China’s answer to Elon Musk has survived once, but he has a fight ahead

William Li is being mobbed. At a gala dinner in Shanghai, the founder of Chinese electric carmaker Nio Inc. can barely move forward in the buffet queue before being stopped for another selfie, handshake or hug. Swapping his usual attire of jeans and a T-shirt for a tailored grey suit and blue dress shirt, the tall 46-year-old happily obliges with a smile.

Li manages to spoon a small amount of fried rice and vegetables onto his plate, but he’s not here for the food. Over the next three hours, Li poses for hundreds more photos, chatting with customers of the automaker he started just over six years ago and has built into a way of life — at least for the people who buy his cars — with clubhouses, a round-the-clock battery recharging service and even clothing, food and exercise equipment, all decked out in Nio’s geometric logo. As Li works the room, a video backdrop shows six performers, each wearing a different-colored Nio hoodie, singing a self-composed song dedicated to the company. “Meeting with Nio, we want to be better selves,’’ the not-so-catchy ditty goes.

While other billionaire executives may cringe at spending their down time glad-handing customers, for Li this is core. Nio’s business model relies on creating a sense of allegiance among buyers, who then persuade friends and family to spread the word about its cars. Dubbed “Rippling Mode,’’ the strategy invokes the ever-widening circles caused by throwing a single stone into a pond, Li says. The scene in Shanghai was just what he was aiming for: a passionate customer base with the loyalty of Apple fans — and a dash of Elon Musk cult-of-personality thrown in.

It’s an approach that’s turned Nio into Musk’s most visible nemesis in a country that seems to be minting Tesla adversaries every other day. While other electric vehicle companies may pump out more cars aimed at the mass market, Nio is targeting the premium buyers that Musk — who established his first Gigafactory outside the U.S. on the outskirts of Shanghai in 2019 — needs to realize his ambitions for global growth and long-term profitability. China is ground-zero in the transition away from gas-guzzlers to alternative-energy cars, with the government intent on dominating a new automotive era that has triggered an onslaught of investment over the past six months and that even the U.S. is now embracing.

The biggest car market on the planet, China is already the world’s largest for EVs. Sales will reach 2 million this year and surge to 6.2 million vehicles by 2025, when they will account for a quarter of all passenger car sales in the country, according to BloombergNEF. 

Urbane, early adopters in China’s biggest cities have been at the heart of that transition, and are prime targets for both Nio and Tesla. Nio’s premium ES6 SUV competes head-to-head with the sporty Model Y that Tesla started making in China last year. It’s a tussle that’s front and center for Li, who in an interview with Bloomberg talked about how the eldest of his two sons, a first grader, wants to follow in his footsteps. 

“One day he told me that he would study hard and work hard, helping dad beat Tesla when he grows up,” said Li. “It’s going to be too late, I said.”

These days, that prospect is looking less like wishful thinking.

Nio delivered more than 20,000 vehicles, all of them SUVs, in the first quarter at an average price of $68,000, while Tesla shipped around 17,000 of its Model Y sports utility vehicle in China, which starts at around $53,000. Nio’s share of the overall China market for higher end cars is second only to Tesla, according to Kang Jun, an analyst at consultancy LMC Automotive, and it’s set a “benchmark” for the wider EV space, “particularly in product and service innovation.”

Tesla has also faced a raft of setbacks of late in China, which accounted for more than 20% of all revenue last year. Increased scrutiny from local regulators has been accompanied by a rising backlash against Tesla and its cars, culminating in one owner climbing on top of a Model 3 at the recent Shanghai Auto Show, claiming the company failed to address issues with her vehicle’s brakes. The protest, which went viral in China, unleashed a wave of complaints about Tesla’s customer service, the very thing Li — who regularly replies to queries from Nio owners on the company’s app and has taken weekend trips across China to meet customers — has used to differentiate Nio in the cut-throat EV landscape.

But Tesla isn’t the only foe Li has to worry about. A Battle Royale is brewing in China’s new energy car market — where retail sales of battery-powered passenger vehicles jumped 10% to 1.11 million last year, despite the hit from the pandemic — one that will challenge both Nio and Tesla, and set the stage for global control over the future of cars.

After years watching from the sidelines, the big auto-making giants are doubling down on EVs, with Volkswagen AG launching an eight-car range from its platform designed for battery electric cars in China, Toyota Motor Corp. unveiling a new EV platform, and premium carmakers like BMW AG aiming for one-quarter of all Chinese sales to be electric. At the same time, Big Tech is eyeing the sector, lured by the technological possibilities. Chinese search-engine titan Baidu Inc. to smartphone maker Xiaomi Corp. and networks giant Huawei Technologies Co. have pledged almost $19 billion into the EV and autonomous driving space since the start of the year alone.

Smaller companies like Nio — which is listed with compatriots Xpeng Inc. and Li Auto Inc. in New York, putting them on the radar of U.S. investors — will face greater pressure as multinationals enter the fray, said Zhang Xiang, an auto-industry researcher at North China University of Technology in Beijing.

“It’s by no means a time they can rest easy.”

Nio has already had one near-death experience.

Carmaking is typically a capital-intensive business, but with Nio, Li has sought to create a brand beyond the vehicles, an approach he describes as “the pursuit of being a user-enterprise.’’ The most visible manifestation of that was the Nio House, an elite drop-in center for the company’s customers — even offering art and music classes for their kids — and located on prime real estate in some of China’s biggest cities. It was coupled with extravagant marketing events. The carmaker holds annual Nio Days, and at the first in 2017 paid for flights and luxury hotels for everyone who ordered a vehicle a year before production started. R&B star Bruno Mars headlined the 2018 event. When its public charging facilities are overwhelmed, Nio has a fleet of cars that can take portable battery chargers to users wherever they’re parked.

Such largesse, along with a major recall after some cars caught fire just as China shifted subsidies from EV purchases to support the charging network, saw Nio rack up $5 billion of losses in its first four years of existence (Tesla took about 15 years to reach that particular milestone). By the second quarter of 2019, the company was losing around $5 million a day. 

“It was our darkest time,’’ Li said. A team met nightly to comb through expenses, from salaries to the cost of Nio Houses. “It was easy to calculate how much we could earn from selling cars, but we had to mind for everything to sustain a normal operation,’’ he said. “Every dollar counted.”

By October 2019, it looked like the gig was up. After posting a worse-than-expected quarterly loss, Nio’s shares plunged to a record low of $1.32. At its nadir, the carmaker had lost more than 70% of its market capitalization — about $5 billion in value — from its New York initial public offering a year earlier.

Even a $200 million cash injection from a sale of convertible notes to Li and an affiliate of Chinese tech giant Tencent Holdings Ltd. — an early investor in both Nio and Tesla — wasn’t enough to shore up the company’s seemingly insatiable need for cash.

The setbacks kept coming. Nio couldn’t afford the final payment on an imported stamping presser, a large machine used to shape a car’s panels. Worse, it had to sell the presser at a discount to Tesla, which promptly installed it in its new Shanghai plant, built with loans and support facilitated  by the government. Soon after, a deal for as much as 10 billion yuan ($1.6 billion) in funding from a Beijing local government-backed firm fell apart. Analysts started to openly speculate that Nio may be delisted or taken over. The situation got so dire that in late 2019, He Xiaopeng, the engineer founder of Guangzhou-based Xpeng, itself in a tenuous position with just 3 billion yuan in cash, proposed a merger of the two struggling electric carmakers, according to an interview He gave to Chinese state media. Li rejected the offer.

“Nio was already in the intensive care unit, while Xpeng was waiting outside,’’ Li recalled. “A merger would bury both of us.”

(Xpeng went on to be the third Chinese EV startup to list in the U.S., raising $1.5 billion in August 2020. The surge of investment in the space has seen its shares more than double, even accounting for a recent dip, and the company is now setting up a third Chinese production base to meet demand.)

Then came the lifeline that showed the lengths China will go to maintain its ambition of creating a world-leading EV industry.

In early 2020, the municipal government in Hefei — the capital of Li’s home province of Anhui, about 600 miles southeast of Beijing — came knocking. Despite the onset of the coronavirus pandemic, which initially paralyzed car sales, a deal was struck in which the Hefei government would lead an injection of 10 billion yuan into Nio, more than the company’s entire revenue for 2019.

Coming just months after Nio said it wouldn’t have enough money to  continue operating for another year unless it got more funds, the agreement essentially provided the company with a state-backed security blanket. That can be a key advantage in China, where the government is the biggest player in almost every industry and has a hand in everything from manufacturing permits to access to capital. It could also provide a decisive edge over Tesla, which seems to have lost the favor it enjoyed early on with Beijing, as tensions with Washington continue to simmer under President Joe Biden’s administration. 

For Nio, the quid-pro-quo was supporting local industry. The company abandoned plans to build a factory in Shanghai in early 2019, and instead — unlike Tesla and most traditional automakers — it pays a government-owned manufacturer in Hefei called Jianghuai Automobile Group Co., or JAC, to make its cars. The deal was extended last month for another three years, with JAC agreeing to double monthly capacity to 20,000 vehicles.

“When William Li brought his proposal to us, most people thought it was fantasy that a Chinese carmaker planned to build first-rate intelligent electric vehicles,’’ former JAC Chairman An Jin said.  “I might be the person with the best knowledge of how Nio came along, with all the challenges and difficulties. In its hardest time, William even devoted his own money to solve the problem. That’s how he fought for his dreams.’’

At an April 7 ceremony to mark the production of Nio’s 100,000th vehicle, Li said he would work with the Hefei government to establish an intelligent-vehicle production base, including an R&D facility. Construction started later that month, and the industrial park is expected to eventually house manufacturing workshops, along with other players in the EV supply chain.

The Hefei pact, described as a government bailout by Sanford C. Bernstein’s senior analyst Robin Zhu, “put speculation around Nio’s funding issues to bed, at least in the foreseeable future,” he said.

Li, though, also credits his loyal customer base. “We sold over 8,000 cars in the fourth quarter of 2019, which was pivotal to our survival,’’ he said. “That’s why I always say that our customers saved us. Even if we sold 500 or 1,000 fewer vehicles, that could have triggered a total collapse.’’ 

Still, the experience was chastening. Nio cut about a quarter of its workforce, slowed its efforts on autonomous driving, delayed wage payments for managers and spun off some non-core businesses. While the rollout of the costly Nio Houses was suspended for more than a year, the strategy of putting Nio ownership at the center of an owners’ lifestyle and creating an aura of exclusivity, wasn’t forsaken with more modest Nio Spaces rolled out. Usually around 100-200 square meters (1,100-2,150 square feet), Nio Spaces are located in cheaper locales and also sometimes in smaller cities. They cost about 1 million yuan to set up, much less expensive than the more salubrious Nio Houses.

It seems to have worked — for now. Nio is still yet to turn a profit but its sales have risen steadily since — topping $1 billion for the first time in the three months to Dec. 31, 2020. The company narrowed its net loss in the first quarter of 2021 to 451 million yuan, down from 1.69 billion yuan a year earlier and 1.39 billion yuan in the fourth quarter of 2020. Even the businesses that underpin Nio’s lifestyle brand are making money, contributing to 1.1 billion yuan in revenue from non-vehicle sales last year, according to the company’s annual report.

“To enter the car industry and survive isn’t easy,’’ said Jochen Goller, BMW’s China CEO. “Some others have disappeared. I have met with William Li a couple of times and I have to say I am impressed by what he has achieved. Nio is also creating awareness for battery cars, and having the right brands in the segment is helping the market.’’

The Hefei deal also came around the same time as investors cottoned on to the EV revolution, putting a rocket under Nio’s shares. They surged more than 1,110% last year, besting even the rally that propelled Tesla into the S&P 500 Index. The stock has given up some of those gains since as enthusiasm has eased, but with a market value of $70 billion, Nio is still bigger than Ford Motor Co.

It’s a long way from Li’s relatively humble beginnings. Raised by his grandparents in a small village in the hills of Anhui, known for farming and — more recently — the automobile industry, Li calls himself one of China’s “first generation of `left-behind’ children’’ because both his parents moved to the neighboring province of Jiangsu to pursue better work. There was no electricity in the village until Li was in his teens. 

While majoring in sociology at Peking University, one of China’s top colleges, Li started his first business — leasing internet servers and helping clients register domain names. The auto industry is where Li has enjoyed his greatest success, however, with the three listed companies he founded in the past 20 years all related to cars. His first, a vehicle-pricing portal called BitAuto Holdings Ltd. was acquired last year by Yiche Holding Ltd. for $2.8 billion, propelling Li’s personal fortune to $7 billion. That was followed by online auto-finance platform Yixin Group Ltd., which listed in Hong Kong in late 2017.

Then came Nio. In an internal presentation in 2016, Li recalled looking out the window of his apartment at Beijing’s smoggy skies before the birth of his first son, and decided something needed to be done to tackle the country’s chronic pollution. He started Nio in late 2014 with funding from a group of well-known investors, including Li Auto founder Li Xiang and Richard Liu, the founder of e-commerce portal Xiaomi’s Lei Jun was also an early backer.

When he’s not dining with super-fans, Li’s workday calendar is packed. On a recent Tuesday at the company’s corporate headquarters — which remain in the slick financial capital of Shanghai — he spent the morning locked in executive committee meetings. In the afternoon, it was more back-to-back meetings with the company’s battery partner, designers, and clients from Europe. In a first, Nio recently announced plans to start selling cars in EV hotbed Norway.

But while the company is on much firmer ground than 18 months ago, questions remain.

“Auto manufacturing has big economies of scale, and at less than 100,000 units a year, Nio hasn’t yet reached the production volume to realize all of those efficiencies,” said Robert Cowell, an equity analyst at Shanghai-based 86Research.

Cost issues linger, with the price of raw materials used in batteries, the most expensive part of an EV, including lithium-ion compound, soaring in recent months. Like most global automakers, Nio has also been hit by a worldwide shortage of the chips used increasingly in modern cars, leading to the suspension of production in Hefei for five days at the end of March. And despite the intensifying competition in an industry defined by technological advances and consumers drawn to the next shiny thing, Nio isn’t planning on unveiling any new models until late this year or early 2022.

While Tesla is the main competitor in view, it’s the rivals to come that Li sees as the biggest threat.

“The final game won’t start until tech giants are in,” he said. In March, Xiaomi unveiled plans to invest about $10 billion in manufacturing EVs, while Huawei has collaborated on at least two cars and is developing autonomous driving technologies. Lurking in the background is the biggest tech giant of all — Apple, which has long harbored ambitions to make its own, self-driving car.

“I trust companies like Apple for their determination, software development, intelligence capability, and user connection,’’ Li said. “It’s going to be different competition from traditional car companies.” 

But like Musk and other EV evangelists, Li is looking to the long game. “I’m very optimistic,” he said. “By 2030, 90% of the newly launched cars will be electric, or even 95%.”

For the Nio fans gathered in Shanghai that Sunday evening, that future is already here.

With the event drawing to a close, owners pose for a large group photo with Li at its center, everyone flashing thumbs up. As the lights dim, Li slips out of the hall and into the night, where his driver — in a white Nio ES8 — waits to take him home..


Yugo enthusiasts are keeping America’s most-hated car on the road

Once one of America’s cheapest new cars, and long one of the nation’s most despised vehicles, the Yugo is gaining ground on the collector car market. Some of the folks keeping the former Yugoslavia’s best-known car export on the road spoke with The New York Times about their experience, and the comments are surprisingly positive.

“You will find people who like it for the obscurity, just for the novelty of owning the unloved,” explained Valerie Hansen, who is restoring a 1984 model imported to America before sales officially started. She told the publication that one of the reasons why she’s on her fourth Yugo is that they can be fixed “with a butter knife and a rubber band.” Some will argue that’s a good thing, because it needed mechanical attention on a regular basis.

On the other hand, many owners feel the car didn’t entirely deserve the jokes and criticism. “I will always have the feeling that Jay Leno personally killed the car. Nobody likes owning a car that is a joke,” explained Steve Moskowitz, a former Yugo dealer. Leno regularly made fun of the little Fiat-derived hatchback on his Tonight Show.

Here’s a point that often gets overlooked when the conversation turns to the Yugo, or to any of the foreign economy models that have become one-liners on wheels (like the Renault LeCar): broadly speaking, they worked relatively well in their home country. Zastava made nearly 800,000 units of the Yugo, which was known by over a dozen different names, and the little hatchback outlived the Yugoslavia; it remained in production until November 2008. While it’s not nearly as common across Eastern Europe as it was in the early 2000s, it’s not a rare sight, either.

We’re not saying the Yugo was a stellar example of craftsmanship, but America’s bad experience with the car is partly due to the fact that it wasn’t designed for a 12-hour trek across Texas in July. It’s not alone. The handful of drivers who bought the original Mini briefly sold in the United States in the 1960s complained about reliability, too.

The enthusiasts who spoke with The New York Times agreed the Yugo isn’t quite as bad as its unpalatable reputation suggests, which might explain why its star is beginning to rise. Clean examples often win awards at car shows, and values are creeping up. Auction platform Cars & Bids sold a 1988 example for $6,100 in October 2020. Other cars sold by the site in the $6,000 range include a 1987 Porsche 924 and a 1990 Mercedes-Benz 500SL. 

Viewed in this light, the once-hated Yugo isn’t doing too bad for itself; merely filling up the fuel tank (assuming it’s not rusty) is no longer enough to double its value. Head on over to the Times for the full story, which includes insight from past and current owners and from Malcolm Bricklin, the entrepreneur that brought the Yugo to America.

Related video:


Moscow will give away free cars to people who get COVID vaccine

MOSCOW — Moscow will give away cars in a prize draw for residents who get the COVID-19 shot in an effort to speed up the slow rate of vaccinations, its mayor said on Sunday, as officials brought in curbs to halt a surge in coronavirus cases.

The Russian capital reported 7,704 new infections on Sunday, the most in a single day since Dec. 24. Authorities confirmed 14,723 cases nationwide, the largest one-day total since Feb. 13.

Mayor Sergei Sobyanin said that anyone over 18 who receives the first of a two-dose COVID-19 vaccine from June 14 until July 11 would now be automatically entered into a draw to win a car.

He said five cars worth 1 million roubles ($13,900) each would be given away every week.

Sobyanin has publicly lamented how few residents have chosen to get the vaccine. He gave no new figures on Sunday for how many have had the shot, but said on May 21 that 1.3 million out of a population of more than 12 million had received one dose.

Sobyanin said on Saturday the city was repurposing thousands of hospital beds for an influx of COVID-19 patients and told residents to stay off work this coming week to help curb the spread of the virus.

Sports pitches, playgrounds and other attractions inside large parks were set to be closed for a week from Sunday. Bars and restaurants were ordered to close no later than 11pm.

“This is only a temporary solution,” Sobyanin said in a follow-up blog on Sunday. “To avoid new restrictions and secure a sustainable improvement of the situation, we need to significantly speed up vaccinations.”

Russia began rolling out its Sputnik V shot in December and it was rapidly opened up to everyone in Moscow.

Related video:


GOP, Democrats trade places on taxing drivers to pay for road fixes

The debate over how to pay for the nation’s roads, bridges and transit systems is leading some normally anti-tax Republicans to embrace higher levies on motorists — even a new one based on miles driven instead of fuel purchased.

But some Democrats who have supported the idea of charging a mileage fee are now opposed. They see infrastructure as an economic stimulus measure and want it paid for by corporate taxes.

That change of positions has Washington observers scratching their heads.

“If you took the positions and went back 10 years, you would say, ‘What?’” said Adrian Moore, vice president of policy at Reason Foundation, a libertarian think tank.

The debate about whether motorists or corporations should foot the bill is threatening to scuttle negotiations between President Joe Biden and Senate Republicans for a massive infrastructure plan. Biden pulled out of one-on-one talks with West Virginia Republican Senator Shelley Moore Capito, but the White House has said he is still engaged with a separate, bipartisan group of senators despite some Democrats agitating for their party to go it alone.

The bipartisan Senate group has agreed to pitch a $1.2 trillion eight-year infrastructure spending package to Biden, according to people familiar with the deliberations, an amount that’s still well below the $1.7 trillion Biden had proposed in his direct talks with Capito.

Although the president is in the U.K. for the Group of Seven summit, the Democrats in the bipartisan group went to the White House on Thursday. “Questions need to be addressed, particularly around the details of both policy and pay fors, among other matters,” said Andrew Bates, a White House spokesman.

Indexing the gasoline tax — currently 18.4 cents per gallon — to a measure of inflation has been discussed by the bipartisan group working on a compromise plan, according to Mitt Romney, a Utah Republican who’s taken a prominent role in those talks. He said it wouldn’t raise much money.

Dick Durbin, the No. 2 Senate Democrat, said Thursday he’s in favor of indexing the gas tax. Still, it’s unclear whether the White House would endorse such a move.

As recently as two months ago, Transportation Secretary Pete Buttigieg said the so-called vehicle-mile tax was under consideration in the Biden administration as a way for all motorists to pay for the upkeep of roads. The advantage of the VMT is that it would offset losses in the federal gas tax brought on by the growing sales of electric cars.

But the White House has since reversed course, saying it would violate Biden’s pledge not to raise middle class taxes.

“I’m working hard to find common ground with Republicans when it comes to the American Jobs Plan, but I refuse to raise taxes on Americans making under $400,000 a year to pay for it,” Biden tweeted on Tuesday. “It’s long past time the wealthy and corporations pay their fair share.”

Democrats have leaned into the idea of raising taxes on large corporations, including some that saw their taxes lowered during the Trump administration.

“This view that lowering taxes on the rich people is good for the economy there’s no evidence that it is,” Senator Sherrod Brown, an Ohio Democrat, said Wednesday. “They would rather increase for the $60,000-per-year person the gas tax than for a $300-million-per-year person raise their income tax.”

25-cent-per-mile truck tax?

Republicans have balked at the idea of raising corporate taxes to pay for roads.

“If you look at the last 30 years where we have passed in a bipartisan way, infrastructure bills here in Congress, they’ve always been predicated on user fees of some sorts,” Representative Darin LaHood, an Illinois Republican, said during a May 19 House Ways and Means Committee hearing.

“But instead, today, we’re talking about a diversion of the tax code talking about raising corporate rates to fund infrastructure,” he said.

Texas Republican Senator John Cornyn suggested last month that a 25-cent tax be imposed on every mile driven by heavy trucks to raise $33 billion a year — about as much as the fuel tax.

Truckers immediately raised objections.

“We’re not opposed to VMT,” said Bill Sullivan, executive vice president for advocacy at the American Trucking Associations, which lobbies for large trucking companies. “What we’re violently opposed to is this idea of ‘Let’s just do this for trucks.’”

Republicans who opposed previous efforts to increase the gas tax or a move to a mileage fee argued it disproportionately affects lower income people, said Greg Regan, president of the AFL-CIO’s Transportation Trades Department. Now, it’s Democrats making that argument and the GOP that’s suggesting user fees should be used to pay for roads and transit.

Ed Mortimer, the U.S. Chamber of Commerce’s vice president of Transportation and Infrastructure, attributed the shifting position among Republicans on user fees to their being accustomed to seeing electric vehicles as a Blue State phenomenon. So, he said, they ignored warnings about a gas tax shortfall — until Republican-led states began seeing their fuel levies decline.

“Some Republicans who maybe have been reticent about user fees, when it comes to a user fee or corporate tax increase, maybe they’ve gotten a different perspective,” Mortimer said.

Electric vehicles

Sam Graves of Missouri, the top Republican on the House Transportation and Infrastructure Committee, has argued a VMT could easily be implemented by using a formula assessed at the gas pump similar to how the fuel tax is paid.

Such a fee would also help shore up highway funds. Gas and diesel taxes leave out a whole new category of motorists on the road — electric vehicle drivers. Backers say it would help close the gap in federal highway funding. The gas tax brings in $34 billion per year while federal spending on highways and public transportation has topped $50 billion annually.

“The suggestion is, middle class workers are going to pay what mega-corporations will not,” Oregon Democrat Ron Wyden, chairman of the Senate Finance Committee, said during the panel’s hearing on funding infrastructure in May. “That’s not a step toward fairness.”

Wyden said he would look at any gasoline tax indexing proposal such as the one Romney said was under consideration before commenting. He pointed out that Biden has a “reservation about this as a regressive tax” and highlighted the Democratic view that corporations are underpaying taxes now.

Senator Chuck Grassley, a veteran Iowa Republican, remarked Thursday about indexing the levy that “it’s better than increasing the gas tax and it has a better chance of getting done.” He also that if that had been done in the early 1990s “we wouldn’t be in the situation we are in now.”

While highway funding is expected to be part of the infrastructure plan, Congress is still working on a standalone bill to take the place of a five-year, $305 billion act that was extended until Sept. 30. The House passed a five-year, $494 billion surface transportation bill in July 2020, but the measure has not been approved by the Senate. Democrats in the lower chamber have introduced a $547 billion surface transportation bill. House Republicans countered with a smaller $400 billion measure.

Former U.S. Transportation Secretary Rodney Slater, who served in the Clinton administration, said the last gas tax increase, to 18.4 cents a gallon from 14 cents a gallon in 1993, was tied to a federal deficit-reduction effort. It passed with no Republican votes.

It wasn’t until 1998 when the extra 4.3 cents per gallon was dedicated to the Highway Trust Fund, Slater said.

Slater said consideration of potential replacements for the gas tax, including a mileage fee, goes back as far as the Clinton years. He cited the creation of the Transportation Infrastructure Finance and Innovation Act program and the Railroad Rehabilitation and Improvement Financing in 1998, in addition to the early VMT explorations.

“We tried to go for a VMT provision,” he said. “We recognized we couldn’t solely rely on the gas tax to fund transportation. We were beginning to explore innovative financing techniques.”


McLaren to enter Extreme E electric SUV series in 2022

LONDON — McLaren will add an Extreme E team to their Formula 1 and Indycar operations next year in a major boost for the newly launched electric off-road series (another team’s car is pictured above).

McLaren Racing chief executive Zak Brown told reporters he expected the involvement to be “commercially positive” from the start.

McLaren would mostly use existing personnel for the team, but not from Formula 1.

“What we will never do is distract or detract from our Formula 1 efforts,” added Brown. “Indycar, Extreme E are there to be complementary and accelerate our Formula 1 efforts.”

McLaren will be the 10th team signed up to the five-race series launched by Spaniard Alejandro Agag, who also founded the city-based Formula E championship, with two more slots still available.

Seven-time Formula 1 world champion Lewis Hamilton, and 2009 and 2016 world champions Jenson Button and Nico Rosberg, also have Extreme E teams.

“The McLaren news is a major, major boost for Extreme E,” Agag told reporters in a video call.

“We know that there are many manufacturers looking at Extreme E. The news of McLaren entering is for sure going to help other manufacturers look at Extreme E with interest. Today is the biggest news in our short history.”

The team will be entered by McLaren Racing, rather than the automotive side whose current model range focuses heavily on petrol-engined supercars.

Other manufacturers involved in Extreme E – Seat’s Cupra brand, Hummer and Lotus – have an electric model or product range to promote but McLaren have in the past ruled out making an electric SUV.

“I wouldn’t want to speak on their behalf,” Brown said when asked whether that approach might change. “This is a McLaren Racing effort solely.

“Of course electrification is very important to the automotive group … (but) it’s not an indication one way or the other as to Automotive’s position on SUVs.”

Brown said a possible involvement in the World Endurance Championship (WEC) and Formula E remained under review until later in the year.

Extreme E aims to raise awareness about climate change and promote sustainability by racing electric SUVs in remote and harsh environments, with a former mail ship used to transport cars between locations.

Brown already has an involvement through his United Autosports, which co-owns a team with Andretti Autosports, but the American said he was a “silent partner” in that.

He said McLaren’s move would give the Bahraini-owned company a broader offering for sponsors.

(Reporting by Alan Baldwin; Editing by Hugh Lawson and Nick Macfie)

Related video:


Ferrari struts its stuff on the catwalk, on the catwalk, yeah

MARANELLO, Italy — Talk about fast fashion. Ferrari is bringing its brand to the catwalk (and fine dining) in an attempt to woo wealthy customers beyond its faithful fans. On Sunday it will be launching a fashion collection and reopening a restaurant in its hometown of Maranello two days later.

The clothing line comes from creative director and former Armani designer Rocco Iannone while Michelin-starred Italian chef Massimo Bottura is relaunching the restaurant where founder Enzo Ferrari once dined with friends and Formula 1 stars.

Nicola Boari, Ferrari’s chief brand diversification officer, told Reuters the aim was to reach new clients “in terms of both age and culture” — beyond its racing fans and sports car clients who already covet its branded jackets, T-shirts and hats.

The customer base for Ferrari’s cars is limited by design to under 10,000 vehicles a year — fewer clients than Bottura’s new restaurant could serve in the same time — and the luxury carmaker has said it hoped its so-called brand extension strategy would account for 10% of profits within a decade.

Ferrari is far from the first luxury car brand to venture into lifestyle businesses. Others like Volkswagen’s Lamborghini and Bentley, as well as U.S. motorcycle maker Harley-Davidson, have turned to clothing collections. Ferrari’s foray into haute cuisine too follows in the steps of luxury fashion groups, including France’s LVMH and Kering’s Gucci, which also turned to Bottura for its first restaurant in Florence and a second in Beverly Hills.

“Ferrari is one of the strongest brands in the world and definitely the strongest brand in the luxury industry,” said Massimo Pizzo of Brand Finance, a brand valuation consultancy.

“It has the potential to succeed even in the luxury apparel industry,” he said.

Ferrari’s Il Cavallino restaurant in Maranello

Luxury Profits

Ferrari’s former chief executive Louis Camilleri unveiled the brand extension strategy, which includes fashion, restaurants and other luxury experiences, in 2019 just before the coronavirus pandemic struck and delayed the plans.

The launch now comes days after the appointment of new Chief Executive Benedetto Vigna, a 52-year-old physicist who has spent 26 years at semiconductor maker STMicroelectronics and is expected to drive Ferrari into the era of electric cars.

Camilleri said Ferrari’s brand spin-offs were too stretched and planned to cut about half of the carmaker’s license agreements and trim some 30% of its product categories.

Perfumes have since disappeared from the shelves of Ferrari’s existing stores, for example, as have some low-end products with no real value beyond the logo.

Analysts said it would take time for Ferrari’s new brand strategy to succeed, while some were cautious about its potential contribution to profitability.

“Given the kind of scale you need to be profitable in luxury, I don’t think this will be accretive to Ferrari’s margins, which are quite high already,” said Susy Tibaldi, luxury analyst at Swiss bank UBS.

Last year, 11.3% of Ferrari’s net revenue came from its sponsorship, commercial and brand category — which includes the Formula 1 team and revenue generated by the brand through merchandising, licensing and royalties — down from 14.3% in 2019.

Ferrari’s direct rival Lamborghini offers several branded collections based on partnerships, including menswear, kids wear and living, while Bentley’s brand extension strategy focuses on accessories and luxury furniture.

Both companies said their brand extension strategies made important, and growing, contributions but declined to detail how much revenue they generated.

Harley-Davidson has long profited from a wide range of branded lifestyle gear with its general merchandising accounting for 5.7% of the company’s motorcycle division revenue last year.

Renewing Tradition

Ferrari, which plans initially to sell its fashion line through its stores and online, will be competing with luxury heavyweights in a market estimated to be worth some 280 billion euros ($341 billion) this year.

Ferrari’s parent Exor, the investment company of the Fiat-founding Agnelli family, has also been moving into luxury.

It recently bought 24% of shoemaker Christian Louboutin and became the biggest investor in Chinese luxury group Shang Xia, which was co-founded by France’s Hermes.

Ferrari declined to give details of its collection ahead of the big reveal on Sunday.

As it moves away from the licensed apparel it already sells, industry sources expect the clothing line to fall within a “middle luxury” category, a notch below top brands such as Gucci or Italy’s Prada and Dolce & Gabbana.

The collection is expected to include ready-to-wear items made with high-end fabrics, rather than more relaxed streetwear looks, the sources said.

The creations could draw from Iannone’s background at Italian fashion house Armani and tailor Pal Zileri, with clean-cut, elegant lines and subtle, minimalist details.

“Clearly there must be a narrative, with a focus on ‘Made in Italy’, they cannot just come out with a T-shirt with a logo,” said Tibaldi at UBS.

As for the Il Cavallino restaurant in front of Ferrari’s headquarters, staff are busily preparing for the opening next week in rooms decorated with a Formula One nose section, framed photos of Enzo with friends and Ferrari racing posters.

Standing near an old V12 engine and a more modern version used in one of Michael Schumacher’s cars, Bottura told Reuters he plans to give local specialities such as tortellini and tagliatelle a fresh, contemporary look.

“I am looking at the past in a critical way, not in a nostalgic one, to bring the best of the past into the future, to renew tradition, exactly as Ferrari does,” he said.

(Editing by David Clarke)


Jeep officially opens Detroit’s first new plant in 30 years

DETROIT — Inside the first new auto assembly plant built in the Motor City since 1991, the smell of hot metal hangs in the air as new Jeep Grand Cherokee L SUVs head down the welding line.

For Stellantis, that is the smell of money. For the City of Detroit, it means nearly 5,000 jobs.

Stellantis opened the doors of its new $1.6 billion Mack Avenue assembly complex on Thursday, showing off parts of a 3 million square foot complex completed and launched into production largely during the pandemic.

The Grand Cherokee L vehicles on the assembly line are the first of a new generation of Jeep’s best-selling model line, aimed at expanding the brand’s sales to customers who want an SUV with three rows of seats.

Until now, Grand Cherokees only offered seating for five. Now, with room for as many as seven passengers, Jeep can take on rivals such as Ford’s Explorer, General Motors’ GMC Acadia and larger SUVs from European and Japanese brands.

The plant, which began building vehicles in March, now is operating three shifts a day, plant manager Michael Brieda said.

In a tight labor market, Brieda said the biggest challenge the plant had “was finding people capable of working in a manufacturing environment.” Job applicants were given dexterity tests as part of their interviews, he said.

About 2,100 Detroit City residents have been hired at the plant, the company said.

The new Jeep plant underscores the split personality of the United States vehicle market, where most of the vehicles coming down the Mack assembly line will be sold.

Tesla is the industry’s most valuable automaker thanks to its lead in electric vehicle technology.

But for Detroit’s automakers, demand for pickup trucks and decked-out gasoline-fueled SUVs still pays the bills.

As the Mack assembly complex accelerates, Stellantis will have two adjacent factories in Detroit capable of building 500,000 or more Grand Cherokee models a year. The nearby Jefferson North Jeep plant was built in 1991 — and until now was the Motor City’s newest assembly plant.

Mario Holmes, the manager who oversaw the development of the Grand Cherokee L, said much effort went into designing a new, more efficient architecture that uses aluminum and high-strength steel to cut weight. Though the new model has three rows of seats, it’s in the same weight class as five-passenger SUVs, he said.

There will be an electrified powertrain offered, but details on that will come later, he said.

One sign of the importance of the Grand Cherokee L is that Brieda, the plant manager, said he has had no problems getting enough semiconductors for the new model, even as Stellantis is idling assembly lines for other vehicles amid a global shortage of the chips needed for modern motoring systems.

Related video:


Junkyard Gem: 1973 Dodge Coronet Custom Sedan

During the middle 1960s through late 1970s, midsize Detroit sedans became the most mainstream of all transportation in North America. GM had countless variations of the A-Body, Ford offered any number of Fairlane/Torino family members, American Motors would sell you the Matador that best suited your needs, and Chrysler stocked every Dodge and Plymouth showroom with sturdy B-Bodies. From 1965 through 1976, the Coronet reigned as the main midsize Dodge available in North America. Today’s Junkyard Gem is a fairly well-equipped Coronet from the first year of the Malaise Era, found in a car graveyard near Denver last fall.

The ’73 Coronet came in two configurations: sedan and wagon. If you wanted the sedan, you either chose the base model for $2,867 (about $17,975 today) or the top-grade Custom for $3,017 (about $18,915 today). Those prices were for cars with Slant-6 engines and three-on-the-tree manual transmissions, of course; if you wanted a V8 and/or a three-speed automatic, you had to pay quite a bit more.

When it arrived at the junkyard, this car had a small-block LA-series V8 engine… in the trunk.

I think this was a project car whose owner ran out of motivation and/or time and/or money and/or storage space.

B-Body coupes and convertibles, especially those from the 1968-1972 period, are worth big money. A ’70 Charger with this sort of rust wouldn’t have suffered this fate. A non-hardtop four-door, on the other hand, just isn’t worth rescuing.

The “Music Master” AM radio was an extra-cost option, and this car has it. If you wanted a stereo cassette deck in this car, the price tag came to $362 (about $2,270 today).

Air conditioning added $358 ($2,245 today) to the price tag; I can’t find the price for the optional Torqueflite automatic transmission, but it would have been plenty. Prices for cars of this era seem very cheap… until you realize how many features that are standard today weren’t standard back then.

As is so often the case with junkyard cars in the Denver area, the interior of this one has containers that once held legal recreational cannabis. Looks like this bottle was just one day late to have been packed on 4/20/20.

These pleated cloth-and-vinyl seats were available in blue, green, black, or gold. 

Buford and J.W. tried to use a ’71 Coronet Custom as a bait car, with unpleasant results.

Related video:


Fast & Furious content is returning to ‘Rocket League’ | Gaming roundup

This week in racing game news:

‘Rocket League’ has brought ‘Fast & Furious’ cars back into the mix

With the much-anticipated “Fast & Furious 9” set to release later this month, it’s not surprising that “Rocket League” has gotten into the promotional mix. Starting June 17, you’ll be able to purchase and use the Dodge Charger, Nissan Skyline and Pontiac Fiero to live out all of your car soccer dreams. This isn’t the first time “Fast & Furious” content has made its way into the Rocket League world, with the original DLC pack releasing all the way back in 2017. This new offering, though, will give players the opportunity to grab everything that was available in the original DLC and more.

The new content will be offered a few different ways. First up, you can get the whole bundle for 2,400 in-game credits ($24) and that will include the Fast & Furious Pontiac Fiero with 2 wheel styles and 6 decals, the Fast & Furious Dodge Charger with 2 wheel styles and 7 decals and finally the Fast & Furious Nissan Skyline which also includes 2 wheel styles and 7 decals. If you don’t want to splurge on the whole bundle, though, you’ll also have the option of buying each car pack individually for 1,000 credits ($10) and if you already have the Charger or Skyline from the last time they were available you’ll be able to buy an upgrade pack to get the new wheels and decal for just 300 credits ($3). Get out there and make Dom Toretto proud.



The SRX racing series actually sounds pretty cool; Castroneves among racing greats

Superstar Racing Experience was envisioned as a series for former greats who still had the skills to square off in identically prepared cars at six of America’s classic short tracks.

Ray Evernham and Tony Stewart took great care in extending invites to the made-for-TV league they had co-created. They thoughtfully pulled in a dozen of the most iconic names in modern-day motorsports.

Never did they expect the reigning Indianapolis 500 winner to be in the field for the inaugural race.

Helio Castroneves doesn’t have a full-time job this season so joining SRX was a no-brainer. He does have a six-race IndyCar deal, however, and it included the Indy 500 — the race Stewart tried five times to win before giving up on his childhood dream.

Stewart was there as a spectator two weeks ago when Castroneves shocked the field and became just the fourth four-time Indy 500 winner in the 105-year history of the race. The Brazilian was unable to parlay the victory into a ride at IndyCar’s doubleheader at Detroit this weekend so he will be with SRX at Stafford Motor Speedway in Connecticut when the series goes green tonight on CBS.

“I’m sure we’re all going to have special passes just to be allowed on pit road next to him now that he’s a four-time winner of the Indy 500,” Stewart said. “His head will be swollen, he’ll be lucky to get that helmet on over that head and we all know how much he loves his hair and wants to protect his hair.

“All joking aside, to be only the fourth four-time winner of the Indianapolis 500 and having him with the SRX Series is all something we are extremely proud of for his accomplishment and we’re excited to bring him back to reality and show him it’s not going to be that easy for the next six weeks.”

Well, Castroneves has won the only two races he’s entered so far this season.

Still, SRX will be a completely new experience for most of the 12-driver field, which at Stafford will feature NASCAR Hall of Famers Stewart, Bill Elliott and Bobby Labonte, as well as Greg Biffle, Michael Waltrip and Willy T. Ribbs. Open-wheel racing will be represented by Indianapolis 500 winner Tony Kanaan, Paul Tracy and Marco Andretti. There’s also Ernie Francis Jr., an accomplished road racer who at 23 is the youngest in the field.

SRX each week will invite a local racer from the hosting track into the event; at Stafford, it will be 41-year-old Doug Coby, a Connecticut native with six championships on NASCAR’s Whelen Modified Tour.

The backers of the league, CBS included, love the dynamic of an underdog upstaging a national great.

“From the CBS standpoint I think that’s a great story,” said CBS Sports Chairman Sean McManus. “That’s Rocky Balboa if that turns out to be the story and some of the great legends in the history of motor racing are being bested by the local hero. That’s a pretty darned good story.”

Stafford Speedway said all 10,000 seats are sold for Saturday night and the popularity is expected to continue as SRX moves on to some of the most prestigious grassroot venues in the country. SRX goes next week to Knoxville Raceway in Iowa, then the Stewart-owned Eldora Speedway in Ohio, Lucas Oil Raceway in Indianapolis, Slinger Speedway in Wisconsin and finally Nashville Fairgrounds.

Camping World signed on as title sponsor of SRX a month ago, and the series was already backed by The Montag Group CEO Sandy Montag and Bruin Capital CEO George Pyne.

CBS, looking to fill a Saturday night summertime void, signed on before SRX even announced its existence and the partnership is a multi-year agreement.

“It’s America’s most watched network,” Montag said. “We know we’re going to do reasonably well there.”

Veteran motorsports producer Pam Miller was brought in to lead the broadcast and assembled a talent team that includes rotating driver analysts Danica Patrick, James Hinchcliffe and Dario Franchitti.

If that wasn’t enough, SRX: The Game launched two weeks ago for consoles and the PC that gave a sneak peek of what’s to come the next six weeks.

Elliott, who is 65 and the father of reigning NASCAR Cup Series champion Chase Elliott, said there is nothing else in motorsports right now comparable to SRX. It is modeled after the old International Race of Champions series that pitted the best drivers from various disciplines in equally prepared cars for 30 seasons. Stewart won its final championship in 2006 before IROC folded.

“The whole idea of the series is very unique and very uncommon to everything else,” Elliott said. “It’s almost like going to golf. You’ve got older gentlemen competing against younger ones in a tournament and this is going to be kind of the same thing.

“I don’t show emotions much and if you could see me from the inside, you’d see how emotional this really is. To get started and get going, that’s where I want to be, you know? To heck with the talk and the show, I want to get the show on the road.”