Could MileageGate sink Mitsubishi? (AutoComplete, Ep. 16)

[MUSIC] This is Auto Complete episode 16 and I'm Brian Cooley. It's the news of the intersection of cars and technology brought to you by Road Show at theroadshow.com. New on Road Show this week we went for a nice ride down PCH with Emme Hall in the new Rolls-Royce Dawn convertible in metal butterscotch. It's a hell of a color, I think you want to see that. The Carfection guys in London went to Africa for an off road romp in an BMW X5 and we got some good seat time in the Jaguar F-PACE, did that over in Montenegro. So our passports have been stamped and we got a lot of tasty content waiting for you on those cars and more over at the roadshow.com. Let's get into the news. Mitsubishi has now Taken and stolen the shade from VW. It's like now the latest of the scandals, with their MPG cheating that they're admitting to. Now here's the latest that we know. They have some 25 years of MPG Cheating they've been doing this. It's really deep much longer than VW cheated on diesel emissions. California Air Resources Board and Federal EPA here in the US have now told Mitsubishi they have to undergo more stringent, special tests. They're basically on probation right now, as you might imagine. Apparently, the main cheat was during what's called, the coast down segment of the EPA test. Where a car coasts down from eighty miles an hour, down to a stop. And that is measured. And, apparently that's where they mostly cheated on the MPG. Now there was a report you may have heard about in the mainstream media a couple days ago that the COO and the CEO have both decided to resign from Mitsubishi in Japan at the headquarters office, and that the company according According to the COO, is in threat of not existing because of the impact of this. As of today, the COO denies that report and denies that he and the CEO are leaving, that's where it's at right now or that there's any existential threat to Mitsubishi. And by the way, a note, there's Mitsubishi the company, Mitsubishi Heavy Industry, that's the parent company. This is of course Mitsubishi Motors which is a sub-division, a big one but a subdivision of Mitsubishi Heavy Industry. So we're talking about the motors division, not about Mitsubishi Heavy when we talk about the impact of this at a corporate level. And if they would have to by any stretch, fold up shop and leave any market, little on the US or whatever you watching. Who keep on up for that. Here's the stupidest thing you can ever do, cheat on emissions to the point that VW did and create a power point documenting how and that you did it. And circulate that around On the company's servers that's apparently, according to a New York Times story with sources they've been talking to, exactly what happened at VW. There was a PowerPoint put together. We're not sure having, no one having seen it whether it was boasting Or just documenting, or, somehow, otherwise, circulating this concept. But, it doesn't sound real smart, because this cuts against the grain of other stories we've heard, in that, a lot of the engineers at VW, apparently, used a lot of code words, to keep this all very hush, hush, so that it wouldn't be easy to go back, and follow the trail of how the Dieselgate cheat was done But then here is something totally opposite, a PowerPoint document. Now, what is not known is who saw it and when. Your classic smoking gun question, how high up did this go? Who at the senior levels and the upper executive management offices ever saw this thing? And And when did they see it? That is not yet clear, but we're gonna keep an eye on this. We also have a lot of details coming out from VW's recent financial reporting. The buyback will cost about $9B, they expect. That was the offer that came up that we had for you last week, the breaking news that they would buy back cars from customers. Who just simply wanted to get rid of their spewing cars. They took an $18 billion write down in 2015, just now with their latest earnings release for the so far damage of dieselgate. Billions more in damage to come. VW had a loss of $144 million in the most recent quarter, chump change for them. Now here's the other more, sort of counter intuitiveness. VW saw a 5% increase in its overall revenue in 2015, the top line stuff compared to a year before. So that's a positive indicator. They passed Toyota last year to nonetheless become the largest car maker, even though almost half of the year was stained by dieselgate. And their overall return on sales dropped Financially, from just 2.5% to 2%. The bottom didn't exactly fall out. Also, VW also said, during that earnings announcement, that they also are looking to partner with investors, and strategic partners, noting, though, clearly, that among them, are not, and, apparently, will not be Google, or Apple. Another indication of, kind of, the frenemy bad blood, in the auto industry, and in some of the original players In Silicon Valley. Now right about now, this week we were expecting to have new details for you on what VW has learned so far about how Dieselgate took place. Who knew what, when. What did they do, and when did they do it? VW has pulled the plug on that this week. At the last minute they said nope, we're not gonna issue preliminary data on what our investigation is learning. We're gonna wait Until it's all done and we have a settlement with the US Department of Justice on paper, in writing. And then they say they'll release the report of what they learn. So they're keeping it hush-hush because for the obvious reason they're claiming it's such a hot Litigious environment, they can't be basically giving their enemies ammunition right now. So unfortunately, this is not the week and there will apparently not be a week any time soon when we can tell you the juicy details as they are coming out of the investigation. That could change, though. We'll see what regulators and lawmakers force them to release. Now on a little cleaner front, Honda's Clarity cars. Honda recently unveiled as we reported here the new Accord Hybrid, the 17 Accord Hybrid getting that car back into that category. But more interesting is how they're expanding the Clarity, which is a very odd model. The Clarity is just coming out as a fuel cell vehicle only in California. So super niche, right? Either an experiment or a compliance card, depending on how you wanna look at it. But now Honda says, no, the Clarity's gonna be for real. They're also gonna have a pure electric battery version and a plug-in version. The plug-in, they say, will get 40 miles on electric only mode before it has to go into blended mode. That would make it, as I recall, The highest range plugin hybrid, if that's the way it stands when it comes out. Now there's a lot of time they have to get this technology even better because the plugin and the battery car are not due until late next year, 2017. The fuel cell of course is arriving later this year. In California as I mentioned. And that is gonna be about exactly one year later than Toyota's [UNKNOWN] which came out tail end of last year as their fuel cell vehicle. Vehicle that is also California only. So interesting double down, triple bet if you will, on the Clarity brand over at Honda. We've told you, or Tim Stevens in fact, got a look at Volvo's Drive Me program. Ram, some months ago. It's gonna be rolled out in Guttenberg. One of the first pilots in a major city where a fleet of largely self driving cars will be using public roads to test themselves. Now, it's not gonna be just in the home market. Apparently, Volvo. Mobil's gonna extend that test program to London. So to our London viewers and listeners, sometime perhaps next year you will start seeing Volvo XC90s that are driving themselves around London, which knowing the traffic and congestion There, that's whole other challenge compared to Guttenberg. A new coalition says autonomous vehicles need to happen soon and consistently. It's a coalition of Ford, Volvo, Google, Uber and Lyft. Those five got together this week to form a new group called the self driving coalition for safer streets. Can you imagine A more be **** title for a group. That is completely playing to everyone out there and just polishing up the app. So the here is that they wanna see a consistent single set of rules and regulations to self driving cars. Their main agenda is not a patch work of regulations but federal level regulations of what autonomous cars can do Should do or what control they can or cannot get rid of all of that basket of stuff thy want back to be a national push because they dread 50 states not even different states set of regulations or even Or even two for that matter would be economically disastrous for development, they say. David Strickland is going to head up this new group. You may recall his name he's been in the news for a number of years in our Podcast and news A newscasts here about the times when he was head of NHTSA the National Highway Traffic Safety Administration now he's working for the car makers and the ride services to go back to NHTSA and others and lobby their point of view for a single form of regulation. A quick note here, car sales were surprisingly strong last year. A lot of folks said we will never break the seventeen million number In the US in 2015. We blew by it by a few hundred thousand. That was surprising. So you might say okay, this is the year of contraction. No, April numbers look as though we're going to be at about a 17.6 million run rate. According to the latest numbers on U.S automotive sale there just seems to be no ceiling on the robustness of car sales in the U.S and you know how much of that is coming from crossovers especially combat crossovers. When we come back, let's talk about whether Apple is building a car or not it's becoming a fever beach discussion especially with Apple's most recent disappointing results, and it's tesla good at building cars we kick that around. When Auto Complete continues. [MUSIC] [BLANK_AUDIO] [MUSIC] Back to Auto Complete. From the Road Show, I'm Brian Cooley, Editor at Large. Continuing with our news this week, a lot of reports have been flying about whether or not Apple's building a car. The most recent Coming out of a newspaper in Frankfurt, that said that Apple has a big hiring spree going on in Germany, poaching dissatisfied young engineers from the well-known German car companies, and building a skunkworks in that company, as well as Silicon Valley office where the project Titan got started. At the same time, there's an awful lot of discussion coming from Wall Street pundits that Apple would never Want to build cars because the margin their so poor. Apples use to making a ton of money on iPhones and iPod and everything that the made. Their margins are great. The auto industry is the best way to really chew through capital. You can put a ton of money into your car company and not really get much out the other end, and even that's not a guaranteed bet. So this is one of the biggest trends that's going on right now is that Wall Street thinks that Apple does not want to get into this business. They're about the technology, never mind what cool stuff they can do. Does it makes sense for a company, that is used to enormous profit margins, To get in to this business now especially as they've had a historic first time in years down quarter, then of course it was just reported a couple of days ago earlier this week. Apple's under enormous pressure to come with the next big thing that is massively profitable. Not just the next cool technology which Wall Street will not be interested in without the massive profit piece. I'm gonna go on record this week This could change. But this week saying I just don't buy the Apple building cars thing. It just, it doesn't add up in a number of ways. The financial piece is a big part of it and the fact that when Apple built the iPhone and launched so many other products in some cases it was also able to build the road as well, if you will. Think about iTunes as a highway system and the iPod originally was the cars that rode on it. They had both pieces. Look at iPhone and look at the apps universe. Same thing, they kind of built and infrastructure of roads, the apps, the economy, is the super highway, or an interstate system, and then they had iPhone especially well work with it. Here, they won't have that ability. They cannot build a car that then runs on special Apple roads to truly become a rich ecosystem of performance and unique offer. It just doesn't work that way in the physical infrastructure world. That's another one that's been nagging me and other people, that Apple, it just doesn't really make that much sense that they would get into cars. And to be honest, I think for them to hire 600 people and do a deep exploration, With their deep pockets, that isn't necessarily a commitment to industry, it's a lot of people, it's a lot of money to most companies. For Apple, that could actually just be a trial balloon, a big one, but a trial balloon. Here's another example why building cars is a dicey business, Ford announcing it will upgrade the Livonia, Michigan assembly plant To start making 10 speed transmissions for F-150's. Okay so transmission they codeveloped with general motors by te way. They're going to spend 1.4 billion dollars, with a B, to upgrade that plant. To make just this one transmission among many that they make. Now of course F-150 will get it, that's a big volume. But it just goes to give you some indication of the enormous amount of money that the car industry chews up to do something relatively minor. Is Tesla good at building cars? When I talk to Tesla owners I get one of two responses. Their car is either flawless, has had no problems. Or their car has a million things that are always wrong with it. I don't mean anybody in the middle, it's just straight, anecdotal, no scientific evidence there. But here's an interesting story from Reuters that we were looking at this week. They did deep analysis of Tesla's financials and found out Tesla spent a lot more on warranty repairs than some of the other big main street car makers. For example, last year according to writers numbers they kind of did read the tea leafs here Tesla spent over a $1,000, $1,043 per car they made on warranty fixes. Compare that to GM which spent $400 per car, Ford 429, and Chrysler or Daimler I should say 970. So getting closer to what Tesla spent. And there's also another one here. The future set aside for future warranty repairs. Tesla sets aside $2,036 per car for future warranty work, Ford, $308, Daimler, $1,094. Again, getting closer to Tesla's number but still, a lot lower, many hundreds lower. Tesla earnings, by the way, come out on the 4th of May. Now, a lot of recalls out there have been making news. Many of them are very drastic and seriously badly engineered systems. Here's one that is much more subtle than that. Fiat Chrysler is recalling 800,000 vehicles. Most of them are Dodge, Chrysler, and Jeep, larger vehicles. Dodge Chargers, Chrysler 300s, and Jeep Grand Cherokees. I'll give you the years in a minute. But they're doing it because the shifter is too hard to figure out. Nothing wrong with it. Just too hard to figure out. If you know one of these cars or have one of these cars, it has kind of a T shifter that is kind of a lopsided T. There's a long arm over to the top of the T there, and all you do is click it back and forth. It's a [UNKNOWN] selector. It's basically a toggle. You click it once each time you wanna go up another gear position, or down, from P, R, N, D, back and forth. The shifter always snaps back to the exact same position. It's one of those. Turns out, it confuses a lot of people. And they have a car in a reverse or drive mode when they think it's in park. And Chrysler says via Chrysler says 41 injuries might, might be related to this misunderstanding. So they're gonna recall the cars. They can't change shifter, that's too expensive. It's still gonna be a click de-tent. Thing, but they're going to change the way that it communicates, what gear position it is, with apparently better indicator lights. Sometimes you just can't help yourself. You know, you try to go forward and make something a little more nuanced and high-tech, it may just leave some folks at the station. Landrover needs a tech upgrade. Landrover just got a tech upgrade. I've never been a big fan of their head units, they and Jag have been middling at best But, here's a new one that just came out. I can't wait to get my hands on it. It's the InControl Touch Pro. It's gonna be the high-end model in Land Rover units, a 10 inch widescreen, set up high on the dash, and all of that. But, a dramatically better, smartphone like experience, they say That will have among other things something called a driver condition monitor that will monitor all of your inputs in the car and let you know if you're drowsy. I believe that's new for them. Other car makers have had it. Intelligent speed limit where the car will look at speed limit signs. Read them and warn you about your differential, which I think makes sense in cars. I don't know why cars today don't more universally embrace that. And they will also have an active lane keep assist in that package. Again, pretty conventional stuff. But they're looking forward to a new head unit in a Land Rover. If you're buying a Land Rover, check with your dealer on when the version, the model you're looking at, will get this new InControl Touch Pro, is what they call this new head unit. Maybe you wanna hold off until they have this in the model you're looking at. And the last story I got for you this week is one that kinda makes a whole lot of sense and you have to wonder why it didn't happen earlier. Jag Land Rover, across their models, Are going to soon enable another app in their head unit that will let you work with tile. Tiles, that little thing you attach to your keys, your laptop, your bag, what have you. So you don't loose them. It works with bluetooth. Well, your car has bluetooth. So, the idea is, you can setup an essentials checklist. And the car will know before you drive out of the driveway and go to work that day, you can tell it, check, do I have everything with me that I put on my list? Why don't you go back in the house and get it? I think we all know that one. OK folks that's it for this weeks news. Round the intersection of cars and tech from Roadshow. I'm Brian Cooley, Editor at large. Make sure you check out our latest stories at theroadshow.com, go get a look at that metallic butterscotch Rolls Royce. And take a look at what Chris Procket found about the Jag F face Over in Montenegro. We'll see you next week. [MUSIC]