Gas2 Week in Review: Investments in the Fast Lane
This week on Gas2, investments from automakers became a common thread among our featured news articles and spurred lots of reader comments. Honda’s R&D and its resulting ten speed transmission to boost sales drew a lot of debate. So, too, did Elon Musk’s unusually off-tempo Tweet that pointed to lowered expectations for the upcoming Model 3. The Deutsche Bank’s dismal forecast for U.S. auto sales sparked a lot of interest, as did a group of retired U.S. general and admirals who voiced concerns over Trump’s promises to lower CAFE standards — they say the move will hurt investments and national security. And autonomous driving continues to pique reader interest, with our in-depth story this week looking at the dilemmas and possibilities when our cars drive themselves.
Here are those stories and more on our Gas2 Week in Review.
The 2018 Honda Odyssey, which goes into production later this year, will offer two trim levels that feature a ten speed transmission. Tom Sladek, Honda’s powertrain development leader, says that engineers focused on reducing the size of two key elements of the transmission’s internal parts — the clutches and the output gear. The engine in an Odyssey fitted with the new transmission will turn only 1560 rpm at 70 miles per hour, which will boost fuel economy while reducing engine noise. The transmission is capable of skipping gears on downshifts. Honda says it will invest $150 million to retool two U.S. factories to build the new transmission.
Last week, Elon Musk tweeted that the Tesla Model 3 would not have a heads up display. The announcement came as part of a larger implication that real Tesla aficionados may be better off with a Tesla Model S. Musk’s descriptions of the Model S, with more seats, a higher level of technology, and the cachet of being the world’s most popular premium electric car, stand apart from the basic electric vehicle investment that the Model 3 will produce. Yet, with more than 400,000 reservations and associated $1,000 deposits for each one, what’s the real story behind the Model 3 reality check here?
Analysts at Deutsche Bank are reporting risks to the U.S. auto industry from rising rates, negative equity in vehicle loans, and used vehicle price deflation. If lackluster March car sales and a trend for consumers to hold onto their cars longer than previously are any indication, the U.S. could sell a million fewer cars than last year. The results for investments could include deteriorating affordability, delayed trade-in cycles, consumer shifts from new to used, diminishing credit availability, and fluctuating mix/pricing.
A group of retired U.S. generals and admirals who have come together to advocate for U.S. independence from foreign oil have urged the Trump administration not to roll back the fuel economy standards set in place by the EPA in the final days of the Obama administration. Securing America’s Energy Future (SAFE) claims that reliance on foreign oil puts the country at risk and makes America vulnerable to terrorism. During his campaign, Trump proclaimed that the U.S. would “become, and stay, totally independent of any need to import energy from the OPEC cartel or any nations hostile to our interests.” However, today, oil accounts for 93% of the energy used by the U.S. SAFE member and FedEx CEO Fred Smith is advocating for those numbers to be slashed to 50% by 2040. He’s also promoting everything from electric batteries for passenger cars to natural gas for freight haulers.
When automakers team up with technology companies and commit investments to autonomous vehicles, there are many issues to consider. Reducing ethical dilemmas into algorithms may be quite difficult for a computer to follow. Moral issues can be compounded by technology errors, poor maintenance, improper servicing, security vulnerabilities, or other failings. Investments in the future of transportation through autonomous vehicles may produce tremendous social benefits in what will likely be safer and easier mobility. But, as with any new technology, multiple issues need to be worked out before practical implementation can occur and before forward-looking investments produce returns.