And So We Drive

I recently drove the Lamborghini Huracán and Mclaren 720s back-to-back and was curious whether my own opinions would align with Trait Signal’s data. We used those two cars for the basis of this week’s Tidbit, and on the three traits we highlighted in that post, I agree.

Where I’m not sure I agree is about “Engine” (which we didn’t include in the Tidbit). According to Trait Signal, driver sentiment toward that trait is more favorable for the 720s than the Huracán, but I think I’d put them the other way. The 720s is obviously quicker, but on Engine alone, I think I’d have the Huracán’s snarly V10 over the 720s’s V8. (And I say this as someone who daily drives a 12C.)

There has been a lot of coverage over the last two weeks of Aston Martin’s potential plans to raise additional capital. Every article I’ve seen suggests that the company is looking to raise additional equity funding; of those, most speculate that Canadian billionaire Lawrence Stroll is the most likely source.

For my part, I can’t work out a scenario in which a minority equity investment makes sense right now from a business strategy perspective. If the conversations are actually about the acquisition of a controlling interest, things seem slightly more plausible, but even then, I can’t see how the timing is right.

To start with recent events and work our way back, Aston Martin itself has partially confirmed these most recent press reports, issuing the following “Statement re Press Comment” to the London Stock Exchange:

Aston Martin Lagonda (the "Company") notes recent press speculation.

The Company confirms that it is reviewing its funding requirements and various funding options. It is also engaged in early stage discussions with potential strategic investors in relation to building longer term relationships which may or may not involve an equity investment.

A further announcement will be made as and when appropriate.

Meanwhile, just a few weeks prior, CEO Andy Palmer stated that the company is not actively seeking additional equity investment:

You know what we would have to do if there was an official approach. Beyond that, I can't comment.

[...]

We're certainly not actively soliciting any other participation. That's not to say it doesn't come.

And, finally, back in September, the company raised $150 million in bonds, intended to capitalize operations through the launch of the upcoming DBX SUV.

I don’t have any inside knowledge or certainty, but it doesn’t make sense to me that Aston Martin would raise outside equity right now.

There are a few ways this can play out:

  1. 1) The company is considering a minority investment now, and the DBX SUV is as successful as Aston has projected. In this, if the company were to raise additional equity right now, it would have been unnecessary. Existing investors would be diluted by new shareholders, with no benefit — they’d have raised cash that is not needed.

  2. 2) The company is considering a minority investment now, and the DBX SUV is not as successful as Aston has projected. In this case, the extra money raised might mitigate the downside somewhat for prior investors, but they’d still probably lose a substantial amount of money.

  3. 3) The company is considering its complete sale, or the sale of a controlling interest, now. From Aston’s perspective, this could make sense if existing equity holders don’t want to bet that the DBX will be a success. The problem with this scenario, however, is that if insiders are betting that events will play out that way, and so are looking to sell now, then why would an outside buyer want to buy a controlling interest at current prices? Better to wait and purchase once the company is further distressed.

Given the above, it’s hard to see the benefit to current shareholders of raising minority equity at this time. They’d be giving up profit in the case that the DBX launch goes well, and still be vulnerable to substantial losses if it does not.

A larger sale, of a controlling interest (or of the entire company), might make much more sense to the existing stockholders, but in that circumstance, I can’t see how it would make sense to a potential buyer.

I expect one of two fact-patterns underlies the recent news coverage. Either Aston is doing much worse than it has yet publicly disclosed, in which case a sale is more likely, or some discussions have taken place, unsolicited, but those discussions will not materialize into a deal.

It’s possible that a deal of some kind in progress, but for the above reasons, I don’t think a pure equity investment or purchase makes any sense. The only plausible scenario I can see for a deal here would be if the actual discussions are around a more substantial, forward-looking joint venture, in which the existing equity holders see upside. If that’s the crux of it, then part of getting that deal done might certainly involve issuing some ownership to the other party, but if that’s the case, I don’t think the motivation would be to get additional short term cash on the balance sheet.

Under any other circumstances, a near term investment or sale doesn’t make sense to me. We shall see if I’m right.

Speaking of using your own products, Trait Signal just started a new, weekly series of posts over on its main blog. Each week, we’ll feature a finding from someone on the team, highlighting an interesting insight about driver preferences, derived from Trait Signal data.

Over the last ten years, I’ve been a decision-maker in about a dozen startups. In about half, I’ve been a founder or investor; in the other half, an early employee or consultant. Most have been software of one kind or another, ranging from videogames to SaaS platforms. (Though one of them made shirts.)

I spent last weekend using and testing product for one of these, and am spending this week doing the same for another. Looking back at all the companies I’ve worked with, I have a theory: the best approximation for the quality of a product is how much time the company’s own team spends using its product.

This metric isn’t something an incoming investor, prospective employee, or potential customer has ever asked me, but it should be.

More than one factor is at play here, and of course, the reason to use your own product varies by type of product. It’s very different for a team that makes videogames to use its product than it is for a team that makes a SaaS platform, particularly if that platform targets business users that are unlike the startup itself.

But that’s precisely why I like this as a metric: there are many different reasons to use your own product, and yet it all ends up in the same place. As a single metric, it cuts across just about every kind of startup.

I see three main reasons for the correlation:

  1. 1) Embarrassment.

  2. 2) Product/Market Fit

  3. 3) Details

I’m sure there’s an exception to this rule somewhere, but I’ve never seen a product succeed that the founding team doesn’t use as much as it can — and in my experience, as soon as you see the opposite trend start to happen (the team beginning to use the product less), it’s a huge red flag.

To get a bit deeper into each, let’s start with Embarrassment. When a company knows its product isn’t quite right, the team is embarrassed (sometimes unconsciously), and doesn’t want to use the product as much.

For example, back when I made videogames, it was always the good ideas that got played the most and tested the most. When we had something that wasn’t as good, just playing it made us cringe. No one wanted to test, and no one played for fun. The difference between good content, with potential, and bad content, without, wasn’t just in how many bugs there were. Great content with a lot of bugs was still something everyone wanted to test, and bad content, even if it was bug-free, was always something you wanted to rush through.

The amount we played with something was a better indicator of quality than our actual feedback on the feature we were playing.¹

Next, Product/Market Fit. When the team doesn’t have reason to use their own product, either the market fit probably isn’t right, or the group isn’t diverse enough to include its intended users. Either way, this bodes poorly.

The details here will vary for different types of startups. If you make enterprise software for a different industry, it can be hard to use that software every day. But here, the metric is whether the team uses the software as much as they can. I once worked with a startup whose SaaS product was conceived to address a pain point the founder had had for years, and yet, when they got to release candidate stage, the founder still was not using the product. If it wasn’t the right fit for the founder, how could it ever be for a customer who supposedly had the same need?

Finally, the Details

Using a product to solve the same problem it should solve for your customers is the only way to get the details right. Hopefully, the team will get the broad strokes right in its design meetings, strategy sessions, and focus groups. Then it builds it, attaches all the buttons, and makes sure everything works. And hopefully, it does. But it’s by actually using the product, for its actual intended purpose, that the team makes it feel right to use, and gets it to the point that, when others use it, they can do so in a state of flow. That’s how a product gets sticky.

There are many reasons startups don’t get off the ground, even with the best products in the world. If a startup is using its own product, it still may not succeed. But in my experience, a team using its own product is absolutely necessary, even if not quite sufficient, for success.²

Notes

  1. Alas, that was 10 years ago, and I didn't learn this lesson until years later.
  2. The shirt company, incidentally, is one that didn't work for other reasons -- but for what it's worth, I have our inventory, and they're still the only dress shirts I own.

Nissan Motor Co (7201.T) reported a 70% drop in quarterly profit on Tuesday and cut its full-year forecast to an 11-year low, hit by a strong yen and falling sales, and highlighting the turmoil at the Japanese automaker after the ouster of Carlos Ghosn.

The latest weak showing from Nissan, which also slashed its interim dividend by 65% after its worst second-quarter performance in 15 years, illustrates the scale of the work ahead for its new executive team, which is due to take over on Dec. 1.

[...]

The company’s global vehicle sales fell 7.5% to 1.27 million in the quarter. Sales in China, its biggest market, fell 2.5%, while those in the United States fell 4.5%.

[...]

Years of heavy discounting and fleet sales, particularly in the United States, has cheapened the automaker’s brand image while lowering vehicle resale value and denting profit.

Nissan is implementing a global recovery plan under which it will axe nearly one-tenth of its workforce and cut global vehicle production by 10% through 2023 to rein in costs which it has said ballooned when Ghosn was CEO.

News as expected, but I think commentary has mischaracterized the problems at Nissan. It’s not just the strong yen, ballooning costs, or fleet sales that have hurt Nissan’s earnings: it’s that over the last five years, Nissan borrowed from its future and has left that debt unpaid for too long.

The company right now has a three-part problem:

(1) The lack of new, exciting models means that Nissan is not attracting new drivers to the brand.

(2) For those drivers who are interested in the brand, there isn’t enough motivation to buy a new car, because the lack of model updates leaves used cars less distinguishable than they’d otherwise be. Even if you want a Nissan, there’s less incentive to buy a new one as opposed to a used one.

(3) And finally, because of the fleet sales mentioned above, the market is saturated with used examples. Not only are used Nissans already more desirable than would be typical, they’re also cheaper than Nissan would like, making the value proposition of a new Nissan even worse right now.

Pushing fleet sales, and delaying new models, both increased Nissan’s sales and decreased its research expenses; but that lack of investment is now precisely the cause of the current trouble. It’s a shame, more so because the very thing that enabled Nissan to borrow from its future is this way was the fact that its cars were quite good. The GT-R, for example, was far enough ahead of its time when it launched that it’s still Nissan’s halo car — 12 years later.

You can borrow against your brand equity for a bit, and companies do it all the time. That’s how you earn the money you need to invest in the next model cycle, and so it’s not only ordinary but necessary. The problem is that you can only push off reinvestment for so long — hence the “global recovery plan,” under which new management now needs to catch up.

Two quick thoughts on the newly announced Ferrari Roma:

(1) Another Ferrari launched at a private event in Italy alongside a major auto show (Los Angeles) that the brand is not attending. This follows the launch of the F8 Spider and 812 GTS during the Frankfurt auto show in September.

(2) The car-internet seems to love the design, so that bodes well. The overall vibe is retrofuturistic, which you’d expect from the tagline of “la Nuova Dolce Vita.” I’m not sure what to make of it, except to say that I think Ian Callum and the rest of the Jaguar F-Type team should be quite flattered by the rear.

James Gilboy, reporting for The Drive:

Aspark has reportedly announced in an interview that his company's electric, nearly 2,000-horsepower Owl will gun for a lap record at the Nürburgring within four months.

I haven’t driven an Owl, a Lotus Evija, or either Rimac, so maybe I’m off-base here, but from everything I’ve read, and from all the spec sheet¹, these cars seem like one-trick ponies. They’re competing (and making incremental progress) on 0-60 times, but I’ve yet to see a single review say that one is a joy to drive. I don’t get the point.

To be clear, I do get the point of electric vehicles, and even electric sports cars, as I’ve written before. It’s this class of seemingly characterless, seemingly identical, super-quick, super-heavy electric hypercars that I don’t understand.

Notes

  1. The irony of me referencing spec sheets to define a car's character, given what I do, is not lost on me.

Either months ago, Hunter Williams and I, along with a few others, formed a new company, Trait Signal, and went to work on an automotive analytics platform. Yesterday we launched. ( Which is also why this blog has been silent for two weeks.)

In short, Trait Signal analyzes vehicle commentary data, identifies what drivers like and dislike about their cars, and correlates that sentiment back to vehicle specifications.

In long, you can check out our announcement post or info sheet, and if what we’re making sounds interesting, get in touch – we’re looking for customers and advisors and will be looking for investors starting next quarter.

Reuters:

Without the roar of performance petrol engines to drown out its brakes in action, they risk being a distraction for drivers enjoying the relative silence of their battery powered vehicles.

[...]

“Electric engines make no noise, so the braking system could eventually be annoying for the passengers,” said Brembo’s Executive Deputy Chairman Matteo Tiraboschi.

It makes sense that Brembo is developing quieter brakes, for the many buyers and riders of cars who are looking for calm and comfort. It’s a continuation of the push for quieter engines, tires, and better sound insulation that we’ve seen for years.

As an enthusiast, though, I’d love to see performance EVs go the other way. Let’s see an electric sports car that embraces the noise of its brakes and gearbox. For all that the silence of electric powertrains robs us of the sound that gives conventional automobiles so much of their character, these powertrains also open up entire new areas for cars to have and show personality. I continue to believe that the best path forward for electric vehicles is to embrace their genuine characteristics, rather than to sell fake engine noises or otherwise try to recreate the experience of conventional engines.

Chris Bruce, writing for Motor1, last week spotted a new V12 engine design patent by Ferrari.

Ferrari looks toward the future with a newly patented engine design that the company believes would reduce emissions while maintaining performance. The Prancing Horse filed the paperwork on April 24, 2019, but the United States Patent and Trademark Office published it on October 24.

Of course the latest V12 supercar from Ferrari has way more power than you can use on the street, and of course Ferrari will sell so few of them that their combined emissions, regardless of efficiency, will make the smallest of differences.

But it’s patents like this that illustrate the point of engines like these, and the cars they power. Their existence – and the fact that they sell for so much money that the cost of developing new technology like this is justified – helps push the state of technology forward. In that way, supercars are just like motorsport. Whereas motorsport is sponsored by companies and brands looking for exposure, supercars are “sponsored” by wealthy collectors looking to own a piece of art or history.

However unnecessary 800 horsepower may be on the street, the technology development needed for these cars continued existence is both the reason they exist and the benefit of their existence to the rest of motoring. Now, if only we could see more of this kind of engineering excess applied to traits other than power.

Car And Driver (and others) reported this week that the new Bollinger B1 and B2 are to debut at $125,000, a higher price than previously announced or expected.

Two thoughts here:

(1) Given the company’s own statements and the fate of similar EV upstarts such as Dyson, it shouldn’t be at all surprising that a new, low-volume vehicle is expensive to manufacture. Honestly, it would have surprised me more if costs had come in on the lower end.

"Our trucks will have a larger battery pack than anything on the road today," he said. "Each truck has two motors, two transaxle gearboxes, and four gear-hub gearboxes. It'll be low-volume, and made from mostly U.S.-made materials. All of that together creates a powerful truck with unmatched capabilities, and it's expensive to make."

Bollinger also said the price was set high because the company isn't following the practices other automakers have adopted for making money.

"Rather than follow the common business model of borrowing money for years and years in order to cover the high cost of producing electric vehicles, we're pricing our vehicles to cover their material and production costs," he said. "As for covering all of the R&D and startup costs that have gone into it, we hope to turn a profit in the first few years. We have been honest and transparent during our entire journey, and this price reflects that."

(2) Wisely though, the company has targeted a specific, price-insensitive niche, for whom the high price is likely not to be a deal-breaker:

The target buyers for the B1 and B2 are the same off-road enthusiasts who are buying capable vehicles that are on the market today and then adding "$50,000 to $60,000 in aftermarket modifications," Bollinger said, so that they have the same performance as a Bollinger EV will have out of the gate.

At a time in which investors are pretending that coworking spaces are worth $40 billion, it’s nice to see a startup choose the novel business model of business model making a product and selling it at a profit. I hope it works out.

Auto Express reported last week that an upcoming Land Rover Defender SVR is set to debut, to be powered by a BMW-sourced V8. While the article implies that the new Defender will use BMW’s current 4.4-liter S63 engine, this news is particularly interesting taken with the September rumor that BMW is working on a new V8 engine, possibly to be named the S68.

While I expect that BMW will initially reserve the new engines for its own cars, a partnership to ship additional V8s through JLR certainly bodes well for likely ongoing investment in the architecture by BMW.

Can you speak to your cinematic approach to dressing?

Growing up, my friends and I would meet every Saturday at the local movie house. We’d watch our favorite movie heroes on that big screen and when I walked out, I imagined that I was the cowboy on the white horse or whoever that hero was that day. From that time on, movies and storytelling have always been an inspiration.

When I started designing, it was never about just the tie or the shirt or the dress. It was always about the hero or heroine I had in mind. They are the stars of my movies and express what I have to say. I study their character and I create for them and through them. I guess you could say, in some ways, I am the director and the screenwriter. I write through my clothes.

Life as performance art.

I missed it at the time, but a few days before Mercedes announced that the next-generation C63 AMG would be switching from its current turbocharged V8 to a turbocharged and electrified inline-four, Garrett announced its upcoming e-turbo system.

This system will make available for the first time to road cars the turbocharger architecture we see in Formula 1, in which an electric motor sits between the compressor and turbine. (In contrast to the e-boosted turbochargers we see on the road today, in which the electric motor is attached only to the compressor.)

Garrett isn’t yet announcing what manufacturer or engine type its e-turbo will be used on, but has indicated that it will appear on a performance car in 2021. I don’t think it’s a stretch to ask if that performance car will be the next-gen C63 AMG. The announcement timing lines up, the technology availability lines up, and the marketing narrative would undoubtedly line up. Debuting a new, race-bred turbocharger would enable Mercedes to double-down on its Formula 1 heritage in promoting the new powerplant.

Notes

  1. Garrett announcement via Sam Abuelsamid, writing for Forbes.

Kirsten Korosec, reporting for TechCrunch:

Transportation services giant Penske Corp. is backing a new car-sharing service called Penske Dash that launched Tuesday in Washington, D.C. and Arlington, Va.

[...]

“Penske Dash furthers our commitment to embrace new technologies while addressing the mobility needs for our consumers,” Roger Penske said in a statement, adding that the company intends to “remain at the forefront of new leading transportation solutions.”

Penske Dash gives customers access to a fleet of Volkswagen Jetta SE vehicles that can be rented by the minute, hour or day through the app. The rental rates, which are $0.45 a minute or $15 an hour, include fuel, parking and insurance. Members are also supported with 24/7 access to a call center and a local fleet operations team.

Penske Dash describes itself as “free-floating,” although within Washington, D.C. it’s a bit more constrained than some other services that allow customers to park anywhere within a geographic area. Customers can park their Penske Dash vehicle in a public, unrestricted, street parking space in Arlington identified by Penske Dash. In Washington, D.C., customers must park in a parking spot marked by a Penske Dash sign in approved garages or lots, according to rules stated on its website.

Maybe I’m missing something, but this just sounds like Zipcar.

Petrolicious:

How can a modern sports car or GT be made to feel less sterile, more classic? Well the obvious way has to be to do away with paddleshift and stick with a manual transmission—along with rear-wheel drive of course. Aston Martin CEO Andy Palmer has always promised to continue to supply a manual model long into the future, and this manual-equipped Vantage is one result of that.

[...]

Power is 503bhp, and the resultant performance is a 0-60mph time of 3.9 seconds and a 200mph top speed.

That’s slower than the auto, despite the weight saving, and though they apparently haven’t been compared yet, the manual would definitely be slower around the Nürburgring Nordschleife where the manual was developed. We drove it on the roads around the ‘Ring, and found it would let go on the greasy roads—so many wet leaves!—before the electronics pull you back. And concentration is definitely needed to get the gearshift right.

So though you’ll sometimes curse the gearbox, the manual Vantage feels more enjoyable, way more involving (that word again) and definitely more like a classic GT or even a muscle car than almost any other modern European-made car. Which would we choose? Manual every time.

I made the point last week that Aston Martin is uniquely positioned to make a performance SUV, and for similar reasons, its also well positioned to preserve the manual transmission.

No matter the transmission, the Vantage is never going to be the quickest car for the money. If you’re buying an Aston Martin, you’re already buying it for its character, not for its performance. Sacrificing a bit more performance for a lot more character is a great bet (as evidenced by everyone talking about it).

That’s a luxury that other brands, locked in constant competition to push the performance envelope, don’t have. The latest Ferrari can’t be seconds slower than its competition. The latest Aston Martin can.

Autoblog yesterday posted some spy shots of the upcoming i4, and I’m thrilled it looks like a car.

The writing is on the wall for the internal combustion engine. Powertrain development is now overwhelmingly trending electric, and every day there’s another article about a major manufacturer leaning into electrification and away from ICE.

The problem, until now, has been that as a consumer, it isn’t easy to choose an electric car. Even if we leave aside all the practicalities and logistics of charging, electric cars just haven’t been good cars, and so you have to really value electric cars for the sake of electric cars to justify choosing one.

If the future of transportation is electric, we’re going to need electric cars that are appealing as cars, both in their driving dynamics and in their styling. Between where we are now, with primarily internal combustion engines, and our electric future, we need to pass through some intermediate stage in which choosing between a conventional powertrain and an electric one is similar to choosing between a gasoline and a diesel engine today. Deciding between gas and diesel is an important decision, and has implications for the character, cost, and driving dynamics of the car you’re buying, but fundamentally whichever option you choose, you’re still buying a car.

That the i4 looks like any other BMW is precisely what we need, and is a welcome change from the i3. I understand that the i3 is targeting a niche for whom it’s appealing that the car takes a strong function-over-form, Star Wars cargo droid aesthetic, but that’s always going to be a niche. What we need for electric vehicles to tip into the mainstream is for buyers to be able to evaluate them as cars, against other cars, and choose the powertrain that’s best for them – just as they do with gasoline versus diesel engines now.

Making and selling electric cars that looked and drove like good cars was the unappreciated differentiator that set Tesla apart in its early years, starting with the Model S. At the time, that was the intangible that analysts and the industry weren’t discussing. But that time has passed, and the large manufacturers are finally starting to respond (starting with the Jaguar I-PACE, I think). That’s why Tesla has been going through a rocky patch. There are now other electric cars for it to compete with, as opposed to just ICE cars and electric boxes.

Maybe I’m optimistic here, but I think once we fully settle into an era of “electric cars as cars” that there will be a resurgence of good drivers’ cars. And given how good some electric cars are to drive, I’m excited about it.

At least if the Porsche Taycan is any indication.

Notes

  1. This whole post, of course, is framed in the near- to mid- future. There may come a day when we've all given up on cars as we know them now, and the future truly is boxes with no personality, except for the odd car collector. But I don't think that future is coming any time soon, and if it ever comes, I think this transition period is still between where we are now and that point.

Axios:

Self-driving startup Zoox has raised $200 million in new convertible note funding, which will be folded into a Series C round that's expected to close later this year or at the beginning of 2020.

Why it matters: Zoox is more ambitious than most other autonomous tech startups, seeking to develop the entire car instead of just the software or sensors.

Reading between the lines, this looks like bad news.

Zoox just raised $465 million Series B round earlier this year, before firing its co-founder and CEO Tim Kentley-Klay. That the company needs a bridge to get to its next full round is never a good sign, and that the company has publicized this raise so little suggests that it knows it.

As we recently saw with Dyson (and, before that, Apple), developing a completely autonomous vehicle from scratch is harder than it looks, and Zoox is likely burning cash more quickly than projected. I wouldn’t be surprised if we hear news of a restructuring or change of strategy sometime before the supposed Series C.

Autocar today reported that the next generation C63 AMG, scheduled to launch in 2022, will be powered not by a big V8 but by a 2.0 liter turbocharged and electrified inline-four putting out more than 500 horsepower.

The new C63 will be offered in saloon (sedan), coupé and convertible bodystyles, with the next C43 likely to be sold in those three guises as well as an estate version.

Other AMG models set to run the new electrified driveline include successor models to today’s GLC 43 and GLC 63 SUVs, the GLC 43 Coupé and the GLC 63 Coupé.

Autocar has been told the M139 engine will adopt a 48V integrated starter motor similar to that already used by the turbocharged 3.0-litre in-line six-cylinder M256 unit, which powers the CLS 53 4Matic+ and other recent new AMG models.

In the CLS 53 4Matic+, the gearbox-mounted starter motor provides an additional 22bhp and 184lb ft of electric boosting. In the next C63, however, it is set to be tuned to provide significantly more power in combination with a similar torque loading.

Reactions from the automotive internet have been a mix of “no comment,” and lamentation on the death of the V8. Greg Kable, in a separate piece for Autocar, for example, said:

The bombastic V8 in today’s C63 is an integral part of the model’s character and gives it a USP above six-cylinder rivals from BMW and Audi. Recreating that character will be extremely difficult with a four-cylinder hybrid powertrain, but AMG’s engineers have as much technical know-how and financial might as anyone to make a success of it.

AMG Mercedes’ are extreme, and their character is to take their respective base model cars to 11. Historically, they’ve done this with high displacement engines – V8s, in the case of the C63 AMG. But I don’t see any reason it has to be that way.

Like it or hate it, Mercedes invests heavily in motorsport, the highlight of which is currently its very successful Formula 1 team. Right now, the emphasis in Formula 1 is highly-strung, small engines, which are both turbocharged and electrified.¹ This powertrain technology is not only cutting edge, but also a core competency of Mercedes-Benz specifically. Why wouldn’t we want these engines in the top-of-the-line AMGs?

We should be applauding Mercedes for installing in its top-end cars a motor that will be both highly performant and unique to the brand. Unveiling a next-gen C63 with a tiny, turbocharged, and electrified I4 kills a few birds with one stone for Mercedes. It helps to meet increasingly stringent emissions standards; it showcases Mercedes’ hard-won motorsports pedigree in turbo-hybrid engines; and, finally, it enables Mercedes to ship a car that will have a unique character. Amid a sea of performance cars that we all criticize for feeling the same, I’m excited to see a new performance sedan that isn’t yet another turbocharged V8.

I hope this report is accurate. I hope Mercedes will not only ship the next-generation of top of the line AMG cars with this I4, but also that it will embrace the character of that engine, and not try to make it feel like a big old V8.

Let’s be clear about what’s happening here: in an age in which all cars are starting to feel the same, Mercedes is shipping a top of the line car, with a top of the line, motorsport-derived powertrain, which will be different from its competitors’ cars and from everything else that came before it. If that isn’t your cup of tea, I totally understand. I’m not sure I’d have one, myself, and if you don’t want that, there are not only Mercedes’ competitors to choose from, but also current-generation AMGs.

But shipping the next-generation C63 AMG is not only obviously on brand, but also a welcome sign of progress for the performance car segment. I can’t wait to see one.

Notes

  1. Admittedly, the current emphasis in F1 on small-displacement hybrids is also a like-it-or-hate-it issue, but it's where we are, and it's absolutely where the money is being spent on ICE-based powertrain technology.

Petrolicious, on Mercedes-Benz’s display at the 2019 Motorclassica in Melbourne, Australia.

The star of the line-up was undoubtedly the recently restored Mercedes-Benz 190E 2.3-16 Group A touring car, one of a pair to have raced at Bathurst in the 1986 James Hardie 1000. Car number 41 was originally entered for the Australian Andrew Miedecke and former Formula One world champion, New Zealander Denny Hulme, but it was raced on the day by Hulme and Olympic downhill skiing gold medallist, Austrian Franz Klammer, while Miedecke raced in the second 190E after a pre-race driver swap.

Beautiful car, but my favorite part of this story is the last-minute substitution of Franz Klammer. These days we get the odd ski racer doing a track day as a publicity stunt, but Klammer was a legend from a different time.

Jeremy Kahn, profiling the Dyson electric car project for Fortune.

“It just wasn’t commercially viable,” he said, in an exclusive interview with Fortune the day after news broke of the car’s demise. Although Dyson’s crack auto team successfully created an innovative new car, he wasn’t willing to price it below cost, as he believes the competition is doing. “It’s a tragedy, really, because our engineers have done a brilliant job.”

[...]

In the meantime, there are already hints that the company’s automotive efforts won’t be wasted.

In a windowless industrial shed being constructed behind Dyson’s striking mirrored-glass D9 research lab, the company has built the largest advanced prototyping lab for solid-state batteries in Europe. Beyond EVs, solid-state batteries have potential uses in everything from mobile phones to consumer electronics to aircraft. And Dyson says it will continue its investment in them. “We think we’ve got something that is groundbreaking and revolutionary,” says Mike Rendall, Dyson’s head of energy storage industrialization. Called D9A, the new battery prototyping facility should enable Dyson “to bring solid-state batteries to market as soon as possible,” Rendall says.

Despite its “cancellation,” I still think its at least even odds that Dyson winds up one of the big winners from electrification.

Since Aston Martin announced the DBX, I’ve been thinking a lot about exotic performance SUVs. Lacking the glamor of their sportscar siblings, we both expect them to perform up to the reputation of the brand, while also somehow rejoicing when they don’t. They occupy a strange niche.

With high sales and profit margins, it’s obvious why (almost) every manufacturer either sells an SUV or has one in the pipeline.

The strange thing is, Aston Martin is uniquely well positioned for this new craze.

Almost every time a performance marque has debuted a car with a bigger, less performant form factor, there’s been an outcry. This goes back before SUVs, too – think back to the reaction to the original Panamera.

The exceptions – such a BMW’s M cars – occur when the larger car, despite its size, performs as well or better than its smaller siblings. When, despite being a larger car, the brand can announce a performance and technology improvement.

A few years ago, this was hard to do. The Cayenne performed worse than the 911, and so on.

But two things are different for Aston Martin, now in particular:

First, road cars have gotten so good, and so quick, that manufacturers all have technological potential left “in the tank,” so to speak. Each generation gets a bit faster to keep sales up, and keep up with the competition, but there’s no other reason for it, so for the most part, manufacturers don’t need to push the bounds of technology. There’s margin to make cars even faster if they want to.

With an SUV, the body style is inherently less performant than a sports car. Historically, this meant that SUVs couldn’t perform as well as their sports car siblings. Now? Now it means that manufacturers need to use some of that otherwise-untapped excess capacity, and, in so doing, can ship an SUV that’s as performant as their sports cars.

Second, and specific to Aston Martin… it’s cars aren’t that quick, by exotic car standards.

Per Petrolicious, “the DBX is capable of cornering at the same speeds as the Vantage and offers even fiercer braking capabilities than the DBS Superleggera.”

With the DBX, Aston Martin can debut a car that’s both more practical and more performant than its own cars that came before. Aston Martin can raise the game over its own sports cars in a way that Porsche or Lamborghini just can’t. Aston Martin is the right brand, and this is the right time, for what should be a really well receivec performance SUV – and not a moment too soon, as the brand is in desperate need of cash.

Notes

  1. This all raises the question, though: how will Ferrari debut a new SUV? Ferrari releasing an SUV that outperforms its own sportscars seems unlikely, but then, it also seems unlikely that it would release an SUV that underperforms its rivals. The only answer here that isn't a lose-lose for Ferrari is to distinguish its new SUV with a vastly different character, and with most recent supercars feeling so similar, I can't wait.

Speaking of Lamborghini, Volkswagen confirmed to Reuters on Sunday that it has no plans to sell the brand after Bloomberg reported that the company was “weighing options.”

In some sense, VW is always “weighing options,” of course, but this denial was expected. It’s the wrong time to sell Lamborghini. If VW hopes to sell it on automotive revenue, better to let the well-selling Urus and Huracán have a few more years, and if it is hoping to sell it as a luxury goods brand, like Ferrari, it just isn’t there yet.

Dyson last week announced the cancellation of its electric car program, for reasons of commercial viability.

Instead, the company will “concentrate on the formidable task of manufacturing solid state batteries and other fundamental technologies which we have identified: sensing technologies, vision systems, robotics, machine learning, and AI…”

With this, Dyson has given up on producing its electric car, but it’s continuing to work on the underlying technology. Notwithstanding that it doesn’t make as good a story, this puts them in the same place as many others in the space.

Just look at the two highest-profile EV “startups” right now, Tesla, and Rimac.

The verdict is still out on whether Tesla will survive, in the long run, as an independent company. (And most of Tesla’s stock value is attributable to technology and battery manufacturing.) The second highest profile company in the space is probably Rimac, and it is a components manufacturer. Sure, Rimac has a halo car it uses to market its technology, but that’s really not how it’s positioning itself, and that’s certainly not the justification for the money it’s raised.

So, yes, Dyson shuttered its EV project, but it continues to work on the same technology that makes its two better-known competitors valuable. It’s too early to call it on Dyson’s contribution to electrification – whether it’s shipping its own car or not.

Notes

  1. The other exception may yet be Rivian, which is positioning itself as an OEM, but I think it's too early to tell how that will end.

Lamborghini:

In just five years of production Lamborghini Huracán number 14,022 rolls off the assembly line, marking a production milestone for the V10 model of Lamborghini: the Gallardo, the previous Lamborghini V10 model, was produced in a total of 14,022 units over a production cycle of ten years (from 2003 to 2013).

For all that Bloomberg keeps trying to compare Lamborghini to Ferrari, this press release illustrates why it isn’t a good comparison yet.

Lamborghini is deservedly satisfied with how well the Huracán is selling. Indeed, it’s a brilliant car (I’ve driven – and loved – the Evo), and automotive brands excitedly report great high numbers.

Automotive brands do. But luxury goods brands do not.

Ferrari, of course, is also trying to sell more cars and make more money. As a public company, it has no choice. But all of its press is about exclusivity, and about everything you cannot buy. Ferrari saves the growing sales numbers for its shareholders, and even then does its best to make sure no one notices.

This press release tells us both that Lamborghini is doing well (which is great to see), and that it’s still not in the same luxury-goods territory as Ferrari.

Ferrari this week opened its third “Tailor Made Center” in New York. It’s always hit or miss when manufacturers show off customized versions of their own cars, and there have been some truly awful examples in the name of showing off just how much is possible. Ferrari nailed this one, though. The cars it selected are clearly customized, while staying tasteful and true to the brand. It’s worth clicking through to the article for the black and gold Pista 488 alone.

Great piece by NYU Professor Scott Galloway on the state of late stage tech startups. He argues, in short, that many are overvalued and ripe for massive devaluations. I agree with him.

Among those he thinks “could lose more than 80 percent of their value or disappear”: Tesla.

Tesla. Dear Twitter trolls: yes … I’m an idiot, I can’t do, so I teach, and I don’t understand genius. It’s a tech/energy play. I get it... Save your breath. Yes, he is a genius, Tesla has changed the world for the better (I believe this). And … Tesla doesn’t have the scale to compete in a well-run, low-margin business — auto.

Tesla makes a great product, but even now, as a nine-year-old, $43 billion company, it is still both reinventing the wheel on modern manufacturing processes, and exploring many different business models. If I had to make a prediction right now, I think Tesla gets scooped up by a larger OEM as a technology and battery manufacturing play.

I hope I’m wrong; I’ve loved their cars since I had a loaner Model S P90D in 2015.

Profile of Kieran Mannings and X8R Limited by Tom Barnard of Autocar. X8R Limited manufactures and sells aftermarket parts, with an emphasis on those that frequently break, or are unnecessarily expensive to replace with OEM components. My favorite part of this story is his business model: he scans forums and talks to mechanics to identify frequent issues, and then engineers and sells parts that address those issues. Brilliant.

It’s been a terrible few years for McLaren, but things are finally looking better this year under new team principal Andreas Seidl. I’m glad to see the team give him the authority to make significant changes, even if it means acknowledging that four years of engine supplier roulette was ill-advised.

I started and never finished a post last week about the new “Porsche Electric Sport Sound” sound package for the Porsche Taycan. For $580, you can add the option for your Taycan to make noise. So far, a little strange, but I couldn’t decide what I thought of it. On the one hand, it seemed a superfluous upcharge, for something with $0 of marginal cost. On the other hand, when has that stopped manufacturers before?

Then yesterday Motor Authority clarified that “the noise resonates somewhere between a throaty 6-cylinder warble, or high-strung V-8. It’s not especially pleasant, and after about 30 minutes it becomes a nuisance.”

Porsche isn’t selling just any noise; it is selling the sound of a fake, naturally aspirated engine. And that’s a problem, not because it’s a $580 option on a Porsche, but because it reinforces that manufacturers don’t yet know how to give electric cars character. They know how to make electric vehicles quick, but character is more than that. Porsche is insecure that the Taycan, for all its performance and handling accolades, will be fun and stirring without some made-up engine noise.¹

Credit to Tesla; for all the company’s faults, it has owned, from the beginning, that electric cars have their own character. I’m disappointed to see Porsche offer this option because it shows that Porsche doesn’t believe that an electric vehicle can be as exciting as a car with an internal combustion engine.² If electric is the future, as every major automaker seems to think it is, then we better hope Porsche is wrong, and that an option like “Electric Sport Sound” is unnecessary.

In the last month, Porsche has basically confirmed both that soon will be electric, and that it does not believe electric cars can be that exciting. Where does that leave us?

Notes

  1. I know some would argue that piped-in engine noises on ICE cars suffer from the same problem, but I disagree -- at least there it's a real noise, albeit artificially enhanced or transmitted. In this case it's the noise of a completely different vehicle.
  2. As Bugatti itself seems to concede in its press release, in saying that this is the last speed record it will chase.

Reuters today reported that Aston Martin has successfully raised $150 million of debt, with the option of another $100 million if the company meets certain milestones. This is good news for Aston, and also underlines how everything is riding on the launch of the new DBX SUV.

Autocar today reported that Jaguar is considering electrification and a mid-engine layout for its F-Type replacement, scheduled to debut in three years.

I understand why Jaguar would do it: as Andrew Frankel points out, the brand needs a halo car, and has been trying to escape its “rather elderly image.” A mid-engined successor to the F-Type could check both boxes.

I’d add here that it was to check the same boxes that Chevrolet just decided to go mid-engine with the Corvette, so at least Jaguar will have a case study to follow before it needs to make a decision.

Notes

  1. As an aside from talk of mid-engined vs. front-mid-engined, I'd be very surprised if the next-gen car isn't *at least* electrified, if not fully electric

Hyundai and Aptiv today announced a $4 billion joint venture for autonomous driving.

The major manufacturers are playing an expensive game of musical chairs when it comes to self-driving. There is a ton of redundant money being spent right now, because no one knows precisely when autonomous driving will be realized, and no one wants to be the odd-manufacturer-out when that day comes.

Autonomous driving research has a big bets, winner-takes-all structure that’s very different from the continuous improvement that characterizes the automotive industry. You could say that it’s more like the tech industry, but even there, most bets aren’t in the billions of dollars.

The race for autonomous driving is more like the race to find the next blockbuster drug in the pharmaceutical industry.

Nestled in a press release about its new Climate Pledge, Amazon quietly announced a commitment to order 100,000 delivery vehicles from Rivian:

... Amazon today announced the order of 100,000 electric delivery vehicles from Rivian, the largest order ever of electric delivery vehicles, with vans starting to deliver packages to customers in 2021. Amazon plans to have 10,000 of the new electric vehicles on the road as early as 2022 and all 100,000 vehicles on the road by 2030 – saving 4 million metric tons of carbon per year by 2030.

The automotive press has been all over this today.

This announcement is a public show of support by Amazon of Rivian, but following on the heels of a $700 million investment, what else would you expect? Rivian is undoubtedly on a roll lately, and I don’t mean to be cynical about that – but with the first deliveries still over a year out, and the full commitment spread over ten years, this announcement is more show than substance.

Notes

  1. Jalopnik has a good writeup with more detail, for those curious.

McLaren:

H1 2019 Group revenues £698m up 36% versus £511m in H1 2018, driven by Automotive volume growth, Ultimate Series sales and an improvement in Racing results

H1 2019 Reported EBITDA £81m up 553% versus £12m H1 2018

This, in a nutshell, is why McLaren doesn’t need an SUV right now.

Laura Benitez, reporting for Bloomberg:

Aston Martin Lagonda Global Holdings Plc may soon return to Europe’s bond market to offset pressure on the luxury carmaker’s free cash flow, according to four people familiar with the matter.

The potential debt issuance will be unsecured and rated CCC, according to two of the people, who are not authorized to speak publicly and asked not to be identified. That would give existing bondholders a buffer given the company’s outstanding notes are all secured.

“If we require some additional financing, from sources with which we are familiar, to maintain capacity and flexibility then that is exactly what we will go out and get,” a company spokeswoman said in emailed comments.

The new financing is expected to bolster Aston Martin’s liquidity until it launches a new SUV model -- the DBX -- in April 2020. The U.K. carmaker generated about 900,000 pounds ($1.1 million) of cash from operations in the first half of the year, the lowest since it started to disclose earnings, data compiled by Bloomberg show.

As disappointing as it is to see sportscar makers turning to SUVs, this illustrates why they have to do it: it’s where the money is. For on-the-margin makers like Aston Martin, an SUV might be the difference between survival and bankruptcy. For Ferrari, the stakes are a little different — it isn’t near insolvency, but as a public company it now faces the constant pressure to maximize profit.

McLaren’s steadfast denial of an upcoming SUV is either untrue or a luxury of its position in the market. McLaren is in a unique position as a well-funded private company: it is neither struggling financially like Aston Martin, nor facing the pressure to maximize near-term profit like Ferrari.

Ars Technica:

In mechanical engineering, I would call us a platform champion," Senger [Christian Senger, who is responsible for VW Group's Digital Car and Services division] said, referring to VW Group's strength in using a small number of common architectures—MQB for transverse-engined vehicles, MLB Evo for premium models, and now MEB for smaller electric vehicles—across multiple brands. "We defined how global industrialization of brands and markets really works. In software, there is no reason for having eight different architectures," he said, contrasting VW Group's current situation with the Android OS, where the same software runs on $60 smartphones as well as $1,000 smartphones.

Consequently, VW Group is now going to take a similar approach to software, consolidating it all under one new internal group, similar to the way that financial services or the ride-hailing Moia exist alongside individual vehicle brands.

This makes sense. It’s ridiculous the extent to which drivers and the media hold automotive software to a lower standard than they hold the software on every other device in our lives. If my Macbook crashed as frequently as the infotainment system on my McLaren, I’d literally be unable to do my job.

Another interesting and unsurprising tidbit:

There are some brands really using Google's automotive services; this is not our strategy. When you do this, you get a great package of function and services, no doubt. But you also have to open up all the car's sensor data [to Google], and when I say all, it really is all sensor data," Senger told me.

Ford Media Center:

DEARBORN, Mich., Sept. 12, 2019 – Vehicle subscription app Fair today announced that it will acquire the assets of Canvas, a vehicle subscription service and wholly owned subsidiary of Ford Motor Credit Company. The agreement furthers Fair’s leadership position in the vehicle subscription category, enabling the company to continue to accelerate consumer adoption and expansion throughout the United States. Terms of the sale are private.

It’s tempting to say that Ford is abandoning the car subscription business, but I don’t think that’s what’s happening here. Techcrunch reports that Ford has received an equity stake in Fair as part of the deal, and I think the better analysis is that Ford gets to continue its experimentation as a partner to a more successful company with deeper pockets.

Michael Leiters, head of technological development at Ferrari, speaking to Top Gear:

We have reached a level of specific power output which, for a naturally aspirated engine, is huge. Right now, nobody needs 800bhp but everybody wants it,” Leiters continues.

“I guess we have to understand how we can enrich the engine and its characteristics in a different way in the future, but still show progress.”

I’ve said this before: if new cars are going to continue to be interesting, and exciting, we need to show progress (to use Leiter’s words) on traits other than power and lap times.

Quick bio by Jalopnik of exhaust tuner Brilliant Exhaust.

At this point, there are so many tuning shops that are so good at what they do that it’s largely possible to get an arbitrary amount of power. For enough money, you can make any car quick, but that doesn’t make any car interesting. Some find interesting by driving and collecting classic cars; others, like Sasaki-san, look for it in modern cars, by embracing the art of tuning things other than power.

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by Tyler Carbone