The autonomous car market is currently growing at an existential rate and many driverless vehicles are expected to be on our roads this year, and in large numbers. Let’s take a look at the growth of the autonomous car market.
Most of the best selling cars in America, such as the Honda Accord or Nissan Altima, generally hit around 300,000 in sales every year.
Tesla saw 276,000 people sign-up to buy its newest all-electric Model 3 sedan — in two days.
That massive number, which far exceeded optimistic forecasts, upends traditional thinking about how to sell cars and is expected to spur the auto industry to shift more dramatically to market electric technology to consumers, analysts said.
“We’ve never seen anything quite like this in the auto industry,” said Jessica Caldwell, a senior analyst at Edmunds.com. “It is unprecedented.”
Mainstream car manufacturers have long dabbled in electric technology and some have made a bit of headway in getting such vehicles on the road. But the category was a niche, measured in thousands — not hundreds of thousands — of cars sold.
Tesla now appears to be doing what no other has so far been able to accomplish — sell electric cars to big crowds.
The company has received nearly as many Model 3 reservations in the past several days as some automakers produce in a single year. Mazda sold 319,000 vehicles in the United States in 2015, according Caldwell. Lexus sold 344,000.
Even if some pre-orders for the $35,000 Model 3 are cancelled — or if Tesla struggles to meet such demand, which many analysts say is likely — the company has shown that consumer appetite for a well-designed car can be robust, even if it is purely electric, said James McQuivey, an auto analyst at Forrester.
“It’s a watershed moment for rethinking vehicles all together. Tesla is putting together the idea a vehicle needs to be cutting edge and cool, more like an iPhone than like a Model T,” said McQuivey. “It’s changing what we mean when we buy a car and what it says about us.”
He added: “Years from now we’ll look back and say Tesla started an electric vehicle revolution. But that’s not because the people buying Tesla thought of it as an electric vehicle revolution.”
Some of the additional comfort consumers may now have with electric technology is due to advancements in the batteries as well as the public infrastructure, analysts said. Drivers generally no longer need to fear running out of juice on the road, stranded without a power outlet. The Model 3, for instance, has a range of 215 miles, similar to that of a rival from General Motors, called the Chevy Bolt, which is priced in the low $30,000s.
And the number of publicly-stationed superchargers — which can recharge a battery in a matter of minutes rather than hours — will double to 7,200 by the end of next year, Tesla said. The company also expects its network of car chargers to grow to roughly 20,000 locations by the same time.
Of course, some of the intense demand for the Model 3 may simply be the fruits of Tesla’s public relations strategy, which centers around its charismatic chief executive, Elon Musk. Interest in his newest creation was helped by the critically-acclaimed reviews of the company’s more expensive models as well as flashy presentations that featured his cars’ cutting-edge tech, such as the ability to summon the car, with no one inside, through a smartphone app.
“The Model 3’s huge reservation list should serve as a big wake-up call for the rest of the industry,” said Kelley Blue Book analyst Tony Lim. “Tesla just did a lot of heavy lifting to attract attention to the EV segment. Now is the time for competitive manufacturers to begin leveraging this momentum that Tesla created and building awareness to their fully electric vehicles that have comparable performance and appeal.”
The surge in orders is all the more impressive because most people will be paying an average of $42,000 for the Model 3, Musk said. The $35,000 model is a stripped down version.
By comparison, most of the best selling sedans in the country generally cost $25,000 or less.
Indeed, tens of thousands of customers lined up outside Tesla’s stores to order the car last week, with some camping out in tents to make sure they were among the first to put down their $1,000 deposits — even though Model 3 is not expected to be delivered until the end of next year.
“In regards to the recent news, we’re certainly pleased to see such strong demand for affordable long range EVs,” said GM spokesman Fred Ligouri. “We trust that the initial interest from consumers will continue when the Bolt begins production later this year.”
After the company announced its latest pre-order number on Monday, shares of Tesla jumped about 4 percent in regular trading.
Yet significant doubts linger over whether Tesla can ever manufacture that many cars. “Definitely going to need to rethink production planning,” a giddy Musk tweeted Friday when orders for the Model 3 had hit a mere 198,000. Tesla has never delivered more than 5,850 cars in a month, according to estimates by Inside EVs. And it has experienced delays in delivering its SUV, the Model X.
Tesla on Monday said that its “hubris in adding far too much new technology,” the lack of oversight over its suppliers, and not having enough internal capacity led to a shortage of parts for the Model X.
But Musk has expressed confidence in being able to meet demand for the Model 3, noting last week that Tesla’s Fremont, Calif. factory had produced 500,000 cars per year — albeit under a different owner.
Written by Brain Fung, Matt McFarland of The Washington Post
Beginning October 2 and ending January 4, Costco Wholesale Corp. (NASDAQ: COST) and General Motors Co. (NYSE: GM) sponsored a promotion for Costco members who wanted to purchase a new GM car. Sales totaled approximately 58,000 GM vehicles for the three-month promotion, up 34% year over year and well above Costco’s estimated 20% increase.
The offer featured GM supplier pricing and included all qualifying manufacturer rebates and incentives on a selection of vehicles, including trucks, sport utility vehicles and luxury and fuel-efficient models. Buyers also received a $300 or $700 Costco cash card for completing a Costco member satisfaction survey.
Customers were also asked if the promotion was a “deciding factor” in their purchase of a GM car instead of another brand. More than half (53%) said it was, and GM took the most sales from Ford Motor Co. (NYSE: F). Some 32% of the GM buyers switched from Ford to GM cars. That’s about 18,650 fewer Ford cars sold in the three-month period. Toyota Motor Corp. (NYSE: TM) and Honda Motor Co. Ltd. (NYSE: HMC) lost 14% and 7% of sales, respectively.If Costco sold nothing but cars it would be the largest new car dealer in the United States. In 2015, the company sold more than 465,000 vehicles. AutoNation Inc. (NYSE: AN) is the nation’s largest car dealer, and it sold 343,753 new vehicles in 2015, a 5% increase year over year. Costco’s year-over-year increase in new vehicle sales totaled 16.8%.
One of the big benefits of driverless cars is that they aim to promote safety on the roads while reducing congestion at the same time. If cars are largely run by computers, talking to each other, they can travel closer together in a more coordinated fashion without fear of causing a fender-bender.
Those machines could obviously malfunction. But on the whole, driverless cars are known to behave more cautiously than their human operators. And by virtue of their, well, virtues, autonomous vehicles won’t know how to speed, run red lights, park illegally or make other traffic violations that would result in a ticket. And that could drive some city budgets into a deep hole.
Take the nation’s capital, which operates the most speeding and red-light cameras of any city in the country. In 2014, the District issued an average of 773 tickets a day from its speeding cameras alone — adding up to roughly $37.5 million worth of fines, according to the latest figures from AAA Mid-Atlantic. Since 2007, speed cameras have been a cash cow for the city’s police, resulting in nearly $357 million in revenue, AAA said.
Last year the city pulled in less money from parking tickets, partly due to new, smartphone-compatible parking meters that allow drivers to keep track of their status online. And driverless cars will only accelerate that trend, said John Townsend, a spokesman for AAA Mid-Atlantic.
“If you have one of these vehicles, your propensity for getting a speeding ticket or red-light camera ticket will be greatly diminished,” said Townsend. “It’ll be another step in the long progression of technology and how it is changing the outcome in the number of people who get tickets.”
Washington isn’t the only city that reaps financial rewards from ticketing drivers. Chicago is looking at more than $1 billion alone in outstanding parking tickets, speeding tickets and red-light violations. New York drivers owe the mayor some $756 million, while the city of Los Angeles is owed $285 million, according to a Freedom of Information Act request by the local news site DNAinfo.
The scale of the problem balloons in some smaller municipalities. That’s because these jurisdictions may lack other meaningful sources of revenue. The town of Mountain View, Colo., made up 53 percent of its budget with tickets in 2013. Mountain View is a bit of an outlier — tickets account for less than 4 percent of the budget in many other Colorado towns — but it’s hardly unique in its approach to budgeting. In Waldo, Fla., (population 1,015) tickets written by its seven police officers are said to account for half of the town’s revenueand nearly two-thirds of the police department’s budget.
James Tignanelli is president of the Police Officers’ Association of Michigan. He says police officers in many jurisdictions are being ordered to write tickets, sometimes despite their vocal objections.
“We’re the only revenue producers in town, once you get past the water department,” said Tignanelli. “That’s how it is here, anyway.”
Driverless cars hold some important potential cost-savings for cities, too. Fewer accidents means cities can spend less responding to incidents. And police officers normally detailed to guide traffic or patrol for speeders could productively be deployed elsewhere. Of course, added Tignanelli, if driverless cars seriously start depriving city coffers of ticket revenue, it will likely prompt top officials to pressure police into whipping up new fees and fines.
“It’d be dog licenses, or bike licenses — there’s always something,” he said.
Or it could mean a new tax. Driverless cars, with all their newfangled gadgetry, can easily log the miles they travel and report that information. Some policymakers, such as former Transportation Secretary Ray LaHood, have expressed support for a vehicle-miles traveled tax that would charge drivers a certain amount per mile. Advocates say it’s a more representative way of determining a driver’s responsibility for infrastructure upkeep compared to the current approach of relying on gas taxes, particularly as hybrid vehicles allow drivers to use the roads more heavily while paying the same amount in taxes as other drivers.
Implementing such a proposal is sure to be politically complex — which just underscores the potential rat’s nest of a budgeting challenge that driverless cars are poised to create.
The beginning of the week appeared as though investors would get some much needed rest from the market turmoil. However, that wasn’t to be the case. All three major U.S. market indices entered corrections or 10 percent off their 52-week high. The Dow Jones Industrial Average briefly fell 500 points on Friday before closing down more than 3 percent last week. The NASDAQ Composite Index ended an eight-day losing streak on Tuesday only to slump with the broader market, ending down 4.3 percent, with the S&P 500 down 3.2 percent.
Despite the brief rally earlier in the week, markets turned sour across the world as investors continued to focus on oil and China. Both are in official bear-market territory, down 20 percent from their highs. Early Friday morning, China released disappointing news as their banks’ loan growth fell more than economists had predicted. Chinese banks have indicated lending conditions are getting riskier, causing many to wonder if this is the beginning of a credit cycle slowdown. Such a slowdown could have broad, global ramifications for investors and, with asset values inflated after years of stimulated Central Bank policies, it may mean even more volatility as we move further into 2016. Indeed, the CBOE Volatility Index, a measure of market volatility based on S&P 500 index option prices, is up over 8 percent last week. A higher measure in the CBOE Volatility Index indicates increased near-term volatility is expected by investors.
Another Week, Another Historic Low
Oil once again grabbed headlines as the usual suspects of oversupply and lack of demand pushed the commodity lower. Many analysts were hesitant to forecast oil at $20 a barrel, but it appears more are joining the chorus as it fell below $30 a barrel on Tuesday and Friday. These are prices not seen since 2003. Oil ended the week down more than 14 percent and off more than 20 percent since its 2016 high. While this bodes well for the consumer and what they pay for gas, there are more than 30 small oil companies that, altogether, owe more than $13 billion in debt and have already filed for bankruptcy during oil’s rout. Adding fuel to the fire, the U.S. shale drillers are proving to be more resilient than investors previously thought. Many of these producers borrowed heavily to participate in the once-thriving U.S. drilling expansion and are now forced to continue drilling at depressed prices in order to make their debt payments. This only serves to exacerbate the supply issue and a possible global slowdown triggered by China could mean depressed demand for the foreseeable future.
2015 was a banner year for car sales. A stronger U.S. economy last year, lower oil, and favorable financing terms helped push the measure beyond its previous peak 15 years ago. According to the report, Americans spent roughly $570 billion on new vehicles with auto makers selling 17.5 million cars and trucks. In fact, trucks and sport-utility vehicles accounted for more than 50 percent of auto sales last year as the price of gasoline hovers around $2 per gallon across the country. However, a confluence of events in 2016 seeks to cast a shadow on the industry. Higher interest rates may impact auto financing while the world’s largest car market, China, is showing signs of an economic slowdown. This led to declines in a number of large U.S. auto makers late last year and the early part of 2016.
Fun Story of the Week
There is a particular tree native to the Caribbean that has a rather nasty reputation. The manchineel tree, or as the Spanish call it, the “tree of death,” has rightly earned the Guinness World Record as the world’s most dangerous tree. The sap of the tree contains a number of compounds that can cause severe burning reactions to the skin, making it a precarious spot to hide during the rainstorms that frequent the Caribbean. While that may sound bad, it’s the fruit of the tree that can ultimately kill a full grown adult. The small, green fruit look a lot like apples and, according to those who have unwittingly tried them, taste slightly sweet. The trees are notoriously difficult to eradicate as chopping them down releases the sap and burning them spreads chemicals in the smoke that can temporarily blind a person and cause significant breathing problems. Given the lack of competition and its toxic nature, it’s no wonder it has retained the ominous moniker.
The average finance rate on 48-month new-car loans was just 4.1% through August 2015, according to the Federal Reserve. The rate exceeded 6% as recently as 2010. Source: Wall Street Journal
Roughly 20% of people under age 65 with health insurance still reported having problems paying their medical bills over the last year, according to a new poll conducted by the Kaiser Family Foundation. Source: New York Times
Today, about 2.5 billion people are registered to use at least one messaging app, according to advisory firm Activate. By 2018, the firm expects that number to be 3.6 billion, 90% of the world’s internet-enabled population. Source: Wall Street Journal
Car dealers may be coming off of their biggest sales year ever, but the future for the auto industry looks murkier as the percentage of Americans with a driver’s license continues to fall.
Just 77 percent of Americans aged 16 to 44 held drivers licenses in 2014, down from 82 percent in 2008 and 92 percent in 1983. The percentage of Americans with driver’s licenses declined across every age group from 2011 to 2014,according to an analysis by Michael Sivak and Brandon Schoettle at the University of Michigan Transportation Research Institute.
Several factors have led to fewer licensed drivers, including a lack of interest among younger consumers in driving or owning a car, a general return to cities and close suburbs with reliable public transportation, a rise in telecommuting, and the advent of ride-sharing services like ZipCar and on-demand taxis like Uber. Tighter restrictions on young drivers haven’t helped either.
The introduction of driverless cars, which some industry experts say will be on roads within the next decade, promises to further reduce the share of Americans who feel the need to get a driver’s license.
The result of fewer licensed driver is that the aggregate number of miles driven has plateaued over the past decade, according to research from the Brookings Institute.
That may be bad news for automakers and the gasoline industry, but it’s good news for drivers themselves. The 2015 Urban Mobility Scorecard from the Texas A&M Transportation Institute found that drivers wasted more than 3 billion gallons of fuel and spent 7 billion extra hours sitting in traffic last year, at a cost of $160 billion, or $960 per commuter.
The Environmental Protection Agency and California Air Resources Board approved the sale of the new 2016 BMW diesel X5 after government testing found no evidence of software to evade emissions standards, the government said Thursday.
In September, U.S. environmental regulators and Transport Canada announced they would review all current diesel passenger cars, trucks and SUVs for sale to ensure that they did not have “defeat devices.”
EPA spokeswoman Laura Allen said Thursday that the agency – along with California and Canada – was doing additional testing before approving new diesel vehicles. “Our screening tests found no evidence of a defeat device in the 2016 BMW X5,” she said.
BMW said late Thursday it had delayed the start of production of the diesel X5 – known as the X5 xDrive35d – until EPA testing and certification were completed.
“The vehicle will be going into production shortly at our manufacturing plant in Spartanburg, South Carolina,” BMW said. It expects the vehicle will go on sale in January.
The EPA diesel review came weeks after Volkswagen AG admitted it installed software in 482,000 U.S. vehicles that allowed vehicles to emit up to 40 times allowable pollution in real world driving. VW says the issue involved up to 11 million vehicles worldwide.
Last month the EPA approved the sale of two new General Motors diesel pickup trucks – the 2016 GMC Canyon and 2016 Chevrolet Colorado – after finding no improper emissions.
The BMW SUV and GM pickups were the only non-VW 2016 diesel vehicles awaiting certification.
BMW says diesels accounted for 5.9 percent, or 20,178, of 2014 U.S. vehicle sales.
In November, VW and its Audi and Porsche units acknowledged it has other emissions issues in larger luxury vehicles that extend to an additional 85,000 vehicles dating back to 2009.
The EPA and California on Nov. 2 accused VW of evading emissions in at least 10,000 Audi, Porsche and VW sport utility vehicles and cars with 3.0-liter V-6 diesel engines. VW initially denied the findings.
Last month, VW and Audi officials acknowledged emissions issues in all vehicles with 3.0-liter diesel engines from model years 2009 through 2016.
VW, Porsche and Audi have issued stop sales for 2015 and 2016 diesel models in showrooms and certified used diesel vehicles. The EPA declined to approve the sale of 2016 diesel vehicles, and VW withdrew its certification request for the cars in October pending further talks with regulators.
Russian car sales are getting absolutely obliterated at the moment.
Sales of light vehicles plunged by an astonishing 42.7% in the year to November, underlining the country’s economic turmoil.
That data comes from the Association of European Businesses.
Some major brands which sold more than 10,000 models in November 2014 saw their sales collapse even further — Toyota and Nissan’s each fell by 53%, while Chevrolet purchases crumbled, dropping by 71% in just 12 months.
In total, there were 131,572 sales in November this year, in comparison to 229,432 in the same month during 2015. For the first 11 months of the year, Russian consumers have bought 765,000 fewer light vehicles than they did in the first 11 months of 2014.
Other sectors of the economy aren’t doing quite so badly, but the stunning collapse of the ruble means that imported goods are now prohibitively expensive for Russians. Even cars actually produced in Russia will require parts and materials from elsewhere in the world, and they’ve shot up in price.
Here you can see the dollar surging in value against the ruble:
The AEB notes that in November last year, the ruble’s plunge had begun, and people were rushing to make purchases of foreign goods, making the decline in the last 12 months particularly sharp.
Russia’s GDP has slumped with global oil prices, and though it’s likely to come out of recession next year, the country’s currency has dropped in value by more than half against the dollar over the last two years.
President Vladimir Putin’s former finance minister even thinks the pressure on Russia means that it will exhaust its currency reserves soon.
Porsche committed to making its first all-electric vehicle, taking on Tesla Motors Inc. with a model that’s set to accelerate faster than the German company’s 911 sports car and recharge in 15 minutes.
Porsche green-lighted a 1 billion-euro ($1.09 billion) project to produce the battery-powered sports car, which will be manufactured near division headquarters in Stuttgart and create 1,000 jobs, the Volkswagen AG unit said Friday in a statement. The model, based on the low-slung Mission E concept unveiled in September at the Frankfurt auto show, will enter showrooms at the end of the decade, it said.
“With Mission E, we are making a clear statement about the future of the brand,” Chairman Wolfgang Porsche said in the statement. “Even in a greatly changing motoring world, Porsche will maintain its front-row position with this fascinating sports car.”
The step is part of efforts by Volkswagen, Europe’s largest automaker, to move beyond a scandal over rigged car-emissions tests. Chief Executive Officer Matthias Mueller, who ran Porsche until late September, has vowed to accelerate and widen development of electric cars amid a reorganization that delegates more decision-making to the Volkswagen group’s brands and regional units.
Porsche caused a stir at the Frankfurt show with the four- seat Mission E electric sports-car concept, whose acceleration to 100 kilometers (62 miles) per hour in less than 3.5 seconds beats the 911’s 4.2 seconds to reach that speed. The new electric vehicle will complement a lineup comprising the 911, the smaller Cayman sports car, the Boxster roadster, the four- door Panamera coupe and the Cayenne and Macan sport utility vehicles. Porsche’s high-performance 918 Spyder has been sold out as production was limited to safeguard exclusivity.
The division is set to sell more than 200,000 vehicles for the first time this year, driven by demand for the $52,600 compact Macan. Palo Alto, California-based Tesla, maker of the battery-powered Model S sedan and Model X SUV, is targeting 50,000 to 55,000 deliveries in 2015.
The 600-horsepower Mission E will be designed to drive more than 500 kilometers before needing a recharge, Porsche said. The battery can reach 80 percent of capacity in about 15 minutes, about half the time needed by Tesla’s Model S to recharge for a 270-kilometer driving range.