, but it’s clear that it’s nowhere near being a reasonable consumer alternative at this stage.

So at least for now, it remains at best unclear whether e-fuels will give a future to combustion engines. It’s however good to see that some thinking around fuel alternatives is going on and who knows, as so often before, maybe there will be other innovations along the way that allow for even better solutions in the end. It would however be high time for some realism to enter the discussion around EV’s and our future mobility. It would also be desirable with some political willingness to engage in discussions on where the electricity is supposed to come from in the emission-free world, when many countries in parallel wish to phase out nuclear? This can’t possibly be something only a few engineers at Porsche have thought about? And finally, perhaps someone can tell us what the plan is for the many millions of fully-functioning cars in the world? Reality is slightly more complex than what the current debate would have you believe and the sooner we’re mature enough to engage in a difficult but highly necessary discssion on it, the better.

The EV market takes off for real

On April 25, 2021May 1, 2021 By ChristofferIn Electrical vehicles, News, Opinion1 Comment

Ten days ago, in a flashy, high-tech online show that you can watch here if you missed it, Mercedes-Benz presented the new EQS, the fully electric version of the S-class. I would claim that rather than just another car launch, the EQS is a real game-changer in the EV market, and likewise the last confirmation needed that the big guys are now entering this segment for real. Interestingly, it’s also a (positive!) game changer with regards to environmental factors and sustainability. This week we’ll take a look at the new EQS, which even without considering the drive train looks to be one hell of a car, and talk a bit more about why it’s important and how it will influence the market going forward. If your love for traditional cylinders (to which we’ll return next week) runs so deep that it prevents you from reading any further, in summary I think you can say that whereas the planned Super League in European football came to a very sudden death this week, there will be nothing stopping the EV Super League from taking off in 2021!

Starting with the EQS, In one simple sentence it can of course be described as an electric S-class, whis is perhaps what many people will do – but that would mean missing the whole point. Because by bringing an S-class to the EV market, Mercedes is also bringing a whole new level of luxury and car quality, where until now the only luxury has been Tesla’s giant infotainment screen.

*The new EQS – notice the very long wheelbase*

Starting from the bottom (literally), the EQS is built on Mercedes’s first EV-specific platform. So far EV’s not only from the Stuttgart brand but also from other large manufacturers have been built on traditional platforms, and this makes a big difference as one specifically developed for EV’s can take into account the absence of an engine and battery space far better. The new platform can also be adapted to different car sizes, something Mercedes intends to do as it rolls out an electric version of all cars in its current line-up over the coming years, some of them already in 2021. To those who know Tesla this is obviously not new, however what happens above the platform, inside the car, definitely is.

The EQS doesn’t look like an S-class and is actually a hatchback (without a frunk, as that space is taken up by various air-cleaning filters). At over 5.20 metres it’s a big car, with lots of interior space, and luggage space of around 650 litres (in addition to which you can fold the rear seats). If the design can be debated, what cannot is the fact that it’s the most aerodynamic car currently in production, with a Cw/Cd-value of 0.20. Also not open to debate is not only the quality, but also the innovativeness of the interior space, at or beyond S-class level. The most spectacular parts are probably the (optional) self-opening-and-closing doors and the gigantic so called hyperscreen (actually consisting of three screens) that extends over the whole dashboard and enables the passenger to for example watch Youtube whilst the driver has access to the navigation. Noteworthy is also that front and rear passengers are independent both in infotainment and speech commands, and chan thus address the car by “Hey Mercedes” independently of each other. The EQS also sets new standards in driver profiles and indiviualization, and the list goes on, and on, and on. Two interior design lines are planned, a more elegant and a more sporty one, and if the hyperscreen for some reason isn’t your thing, you can opt for the mid-mounted “iPad” of the new, “normal” S-class instead – a simple example of how a large car manufacturer can cross-fertilize various items between product lines.

*The hyperscreen in the elegant layout version*

The EQS is set to come to dealers this summer and will initially be available with 333 or 524 hp as rear- and all-wheel drive. An AMG version is set to follow later. The range will be up to 770 km WLTP, which should translate to something like 600-650 km in real life under pretty ideal conditions. This is a really important point, as no one has so far been able to compete with Tesla’s superior range – until now. Prices aren’t known, German media expect them to start around EUR 110.000 (with as always an almost unlimited upside…), which means pretty much on par or actually even slightly below the regular S-class. Mercedes have stated that they will earn less by car produced than for conventional cars, which in turn means they believe strongly in the growth of the EV segment. If pricing at this level is confirmed it goes against what has been the case so far, where EV-versions from traditional brands such as the Audi E-tron or the MB EQC tend to come at a premium to diesel or petrol versions.

*The hatchback rear with the mandatory light bar*

As stated previously on this blog, I don’t subscribe to the view that the big car companies have missed the EV train, quite simply as it hasn’t left the station yet. Although the amount of media attention it gets would make you believe it’s already a significant percentage of new car sales, the global EV market is still around only 2%, however with growth really starting to take off in selected markets in Europe, as well as in California and other places. Also, if you except small EV’s with a 150 km range, the market has basically been owned Tesla until now, as we know a three-model car company with only one of them, the Model 3, selling outside of the US, and with the exception of improved range and software, no significant facelifts or updates since the models were launched. I’m sure most large car brands have watched the market carefully whilst preparing in the background for the day growth takes off, and nowhere more so than in Germany. From that perspective, Mercedes’s timing looks pretty impeccable to me. The VW group is about to introduce its new EV platform with notably 20 electric Audi models rolled out over the coming five years, and others will follow close behind. Given the expertise all of these have in building not only cars, but also real luxury cars, the fundamentals of the market are probably about to change, which in turn will make life hard for Tesla, especially in Europe.

Last but not least, let me come back on the sustainability of EV’s that I was very critical of in my post back in January (see here), and that indeed still deserves to be looked at critically, notably in terms of the “CO2 cost” of battery production. If you saw the introduction of the EQS, you may have noted Mercedes CEO Ola Källenius saying that the battery train of the EQS will be produced in Germany in a carbon-neutral way. This sounded a bit too good to be true, so I was in touch with Mercedes’s customer relations this week to have it confirmed, and very impressively, they came back to me in 24 hours. Not only did they confirm that from the first car built, the EQS’s battery pack will be produced exclusively with fossil-free, CO2-neutral energy. They also said that every Mercedes factory in the world will be carbon-neutral by 2022, with some of those in Germany already being so. This is obviously very good as it resolves one of the main issues around EV’s, and will hopefully influence both the public and competitors..

*The car can still charge quicker than most stations, but Ionity has really taken off!*

EV’s have a lot going for them, and resolving some of the issues with the battery production adds to the positive list. I believe that what Mercedes now starts with the EQS will be a game-changer for the direction of the EV market, as others can be expected to follow close on their heels. In parallel, the European Ionity charging network is growing quickly, already providing a far better coverage than could be expected a few months ago. So whereas I still don’t think you should take your 10-year old car to the car scrap, it definitely looks like the future is electric, and that it may happen quick than I would have thought only a few months ago. Thus, if I were in the market for a new S-class, I would probably think twice about which one to get. In a couple of years, maybe that won’t even be the main question for the typical S-class buyer, but rather if an S-class can really be a hatchback…

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

On January 24, 2021January 25, 2021 By ChristofferIn News, Opinion10 Comments

“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 CO₂emissions 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

On January 3, 2021February 12, 2023 By ChristofferIn Fun stuff, News, Opinion1 Comment

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 electric cars. 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, electric and hybrid cars grew their market share more than four times, and experts now speak of 2020 as the year of the electric 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 EV’s (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 electric cars as such will continue to grow, the question is how much and how fast.

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.

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!

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!

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…

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…

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

On November 29, 2020November 30, 2020 By ChristofferIn News, Opinion, The Dream Garage, The Thrill of Owning5 Comments

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!

On November 8, 2020November 8, 2020 By ChristofferIn News, OpinionLeave a comment

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

On July 26, 2020July 26, 2020 By ChristofferIn News, Opinion1 Comment

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.

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%.

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)?

On July 6, 2020 By ChristofferIn F1, News, Opinion1 Comment

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.

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

On May 17, 2020May 18, 2020 By ChristofferIn Opinion1 Comment

*Not as dead as you would have thought a few months ago.*

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!

The Thrill of Driving

Category: Opinion