A “swamp cooler” fitted to a Volkswagen Beetle. This early vehicle air conditioner worked through evaporative cooling. When the vehicle was in motion, air would move over a pad which would be moistened by a reservoir of water. Evaporation of the water from the pad cooled the air before it entered the vehicle. Photo courtesy of Michael Ross, Lane Motor Museum, Nashville, Tenn.
Vehicle design has been an ever-changing field, and automakers are constantly introducing new features and improvements. However, some things have been around for years: steering wheels, rearview mirrors, windshield wipers, and so on.
But many of these things were once absent from vehicles, or only available as aftermarket options. For example, early automobiles used a tiller for steering before the wheel became more common.
These are some of the surprising stories of vehicle innovations over the years.
For cruise control, we have a blind engineer to thank – and perhaps a lawyer who was a lousy driver.
Ralph Teetor lost his vision in a childhood accident, but successfully pursued a career in mechanical engineering. He went on to become the lead engineer for the family company producing piston rings.
A federally imposed 35 mph speed limit during World War II may have helped inspire the idea of cruise control. The ability to automatically maintain a constant speed would drivers with this requirement, and Teetor received a patent for a cruise control device in 1945.
But family lore holds that Teetor was motivated more by the erratic driving of patent attorney Harry Lindsay, a friend who frequently chauffeured him. This story holds that Lindsay tended to slow down while talking and speed up while listening. If a vehicle feature could maintain a constant speed, Teetor wouldn’t have to suffer such a jerky and uncomfortable ride.
The first “Speedostat” used a vacuum-driven piston to push back on the gas pedal once a desired speed was achieved; an electric motor would vary the throttle as needed. A driver could simply push against the resistance if they needed to speed up.
Chrysler was the first to introduce this device, under the name Auto-Pilot, in 1958. Other automakers soon adopted it as well, and the “Cruise Control” name introduced by Cadillac in 1959 proved to have staying power.
Teetor was originally opposed to the idea of locking in a speed so a driver could take their foot off the accelerator. He worried that people would become distracted or sleepy if they didn’t have to focus on the accelerator. When automakers demanded this feature, he consented to upgrading the design to maintain speed until the driver pressed the brake pedal.
The OPEC oil embargo in 1973 helped spur the wider adoption of cruise control. As a 55 mph speed limit was imposed to reduce fuel use, cruise control was offered as optional equipment on most new vehicles.
Headlights and taillights
Early vehicle headlights housed kerosene lamps within reflectors. This feature was introduced in the 1880s, but wasn’t very effective at illuminating the road ahead. Furthermore, the lights could be doused by rain or a gust of wind.
Vehicles then began to feature headlights fueled by acetylene gas tanks stored in the vehicle. But the reflectors used in headlights were still less than reliable, since they tended to be ineffective at focusing light.
Electric lights began to supplant gas systems in the 1910s, although they were also prone to blinding oncoming drivers. A dimmer was offered as an accessory in 1915, and Cadillac introduced depressible headlamps two years later. In 1925, the Guide Lamp Company launched a headlight bulb with two filaments, allowing drivers to switch between high beams and low beams. Sealed headlights, which use a reflector and lens, were introduced in 1939.
Early taillights, meanwhile, were originally meant to simply illuminate license plates. Drivers relied on hand signals to let tailing drivers know when they were planning to stop; brake lights did not appear until 1905, although 11 states mandated their use by 1928.
For quite some time, turn signals were not seen as an essential vehicle feature. Drivers could simply use hand signals to indicate if they were making a turn. Or, as many inconsiderate drivers do today, they could simply make the turn without offering any signal at all.
The first patent for a turn signal was issued in 1909 to Percy Douglas-Hamilton, whose idea consisted of a set of hands on either side of the vehicle which could be illuminated to indicate which way the driver wanted to turn. However, this system apparently never went into production.
Dorothy Levitt, who is credited with popularizing the term “glove compartment.” In her handbook “The Woman and the Car,” she suggested that the “little drawer under the seat of the car” was a perfect place to keep gloves.
Credit for the first practical turn signal is usually attributed to Florence Lawrence, who is also frequently described as Hollywood’s first movie star. In 1914, Lawrence said she had developed an “auto signaling arm” for her vehicle: a flag located on the back fender that could be raised or lowered at the push of a button.
In addition to signaling which way she wanted to turn, her system had a stop sign which was automatically deployed when she hit the brakes. Lawrence never patented the device, so she never received any royalties from her inventions.
Several other patents for turn signals would be issued in the early 20th century, including one to Joseph Bell in the late 1930s for the first flashing signal. Electric turn signals were not offered by manufacturers until 1939, and did not become widespread until the 1950s.
When race car driver Ray Harroun saw a horse-drawn buggy with a mounted mirror to let the driver see to the rear, it inspired him to add a similar feature to his own vehicle. In this way, the rearview mirror became an unexpectedly controversial part of the first Indianapolis 500 in 1911.
Race rules stipulated that each driver must be accompanied by a mechanic. In addition to repairing the vehicle in the event of a breakdown, this person was meant to act as a safety feature. He would keep an eye out to the side and rear during the race, letting the driver know of any approaching vehicles.
Harroun was convinced that his own car wouldn’t break down, so he persuaded race officials to exempt him from the rule. Instead of carrying a mechanic, he would use a rear-facing mirror to look for any potential hazards. In this way, he would cut the weight of his car and potentially gain an advantage in speed and fuel use.
The stratagem worked. Harroun won the race, although he later admitted that the brick pavers of the racetrack caused so much vibration that he couldn’t reliably discern images in the mirror.
After this well-publicized use of an automotive mirror, rearview mirrors became more common. The location of the mirrors was up to the drivers. Added as aftermarket options, they appeared in varying places such as the front fenders or on top of side-mounted spare tires.
Side mirrors were not mandated until the 1960s, and were slower to gain popularity. As late as the 1970s, some models only came with a driver’s side mirror, with a passenger side mirror available only as an optional add-on.
Electronic stability control
Electronic stability control uses sensors to measure data such as turning force, lateral acceleration, and the angle of the steering wheel to determine if the vehicle is traveling the way the driver wants it to. If not, it automatically activates the brakes on individual wheels or selectively uses the throttle to help restore control. The feature is especially useful during evasive maneuvers, as it helps prevent the vehicle from rolling over.
Although the system has its roots in traction control systems developed in the 1980s, the invention of electronic stability control is credited to engineer Frank-Werner Mohn. During a Mercedes-Benz test trip in 1989, Mohn lost control on an icy road in Sweden and wound up in a ditch. The incident inspired the idea of connecting a vehicle’s antilock brake system to the onboard computer to make it more effective.
Electronic stability control was successfully tested in 1991. Mercedes-Benz began using it in production vehicles in 1995, followed soon after by Toyota.
The feature was originally used only on luxury models. But the need to extend it to a wider range of vehicles became apparent in 1997, when a journalist was able to flip a Mercedes A-Class microcar at 37 mph during the evasive maneuvers of a “moose test.”
Mercedes responded with a design overhaul to include electronic stability control on the A-Class. As other manufacturers opted to install the feature on non-luxury models, Mercedes supplied the technology to them at no cost.
Heat and AC
An advertisement promoting the first automotive air conditioning appeared in 1933. The first factory-installed air conditioning was offered by Packard in 1940.
A Mercedes-Benz A-Class in 1997 during test drives. Electronic stability control became more widespread after an A-Class was flipped during the evasive maneuvers of a “moose test.” Photo courtesy of Daimler.
Air conditioning was a rather unpopular option, though, with just a few thousand cars equipped with it prior to World War II – mostly in the arid regions of the Southwest. The units were bulky, took up a great deal of trunk space, and could not reliably cool the front seats. Other problems included dripping condensation and the inability to circulate outside air.
In 1953, GM had figured out how to fit the air conditioning system in the engine compartment to offer more efficient cooling. Three years later, all automakers were offering air conditioning as an option.
More than half of all cars available in 1969 had air conditioning, and drivers could opt to have a unit installed at the dealership if one was not added at the factory. Due to concerns that Freon was contributing to the depletion of the Earth’s ozone layer, a switch to a less harmful refrigerant was mandated by 1996. By this time, nearly all available models had air conditioning.
The first rudimentary car heaters circulated exhaust gases through pipes to radiate heat into the vehicle’s interior. In 1933, Ford offered a gas-fueled boiler in the dashboard to provide heat.
GM created the heater core in 1930, using a fan to direct heat from the vehicle’s coolant into the vehicle’s interior. The same basic system is still in use today, with further developments creating climate control to create a mix of cool and warm air to create the optimum temperature.
The development of seat belts in vehicles descended from similar work in airplanes. Patents for vehicular safety harnesses were filed almost simultaneously with the introduction of motor vehicles, with the first one issued in the United States in 1885.
But there was little interest in such a feature. Automakers believed that if too much attention was given to safety features, drivers might conclude that the vehicle was unsafe. Race car drivers were also uninterested, believing that it was better to be thrown clear of a wreck than held inside by a seat belt – still a common misconception today.
Implementation came slowly. Some physicians, horrified by the serious injuries caused by car crashes, installed homemade seat belts on their vehicles. U.S. automaker Nash began offering lap belts in 1949, but the feature was withdrawn after a year. Ford and Chrysler developed seat belts in 1956 and also found little demand for them.
Part of the problem was that early seat belts only crossed an occupant’s lap. Lap belts were not only ineffective at protecting occupants, but they could also cause serious internal injuries in high-speed collisions.
A breakthrough came from Nils Bohlin, a former aerospace engineer who developed the modern three-point seat belt. This feature debuted in Volvo vehicles in 1959. Although Bohlin filed for a patent, Volvo opted to make the feature available to other manufacturers; on the 50th anniversary of this development, the automaker estimated that the three-point harness has saved at least a million lives.
Initially, though, it was met with skepticism. Frustrated by the public’s disinterest, Volvo enlisted race car driver Orvar Aspholm to deliberately roll a PV 544 vehicle equipped with seat belts at auto shows and other events across Sweden. Thousands of people witnessed him emerge unscathed from each crash. Aspholm also climbed aboard a crash test sled for several simulated low-speed collisions to demonstrate how the belt prevented whiplash and kept the driver’s head from impacting the steering wheel.
In the wake of these demonstrations, seat belt requirements quickly became common. Several states mandated seat belt use in the early 1960s. The Highway Safety Act of 1966 mandated that all cars come equipped with seat belts starting in 1968, with trucks to follow in 1972.
It would still take years of public awareness and law enforcement campaigns before drivers began using seat belts in significant numbers. The federal government even sought to mandate seat belt interlocks in 1974, requiring vehicle occupants to buckle up before the vehicle would start. However, this system proved unreliable and extremely unpopular, and it was quickly scrapped.
The first patent applications for vehicle airbags were submitted in the early 1950s, but the system initially seemed impractical. Nevertheless, automakers and safety groups soon began showing a keen interest in airbags, believing they might even be more reliable than seat belts.
In 1968, Allen Breed was awarded the first patent for an electromechanical airbag system. This coupled a crash sensor with an airbag which would be inflated by a chemical reaction or gas held in a storage container.
Airbags were introduced as optional equipment on some models in the 1970s, but the oil embargo slowed their implementation. They became more widespread in the 1980s, with Mercedes-Benz offering them on all available models in 1986 and Chrysler making them standard in 1988.
Frank-Werner Mohn, Mercedes-Benz developer and electronic stability control co-inventor. Photo courtesy of Daimler.
In 1990, a head-on crash involving two Chrysler LeBarons in Virginia was thought to be the first collision between two vehicles equipped with airbags. At the time, it was estimated that just 2 percent of the vehicles on the road in the U.S. had the feature. Both vehicle occupants walked away with minor injuries.
However, there were also concerns that airbags presented a danger to children and other diminutive passengers. When front seat airbags became mandatory starting with 1998 models, automakers were switching to “depowered” airbags. While airbags originally deployed at speeds of up to 200 mph, the velocity of depowered airbags is considerably reduced to cut down on the risk of injury. Today, sensors and computers also work to deploy airbags in different ways based on the severity of the collision.
During a snowy ride on a New York City streetcar in 1902, Alabama businesswoman Mary Anderson noticed that the driver had difficulty seeing through the windshield. Before she reached her stop, she was sketching an idea for the first windshield wipers.
Anderson’s concept involved spring-loaded wiper arms made of wood and rubber, attached to a lever manually operated by a driver. The wipers could also be removed so there was “nothing to mar the usual appearance of the car during fair weather.”
Although she was awarded a patent for her “window cleaning device” in 1903, Anderson had no luck marketing her invention. Automakers told her that windshield wipers weren’t practical and would be too distracting. Despite these assertions, windshield wipers soon became widespread on vehicles.
Robert W. Kearns would feel similarly jilted by automakers when he came up with the idea for intermittent windshield wipers. He patented this technology, which allows drivers to set how quickly the wipers will operated, in 1967. When he tried to introduce it to automakers, none expressed interest.
As with Anderson, however, automakers soon introduced intermittent wipers on their own. Kearns subsequently sued Ford for patent infringement in 1978, and hit Chrysler with a similar lawsuit in 1982.
The cases would be tied up in court for several years. In 1990, a jury concluded that Ford had infringed on Kearns’ patent, but had not done so deliberately. Nevertheless, Ford agreed to pay Kearns $10.2 million; Chrysler later paid him $18.7 million.
It was something of a Pyrrhic victory. Kearns’ lawsuits against GM and foreign automakers were dismissed, and much of the money he won went toward legal expenses. And while he had hoped to become a major manufacturer of intermittent windshield wipers, the courts didn’t bar automakers from developing their own technology.
The closest thing to a cup holder in early vehicles may have been some accessories to aid motorists looking to stop for a picnic. The Model T even had a complete kitchenette designed to strap onto the running board, with features such as a folding table, ice box, and storage compartments for butter and eggs.
Eating and drinking in vehicles became more common in the 1950s with the popularity of drive-in restaurants and theaters. Some vehicle models began to include small cup holder depressions in the glove compartment, though these were not sturdy enough to use during travel. Amazingly enough, the 1957 Cadillac Eldorado Brougham even came with a magnetized glove compartment and four metal cocktail tumblers.
Cup holders designed for use during travel began to appear in the 1960s, almost by accident. Ford’s Econoline van included a tray located near the floor, and the automaker realized that people were often keeping cups there. Worried that drivers might lose control of the vehicle while reaching for their drink, the automaker updated the design to include cup holders within easy reach. Chrysler would also stake a claim in the popularization of cup holders, saying they became more universal in the 1980s after they were included in the company’s popular minivans.
An infamous lawsuit likely had a role in making cup holders nearly ubiquitous in vehicles. After an elderly woman suffered severe burns after spilling hot coffee on her lap while riding in a 1989 Ford Probe, she sued McDonald’s and won a hefty settlement.
Although Ford was not named in the suit, the auto industry was likely spooked by the possibility that they could have been held liable. After all, the Probe had no cup holders. In particular, European automakers who had spurned the feature began to introduce cup holders not long after the litigation.
A 1900 Packard model is thought to have one of the earliest examples of a glove compartment, since it offered a “boot or box forming part of the body.” Other automakers soon followed suit. The storage box quickly came to be used for other protective wear, including driving gloves.
A White 1909 steam-powered vehicle with an acetelyne tank used to power the headlights. The vehicle also featured lanterns and a taillight fueled by oil. Photo courtesy of the National Auto Museum, Reno, Nev.
The popularization of the term “glove compartment,” however, is usually attributed to Dorothy Levitt. A prominent “Edwardian motorist” and the first woman to race a car, Levitt penned a handbook entitled The Woman and the Car to offer a number of recommendations for female drivers. Although she recommended a full set of driving apparel, including a muffler and washable overall, she noted how the “little drawer under the seat of the car” was a perfect place to keep gloves.
Amusingly enough, Levitt also prophesied the glove compartment’s use as a catch-all for all manner of vehicular detritus. The inventory of her under-seat drawer included an extra handkerchief, veil, powder puff, hairpins, and some chocolates.
Early attempts at car radios proved unpopular due to their expense, bulky size, and massive antennas. While an aftermarket Motorola radio introduced in 1930 is considered the first successful car radio, it still required complex installation and the added cost of $130 – about a quarter of the price of a Model A Deluxe coupe. Nevertheless, orders came pouring in after the radio was demonstrated at the Radio Manufacturer’s Show.
Vacuum tubes were used to power car radios for the first half of the 20th century. The FM band was included in car radios in 1952, with the AM/FM option debuting a year later.
Drivers interested in playing their own selection of music had, for a brief period of time, the option of purchasing a vehicle with a record player built in under the dash. Chrysler first introduced this option in 1956. Since competing record companies had different formats, the automaker opted to take a third option: designing its own “microgroove” format which could fit LPs on seven-inch records. A spring-mounted stylus was designed to resist bumps during travel.
While the system performed well in testing, it was less successful in practice. The bouncier suspensions of Chrysler’s more economical cars meant that record players in these models frequently skipped. In addition, there were only a limited number of records compliant with the new format.
Chrysler discontinued its “Highway Hi-Fi” system in 1959, though it also tried to introduce turntables into vehicles produced in 1960 and 1961. A British system, featuring a load-in slot, survived through 1970.
Further developments to car stereos included the transistor radio in 1963, 8-Track players in 1966, and stereo sound in 1969. Cassette players became widespread in the 1970s and had a surprisingly long run, making their last appearance on the 2010 Lexus SC 430. However, it’s worth noting that the popular British motoring program Top Gear also derided this model as the “Worst Car in the History of the World.”
The first factory-installed CD player appeared in 1985. Today, these are starting to go the way of the audio systems before them as newer models incorporate satellite radio and streaming services.
Nils Bohlin, who is credited with inventing the first truly effective seat belt. Photo courtesy of Volvo.
President Calvin Coolidge standing by an automobile equipped with an early form of radio in 1924. Photo courtesy of the Library of Congress.
On October 6th 2018, The Intergovernmental Panel on Climate Change released a special report for policy makers with an urgent message: in order to avoid the most catastrophic effects of climate change, we must reduce our greenhouse gas emissions 45% by 2030 and reach zero emissions by 2075.
While comprehensive climate change mitigation requires action across most sectors, transportation has become an area of increasing focus. As the leading contributor to U.S. greenhouse gas emissions, the transportation sector needs an overhaul to make any significant progress on climate change.
Fortunately, technology improvements have led to the development of electric vehicles, which produce less than 25% of the greenhouse gas emissions traditional vehicles emit, according to a report by the California Air Resources Board.
By October 2018 U.S. electric vehicle sales reached 1 million units. As the economy poises to embrace the electrification of transportation, many energy, automotive, and economic experts agree our future will be driven by an electrified transportation system, due to both the economic and environmental benefits of these technologies.
Yet even with clear benefits and increasing availability, there are consumers who are hesitant to switch to electric vehicles. What are three myths about electric vehicles that consumers need to know in 2019? Which startups are developing solutions to make the transition to electric vehicles easier?
1. Consumers believing electric vehicles are more expensive than traditional vehicles
In 2018, the upfront price of an electric vehicle was still on average higher than that of a traditional gasoline vehicle. However, the true price of a vehicle includes the lifetime costs of owning and operating it. A study by the Electric Power Research Institute, which examined lifetime costs of the electric Nissan LEAF and Chevy Volt, showed electric vehicles performed in many cases better than conventional vehicles, due to cheaper fuel and lower maintenance costs.
To subsidize the upfront costs, governments in major countries and cities where electric vehicles are prominent offer financial incentives to electric vehicle buyers. The U.S. Federal government provides a tax credit of up to $7,500 for buyers who purchase qualifying electric vehicles.
Regardless, the upfront costs of electric vehicles will likely fall over time. According to Reuters, major car manufacturers recently invested at least $90 billion into batteries and electric vehicles. This investment combined with rapidly improving battery technologies and dropping battery prices, will also drive down the cost of owning electric vehicles.
2. Consumers believing there are not enough public charging options available
Despite the benefits of electric vehicles, the general public is still hesitant to make the switch. Among respondents to a 2018 AAA survey, 63% cited not enough places to charge as a reason they were unsure or unwilling to choose an electric vehicle as their next car.
While most current electric vehicle owners charge at home, not every driver has home charging access, particularly those renting and living in apartments. According to the International Council on Clean Transportation (ICCT), cities in the U.S. tend to have less public charging per capita and have the highest ratio of electric vehicles to public charging.
In response to the charging shortage, state governments such as California, New Jersey, and New York have announced combined investments of $1.3 billion to build more public charging infrastructure. While consumers wait for more charging stations to become available, there are startups with technology solutions that currently enable electric vehicle owners to access everyday charging.
A California-based startup, EVmatch, is mobilizing the sharing economy to increase access to reliable electric vehicle charging options in a similar way to Airbnb and Uber. Using the EVmatch app, electric vehicle drivers find and reserve charging stations rented out by homeowners and businesses, increasing public charging options without needing new hardware.
Heather Hochrein, the Millennial founder and CEO of EVmatch, says that “we’re approaching public EV charging in a fundamentally different way. By using a peer-to-peer network, we offer reservable and affordable charging simply by taking advantage of existing resources.”
3. Consumers fearing they may run out of charge while driving
According to the same survey, 58% of consumers said they wouldn’t go electric because they feared running out of charge while driving. The average range of an electric vehicle today is 194 miles compared to the range of traditional gasoline vehicles which is 418 miles.
However with increasing investments into and improvements to technologies, the likelihood of running out of charge will diminish as the driving range for electric vehicles increase, and faster and more charging services become available.
There are currently three levels to electric vehicle charging speeds, and the difference among the three levels is significant. Level 1 can add two to five miles, while Level 3 can add 180 to 240 miles from a one-hour charge respectively.
Though charging speed can be appealing for consumers, it is arguably more important to have a charge when you need it. U.S. venture, Volta is trying “to build the most useful charging network for the amount of capital,” says Scott Mercer, CEO & Cofounder of Volta, by constructing public charging stations where there is the highest traffic and visibility.
Volta “partners with businesses to set a [charging] speed that matches the speed of the customers,” says Mercer. In this way, Volta can provide free sponsored public charging stations that integrates with everyday activities – charging your vehicle during a 30 minute visit to the grocery store or a two hour movie at the local cinema.
Additionally if you are fortunate enough to work for a company which supports electric vehicles, you may be able to access mobile charging solutions. FreeWire Technologies founded in 2014, manufactures mobile electric vehicle charging stations. Their Mobi charging unit can be booked by workers via their app, charging electric vehicles while parked at work.
As public pressure to address climate change grows, governments, utilities, advocacy groups, private businesses, and startups are responding to drive a shift to an electrified transportation system.
States like California that have the Zero Emission Vehicle (ZEV) programrequire auto manufacturers to offer specific numbers of clean cars, including electric vehicles, to consumers. Nine other states so far have joined California in adopting the ZEV program, accounting for over 30% of the U.S. auto market. As more states adopt the ZEV program, automakers will have no choice but to offer more affordable and diverse electric vehicles.
That’s why cities and states are focusing on consumer education with plans to increase public charging installations while, at the same time, private startups are developing innovative solutions to increase access to electric vehicle charging. Los Angeles hopes to install 25,000 electric vehicle charging stations by 2025, up from 1,800 today. And New York recently announced a $250 million investment in DC fast charging stations to be installed along major corridors and John F. Kennedy Airport.
These efforts are beginning to pay off. In the U.S., electric vehicle sales have been hovering around 1% for the last two years, but electric vehicle sales in April 2018 were 1.74% of total light vehicle sales. To compound this fairly significant and rising growth in market share, 2018 saw an 81% increase in electric vehicle sales from 2017. It’s clear that the electric vehicle movement is coming , and drivers should make the switch that may prove decisive in the fight against climate change.
The tariffs that President Donald Trump may impose on vehicles imported to the U.S. would be just the latest kick in the teeth for carmakers battling cooling markets across the planet.
Findings of an investigation into whether imported cars could pose a national security threat were received by Trump on Sunday. That was hours before China reported yet another monthly slump in car sales. The world’s largest auto market joins other regions including Europe and the U.S. starting the year on a weak note, fueling anxiety over an industry already grappling with falling profits amid record spending to finance the shift to electric and self-driving cars.
China passenger vehicle sales fell by most since 2012 as economy, trade woes mount
Source: China Association of Automobile Manufacturers
The persisting gloom in China, the engine room for growth over the past decade, leaves automakers with few places to go. Japan is sputtering too, while volumes in other smaller markets aren’t enough to offset the declines in the biggest sales regions.
“Downward pressure is still there,” Gu Yatao, a Beijing-based auto analyst with Roland Berger, said of China. “The government isn’t adopting stimulating policies to give the market a shot in the arm.”
The global slowdown has hit earnings of almost everyone from Ford Motor Co. to Volkswagen AG and Toyota Motor Corp. to pile on the pressure as they spend on electrified and autonomous vehicles. In addition, trade woes, political upheaval and diesel’s demise are hurting consumer sentiment, while the increasing availability of ride-hailing and car-sharing services makes it less necessary to own a car.
Even with an expected recovery in China in the second half, the global car market will stall this year or grow just 1 percent, said Janet Lewis, an analyst at Macquarie Group Ltd. in Tokyo. The U.S. and European markets will be little changed, she predicts.
“You can’t expect mature markets to grow significantly,” said Zhou Jincheng, an analyst at research firm Fourin Corp. in Nagoya, Japan. “The complexity of global trade environment is not helpful either.”
Sales to China’s dealers plummeted 17.7 percent last month as the world’s second-largest economy slowed and negotiations with the U.S. for a trade-war truce dragged on. Consumers stayed away from showrooms even with discounting by dealerships ahead of the Chinese New Year Holiday. Last year, the market contracted for the first time since the early 1990s.
That’s leaving manufacturers who’ve spent billions of dollars adding plants and production lines in China in the past decades uncertain if and when growth will return. Geely Automobile Holdings Ltd. targets sales of 1.51 million cars this year, an increase of just 0.7 percent from 2018. Volkswagen, the No. 1 foreign manufacturer on the mainland, is expecting further growth for the company this year, but has predicted the overall Chinese market to shrink in the first half.
Jaguar Land Rover Automotive Plc’s problems in China forced its parent to take a $3.9 billion writedown this month. Daimler AG and BMW AG reduced profit forecasts last year amid pressures from the U.S.-China trade war that’s hit auto demand, while Hyundai Motor Co. said last month it’s letting workers go as it reviews production plans in the country.
What’s happening in China is a reflection of the situation worldwide. In Europe, car sales declined for a fifth straight month in January. In the U.S., the top four premium car brands all posted sales declines last month to deepen a slump that began taking hold near the end of 2018.
Then there’s Trump, who has threatened a tariff of as much as 25 percent on imported autos, risking a further hit to vehicle demand and carmakers’ bottom lines. The U.S. president has received the findings of a probe into whether imported vehicles pose a national security threat, the Commerce Department said Sunday.
The main suppliers of cars into the U.S. are among America’s top allies
Source: International Trade Administration, citing data on U.S. imports of new passenger vehicles and light trucks.
The probe covers imports of vehicles including SUVs, vans and light trucks, as well as auto parts. American and foreign-based auto manufacturers have been lobbying against it, and Trump now has 90 days to decide whether to act on the findings.
A record number of Americans are falling behind on car loan payments, as more than 7,000,000 car loans were past due by at least 90 days, according to data released by the New York Federal Reserve.
According to Forbes, there were 74,000,000 car loan accounts across the united states back in 2003.
Ten years later in 2013, that number increased to over 81,000,000.
And recently, the number is now over 100,000,000.
“We’re seeing that I think because, with technology, the automobiles are becoming more expensive,” said Matt Maxwell, with Reliable Chevrolet.
Maxwell said more loans means more potential defaults.
“You know, safety, things like that, the cars have gotten more expensive, and so payments are going up, so higher the payment, little bit tougher to make sometimes,” Maxwell said.
“It sounds to me like we have a lot of people who need to take a serious look at their spending habits,” said James Philpot, an associate professor of finance at MSU.
Philpot explained potential reasons why so many people are missing their car payments.
“Maybe consumers got overconfident and overreached, and it could be well okay I have this job now, but maybe the wage growth hasn’t quite kept up with the spending,” Philpot said.
“They don’t have any money down, they finance for the longest term, they go out and they decided, in 36 months, that they really would like a different car, and they really can’t afford to do that because they’re upside down,” said Debbie Bills, a consumer loan sales manager at Arvest Bank, “so what happens is when they’re financing that car back into the price into the new car they’re wanting, so it’s kind of a vicious cycle.”
Bills stressed the importance of doing research before purchasing a vehicle.
“Knowledge is power,” Bills explained, “so, if you have the knowledge before you go in, you’re not as apt to overpay for a car or to get yourself in a payment that you can’t really afford.”
Philpot said something to keep in mind is the “20, 4, and 10” rule.
The “20” stands for having at least a 20% down payment, “because that gives you a big cushion against getting inverted in the car, should you see a decrease in the value,” said Philpot.
“4” stands for trying to get the loan for four years, “not six, so that you can get the car paid for more quickly, well within its useful life period,” Philpot said.
And the “10” stands for using 10% of your monthly income on auto payments, Philpot said, “for some people, some of those numbers might not just be very realistic, but it’s a rule of thumb.”
Financial experts say in addition to making sure you can afford the vehicle it’s also important to budget for insurance, gas, maintenance, and all that extra money needed to own a car.
European carmakers’ share rally this year might hit a roadblock as a U.S. probe of auto imports raises the potential of new tariffs, with underperforming German manufacturers particularly at risk.
U.S. Commerce Secretary Wilbur Ross submitted a report to President Donald Trump on whether vehicles made abroad pose a national-security risk, according to a statement Sunday. Trump will have 90 days for any response and, if he says he’ll move forward with measures under Department of Commerce recommendations, another 15 days to act.
U.S. government officials haven’t given any insights into the findings. At the Munich Security Conference on Saturday, German Chancellor Angela Merkel rejected the idea that her country’s autos pose a threat to the U.S.
Car producers’ and suppliers’ stocks in Europe have gained in 2019 — with the Stoxx 600 automotive index jumping 9.6 percent — amid optimism that the U.S.-Chinese talks will resolve a dispute hampering the industry worldwide. BMW AG and Volkswagen AG have lagged behind as the German companies grapple with weakening demand in their home region and China.
Even with this year’s bounce, the industry still trades at a depressed valuation, with a price-to-earnings ratio of 6.6 that’s by far the lowest among all the sectors in Europe. And the automotive gauge is down 24 percent from a year ago. That’s a little before Trump began tweeting threats to tax German makers’ vehicles, though he’d complained since mid-2017 about the cars’ presence on U.S. streets.
While Trump and European Commission President Jean-Claude Juncker agreed in July to hold off on new tariffs during discussions to resolve an American-European dispute, the U.S. leader’s repeated tweets may indicate he’s primed to add import fees especially targeted at cars from the bloc, according to analysts.
“The risk that tariffs between Europe and the U.S. will come is rather high — I would say slightly more than 50 percent,” Juergen Pieper, an analyst at Frankfurt-based Bankhaus Metzler, said in an email. “Trump seems to have a real problem with German cars.”
The European Union estimated in June that a 25 percenttariff would add about 10,000 euros ($11,300) to the sticker price of a car made in the bloc and sold in the U.S., and would cut American purchases of vehicles and parts in half. The Munich-based IFO Institute’s Center for International Economics calculates that an import fee of that size would cut German car sales to the U.S. by almost 50 percent, or about 17 billion euros, eroding total auto exports by 7.7 percent.
Daimler AG’s Mercedes-Benz brand and BMW, the world’s two biggest makers of luxury cars, and Volkswagen, the largest auto producer globally, have the most at stake from any U.S. trade penalties, even as they’ve reduced the need to bring in vehicles by building American plants. The U.S. is the second-largest market for both Mercedes-Benz Cars and BMW.
France’s Renault SA and PSA Group, the owner of the Peugeot and Citroen marques, don’t sell vehicles in the U.S. PSA shares outperformed the European automotive benchmark in the past 12 months, while among carmakers with a U.S. presence, Daimler has posted the gauge’s worst decline.
Car and component exports from the EU to the U.S. totaled $62.5 billion in 2017 while imports amounted to $17.7 billion, according to a Feb. 15 note by Bernd Weidensteiner, an economist at Commerzbank AG. Germany accounted for $30.5 billion of the outbound figure, though only $8.5 billion of purchases from the U.S.
Even as American imports have declined in recent years as manufacturers established significant U.S. production, the German surplus of $22 billion is “a particular thorn in the side of President Trump,” he said.
President Donald Trump is hailing a renaissance in U.S. auto manufacturing that has not happened. The industry is chugging along without the “massive numbers” of car companies that he says are setting up shop in the country.
Always eager to claim a manufacturing revival, Trump in recent weeks has spread the notion that car makers are rushing to produce in the country. It’s become a leading justification for his apparent evolution on legal immigration, although whether he’s really changing on that subject is suspect, too. He now says the U.S. needs more foreign workers to keep up with the demand. But he’s misrepresenting the state of the auto industry.
A look at his comments:
TRUMP: “A lot of car companies are coming back to the United States. “ – Cabinet meeting Tuesday.
TRUMP: “We’re most proud of the fact – you look at the car companies, they’re moving back, they’re going into Michigan, they’re going into Pennsylvania, they’re going back to Ohio, so many companies are coming back.” – El Paso, Texas, rally Monday.
TRUMP: “We have massive numbers of companies coming back into our country – car companies. We have seven car companies coming back in right now and there’s going to be a lot more.” – remarks to reporters Feb. 6.
THE FACTS: There’s no such discernible influx.
Since Trump took office in 2017, auto manufacturing employment has risen by about 51,000 jobs to just over 1 million, according to the Labor Department. That’s a 5 percent increase over two years.
There have been new factory announcements, but excluding those that were planned before Trump took office, they don’t add up to seven.
Last month, Volkswagen announced plans to expand manufacturing in Chattanooga, Tennessee.
Toyota is building a new factory in Alabama with Mazda, and Volvo opened a plant in South Carolina last year, but in each case, that was in the works before Trump took office.
Fiat Chrysler also has nebulous plans to return some pickup truck production from Mexico to suburban Detroit next year, and it may reopen a small Detroit factory to build an SUV. At least one Chinese automaker wants to build in the U.S. starting next year but hasn’t announced a site.
Against those uncertain and limited gains, GM is laying people off and plans to close four U.S. factories. Both GM and Ford also are letting go of white-collar workers in restructuring efforts.
As for legal immigration, Trump asserted in his State of the Union address last week: “I want people to come into our country in the largest numbers ever but they have to come in legally.”
Although he has talked about switching to a merit-based, instead of family-based, immigration system, his policy proposals to date do not reflect a wish for more legal entries. He’s proposed sharp limits on the ability of citizens and permanent residents to bring in family, slashed the number of refugees the U.S. will accept for two years, proposed eliminating diversity visas and taken steps to limit asylum seekers – all paths for legal entry.C
Car sales in China continued to decline in January after their first full-year slump in more than two decades, adding to pressure on automakers who bet heavily on the market amid waning demand for cars from the U.S. to Europe.
Passenger vehicle wholesales fell 17.7 percent year-on-year, the biggest drop since the market began to contract in the middle of last year, while retail sales had their eight consecutive monthly decline, industry groups reported Monday.
Car sales in China continues to fall on economic slowdown, trade tensions
Source: China Association of Automobile Manufacturers
“Downward pressure is still there,” Gu Yatao, a Beijing-based auto analyst with Roland Berger, said before the figures were released. “The government isn’t adopting stimulating policies to give the market a shot in the arm.”
The persisting slump leaves carmakers with few places to go for sales growth. The markets in Europe and North America are shrinking as the increasing availability of ride-hailing and car-sharing services makes it less necessary to own a car. Japan is sputtering too, while volumes in other smaller markets aren’t enough to offset the declines in the biggest sales regions.
Sales in China continue to be suppressed as the world’s second-largest economy slows and negotiations with the U.S. for a trade-war truce drag on. Consumers stayed away from showrooms even with discounting by dealerships ahead of the Chinese New Year Holiday.
The wholesale decline in January, to 2.02 million units, accelerated from a 15.8 percent slump in December, the China Association of Automobile Manufacturers said. For last year as a whole, the drop was 4.1 percent, the first decrease since the early 1990s.
Retail sales dropped 4 percent to 2.18 million units, China Passenger Car Association said.
The first half of 2019 will continue to see downward pressure, as a purchase-tax cut in effect in 2016 and 2017 prompted many consumers to purchase vehicles earlier than planned, and now have no need to buy, said John Zeng, managing director of LMC Automotive Shanghai.
Car manufacturers that spent billions of dollars adding plants and production lines in China in the past decades are now uncertain if and when growth will return. The economic and geopolitical hurdles are prompting the companies be more cautious with their annual sales targets.
Geely Automobile Holdings Ltd. targets sales of 1.51 million cars this year, an increase of just 0.7 percent from 2018. Volkswagen AG, the No. 1 foreign manufacturer on the mainland, is expecting further growth for the company this year, but has predicted the overall Chinese market to shrink in the first half.
Jaguar Land Rover Automotive Plc’s problems in China forced its parent to take a $3.9 billion writedown this month. Daimler AG and BMW AG reduced profit forecasts last year amid pressures from the U.S.-China trade war that’s hit auto demand, while Hyundai Motor Co. said last month it’s letting workers go as it reviews production plans in the country.
What’s happening in China is a reflection of the situation worldwide, with rising prices, political upheaval, dislike for diesel and new services such as Uber and Lyft eating into auto demand in markets such as the U.K. and the U.S.
In Europe, car sales declined for a fifth straight month in January, while in the U.S. the top four premium car brands all posted sales declines last month to deepen a slump that began taking hold near the end of 2018. President Donald Trump has threatened a tariff of as much as 25 percent on imported autos, risking a further hit for vehicle demand.
China’s car market will probably be little changed in 2019, CAAM predicts. Last month, the government announced measures to spur car demand but the move fell short of expectations and lacked details. The stimulus actions include letting local governments provide subsidies to rural residents for purchase of some types of trucks and cars.
Carmakers are now increasingly placing their bets on electric vehicles, which are gaining popularity amid China’s environmental policies. The state introduced stringent rulesto promote the sale and production of greener cars, with major manufacturers facing penalties unless they meet quotas for zero- and low-emission cars or buy credits from other companies that exceed the quotas.
China’s automobile sales in January fell 15.8 percent from a year earlier, the country’s top auto industry association said on Monday, marking the seventh straight month of declining sales in the world’s largest auto market.
China’s Association of Automobile Manufacturers (CAAM) said in an emailed statement to Reuters that sales dropped to 2.37 million vehicles last month. This follows a 13 percent drop in December and a 14 percent fall in November.
China has been grappling with slowing economic growth as well as the fallout of trade frictions with the United States, forces which contributed to its auto market contracting for the first time in more than two decades last year.
Beijing is now trying to persuade consumers to loosen their purse strings and has pledged to provide subsidies to boost rural sales of some vehicles and purchases of new energy vehicles.
Industry executives also say China’s car sales in January and February tend to be affected by the Lunar New Year holiday, as consumers hold off on their car purchasing decisions around the festival.
The holiday’s dates change annually but tend to occur in either month. It took place in the first week of February this year.
China’s sales of new energy vehicles, however, continued to buck the trend, totalling 95,700 in January, a year-on-year increase of 140 percent, CAAM said. (Reporting by Yilei Sun and Brenda Goh Editing by Jacqueline Wong)
UAE-based automotive company W Motors’ has announced the unveiling of MUSE at Auto Shanghai 2019 on April 16.
The fully-electric MUSE features a Level 4 / Level 5 autonomous driving system, innovative user interfaces and cloud-computed connectivity, as well as several interior configurations catering to different business needs and consumer requirements. It will be fully produced in Dubai, UAE by W Motors at the all-new production facility of which the first phase is set to be completed in the last quarter of 2019.
Pioneers of the future of driving, W Motors is the first and only automotive developer in the Middle East – in partnership with sister company ICONIQ Motors – to release a self-driving vehicle, designed to be on the road for EXPO 2020 in Dubai.
MUSE was developed by W Motors and ICONIQ Motors in collaboration with international partners AKKA Technologies, Magna Steyr and Microsoft USA, each offering highly specialized and cutting-edge technologies in the realm of advanced autonomous driving solutions. With its name deriving from the greek goddesses of inspiration, all elements of the MUSE create a balanced harmony of the science and art of automotive technology and functionally aesthetic design.
W Motors Founder & CEO, Ralph R. Debbas says, “The move from conventional vehicles to electric will happen much sooner than we expect, and we are honoured to be part of this movement – as well as Dubai’s vision for the future of mobility. Autonomous vehicles will change the way we travel and connect with one another, and as a UAE-based company, it is an exciting achievement for us to be leading the way in the region’s development within this sector.”
The announcement comes in line with the recent introduction of the Dubai Autonomous Transportation Strategy, which is expected to bring Dh22 billion in annual economic revenues by reducing transportation costs, carbon emissions and accidents, raising the productivity of individuals and saving hundreds of millions of hours wasted in conventional transportation.
The MUSE Level 5 show car was presented ‘pre-launch’ for the first time during a private function at W Motors flagship gallery on February 13, 2019. An official signing ceremony with the private office of Sheikh Saeed Al Maktoum also took place earlier that day.
By 2040, 30 percent of all new car sales will be electric, according to analysts at IHS Markit.
What does this massive increase of electric vehicles mean for the future of oil?
Is the death of crude oil imminent? It doesn’t appear to be, and there is still reason for oil markets to be skeptical of a near-term massive decline.
Just two percent of all auto sales today are electric. It is estimated that over 3.5 million electric cars are on the road today, and there may be as many as 36 million electric cars by 2025. By 2040, 30 percent of all new car sales will be electric, according to analysts at IHS Markit. What does this massive increase of electric vehicles mean for the future of oil?
The largest disrupter to the future of oil may be coming from China. Elon Musk has big plans in China where electric vehicle sales are 3 times higher than they are in the United States. Tesla has just broken ground on a massive gigafactory that will have capacity to manufacture 500,000 cars per year.
Since tariffs have driven up the price of importing these vehicles, Tesla will now be able to build locally and bypass tariffs. In addition, BP Ventures just invested in the Chinese electric vehicle (EV) charging start-up PowerShare.
China is targeting sales of more than 7 million EVs by 2025, up from just 350,000 over the last 12 months. By 2030, China will overtake the United States as the largest consumer of oil with net imports reaching 13 millionbarrels per day (the U.S. currently consumes about 20 million barrels per day).
Global oil demand is forecast to stall within the next decade, and the rise of EVs may accelerate the decreased demand. According to the Energy Information Administration, global oil demand is expected to average over 101 million barrels per day in 2019. But growth may have already peaked. The EIA’s estimate is a reduction of about 100,000 from its previous outlook.
The 101 million barrels consist of approximately 80 percent crude oil and 20 percent natural gas liquids. According to EIA, about 55 percent of the crude oil demand is for transportation while 35 percent is for industrial use and the remainder in other categories such as electricity. IHS also estimates that roughly a third of global oil demand is from cars: 40 percent of the growth since 2000 has come from cars. Again, the growth of EVs, especially in China, may greatly affect this number.
China closely reflects the conditions of the global auto market and is likely to impact the demand for gasoline over the next 10-20 years. This has been reported as a possible devastating hit to the oil industry due to the anticipated decline in future demand for oil and gasoline. But, based on the above figures, it is estimated that the increased demand for EVs as opposed to gasoline powered autos may reduce oil consumption by approximately 5 million barrels per day – or 5 percent of the daily production. In 2017-18, EVs displaced only about 50,000 barrels of the 100 million per day global demand, according to IHS.
But is the death of crude oil imminent? It doesn’t appear to be and there is still reason for oil markets to be skeptical of a near-term massive decline. Auto manufacturers need to reduce the prices of EVs and there are not enough fast-charging stations available for convenient long-distance travel. The number of electric charging stations in the US is small but growing.
As of September 2018, there are an estimated 22,000 public charging stationsin the US and Canada that are classified as level 2 and DC fast charging. (Typically, fast-charging stations supply 60 to 80 miles of range for every 20 minutes of charging). By comparison, there are seven times more gas stations: about 168,000, according to FuelEconomy.gov. This is one of the reasons that in my opinion we are still years away from electric vehicles having an impact on gasoline demand.