Cars, Candidates, Loans, and Bailouts

[TEG]

Not exactly news, but
DSiry makes some predictions:

So here are some of my predictions for the EV industry in 2009:

1) The first Tranche of ATVM loans will be heavily weighted toward legacy manufacturers and building domestic battery capacity - perhaps the most important decisions that will impact the EV industry are being made now in the halls of the DOE. 70 applicants await decisions on whether their projects will receive direct, low interest loans from the government. While there is a bit of a "pigs at the trough" mentality going on, at the end of the day I think that the incoming administration will be looking at this program in the larger context of the economic stimulus and will therefore show a bias toward preserving established jobs and manufacturing capacity when it comes to vehicle programs. As for batteries, the lack of any domestic capacity is both a concern and a great opportunity to build a new industry. The big winners (but certainly not the only ones) will be GM, Ford and A123 in the first round of loans.

2) Recession and government involvement in funding advanced vehicle technology will accelerate the convergence of Silicon Valley and Detroit - for similar reasons outlined above, the DOE will attach conditions to loans that will either explicitly or implicitly encourage new companies to leverage old manufacturing capacity and job bases. Imagine, for example, that the DOE approves the application that Tesla has submitted for battery Model S assembly, but conditioned on them using an existing plant with excess capacity or a plant that is planned to be closed by one of the Big 3. The example is hypothetical, but you can bet the government is going to be very hands on in not just the "who" but the "how" these loans are implemented, and it will be done with an emphasis on protecting existing jobs and stopping the bleeding. The other force driving convergence will be the economy. Lack of capital will drive startups to get out of the manufacturing business and into the patents/components business, turning to the incumbents as their customers.

...

So would that mean Tesla wouldn't build Model S in San Jose after all?

 

[dpeilow]

Metro20090126

Should the US car industry be allowed to fail?

Yes. Anybody who fails should be allowed to fail. Capitalism without bankruptcy is like Christianity without Hell. It doesn't work otherwise.

Lord Mandelson loans to jump-start car sales - Times Online

LORD MANDELSON, the business secretary, will this week offer government loans to help stimulate car sales as part of a multi-billion-pound rescue package for the struggling motor trade.

The “bailout” to be unveiled at a car summit on Wednesday is also expected to include government cash to subsidise car workers’ training, help for the suppliers of car parts and grants for “green” research and development...

 

[dpeilow]

BBC NEWS | Politics | Car firms get £2.3bn loan package

He said regional development agencies and the Technology Strategy Board would be invited to bring forward a "step change" in research and development programmes into cleaner engines, lighter cars and "plug-in hybrids".

...

The car industry had to change to succeed in the "new world" and had to be cleaner and greener, Lord Mandelson said.

"This industry is not a lame duck and this is no bail out," he added.

On the loan guarantees he said there would be "no blank cheque" and anything backed by the government would have to offer value for money, help "green Britain's economic recovery", deliver "significant innovation in processes or technologies for the long term" and support jobs.

Hopefully Tesla (and Lotus) can gain access to this.

 

[dpeilow]

Not exactly news, but
DSiry makes some predictions:

This one almost flew under the radar:

5) All major players will seek equity tie ups in battery makers to ensure supply - in the future world of EV production, guaranteed access to cell supply is absolutely vital. The current projections for demand for automotive lithium ion batteries vastly outstrips current capacity. What is shaping up is the possibility of a battery squeeze play, with some being left wanting for supply. The situation was made worse by Panasonic's acquisition of Sanyo. Toyota has already made it clear they will develop batteries in-house (in addition to their JV with Panasonic). Daimler has already announced their tie up with Evonik. Nissan has a JV with NEC. GM will be looking to strengthen their ties to LG Chem (possibly through a US based JV) and Ford will be looking for a partner. With so few players in the cell manufacturing business, smaller players or those late to the game risk being squeezed out.

 

[TEG]

Lack of 'Car Czar' Stalls Progress on Bailout - WSJ.com

 

[dpeilow]

Nissan Joins U.S. Carmakers in Seeking Federal Efficiency Loan - Bloomberg.com: Japan

 

[dpeilow]

Sounding the charge for electric-car batteries | Business | Chron.com - Houston Chronicle

US govt prepares to spend on clean energy : News : Business - ZDNet Asia

 

[dpeilow]

Obama drops car czar idea | Motoring | Reuters

 

[TEG]

http://www.nytimes.com/reuters/2009/02/16/business/business-us-autos-gm-tranche.htmlGM to Get $4 Billion Aide Tranche Tuesday

 

[TEG]

GM, Chrysler seek nearly $22 billion more U.S. loans | U.S. | Reuters

(Keep those tax $ flowing?!)

 

[TEG]

GM May Need Up To $30 Bln In Additional Federal Funding - FOXBusiness.com

 

[dpeilow]

The plan also calls for further cuts in production to match a weaker sales outlook, and includes phasing out the Saturn product line. The automaker also aims to reduce its global workforce by 47,000 over the year and will shut five additional facilities than it had outlined in December.

Some more detail: General Motors to cut 47,000 jobs worldwide - Business News, Business - The Independent

 

[dpeilow]

UK car makers and unions asking for more cash:

BBC NEWS | Business | Car industry 'crisis of confidence'

BBC NEWS | Business | Sharp fall in UK car production


The end of Saab?

BBC NEWS | Business | Saab board ends emergency meeting

 

[vfx]

Borrowed from Martin's site:

From the transcript of Larry King’s interview last night with Bill Clinton, in which he mentions competition from these entrepeneurs who think they can build electric cars:

And before we move on to other things, should taxpayers be bailing out the automakers?

Just today, Chrysler asked for another $5 billion. That’s on top of $4 billion that it got in December.

Do we owe this to them?

CLINTON: We don’t owe it to them. We should only do it if it’s in our interests. I believe it’s in our interests…

KING: It is.

CLINTON: …if they have presented a plan that will reform the way they do business — that will cut a lot of their overhead costs, their legacy costs and reflect the new world they’re going to be living in, which will be far more competitive, more dominated by energy-efficient cars and, ironically, maybe more competitors. Because you have a lot of these individual American entrepreneurs now that are producing electric cars who believe they can get into the market.

Now, if you look at what Chrysler and General Motors — their investors and bond holders and the labor unions have agreed to, they’ve been working on quite a number of shared sacrifices to undertake a restructuring. And I strongly believe that America needs to produce cars and that we don’t want to have what would happen if General Motors and Chrysler and then Ford went down. We’d would lose two million jobs, with all the suppliers and the dealers and everybody that depends on them.

So if they have presented a good plan for restructuring that will give them a chance to succeed over the long run on their own merits, just by selling cars and without any subsidy from the taxpayers, then I think that to go one more time to help them is a good thing to do

Comment by kj February 18, 2009 @ 3:46 pm

 

[dpeilow]

So it turns out the plant the union leader in the BBC video about was talking about is GM's Ellesmere Port plant: Astra plant named as car factory at risk of closure "within days" - Times Online

I read recently that this was a candidate for European Volt/Ampera production. Maybe this is a clever play for the government's bailout for environmental vehicle projects.

 

[dpeilow]

BBC NEWS | Business | Van firm LDV seeks government aid

The management buy-out of the firm, currently owned by Russian energy giant Gaz, aims to make it into the first big producer of electric vans in the UK.

See a theme emerging here?

 

[dpeilow]

Government says no: BBC NEWS | Business | LDV told 'no more government aid'

I was wondering why a van maker whose parent company is owned by one of Russia's richest men would need a bailout. LDV are a perennial problem case that emerged after their predecessor went into administration in 1993 and then again it went into administration in 2005. Their case has not been helped by the dubious relationship between GAZ's head and politicians of both sides being exposed in the media last year, but it seems the government is saying enough is enough.

 

[TEG]

Why we should help GM, Chrysler and Ford - Feb. 17, 2009

( Darryl Siry said something similar here:
The Fundamental Issue in the Auto Industry Is Overcapacity )

 

[TEG]

U.S. auto sales plunge as recession deepens | Reuters
U.S. auto sales plunge as recession deepens | Reuters

 

[TEG]

• GM Shares Crater As Auto Team Meets At White House
• Ford May Be 'Last Man Standing'