10 May 2019

Auto manufacturers face a tough regulatory landscape but hopefully, miracles will happen

They say a week’s a long time in politics and the same can be said for the auto industry. This week alone has seen some very good news stories and others which are cause for concern. Like football, it’s a game of two halves and its never over until it's over.

As this article is penned, the US-China trade talks remain on a cliff edge with further swingeing US trade tariffs starting to bite in the last few hours. Already the German car makers have said the tariffs are affecting their profits given their reliance on the Chinese market. Most manufacturers have plants in the US supplying China and demand has been affected by retaliatory steps by China. However, one has to adopt a glass half full empty approach. China is keen to maintain its trading links with Europe by offering olive branches to European manufacturers allowing them greater ownership flexibility in joint ventures with Chinese companies. Also, greater opportunity for intellectual property rights to be protected. Let’s hope the US-China talks lead to a constructive outcome at a critical time when manufacturers need a consistent and profitable market to help fund their major EV and autonomous vehicles budgets.

Meanwhile, BMW has taken a profit hit as their first-quarter profit slumped after car sales in key markets slowed whilst they made a provision for a potential fine of 1.4 billion euros ($1.6 billion) for alleged collusion concerning emissions. Assuming the fine is imposed what happens to the money? Is it used for clean air R&D? Assuming culpability, a balance has to found between punishment and rehabilitation.

The other big story this week is Uber floating on the New York Stock Exchange with an initial price of £35 ($45). The price is said to be conservative as Uber wishes to avoid the fate of its rival Lyft which had an opening price of $72 and then slumped by as much as a third since March this year. Uber is spending big on driverless cars and sceptics say its many years before such cars will take off whilst ride-hailing services remain a limited market for the relatively affluent. Let’s hope the investment market does not get carried away by long term prospects and ignore the more immediate market for clean technologies; only today the University of Cambridge has announced a new department to research technologies to reverse the effects of climate change including refreezing the Poles- crikey this is stuff that makes a Bond movie look pedestrian.

The Republic of Ireland has declared a climate and biodiversity emergency. A Fianna Fáil amendment to the Oireachtas report on Climate Action was accepted without a vote. Ireland is following other countries who have declared a similar emergency-a national climate emergency was declared by the UK Parliament- as have a number of UK cities and towns. What this means, in reality, is open to interpretation with some expecting zero carbon by 2030- 2035. What are the regulatory and legislative issues for the auto industry and how will they work efficiently if there are competing criteria from one country to the next?

It is a fast changing and at times daunting landscape, but as Liverpool FC and Tottenham showed this week by getting to the European Champions League final miracles can happen.

Julian Wilkins

Postscript:Polestar, which is jointly owned by Volvo Cars and its Chinese parent Geely has announced that it is setting up an R&D centre in Britain to develop its electric passenger cars. Mainstream UK manufacturing has taken a knock due to the Brexit uncertainty- although PSA announcement to build Peugeot 308s at the Ellesmere Port site offers hope. Polestar wishes to take advantage of the UK’s engineering pool and intends to initially employ 60 engineers in Coventry with plans to expand.

Meanwhile, initial observations of Dyson’s patents for its first foray into electric vehicles give some idea of the car design including a long wheelbase. It will be fascinating to see the vehicle.

Let’s keep hoping for further miracles.

Publisher: Shaun Hunter

Global News Editor: Trisha Chowdhury

Legal Affairs Editor: Julian Wilkins

Chief Executive: Peter Wooding

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