- 2018 was possibly the wildest year in the history of the auto industry – and it wasn’t all because of Tesla and Elon Musk!
- Auto sales continued to boom in the US, gas prices stayed relatively low, self-driving car companies moved closer to commercialization, electric cars arrived in force, and Uber and Lyft announced IPO intentions.
- The industry also lost one of its greats in FCA and Ferrari CEO Sergio Marchionne, who died at 66.
Every year, I like to look back of the highs and lows of the auto industry and pick out the biggest stories.
For 2018, I had so many that the choosing wasn’t easy. I’ve zeroed in on 13 here, but I think I could have listed twice that many.
Looking ahead, it’s hard to imagine that 2019 will be as wild. But then again, Tesla and CEO Elon Musk aren’t going anywhere, auto sales in the US continue to boom, and nobody knows what will happen to jailed former Nissan chairman Carlos Ghosn.
But for now, let’s review that year that’s passed:
Elon Musk, Elon Musk, and yet more Elon Musk.
The already incredibly interesting Mr. Musk pushed it right over the edge in 2018. And then he pushed it some more.
He all but took over personal oversight of Tesla’s troubled Model 3 sedan rollout. He slept at his factories, possibly sometimes with the assistance of Ambien. He started dating musician Grimes. He flipped out on Wall Street analysts on an earnings call. He later apologised the analysts for flipping on their earnings call. He made a weak pot joke when he decided to float a Tesla go-private scheme on Twitter ($US420? Dude!). The was investigated by the SEC for said tweet and had to pay a fine and resign as chairman of Tesla. He wept in an interview with the New York Times. He talked tough in an interview with “60 Minutes.” He accused a rescue diver during the Thai cave crisis of being a pedophile (and later apologised).
There were many, many, many tweets. I’ve probably missed a few choice Muskisms. He was seemingly everywhere. And by the end of it all … Tesla was the most valuable US carmaker, by market capitalisation, surpassing GM.
The Tesla Model 3 arrives in force.
The Model 3 was officially launched in July of 2017, but building and delivering the 400,000 pre-ordered vehicles to customers proved to be a titanic challenge for Tesla. By the end of the year, just a few thousand had left the factory.
The situation didn’t improve much in the first half of 2018, as Tesla struggled through an intense version of what Musk called “production hell.”
But by mid-2018, the situation was under control. Sort of. An innovative Model 3 automated production line wasn’t working properly, leading the carmaker to erect a temporary assembly line in its parking lot – under a tent! The $US35,000 mass-market Model 3 also didn’t materialise, as Tesla concentrated on upscale trim levels, including the almost $US80,000 Performance version.
As the year closed out, Model 3 production was relatively robust, and Tesla was on track to produce twice as many vehicles – 200,000 or more – as it did in 2017.
Near-record US auto sales hold up.
The record sales year of 2015 – when 17.5 million new cars, trucks, and SUVs were sold in the US – was followed by a new record in 2016 (17.55 million) and a near-record in 2017 (17.2 million).
A US market above 17 million is considered robust, so for the past few years, forecasts of a downturn have been common.
It hasn’t yet arrived, although sales have been slipping, in a month-by-month basis. And although the final 2018 numbers haven’t come in, it looks as though another 17-million-plus year will be in the books.
General Motors’ Cruise self-driving division is valued at $US14.6 billion — and gets a new CEO.
GM bought Cruise in 2016 for $US1 billion, all-in (around half of that was future spending to cover hiring and expansion). Two years later, in 2018, a dual $US3.35-billion investment by Japan’s SoftBank Vision Fund and GM brought the valuation of the self-driving unit up to $US11.5 billion.
GM later joined with Honda to pump in another $US750 million, taking Cruise’s valuation to $US14.6 billion.
And then Cruise CEO Kyle Vogt stepped aside to focus on technology development as Cruise commercializes in 2019, handing the reins to GM President Dan Ammann, who had overseen the acquisition and follow-on investments.
All this activity positioned Cruise as the chief competitor for Alphabet’s Waymo in the push to bring driverless services to the marketplace.
Waymo One officially launched in the Phoenix area.
Speaking of Waymo, the former Google Car project officially launched its first commercial ride-hailing service, called Waymo One, in the Phoenix area.
It is the culmination of 10 million driverless miles racked up over a decade of testing.
Uber recovers from the Kalanick debacle and prepares for an IPO.
With steady-handed CEO Dara Khosrowshahi at the helm after the crisis brought in by the 2017 resignation of founder and former CEO Travis Kalanick, Uber announced its long-awaited IPO plans in December.
The ride-hailing service could go public at a valuation of $US120 billion.
Lyft also gets ready for an IPO.
But Uber’s main rival, Lyft, also announced an IPO – and beat Uber to the punch by a day!
It’s unclear how much an IPO could make Lyft worth, but it’s safe to say it won’t be anywhere near as much as Uber.
The upshot is that investors are ready to exit both companies. The big question is whether either will be financially successful. Both Uber and Lyft are burning though massive amounts of cash and have failed to achieve profits.
Fiat Chrysler Automobiles and Ferrari CEO Sergio Marchionne dies suddenly, leaving behind a legacy not likely to be matched.
Marchionne, 66, passed away in July after falling into a coma after complications from surgery. The outspoken leader of Fiat, Chrysler, and Ferrari created FCA out of the near-ruin of Fiat and the bankruptcy of Chrysler. It was among the most impressive achievements in modern business.
“Marchionne’s death leaves the car business without a truly original personality and a leader who always sought to balance opportunistic optimism and flinty realism, hard work and humour, the world of business and the wider realms of life,” I wrote in my obituary.
New electric vehicles finally start arriving in the market.
Ever since 2012, Tesla had the luxury EV space all to itself. But the picture began to change in 2018. A new Nissan Leaf arrived, Chevy continued to sell its Bolt all-electric hatchback, and major luxury names, such as Jaguar with its I-PACE, introduced premium vehicles that renounced the internal-combustion engine.
The Great Pickup Truck wars of the late 2010s begin.
Ford has had it all-new F-Series pickups in the market for a few years. But in 2018, FCA’s RAM brands and GM’s Chevy and GMC brought their redesigned full-size pickups to the battle.
Now the Ford F-150 can duke it out with the RAM 1500 and the Chevy Silverado and GMC Sierra.
The great American family car dies off.
Fiat Chrysler was the first big US carmaker to shift away from sedans. Ford followed, and GM finally joined the trend, idling five factories in the US and Canada that built or contributed to a four-door passenger-vehicle lineup that the company has decided to phase out.
Consumers don’t want the classic American car anymore. The sedan, it seems, it on the way out, replaced by crossovers and SUVs.
Gas prices remain affordable.
Gas wasn’t as cheap in the US as it has been in previous years. But it wasn’t horribly expensive, either.
That kept Americans on the road and supported sales of large, profitable pickups and SUVs. After peaking during the spring and summer, the average price per gallon in the US steadily decline toward the end of year, ending up under $US2.50, according to GasBuddy.com.
Auto industry legend Carlos Ghosn is arrested and jailed in Japan.
After decades in which he ruled over the Renault-Nissan alliance (Mitsubishi was recently added), the globetrotting Ghosn was easing toward retirement when he was arrested in Japan and accused by Nissan of financial misconduct.
The auto-industry celebrity was deposed as chairman of Nissan, but Renault stood by him, opening an international rift. The future of the alliance hung in doubt as Ghosn was re-arrested twice by Japanese authorities and kept silent in jail.
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