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Autoblog Minute: VW Q3 financial woes, 2015 Tokyo Motor Show

Consumer Reports pulls its Tesla recommendation, the U.S. Copyright Office offers a ruling affecting car owners, VW gets hit hard with third-quarter losses, and lots of exciting news from Tokyo. Autoblog senior editor Greg Migliore reports on this edition of Autoblog Minute Weekly Recap. Show full video transcript text [00:00:00] Consumer Reports pulls its Tesla recommendation, the U.S. copyright office offers a ruling that affects car owners and gear heads, VW gets hit hard with third-quarter losses, and lots of exciting news from Tokyo. I'm senior editor Greg Migliore and this is your Autoblog Minute Weekly Recap. After a week away testing vehicles for Autoblog's Tech of the Year award, we're back in the office to recap the week in automotive news. [00:00:30] One of the things you might have missed was Consumer Reports pulling its recommendation of Tesla's Model S sedan. The blemish for Tesla comes after a tally of reviews from customer surveys. The most common problem areas for the Model S as cited by survey takers included: the drivetrain, power equipment, charging equipment, body and sunroof squeaks, rattles, and leaks. So lots of stuff. Though they could not ignore a score of "worse-than-average", Consumer Reports still [00:01:00] highlighted the fact that the Model S was "the best performing car" they've ever tested. Telsa CEO Elon Musk took to social media to defend his sedans saying: "Consumer Reports reliability survey includes a lot of early production cars. Already addressed in new cars." And, "Tesla gets top rating of any company in service. Most important, CR says 97% of owners expect their next car to be a Tesla (the acid test)." In Financial news, Volkswagen took a hit and reported an operating loss of [00:01:30] $3.84 billion. This is the first such loss for VW in 15 years. Toyota reclaimed the crown as the world's largest automaker as well. It's important that it's not all doom and gloom for VW though in Q3. Sales revenues were up and the company's automotive division boasts $30 billion dollars in liquid assets. It's a sizable war chest that will no doubt come in handy, as the company has yet to feel the full brunt of the diesel emissions scandal. Good news for gear heads. The US copyright office [00:02:00] ruled in favor of mechanics and car owners by granting an exception to existing copyright law. The law was originally meant to prevent software pirating and bootlegging of Hollywood movies.

Russian auto boomtown grinds to halt over Ukraine sanctions

Thousands of auto workers have been furloughed and food prices are soaring as Western sanctions pummel the small Russian city of Kaluga and its flagship foreign carmakers, with more sanctions likely to come. The Kaluga region, 190 kilometers (120 miles) southwest of Moscow, says it has attracted more than 1.3 trillion roubles ($15 billion) in investment, mostly foreign, since 2006. But Western sanctions imposed in recent weeks after Russia sent tens of thousands of troops into Ukraine have exacerbated lingering component shortages and halted production at two flagship car plants, Germany's Volkswagen and Sweden's Volvo. A third, the PSMA Rus plant that is a joint venture between Stellantis and Mitsubishi and employs 2,000, may halt production soon due to a lack of parts, Stellantis' chief executive said last Thursday. "It is not clear what will happen. They don't give us any concrete information," said Pavel Terpugov, a welder at the PSMA Rus plant. Terpugov said he needs twice as much money to buy groceries than before the sanctions. Analysts have forecast Russian inflation could soar to 24% this year, while the economy may shrink to 2009 levels. The United States and Europe are weighing more sanctions against Russia after Ukraine accused Russian forces of civilian killings in northern Ukraine, where a mass grave was found in Bucha, outside Kyiv. Russia calls its actions in Ukraine a "special operation" and the Kremlin categorically denied any accusations related to the murder of civilians, including in Bucha. One source of hope for some in Kaluga, with its 325,000 residents, is the West may be reluctant to hurt its own companies. "Does it make sense to impose sanctions on its own plant and lose money?" said Valery Uglov, an auto mechanic at the Volkswagen plant. "Does it make sense to lose the Russian market?" "We hope to return to work as soon as possible and everyone will have confidence in the future again," Uglov said. Volkswagen, whose factory employs 4,200 people, in early March suspended operations. A spokeswoman said production remained frozen. Volvo Group, which employs over 600 people to build trucks, also suspended production. Even before the sanctions, Russian car sales had contracted from 2.8 million units from when the Volkswagen factory opened in 2007 to 1.67 million units last year, damaged by both sanctions after the 2014 annexation of Crimea and the COVID-19 pandemic.

VW modular platform strategy goes all-in on EVs

The Volkswagen Group has already revealed or put on sale a broad slate of new electric vehicles: the E-up, the E-Golf (shown above), the Porsche 918 Spyder, the Panamera S E-Hybrid and the XL1. In 2014, there will be at least six more models, including the A3 Sportback E-Tron. And after that? Well, to hear Rudolf Krebs, Group Commissioner For Electric Vehicle Drive Systems, tell it, VW's future is full of plug-in goodness. "With our platform strategy, it is quite easy to bring a lot of electrified vehicles to the market for the different brands in a very short time," he said. "We try, with a minimum of those components, to produce a maximum number of variants of cars" That strategy starts with three platforms: MQB for small cars, MLB for midsize models and MSB for sporty and premium products (there's also the NSF for cars like the E-up). Speaking to AutoblogGreen, Krebs said VW has designed modules, things like engines and electric components (think: AC compressor, on-board chargers and battery management systems), to be used across all three platforms and across all brands all. "We try, with a minimum of those components, to produce a maximum number of variants of cars," he said. "This is only possible if, at an early stage of the design of new vehicles, we implement the idea that these cars are not only designed for gasoline and diesel powertrains but that we can also include CNG concepts, flex-fuel concepts, pure electric vehicles or plug-in hybrid vehicles. With minor changes in the body in white, we can produce those vehicles, bumper-to-bumper, in one factory." "VW wants to be the leader in the electrification of vehicles" In this way, customers can choose the powertrain that they want, or whatever powertrain their local regulations demand. Politicians have already put a lot of pressure on the automotive industry, with ever-stricter CO2 regulations coming into effect in all of the major markets. In the US, the fuel economy regulation numbers require the equivalent of 101 grams of CO2 emissions per kilometer by 2025. Europe, it's 95 grams by 2020. And China, which is asking for 118 grams by 2020, will be a tough scenario, Krebs said. Today, by optimizing conventional technologies and supporting things like CNG and biofuels, more than 300 VW Group models emit less than 120 g/km. A hundred of those are even under 100 g/km. But this is not sufficient, and VW admits that conventional powertrains will not be not enough.