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Axalta SEP 2021
BMW SEPTEMBER 2021

In early April 2021 Shanghai hosted a major motor show, effectively the first major event since early 2020. In between vehicle manufacturers showed off new products in anonymous studios, with socially distanced presenters and broadcast to an unknown audience. For all of us the mass lock down process has been deeply traumatising, but for vehicle manufacturers it was something else.

In no particular order, before the lock down very nearly destroyed the entire global economy, vehicle manufacturers were faced with:

Extended lobbying to improve vehicle safety, led by the usual hot spots of Europe and the U.S.

Extended lobbying to initially dramatically reduce internal combustion engine exhaust emissions, whilst in parallel campaigning to end internal combustion engine production with no plan ‘B’ (i.e., a viable, affordable mass market alternative).

Excess production capacity, especially in China and Europe.

A fast-moving market, at odds with the time it takes to design/develop/tool/make new products.

The rise of heavily subsidised ‘next gen’ automotive companies who took pleasure in not doing things in the expected way, with the expected results in terms of quality. The issue is these companies are heavily promoted by social media, and label all of the existing industry as ‘legacy’…

Many vehicle manufacturers faced a perfect storm. Product investment and piece costs rising in ways almost beyond their control, market pressures adding product complexity (effectively Europe mandated hybrid drive for most internal combustion engine applications, or hefty fines if not adhered to) – and fighting the ‘legacy’ image promoted by heavily subsidised ‘next gen’ companies and their unquestioning social media followers.

Economics, but not in a conventional way

The automotive industry has known bleak economic times before, but not on this scale. Then comes the inexplicable lock down technique, developed by China and adopted almost everywhere. If the automotive industry was a single human, the lock down imposition would be enough to send that person over the edge.

The automotive industry has come out the other side. Damaged, yes, but for the most part intact. Odd things have happened, such as the quantitative easing of cash distributed from Governments to banks for the expressed purpose of supporting business. For the UK, in no particular order, this cash has:

  • Been used to pay off mortgages (not allowed)
  • Been used to buy expensive vehicles, boats, second homes (not allowed)
  • Been used to pay shareholder dividends (not allowed).

The breaches are common – yet the UK Civil Service tasked with policing this abuse do not know where to start. Of course, the start was the problem, since loans of around £50 000 and upwards were waved through with a single form and no supporting evidence. In other words, to capture the loans now is like chasing a racehorse on foot after it has bolted.

This income blip for the select few took place all over the world. It in part explains why companies such as Bentley had a near record sales year in 2020, even though the assembly line was closed for three months. Yes, it’s funny data, funny money time.

Remove the gloss of carefully crafted PR and one will see, from the thousands of engineers and tens of thousands of assembly line workers removed from their jobs, all is not well. Yet another bubble of automotive debt has been created, packaged and financed, on the hope that better times are ahead. This approach works as long as structural changes are made too, which unlike 2008, seem to be taking place. The issue is the cost structure revisions address a stable product development plan, and most vehicle manufacturers are firmly in reactive, unstable product plan territory.

The evidence was abundant at the Shanghai show. Suddenly we have a premium brand (Polestar, for example) trading alongside a mainstream brand (sister company Volvo, for example) swapping market position as each new vehicle is introduced. In this case both companies are owned by Geely, and they also position own brand vehicles in the same space. In Audi the ‘e-tron’ brand is on the move in all directions at once, whilst Mercedes-Benz slap ‘EQ’ on almost anything that moves.

These are all indications of reactive, distressed and confused market strategy. Our entire global automotive sector apart from Government subsidised EV companies is on life support.

Electrify the world

There are two movements which promote land transport exhaust emissions as a major issue – the Green agenda (also known as Climate Change, which does not really care about humans) and the World Economic Forum (which represents the interests of a very wealthy elite, who are not overly concerned by humans less fortunate than themselves).

For the automotive industry, the objective of these groups is clear: Delete the internal combustion engine.

Every single flag waving political lightweight around the world bounces with joy as they promote this message, aided by plenty of un-disclosed funding. However, there are some major issues:

  1. It takes time to build, let alone design a vehicle. So, the idea the entire global vehicle population will change to an entirely different means of propulsion in 10, 20 or even 30 years is fantasy.
  2. It takes time for vehicle purchasers to acquire enough money to buy vehicles, even with finance packages. The idea that those very same people will now fund vehicles typically costing 50% to 100% more than an internal combustion engine powered vehicle is… fantasy.
  3. The Green/World Economic Forum movements have decided electricity is the solution. In the UK thanks to a Government dominated by arts graduates, our electricity generation buffer has been stripped almost to zero – and that’s before we start handing lots of electrified vehicles on to the grid. The criminal neglect of energy and industry strategy has driven the UK to a very dangerous place – the same pattern can be seen across most of Europe.
  4. The ‘electrification’ agenda conveniently takes no account of the energy required to source or process materials, let alone create high voltage system assemblies.

So, the early adopters of electrified vehicles – especially pure electric vehicles – are exercising free market choice but are in a very poor place to lecture.

Let’s zoom away from the UK and look to Africa. All of the above is a rich person’s world view. A choice to ride a £10 000 bicycle, or to ride in a £90 000 pure electric vehicle. It is a case of projecting the view of the fortunate few onto those who have no chance to participate, regardless of economic subsidy.

The vehicle manufacturers for the most part do not indulge in politics, instead concentrating on how to make a living. The ‘legacy’ organisations are deeply, profoundly impressive and provide automotive very real economic benefit to tens of millions of people worldwide, let alone those who use the vehicles. If there is one freedom we have to maintain, it’s personal mobility.

Now we see the hell the automotive sector faces. A strident, rich, powerful lobby which only sees the world from its own narrow perspective, weak Governments who play along with this agenda, and the possibility that thanks to the view of organisations such as the World Economic Forum we should all be reduced to walking everywhere – except our self-appointed masters.

Europe and North America are chasing the electrification dream, facing economic ruin in the process and embracing elimination of three centuries of industrial progress. Africa does not need to follow the same path. You can take a different way.

Internal combustion – the job is not finished

I remain worried that the engineers involved with internal combustion engine development have and will continue to drift away, and that will over the next three decades degrade the performance significantly due to lack of technology progress. So, what is the main road block to keeping internal combustion engines? Fuel.

In the immediate future, automotive manufacturers could ‘lift and shift’ engine production from all over the world where it is deemed irrelevant (such as North America and Europe). These engines – petrol and diesel – already are at Euro VI exhaust emission levels.

However, these engines need good quality fuels. The refineries in South Africa famously have no capability to make such fuel, which limits the effective control of particulates.

If the fuel quality is not matched to current internal combustion engine emission control technology, the engines become more expensive since they are brand new units using components which have to be made especially for African markets only.

There’s more. Globally air and sea transport are struggling with exhaust emissions too, and for aircraft the energy source options are limited. Yes, electric powered aircraft prototypes exist now, and the first flight of a hybrid powered airliner is due by 2025. However, these aircraft serve short routes, typically less than 200 km.

One movement, not universally supported, is new fuels for internal combustion engines as well as gas turbines. Thanks to “Sir” Roger Houghton and “Dame” Claire Macfie, I saw a video about a scheme to produce hydrocarbon fuel by combining CO2 from the air with hydrogen – carbon capture. Sure, we can pick holes in the company presentation, but the idea is sound – make fuel that burns with less harmful effects in an internal combustion engine rather than throw away everything.

Carbon capture is the Holy Grail for Governments around the world, especially those who think the Paris Climate Accord agreement makes any sense. Until now carbon capture is the stuff of ‘almost’ technology, along the lines of nuclear fusion (endless energy from a cup of water, forgetting the immense energy pulse required to initiate the process).

Now there are plenty of nay-sayers in this space, but this gives a ‘Plan B’ route to extend the internal combustion engine well into 2050, if not beyond. By addressing the immediate issue of fuel quality, the ‘system’ will gain at least a decade of reliable supply during which competing alternatives can be refined and brought on stream.

Even better, this planned, pragmatic approach will avoid the debt pit caused by the electrification fashion and offer a very real solution to the wider world. Fear not, the electrification party hang-over will be immense.

South Africa as a major energy exporter? Who would have guessed? Keep the faith.

There are very real obstacles to this idea:

  1. Green politics, including Greta Thunberg et al who stand in the way of debate.
  2. Vested interests (World Economic Forum et al).
  3. Cost.

However, there is a much, much bigger picture. We need to understand the energy investment to be able to build and then operate ‘new fuel’ plants using carbon capture technology. Once the cost is possible to develop into the right place (less than refined oil today, before tax) then Governments will go for this.

The Green lobby and the World Economic Forum will not support this. For them the ‘Build Back Better’ mantra is built around insane levels of personal as well as national debt, electrification based on 19th century technology and return of the masses to slavery. ‘Build Back Better’ is the vehicle to ensure the self-appointed global elite by-pass the masses, remove our collective power, trim our numbers like herds of farm animals and enjoy whatever takes their eye whilst ensuring peasants will never be able to do the same.

For vehicle manufacturers all over the world the fight has begun. Auto Industry Consulting is an independent provider of technical information to the global collision repair industry via EziMethods, our online collision repair methods system. For more information please visit the website: www.ezimethods.com