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March 22, 2018 News of the Day: China's GAC Ready to Recruit U.S. Dealers, Porsche CEO Says Tesla is Not a Benchmark

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【Summary】March 22, 2018 News of the Day

Eric Walz    Mar 22, 2018 3:30 PM PT
March 22, 2018 News of the Day: China's GAC Ready to Recruit U.S. Dealers, Porsche CEO Says Tesla is Not a Benchmark
author: Eric Walz   

China's GAC Ready to Recruit U.S. Dealers to Sell Their Cars

Chinese automaker GAC Motor is attending this year's National Automobile Dealers Association (NADA) is Las Vegas where it is looking for retail partners at the NADA Show who are comfortable with taking a chance on a new automaker.The company says it's ready to enter the U.S. market.

The unit of Guangzhou Automobile Group is attending the NADA event for the first time, offering informational meetings with dealers in hopes of selling a three-row SUV as its first U.S. model by the end of 2019, the company said.

GAC Motor, which sold more than a half million vehicles in China last year, showcased its cars and crossovers at the Detroit auto show along with an electric vehicle concept. GAC has presented in Detroit before and has been eyeing the U.S. for years. How it fares in this week's meetings could offer insight for other Chinese automakers that aspire to enter the U.S.

"We will explore all sorts of channels," said GAC Motor President Yu Jun at a press conference in Detroit. "We will also try to build our own dealership network in the future. All of these options are on the table."

GAC has made cars in China with partners such as Toyota and Fiat Chrysler Automobiles in addition to its own models. One GAC brand is Trumpchi. The similarity to the name of U.S. President Donald Trump is a coincidence, the company has said.

The Chinese automaker has said it will develop a new brand name for the U.S.

Analysts say establishing an auto brand in the crowded U.S. with slowing sales would be a challenge regardless of the marque's origin. Results over the past few decades have been mixed.

South Korean carmaker Hyundai had a rocky start when it arrived in the U.S., but eventually found its footing there in the recession caused by the 2008 economic crisis. While Fiat has struggled since its return to the U.S. in 2011, but sibling brand Alfa Romeo got a big lift in 2017 as its product portfolio filled out.

With a $7.4 Billion Investment in Electric Cars, Porsche CEO Says Tesla is Not a Benchmark

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Porsche is making a $7.4 billion investment to launch the German performance carmaker into the electric age. The funds will help Porsche electrify one-third of its lineup by 2022, introduce its first battery-powered sports car and SUV, and create a fast-charging network.

When it arrives next year, the Mission E electric sedan is expected to exceed 600 horsepower, reach 60 m.p.h. in under 3.5 seconds, hit a top speed of 155 mph, and travel more than 300 miles on a fully charged battery.

These impressive numbers rival the only other high-performance electric sedan currently on the market—Tesla. However, Porsche executives insisted that the new model is not meant to challenge the Tesla Model S. "Tesla is not a benchmark for us," Porsche CEO Oliver Blume said at the company's annual press conference.

The investment includes more than $859 million for a new factory at Porsche's headquarters in Stuttgart, Germany, with the eventual goal to produce 20,000 Mission E's annually. The saloon, whose production name has not been confirmed, will be sized between Porsche's 911 sports car and Panamera sedan and priced in the mid $80,000s. Production calls for a new platform, which will be shared by the Mission E Cross Turismo, a forthcoming crossover version unveiled at the Geneva Motor Show earlier this month.

The key differentiator between the Mission E and its rivals will be its rapid charging time, said Dr. Robert Meier, a senior director from the battery-electric program. The car is expected to reach an 80% charge in just 15 minutes when equipped with an 800-volt battery and in 40 minutes with its standard 400-volt battery. Porsche will enter the car next year in the Formula E racing series, where it expects to learn more about the car's engine and thermal management systems in order to tweak production models.

The focus on battery power follows a record year for Porsche, with global sales up 4%, and is part of a larger effort within its Volkswagen Group parent company to distance itself from diesel engines and launch more electric vehicles. Last week, VW said it would invest $25 billion in battery supplies to equip 16 factories that will produce dozens of new models.

Meanwhile, part of the $7.4 billion investment will support Porsche's bid to become the leading provider of digital mobility in premium segment, executives said. That includes hundreds of millions of dollars earmarked over the next two years to build a network of fast-charging stations and support the development of connected services, which are projected to generate 10% of Porsche's revenues in the "mid-term," said Lutz Meschke, deputy chairman of the executive board.

But Porsche, which recently built its 1 millionth 911, says it has no plans to make self-driving cars. "We don't envision any Porsche without a steering wheel," said Detlev von Platen, a member of the executive board for sales and marketing. Autonomous capabilities might be useful for certain situations, such as navigating gridlock or showing the racing lines on a track before handing control to the driver, but "it needs to make sense for Porsche expectations and values," said von Platen. "Driving a Porsche in a traffic jam, I'm not sure this is the heart of the fascination."

Trump Sets China Tariff Plan

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WASHINGTON — U.S. President Donald Trump signed a presidential memorandum on Thursday that could impose tariffs on up to $60 billion of imports from China, that could have a rippling effect on many industries, including the automotive industry.

Trump appears to have backed down from his initial tariff plan, as his actions were far removed from his initial threats that could have ignited a global trade war.

Under the terms of the memorandum, Trump will target the Chinese imports only after a consultation period, a measure that will give industry lobbyists and legislators a chance to water down a proposed target list which runs to 1,300 products.

China will also have space to respond to Trump's actions, reducing the risk of immediate dramatic retaliation from Beijing, and Trump said "I view them as a friend."

"We have spoken to China and we are in the middle of negotiations," Trump said, adding that loss of American jobs from unfair trade was one of the main reasons he had been elected in 2016.

The United States runs a $375 billion goods trade deficit with China.

Washington will also pursue alleged breaches of intellectual property law by China through the World Trade Organization, a body that has repeatedly drawn the ire of the administration but which could provide a resolution that avoids a trade war.

Global stocks had a massive sell off on Thursday on the expectation of tough action from Trump, with U.S. markets down as much as 2 percent, but recovered somewhat after the announcement.

Following Trump's announcement on Thursday, the U.S. Trade Representative's office will present a list of products that could be targeted, primarily from the high-tech sector. There will then be a 60-day consultation period before definitive action will be put into force.
White House officials told a briefing ahead of the trade announcement that the administration was eyeing tariffs on $50 billion in Chinese goods. They said the figure was based on a calculation of the impact on the profits of U.S. companies that had been forced to hand over their intellectual property as the price of doing business in China.

There was no explanation of the difference between the numbers provided by White House officials in the briefing and Trump's $60 billion in tariffs—$10 billion more.
"Many of these areas are those where China has sought to acquire advantage through the unfair acquisition and forced technology transfer from U.S. companies ... establishing its own competitive advantage in an unfair manner," Everett Eissenstat, deputy director of the National Economic Council, told reporters.
In addition, Trump will also direct the U.S. Treasury to propose measures that could restrict Chinese investments in the United States, Eissenstat said.
The tariffs and investment restrictions will be imposed under the U.S. Trade Representative's "Section 301" investigation into alleged misappropriation of U.S. intellectual property by China.
Eissenstat said the investigation clearly demonstrates unfair practices by China, which forces U.S. investors to turn over key technologies to Chinese firms.

Ford & India's Mahindra to Co-Develop SUVs & Electric Vehicle

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Mahindra Group and Ford Motor Company will jointly develop new SUVs, and a small electric vehicle as part of several initiatives announced today between the two companies.

The two companies signed five new memoranda of understanding (MoU) that further strengthen their strategic alliance and accelerate the development of key products for consumers in India and emerging markets. The MoUs, which are non-binding, mark the progress made by the two companies since announcing their alliance in September 2017.

Under the initiatives, Mahindra and Ford will leverage their strengths in the compact utility vehicle space to co-develop a midsize sports utility vehicle (C-SUV). Built on the Mahindra platform, the new SUV will drive engineering and commercial efficiencies and will be sold independently by both companies as separate brands.

Mahindra and Ford also agreed to evaluate co-development of a compact SUV and electric vehicle, along with  sharing powertrain portfolios, including the supply of Mahindra powertrains to extend Ford's product range.

Building on the collaboration, Mahindra and Ford also announced plans to co-develop a suite of connected car solutions for consumers. The collaboration is in line with Ford's commitment to helping people around the world move more safely, confidently and freely.

"Today's announcement is the next step in the collaboration between Mahindra and Ford," said Dr Pawan Goenka, Managing Director, Mahindra and Mahindra Ltd. "Both teams are working together on joint development areas in keeping with industry requirements and leveraging mutual strengths. We are excited about the synergies unveiled through this collaboration and the potential opportunities it will bring."

"Ford is committed to offering the best vehicles, technologies and services that fit the lifestyles and preferences of Indian consumers," said Jim Farley, Ford executive vice president and president of Global Markets. "Listening to our customers and incorporating their future needs is the core premise of this collaboration. With utility vehicles and electrification as key focus areas, we are glad to see the progress our two companies have made."

Aiming to generate synergies and improve efficiencies with the new initiatives, the strategic alliance between the two companies continues to focus on leveraging the benefits of Ford's global reach and expertise and Mahindra's scale in India and its successful operating model.

Teams from both companies will continue to collaborate and work together, for a period of up to three years, to develop further avenues of strategic cooperation such as extending support for Mahindra in global emerging markets and collaboration to address future mobility needs

Mahindra has been leading the utility vehicles segment in India for the past seven decades. The spirit of ingenuity has driven Mahindra to be among the few global companies pioneering the development of clean and affordable technology and is the only player with a portfolio of electric vehicles commercially available in India.

Mahindra owns a majority stake in Ssangyong Motor Company in Korea, has forayed into the shared mobility space with investments in ridesharing platforms in the U.S., and is developing products like the GenZe - the world's first electric connected scooter.

Ford was among the first global automakers to enter India in 1995. Now one of the largest exporters of cars from the country, Ford manufactures and exports vehicles and engines from its manufacturing facilities in Chennai, Tamil Nadu and Sanand, Gujarat.

India is also the second-largest Ford employee base globally, with more than 14,000 people working across the Ford India or Global Business Services operations in New Delhi, Chennai, and Coimbatore.

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