Memphis Daily News Chandler Reports Nashville Ledger
» Subscribe Today!
The Power of Information
Home
The Ledger - EST. 1978 - Nashville Edition
X
Skip Navigation LinksHome > Article
VOL. 43 | NO. 25 | Friday, June 21, 2019

Tennessee’s carmakers are focused on the next generation of global consumers

Nissan, GM, VW all-in on electrics, self-drivers

By Sheile Burke

Print | Front Page | Email this story

Tennessee’s three big automakers, General Motors, Nissan and Volkswagen, are being forced to adapt to a global economy largely dictated by China. Why? Because China is now the world’s largest producer and consumer of automobiles.

And the Chinese are going all-out to make electric vehicles. What does that mean for Tennesseans and the state’s auto industry? Expect big changes to vehicles in the coming years, with all three automakers phasing out their existing lines for both electric vehicles and self-driving cars, analysts say.

In order to compete in a global marketplace, where Europe, China and others are moving to meet far stricter emission standards than in the U.S., Tennessee’s automakers have got to move swiftly toward electrification and automation.

“An easier (emission) standard in the U.S. still doesn’t mean that they don’t need to develop these technologies,” says Bernard Swiecki, assistant director of Industry Labor and Economics at the Center for Automotive Research, a nonprofit auto industry think tank. “They still do because they all sell in other places around the world.”

And those other places, Swiecki says, are not letting up on moving to electrification and automation.

That’s the major reason VW is betting its future on electric vehicles, he adds. The German automaker, which has a large operation in Chattanooga, has set a goal of selling 1 million electric cars by 2025.

Nissan North America, headquartered in Franklin, is already trying to best Tesla as the world’s largest maker of electric vehicles.

And General Motors, which builds cars in Spring Hill, is banking on its luxury sport utility vehicles to be popular while the Detroit-based automaker spends big on research on self-driving technologies and EVs while delivering more fuel-efficient autos.

Will Tennesseans want to drive these new vehicles in the not-so-distant future?

Industry analysts say yes.

And while it’s true that the Ford F-150 is still the most popular vehicle in Tennessee, Kelley Blue Book reports, Tennesseans like to drive vehicles that are made here. The Nissan Rogue and Nissan Altima, both made in Smyrna, were the two most popular vehicles sold last year in the Volunteer state following the popular Ford pickup, figures from Kelley Blue Book show.

There also is growing demand for electric vehicles globally, and the U.S. is the second-largest market for EVs after China, says Amanda Plecas, a representative for the VW plant in Chattanooga. And Tennesseans will want these fun-to-drive vehicles because they save money on fuel and maintenance costs and are good for the environment, she adds.

The shift to electric vehicles won’t happen overnight, she continues, but it will come as the cost of making them declines and the charging-station infrastructure is built throughout the country.

In January, the German automaker announced that the plant in Chattanooga would serve as Volkswagen’s North American base for manufacturing electric vehicles, representing an $800 million investment and 1,000 new jobs.

Policies lag technology

Electric vehicle prices will drop rapidly as cars become capable of going much farther on a charge in the near future, says David Greene, a research professor in the Department of Civil and Environmental Engineering at the University of Tennessee at Knoxville. Still, not more than 1.5% of all vehicles sold in the U.S. are plugin electric or plugin hybrid, he points out. The government, he notes, has got to do much more to move the country to EVs.

“Without policy to drive that transition, it’s not likely to happen,” Greene says. “But I think the auto industry is convinced that sooner or later this is the way things have to go. Because otherwise, we will be doing serious damage to our climate, and it will be dangerous for future generations.”

The auto industry is expected to spend unprecedented sums of money in the near future developing electric and self-driving cars, consulting firm AlixPartners predicts. Automakers are expected to spend $255 billion on research and development and capital expenditures globally on electric vehicles, a report by the consulting firm adds.

More than 200 electric vehicle models could be on the market as early as 2022, the firm estimates. Many of those vehicles, however, won’t be profitable because of the high cost of making them, inadequate projected sales and intense competition to get them to consumers.

Nissan is going full-speed ahead with new technologies. The Japanese automaker announced in March that it’s LEAF EV has become the first electric car to surpass more than 400,000 in sales.

Nissan continues to offer a strong lineup of cars, trucks, SUVs and crossovers to meet the needs of a broad range of customers, says Lloryn Love-Carter, a spokeswoman for the company. The production lines in Tennessee include the popular Rogue crossover and the Altima sedan, as well as the Pathfinder SUV, the Maxima sedan and the all-electric LEAF.

“We are committed to bringing innovative technologies to market for our customers, including the LEAF electric drive system and ProPILOT Assist, our single-lane driver assistance system,” Love-Carter explains.

The Japanese automaker announced earlier this year that it had hit a slump with global sales falling 2.8% in 2018 to 5.7 million. Nissan has been coping with mounting pressures that include the November arrest of former chairman Carlos Ghosn, who has been accused of financial misconduct.

Adding to the company’s woes was a decision by Netherlands-based Fiat Chrysler Automobiles NV to propose a merger with French carmaker Renault SA. That proposal appears to have caught Nissan off-guard.

Renault owns 43% of Nissan. The merger would have created the world’s largest automaker and was intended to help both automakers weather the industry’s challenge of lagging sales amid a race to get more EVs and autonomous vehicles to market. Fiat Chrysler withdrew the merger offer with Renault after the French automaker had sought more time to convince Nissan to agree to the deal.

The French government, which owns a stake in Renault, called Fiat Chrysler’s behavior “pushy” and blamed the automaker for placing “massive pressure” on quickly taking an offer, The Associated Press reported.

Love-Carter declined to comment on the proposed merger.

GM still bullish on SUVs

As for General Motors, which has a large plant in Spring Hill, the Detroit-based automaker says its priority is making electric and self-automated vehicles, but also helping drivers transition to that future.

“We’re fully behind developing electric vehicles that will be very affordable and desirable and attainable to everyone,” says GM Spring Hill plant executive director Ken Knight. It won’t be this year or next, he adds, but they will be coming in the next five to 10 years.

“So, I think it’s a fairly simple bridge to believe that our factory here in Spring Hill will adapt and change and be able to make the product for the future, which I think will be electric.”

Late last year, GM announced that it would cut 15% of its salaried workforce and close five plants in the U.S. and Canada. Tennessee was not affected by the restructuring plan, which will reportedly save the company $6 billion through 2020. The move allows the Detroit automaker to take the focus off sedans and concentrate on more fuel-efficient, larger vehicles, EVs and self-driving cars.

Much has been reported about the supposed death of the sedan, but they still account for a third of all car sales in the U.S., says Swiecki, of the Center for Automotive Research.

GM is catering to customers who like SUVs. More advanced fuel-efficient technology to the automaker’s V-8 engines means large vehicles – which many consumers still demand – get good mileage, Knight says. The Cadillac Escalade, the GMC Denali pickup and other large vehicles in the company’s lineup are now getting gas mileage in the mid-20s, he notes.

The Spring Hill plant is getting ready to roll out the Cadillac XT6 premium three-row SUV. “It’s going to hit the heart of the demand for that family-friendly luxury sport utility,” Knight continues.

Regardless of the type of vehicle made here, the auto industry is vital to the state’s economy, says Carly Schroer, a spokesman for the Tennessee Department of Community and Economic Development. In addition to the major assembly plants of the three automakers, the state has automotive operations in 88 of 95 counties.

Transportation equipment is Tennessee’s top export – accounting for 22.8% of the state’s total exports, state figures show.

Two-thirds of a vehicle’s value comes from the suppliers, and not the automakers, Swiecki says. The sheer number of suppliers across the state, feeding to Japanese, European and American automakers, makes for a thriving auto industry in Tennessee, he adds.

“And Tennessee’s central location means that those suppliers are also poised to sell to plants in other states,” Swiecki points out.

“So, the solid nature of the suppliers’ sector in Tennessee is, I think, a big part of the story. Because, again, they contribute more of the value of the vehicle than the automakers.”

Follow us on Facebook, Twitter & RSS:
Sign-Up For Our FREE email edition
Get the news first with our free weekly email
Name
Email  
TNLedger.com Knoxville Editon
RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 0 0 0
MORTGAGES 0 0 0
FORECLOSURE NOTICES 0 0 0
BUILDING PERMITS 0 0 0
BANKRUPTCIES 0 0 0
BUSINESS LICENSES 0 0 0
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0