The Morning Shift: Fiat Is About To Give It One More Try In The U.S.

Good morning! It’s Monday, June 5, 2023 and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

The Mundane Cars You Can’t Help But Love

1st Gear: The Return Of The 500

Remember the fanfare to which Fiat introduced the last 500 to the States? For but one precious, fleeting moment, an automaker actively tried to market a small car to Americans with intent to its design. You got the sense that just maybe this country didn’t hate small cars; we merely needed somebody to put in the effort again. Those hopes were quickly dashed, but Stellantis has been loath to give up on the 500 on these shores. Because it’s about to come back — this time, as an EV only. Automotive News dove into Fiat North America’s efforts to reinvent itself around the new 500e this week:

The stage is set for Aamir Ahmed, a former Fiat Chrysler Automobiles marketer appointed to head Fiat’s North American operations last month. Ahmed left FCA in 2017 to work for Harman International and Amazon. Ahmed succeeds Larry Dominique, who had been leading Fiat in addition to his role as senior vice president for Alfa Romeo in North America.

There’s a tough job ahead.

Although the brand has been a major player globally, it hasn’t been able to find its footing in the U.S. market, where it sells only the 500X. Fiat sold just 138 vehicles in the first quarter of 2023.

Despite Fiat’s rocky track record since its 2011 return to the U.S., industry observers say the 500e could bring viability to the brand as automakers move aggressively toward electrification. The 500e, according to Fiat CEO Olivier Francois, is coming back to the U.S. to capitalize on the industry’s EV revolution.

138 cars in three months. Yikes. A competent, affordable EV with any marketing at all should smash that. Even Nissan moved 2,300 Leafs in the first quarter of this year. While the last 500e sold Stateside was very clearly a compliance car with a pitiful 84-mile range, the new one has a WLTP range of 200 miles. In EPA numbers, the new one should travel for about double its predecessor’s distance on a charge. Not quite the Bolt, but not awful.

Today, the European version of the 500e, called the New 500, is among that continent’s top-selling EVs.

“If they could come to market with something very small and electric and [with] better range, that’s the kind of vehicle that can turn some heads,” Ivan Drury, director of insights for Edmunds, told Automotive News. “Right now, the average ATP for an EV is $60K, and while [EVs are] pulling in a lot of buyers and a lot of money, we know there’s people that don’t want to spend that. They’re not looking to buy a used one, either.”

We’ll see what happens. With the Bolt gone, the entry-level EV space is about to get considerably worse but also more competitive for everyone else. I’d love to see the 500 finally flourish and really claim that domain for itself, but Stellantis can’t just throw the little guy out there. It has to come out swinging this time.

2nd Gear: Volvo On The Up

Volvo’s sales increased 31 percent in May of 2023 versus the same month last year, good for 60,398 cars. Courtesy Reuters:

The 31% rise comes after a strained 2022, when the company, like other automakers, felt the effects of persistent COVID-lockdowns in China, chip shortages and other supply constraints that hampered production.

As Volvo, majority-owned by China’s Geely, has begun recovering from 2022’s setbacks, sales figures have consistently been up for the past few months.

Still, automakers’ worries are not yet over as high costs linger. That forced the company recently to commence a cost-slashing effort that has seen 1,300 jobs being cut.

It also announced in May that production of its fully electric SUV was delayed until 2024.

Europe and China posted the biggest gains, at 40 and 49 percent respectively. In the U.S., Volvo only moved 15 percent more vehicles. The thing is, it’s not like Volvo is lacking for American-friendly product. In fact, its lineup became nearly all-SUV so slowly, the world barely noticed.

3rd Gear: VW Wants China Out Of Its EV Supply Chain

Every manufacturer that primarily does business in North America and Europe is moving to focus its EV and battery production in the West, to capitalize on government incentives. Volkswagen’s new energy subsidiary PowerCo (really) is leading the company’s efforts to make that happen. From The Wall Street Journal:

[VW board member and technology chief Thomas] Schmall and PowerCo chief Frank Blome have traveled the world to secure resources. They have met government officials and mining operators from Canada, South America, Indonesia and Australia. There are large deposits of lithium in South America, where Chile in April said it would nationalize the country’s lithium industry to maintain control of the resource. Mexico has also taken steps to nationalize lithium deposits.

Schmall said VW has spoken to a number of lithium suppliers in South America.

One of the lithium producers that VW has been speaking to, according to people familiar with the matter, is Sigma Lithium, a Nasdaq-listed Canadian mining company with operations in Brazil that has begun mining hard rock lithium, which experts say is less environmentally damaging than other methods of extraction.

In March, PowerCo said it would build its biggest planned battery factory to date in St. Thomas, Ontario, which is near deposits of lithium, nickel and cobalt. Schmall said another factor for picking the site was a trade agreement between the EU and Canada that would enable VW to export battery materials or cells from Canada to Europe in a pinch.

This is really a continuation of Volkswagen doing what Volkswagen has always done: marketing itself as a purveyor of green mobility, when the only reason it ever started was because some government forced it to.

4th Gear: Tiny Lexus

Lexus has a new subcompact SUV for Europe and Asia, based on the handsome Yaris Cross that we also don’t get here. It’s called the Lexus LBX, and its entire aim is to cash in on the segment dominated by the likes of the Mini Countryman and Audi Q2. That is, to say, be small but not look small, because looking small is death nowadays. From Automotive News:

We failed miserably on the first run,” admits Simon Humphries, who as chief branding officer at Lexus parent Toyota Motor. He oversees design for the Lexus and Toyota brands.

He said that when executives gathered to review the first full-size LBX design proposal, “it dawned on us … we had fallen into the trap of making a small car with small car proportions,” he said.

The project went back to the drawing board, with extensive engineering work on the platform. As a result the wheelbase was extended by 20 mm compared with the Yaris Cross but its overhangs were reduced to keep its length at 4190 mm.

“The big tires, the broad shoulders, the ratio between the body and cabin are calculated to give the car an air of confidence and strength well above its dimensions,” Humphries said.

The Audi Q2 is kind of adorable, insofar as it looks like a Q3 that’s been smashed at the front and rear in equal proportion. The Mini Countryman is, of course, a Mini. The idea of a small Lexus is strange for some reason and the name could certainly use some work. It’ll also be quite slow. There will be two powertrains: a 136-horsepower three-cylinder and a hybrid version of that, with 0-60 mph times just north of 9 seconds.

5th Gear: Toyota Won’t Give Up Hydrogen

Toyota will accompany the shockingly svelte Mirai hydrogen fuel-cell sedan with a hydrogen-powered version of the Crown sedan. That’s not to be confused with the Crown crossover that the company just started offering in North America, which is still the only Crown you can buy here. Take it away one last time, Auto News:

Toyota hopes the Crown will help propel its worldwide fuel cell vehicle sales to 8,000 units in the current fiscal year ending March 31, 2024, from 3,440 the fiscal year before.

Fuel cell sales are rising from a tiny base and still have meager numbers. Toyota’s full electric vehicle sales, by contrast, are expected to rise more than fivefold to 202,000 this fiscal year.

In a briefing about Toyota’s drivetrain strategy in April, Executive Vice President Hiroki Nakajima said the company sees mass production of fuel cells being driven by commercial vehicles.

“The energy source, hydrogen, is lightweight, so even when traveling longer distances the vehicle is not as heavy as a battery EV, and less space is required,” Nakajima said. “Refueling is also much quicker. Taking advantage of these strengths, we will work with business operators to promote FCEVs by starting with commercial vehicles such as medium- to heavy-duty trucks.”

Fuel cell technology was one key thrust of Toyota’s decision last week to agree with Daimler Truck on combining their commercial truck subsidiaries, Hino and Mitsubishi Fuso.

For as much as Toyota pushes hydrogen particularly in its home market, North America is actually the company’s biggest territory for such vehicles. Toyota moved nearly 4,000 Mirais around the world last year, and more than half of those sales hailed from North America. That said, it still hasn’t been confirmed whether we’ll get this version of the Crown, let alone any Crown sedan at all. You’d figure the company won’t reach its self-imposed target for FCV sales without American participation.

Reverse: A Messy, British Divorce

On this day in 1998 — 25 years ago — Volkswagen didn’t know exactly what it bought. See, the German automaker acquired Rolls-Royce Motor Cars, but critically that entity did not include the Rolls-Royce brand. The latter went to BMW, and so Volkswagen’s newly-acquired luxury car division ended up being folded into Bentley. From a CNN story dated June 5, 1998:

Vickers PLC shareholders overwhelmingly voiced their support Friday to sell its Rolls-Royce Motor Cars Ltd. to Volkswagen AG for 430 million pounds ($700 million).

The London-based industrial concern said the official count was 5.1 million for the Volkswagen bid and 109,000 against.

Vickers said Volkswagen provides a parent for the British luxury car maker with the engineering capability, resources, brand expertise and global reach to match Bayerische Motoren Werke (BMW) AG, whose rival bid of 340 million was rejected.

But Rolls-Royce PLC — a separate company that makes jet engines and controls the brand name and logo — has made it clear it would rather see the automaker go to BMW, which happens to be its partner in a jet engine venture.

Rolls-Royce PLC hasn’t said whether it will negotiate with Volkswagen or try to block its use of the brand name. Asked about that, Vickers Chairman Sir Colin Chandler insisted that a 25-year-old contract that would let Rolls-Royce PLC veto the purchase of Rolls-Royce Motor Cars Ltd. by a foreign buyer is legally unenforceable.

“The trademark can’t go anywhere else,” Chandler said. “We exclusively own the radiator, the flying lady and Bentley.”

Neutral: Fiat’s Chances

To those of you who have lived with or shopped around for tiny EVs before, like the Bolt, BMW i3, etc., I offer a question: Would you welcome the 500e with open arms? I might, but would really clinch it for me is the 3+1 version with its rear-hinged half doors. We need more rear-hinged doors in this world. Also, an Abarth version wouldn’t hurt.