What Chip Shortage? Tesla Posts Strong Q2 Sales Results

2021 Tesla Model Y blue
Tesla raised the price on its Model Y Long Range by $10,000 due, in part, to supplier issues.

As many automakers struggle to find semiconductor chips for their high tech vehicles, Tesla Inc. clearly has the issue taken care of as its second-quarter sales pass the 200,000-unit mark.

“In the second quarter, we produced and delivered over 200,000 vehicles,” the company said in a statement. “Our teams have done an outstanding job navigating through global supply chain and logistics challenges.”

For many car companies, the second quarter’s been difficult as it relates to keeping a steady supply of the chips. Tesla did have a short shutdown in February due to the problem, but since then has been churning out vehicles steadily, especially during the most recent quarter.

Tesla delivered more than 200,000 Model 3 and Model Ys during the quarter.

The company produced 204,081 Model 3 or Model Ys last quarter, a massive increased when compared with the year-ago period’s 75,946 vehicles. While pushing out its most popular vehicles — Model Y being the company’s biggest seller — it put the freshened 2021 Model S and Model X on the road during the quarter. It moved

Chip problems

The company did have a production hiccup in the first quarter of last year due to chip problems, but has since not had a problem. CEO Elon Musk said the semiconductor problem was causing some companies to behave impulsively.

“Our biggest challenge is supply chain, especially microcontroller chips. Never seen anything like it,” he tweeted June 2. “Fear of running out is causing every company to overorder — like the toilet paper shortage, but at epic scale. That said, it’s obv not a long-term issue.”

However, it doesn’t mean Tesla hasn’t been part of the sales rush. The Financial Times reported Tesla held discussions with chip makers to pay in advance, including offering deposits on high-volume orders. The company reportedly explored the idea of buying a plant to build its own chips.

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CEO Tavares Giving 14 Stellantis Brands a Chance to Prove Their Worth

The merger of Fiat Chrysler Automobiles and the PSA Group created an automotive powerhouse now called Stellantis, but it’s also produced a jumble of 14 individual brands. And CEO Carlos Tavares says each of them will have to prove their worth — though he’s giving them time to do so.

Stellantis sign Auburn Hills
Stellantis’ North America offices in Auburn Hills, Michigan, house Chrysler, Dodge and Ram — which may not make the final cut.

Even before the merger there was widespread speculation that some FCA brands might be on the chopping block due to declining sales. But the merger adds a layer of complexity, especially at a time when Stellantis must pick up the pace of its electrification and mobility services programs.

As an executive known for moving quickly, Tavares seems to be in no rush, however. Instead, he appears to be willing to let all 14 of the Stellantis brands lay out plans and prove they’ll work.

Showing the love

“For the time being, we love them all,” the Portugese-born executive said during a webinar sponsored by Automotive News.

“Each (individual brand) CEO has 10 years for which I am telling him or her that he has the funding, the ability to build his long-term business plan and plan for the different product launches and technologies to make the brand grow or rebound and create value for the company.”

Smoke and mirrors won’t help the Dodge brand make the cut in the long term.

Post-merger, Stellantis has more individual automotive brands than any other company, even Volkswagen’s dozen. The list includes a handful of truly global marques, such as Jeep, but most focus on specific markets or regions. Ram is largely limited to the Americas, while Peugeot and Citroen abandoned North America back in the 1990s. Some, like Jeep, have posted dramatic growth in recent years. Others, including both Fiat and Chrysler, are struggling.

A troubled future for two namesakes

In fact, the two namesake Fiat Chrysler marques have been teetering on the edge almost since the day FCA was formed a decade ago. Former CEO Sergio Marchionne had largely shifted focus — and resources — to two Italian brands, Alfa Romeo and Maserati. But the grand plan the late Marchionne laid out has yet to pay off despite billions of dollars spent on new products.

When the FCA-PSA merger plans were announced in 2019 many analysts thought that a retrenchment was inevitable. And they pointed to Tavares, who was designated to become Stellantis CEO, as someone unwilling to tolerate ongoing losses.

2021 Chrysler Pacifica Limited AWD S front
The Pacifica is currently one of only two offerings from the once iconic Chrysler brand.

But the 62-year-old executive has also shown a willingness to give struggling brands a second chance. That became apparent when PSA completed the acquisition of long-struggling Opel-Vauxhall in 2017. The German-based manufacturer had lost billions under the ownership of General Motors during the prior two decades. Yet Opel wound up back in the black within the first year it was run by Tavares.

By the brand

Whether he can pull off a similar turnaround with the other Stellantis brands is far from certain. Fiat and Chrysler are clearly going to be the most trouble, according to analysts. The U.S. marque now offers only two models, the aging 300 sedan and the Pacifica minivan, not much on which to base a brand. Fiat’s U.S. turnaround fell flat and it is barely hanging on there. It’s continued to lose ground in its home European market, as well.

Dodge isn’t in much better shape. It does have a loyal following for its Charger and Challenger muscle cars, as well as the Durango SUV. But it will have to adapt to a world in which electric drivers, rather than supercharged Hellcat V-8s, rule the road.

2021 Jeep Wrangler Rubicon 4xe white climbing
Jeep’s new plug-in hybrid only continues to expand the brand’s global popularity, making it virtually assured of surviving long term.

Alfa and Maserati are still works in progress but have yet to deliver the sort of sales and earnings numbers Marchionne predicted at an FCA investors seminar shortly before his untimely death in July 2018. Both brands are making major changes to their product programs, among other things, increasing focus on electrification.

Only Jeep and Ram, of all the FCA brands, have a strong and clearly identified path laid out for them. But both must also adapt to an electrified future.

Europe has its own issues

The French Stellantis brands appear to be a bit better positioned than their Italian and American counterparts, but Peugeot, Citroen and DS have their own challenges, especially when it comes to entrenching themselves in China, the world’s largest automotive market. And, shortly after the FCA-PSA merger was completed this year, Tavares called off plans to return Peugeot to the American market.

Stellantis instantly became the world’s fourth-largest automaker based on vehicle sales once the deal was completed. But it lags behind its three largest competitors, Volkswagen Group, Toyota and the Renault-Nissan-Mitsubishi Alliance, in some key categories. That includes not only a weak presence in China, but also a slow push into both battery and autonomous vehicle technologies.

It appears that Tavares is looking to give each Stellantis brand enough time to define the path forward, rather than racing to cut them out of the family.

Q&A: Green Car Pioneer Ron Cogan Offers Sage Insights

Green Car Journal Publisher Ron Cogan at the 2020 Green Car Awards. He’s been covering the shift to environmentally friendly vehicles for three decades.

The automobile has transformed we live, work and play. Unfortunately, it’s also had a seriously detrimental impact on Planet Earth. And now, as it becomes more crucial to address issues like climate change, the automobile is in the crosshairs.

That’s a message many have come to just lately. Not Ron Cogan. The veteran automotive journalist was among the first to recognize the need to clean up the car, in 1992 launching Green Car Journal. Where some have focused exclusively on electrified vehicles, pure battery-electric models, in particular, Cogan and his magazine have looked at all the various green car technologies that have come — and, in many cases, gone — during the past three decades.

The latest issue of Green Car Journal focuses specifically on battery-electric vehicles. But, as is Cogan’s style, it takes a pragmatic, even somewhat skeptical, look at this potentially game-changing technology, recognizing there are still many challenges to be overcome before BEVs can clearly replace the time-tested internal combustion engine.

Cogan spoke to TheDetroitBureau.com about his years covering the green car world and what he sees coming in the years ahead.

Cogan’s enjoyed a front-row seat, watching and writing about the shift from ICE-powered vehicles to electrified models in the U.S.

TheDetroitBureau: These days, everyone is writing about electric vehicles but you’ve been at this for a long time, haven’t you? And don’t you take something of a broader look when it comes to environmentally friendly vehicles?

Ron Cogan: Green Car Journal, which launched in 1992, has been all about options, everything that’s happening in the green space, whether it’s methanol, ethanol and natural gas, even high fuel-efficiency gasoline. Now, there’s a huge push towards electrification. It wasn’t our call to tell people what to drive. With our 30th birthday coming up we wanted to let people read different opinions from industry leaders.

TDB: We now have General Motors CEO Mary Barra setting a transition to all-electric vehicles and announcing a second battery plant. Is this the year of the tipping point for battery-electric vehicles?

Cogan: I would agree there’s a tipping point going on in the sense that there’s a major commitment by a lot of automakers. It’s gone beyond lip service. For the industry, the tipping point is here. The question is whether it is a consumer tipping point yet. Only so many people are willing to step up to pure electric vehicles. More see a hybrid as the way to go because it’s so seamless, and some to plug-in hybrids. But have we reached a tipping point for consumers? I’m not so sure.

Cogan notes that hybrids provide a level of convenience that pure EVs cannot.

TDB: Yet BEVs do seem to be gaining a lot of momentum.

Cogan: Well, the range issues is being overcome to a large degree, But even with 250 miles, on a long trip you have to plan ahead (to find places to charge), which is why I think plug-in hybrids are going to be pretty huge. When you can’t plug in you’re not limited, so I think that category is really going to expand. With a plug-in you can do everyday driving in electric but switch to internal combustion when you have to go farther. I think it’s a win-win. And it will get more people into buying electric vehicles.

TDB: I find that the best way to promote electric vehicles is to get people into electric vehicles. They’re often surprised by the performance, for one thing.

Cogan: Yeah, today’s electric vehicles are pretty amazing given what they offer — everything a combustion vehicle can offer and more. The launch in an electric vehicle can be pretty exciting and some companies, like Tesla, are keying in on that, talking about how they can beat a Ferrari on track and all that. I think that’s surprising a lot of people.

Cogan is quick to note that EVs are not the only way to improve the efficiency of vehicles. His publication’s honored several diesels.

TDB: I have more and more people asking if this is the right time to buy an electric vehicle. Many worry that, like with an iPhone, if they buy today something better will soon come out and they’ll regret it. What would you tell them?

Cogan: The technology, the range, all of that will improve over time, as will the cost which will continue to go down incrementally. So, it’s a tough question. If you find the right vehicle that appeals to you, it makes sense, go ahead and buy the vehicle. There are some great choices out there now and there are going to be more coming up. The jump to 250 miles (which most new BEVs are offering) is huge and there are going to be more and more charging stations coming online. True, the nature of it is that there’s always going to be something better. But do you never buy an electric vehicle because of that?

TDB: Doesn’t that make an argument for leasing, rather than buying? You can move to something newer and better in a few years — and not worry about trade-in values.

Cogan: I think leasing is the ideal way to go with electric vehicles. It means you don’t have to take as much of a risk. You know what your payments are. You know when you’re going to turn it in. And then, you can move on to the next generation of electric vehicles. Leasing takes the risk out.

Green Car Publisher Ron Cogan, Chevy Marketing Director Steve Mojoras and the 2016 Volt, which was honored by the Green Car Awards.

TDB: Let’s talk about batteries — in particular, next-generation batteries. Honda, Ford and others are all talking about solid-state batteries (which supposedly will be lighter, deliver longer range and shorter charging times and even reduce the risk of fire). Are they real? And will they live up to expectations?

Cogan: It seems that if solid-state comes close to all the promises it would put BEVs over the top, making all the difference in the world. Solid-state, from what we hear, is the ideal technology.

TDB: What would you estimate will be the BEV share of the market by 2030? And could it be even bigger than people are forecasting now?

Cogan: It’s tough to make a prediction, and I try to avoid that. But automakers and other interests are pushing for them and there’s a lot of interest in setting up a nationwide rapid charging network. All of that takes us in the direction where we know there’s going to be significantly more electric vehicles sold by then. But many things could influence the fate of gasoline vehicles. How’s the price of gas? If gas prices stay low there’ll be less incentive for electric vehicles. Technology will influence things. A recession could, as well. Legislation clearly will have an influence, especially if it’s a disincentive to drive on gasoline.

Honda has been at the forefront of fuel-cell vehicles with the Clarity.

TDB: On the subject of politics, the Biden administration wants to have 500,000 charging stations in place by 2030. Could that mean a faster growth rate for electric?

Cogan: If we get the range to drive on battery like you would on gasoline and you have a network of rapid chargers, suddenly, your functionality is increased exponentially. But there’s no way yet to know if the government is going to create (that public charging network). Administrations change. Agendas change. So, I don’t put stock into what you can count on as far as legislation matters.

TDB: But the Biden administration is clearly making a lot of proposals to promote electric vehicles. Do you like what you’re seeing?

Cogan: Yeah, as far as I can tell. I mean, we’re going to see how this all unfolds. This administration has a more proactive agenda for environmental issues in general and clean cars, specifically, than the previous administration. But I have to say you can’t always count on that. Back under the Obama administration, he wanted a million electric vehicles by 2015. It was never going to happen because there weren’t enough vehicles to make it happen. (But) I look at all of these things (Biden is proposing) as positive … a direction that seems to make sense for electrified vehicles.

Cogan drove a GM EV1 for a full year.

TDB: You started publishing Green Car Journal in 1992. Looking back on the last three decades, what were biggest surprises, the things you didn’t count on early on?

Cogan: One of the milestones was the debut of the GM Impact prototype and then the actual production of the GM EV1, I drove one of those for a year. It was an amazing car to be in on the evolution of electric vehicles. It was also interesting to note how hydrogen was big and then (see automakers) backpedaling, Now they’re interested in hydrogen again. It’s gaining momentum again.

One of the (other) things that surprises me is that we’re seeing such a push for electrification, at the extreme high end of both luxury vehicles and sports cars and exotics.

 

TDB: To wrap up, is the age of the internal combustion engine coming to an end?

Cogan: I don’t think you can discount internal combustion because it keeps getting better and better. And I don’t think you can discount hybrids and plug-in hybrids and focus just on battery-electric vehicles. Those are all a big part of the solution. It may have narrowed from when we started publishing. It’s no longer really about ethanol and natural gas and propane. It’s really about electrification and significantly more efficient internal combustion engines — and a combination of the two. It’s going to be even more exciting in the years ahead seeing how it will play out.

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BMW Does a Complete U-Turn on its EV Program

The production version of the i4 Concept will reach the U.S. next year. It will use a shared platform.

A week before unveiling the all-new iNext battery-electric vehicle, BMW said it will “realign” its strategy and begin developing a unique architecture solely for “electric drives,” rather than sharing the same platform for vehicles using both battery and conventional gas and diesel powertrains.

That’s a complete about face for the Bavarian marque which, in recent years, had hoped to save money and simplify manufacturing by coming up with common architectures that could roll off the same line. But it also marks a return to BMW’s original strategy when electrified models like the all-electric i3 city car and plug-in hybrid i8 sports car used unique platforms.

“The aim is to create an overall optimum with the new architecture,” CEO Oliver Zipse said during BMW’s quarterly earnings presentation on Wednesday.

(BMW preps for i4 launch, confirms plans for all-electric 5-Series and X1.)

Over the past decade, the auto industry has gone back and forth on the appropriate approach to developing electrified vehicles, pure battery-electric models, in particular. Some, like the Ford Focus Electric and the Volkswagen e-Golf, shared common platforms with the gas and diesel versions of those vehicles. Others, such as the original BMW i models, as well as the new Ford Mustang Mach-E and VW ID.3, used unique architectures.

BMW says the production iNext should get nearly 400 miles of range per charge.

Each approach had both pluses and minuses. Shared platforms result in design compromises, often limiting the amount of batteries that could be stored on a vehicle – impacting range, among other things. But development costs can be held down, while increasing the flexibility of a company’s assembly lines.

Unique platforms, most adopting a skateboard-style layout with batteries and motors mounted below the load floor, can handle larger packs, increasing range and lowering a vehicle’s center of gravity. But that means additional development costs and the tooling up of plants dedicated solely to EVs.

With an upcoming wave of new products BMW had aimed for a compromise strategy. They use flexible platforms that can squeeze more batteries under the load floor for models like the all-electric i4 fastback due out next year. But there’s space for a conventional internal combustion engine for products such as the next BMW 4-Series.

Now, , “We will realign our vehicle architecture from the middle of the decade,” said Zipse, adding that, “Our new cluster architecture is geared towards electric drives” exclusively.

BMW’s i3 is one of the automaker’s best-selling electric vehicles. It uses a unique, rather than shared, platform.

“Our new plant in Hungary plays a key role here,” said the CEO, noting that production of “the new BEV-centered architecture will start there.”

(BMW and Mercedes suspend joint autonomous vehicle development program.)

The plan is to make the new strategy a high priority, an all-new product development operation reporting directly to Zipse. But it will be able to reach out to all other areas within the company, from engineering to sales and marketing which “gives us more control and makes us much faster,” he explained.

The shared platform strategy had come under intense scrutiny within BMW, noted German magazine Automobilwoche, Over the summer, Manfred Wochs, the head of the BMW Works Council, had warned that it resulted in “too many compromises” that could set BMW back competitively, especially in key markets like the U.S. and China.

BMW is racing to get a leg up in an emerging market segment that currently is dominated by the upstart Tesla – with an assortment of traditional competitors, as well as start-ups like Lucid, Fisker and Rivian, aiming to gain share.

But Zipse insisted that BMW will be ready when its new EVs hit market around 2025. “We anticipate that the demand for fully electric vehicles will continue to increase significantly from 2025 onwards. Exactly then – keyword timing – we will ignite phase III of our transformation.”

(BMW may go for a plug-in hybrid with upcoming X8 M.)

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