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Runtime: 11:58
0:00 VW Only Has 2 Years to Turn Things Around
1:02 Germany To Revive EV Subsidies
1:43 Mercedes S-Class Sales Plunge Globally
2:22 U.S. Dockworkers Threaten Strike
3:12 BYD & SAIC Eye Mexican Market
4:32 Stellantis Shows FCEV Van
5:18 Nissan Updates the Armada
6:43 EVs More Popular with Active Drivers Than ICEs
7:37 Jeep Names New Head of North America
8:16 Geely Offers Free Ice Cream for A Test Drive
9:14 Ford Extends Mach-E & Maverick Lifecycles
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VW ONLY HAS 2 YEARS TO TURN THINGS AROUND
The situation at Volkswagen in Europe seems to be getting worse. Yesterday we reported that it’s thinking the unthinkable–closing factories in Germany. Today, VW’s CFO said the company only has 1 or 2 years to turn things around. He blamed weaker car sales in Europe, saying VW has lost half a million units a year since the Covid pandemic, while the total European market is down by about 2 million vehicles. And 500,000 cars is about the equivalent of two assembly plants worth of production. VW’s labor unions and works councils have vowed to prevent any plants in Germany from closing, but VW likely needs to close even more than two plants. It has a global capacity to make about 14 million vehicles a year, but last year it made 9 million.
GERMANY TO REVIVE EV SUBSIDIES
And these developments have alarmed German government officials to the point that they’re reviving a plan to offer EV incentives. EV sales plunged in Germany after it ended a subsidy program last December. They were down almost 37% last month alone. Under the new plan, car buyers will be able to deduct the depreciation of their EV from their taxes, starting at 40% the first year then gradually sliding down to 6%. And it’s not just EVs. Other zero emission vehicles will also qualify. The total cost of the plan will be nearly half a billion dollars a year.
MERCEDES S-CLASS SALES PLUNGE GLOBALLY
But VW isn’t the only German brand running into problems. Autoforecast Solutions says that sales of the Mercedes S-Class have dropped dramatically. They’re down 17% in China, 29% in Europe and 33% in the United States. So, Mercedes is eliminating a shift at the plant where the car is made in Germany. And a major redesign won’t be out until 2029. Mercedes is blaming the slow sales on a sluggish global economy and high interest rates. But we think it’s also facing more competition in the U.S. and in China.
U.S. DOCKWORKERS THREATEN STRIKE
Dockworkers in the U.S. are threatening to go on strike if they don’t receive a new labor deal before the current one expires at the end of the month. And that could have a huge impact on all the vehicles and components that are imported. The International Longshoremen’s Association represents about 45,000 dockworkers on both the East and Gulf coasts at about three dozen ports. Six of those ports are among the 10 busiest in the U.S. Dockworkers want an 80% pay raise over the next six years and are concerned about the increased use of automation. Logistics experts estimate that every week of a stoppage would result in about a month of shipping delays.
BYD & SAIC EYE MEXICAN MARKET
BYD has said that the plant it wants to build in Mexico will not ship cars to the U.S. And yet Bloomberg reports the company is pausing plans to build that plant until after the U.S. elections. No doubt the U.S. is putting pressure on Mexico to prevent more Chinese plants from getting built there. But it’s kind of odd to us that BYD would wait until after the election to announce a plant in Mexico. The one thing both Democrats and Republicans seem to agree on is that they’re not going to let Chinese cars into the American market, even if they’re made in Mexico. Even so, Autoforecast Solutions says SAIC is scouting for a Mexican plant to build its MG 5, MG HS, and its MG Mulan electric there. By the way, MG says it will launch an EV with only solid state batteries in China sometime next year, possibly on the Cyber GTS.
STELLANTIS SHOWS FCEV VAN
Stellantis continues to expand its lineup of hydrogen-powered commercial vehicles in Europe. And like the new Opel Movano Hydrogen, I think all of Stellantis’ fuel cell vehicles are commercial vans. Power comes from a 150-horsepower electric motor and range is estimated at 500 kilometers or 310 miles. Opel doesn’t say, but if it’s like its other hydrogen vans, the tanks are mounted under the floor where the battery pack would be in an all-electric model. There’s also an 11-kWh battery, likely under the front seat, but it’s mostly there to provide support when starting and accelerating. Price and on-sale date for the Movano Hydrogen were not revealed yet.
NISSAN UPDATES THE ARMADA
The Nissan Armada or Nissan Patrol, depending on where you’re from, is getting some big changes and it will go on sale before the end of the year. Those big changes include no more V8. It’s replaced by a 3.5L twin-turbo V6. But it makes 425-horsepower and 516-lb-ft of torque, which is 25 more horsepower and over 100-lb-ft more than the V8. And thanks to upgrades to the frame it can still tow the same 8,500 pounds. The engine is paired to a 9-speed automatic, replacing the old 7-speed unit, and it sends power to the rear wheels or through an optional 4-wheel drive system. The interior, for me, is also a real step up for Nissan in terms of style. The seats especially look like they got a lot of attention with unique patterns in the backs and bottoms and the use of contrasting colors and stitching. A new push-button shifter and HVAC controls clear up space on the center console and a longer, thinner display sits on the dash. A few other highlights include optional 22-inch wheels, an air suspension system, hands-free driving capability and, in North America, the new Armada gets Nissan’s off-road package for the first time, called Pro 4X.
EVs MORE POPULAR WITH ACTIVE DRIVERS THAN ICEs
While car buyers often cite limited driving range compared to ICEs and the lack of a charging infrastructure for not purchasing an EV, a new study from Bloomberg found that in countries with a more mature EV infrastructure, EVs are more popular with active drivers or drivers who drive more. For example, in China and the Netherlands, EVs traveled 66% and 56% more than ICE vehicles, respectively. And the same is true in Norway, Sweden and Canada. In the U.S., ICE vehicles still travel more than EVs, however in California, which has the highest EV adoption in the country, EV usage is higher. EVs are cheaper to operate on a per-mile basis than ICEs, so if you drive a lot, you’ll save money.
JEEP NAMES NEW HEAD OF NORTH AMERICA
Jeep is already replacing its head of North America. Stellantis announced that Bob Broderdorf will replace Bill Peffer effective immediately. Peffer was named the head of Jeep North America only nine months ago but now he’s being moved to head of Stellantis’ North American dealer network development. Broderdorf, who was most recently the VP of Ram brand operations, has his work cut out for him. Jeep’s sales have declined for the past five years and in the second-quarter of this year, they fell another 19%.
GEELY OFFERS FREE ICE CREAM FOR A TEST DRIVE
Geely is launching a new low-cost EV that will compete with the BYD Dolphin and it’s giving away free ice cream to anyone who goes for a test drive. Geely actually formed a partnership with Häagen-Dazs for the new Geome Xingyuan and used different ice cream flavors as inspiration for all of the paint colors. Power comes from either a 78- or 114-horsepower electric motor, which are fed by a 30- or 40-kWh LFP battery from CATL. Range is estimated at 310 and 410 kilometers or 192 and 254 miles. And China’s EV price war is still alive and kickin’. The Geome Xingyuan has an expected starting price around $11,250, which would be over $2,000 cheaper than the BYD Dolphin.
FORD EXTENDS MACH-E & MAVERICK LIFECYCLES
Ford is going to take longer than we typically see to make major updates to a couple of current products. Autoforecast Solutions reports that the Mustang Mach-E won’t get a new platform until 2028. The EV will continue to be made in Mexico and China with production of the next-gen model starting in April of that year. It also says production of the next-gen Maverick won’t start until September of 2031. The small truck is also made in Mexico, but at a different plant than the Mach-E. The slowdown in EV demand and uptick in hybrid sales likely played a role in this decision, but Ford can also reduce costs by keeping the models around a little longer than usual.
And that brings us to the end of today’s show. Thanks for tuning in.
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Sean, call me a skeptic, but in the long run I am POSITIVE that an EV will not be cheaper to run than an ICE. Governments get billions of dollars from gasoline ‘road’ taxes. Once ICEs are gone, EVs are going to have to shoulder that burden. How will they decide what the per kw tax rate should be? They will set it so that the cost of running an EV will equal the old ICEs, since drivers have already agreed that that amount was an acceptable tax. As long as that amount raises at least as much tax revenue, the government will be happy. They’ll still have to put a tax on home chargers, but their is still time to work out how to do that.
@Kevin – EV road taxes are most likely to go to one of the two models already in effect – fixed annual or per km driven fee. I think most of the cost advantage is higher mileage drivers as the energy and maintenance cost per km tends to be lower for the first 5-8 years of ownership (we don’t have great data out past 9+ years) – the big factor affecting costs tends to be insurance, which has been all over the place in different markets.
I agree with Kevin that we are still at the introduction stage of EVs and while they may be cheaper to operate now, I have little doubt it will stay that way. I will be willing to bet that before EVs have a 40% market share the operating costs will be on par with ICE.
VW has 2 years to turn things around or what? Is the story implying VW could file for bankruptcy? Too big to fail? That would certainly lead to the sale of some brands and certainly change things up for some divisions.
Dock workers should worry about the increase in automation especially if they get an 80% raise. They have to understand that the expensive tech available becomes a lot more viable as their pay increases.
Most state governments have already addressed the tax issue by increasing the registration fees for EVs. They raised them so much in Michigan that an EV owner now pays far more to register their vehicle than an average ICE owner would pay in registration and gas taxes combined. Even at that, EVs are still significantly cheaper to operate than ICE vehicles. Since states regulate the price of electricity, its hard to see how the feds will replace the gas tax income, unless they just enact some other tax to cover the difference. I would say that is a certainty since the annual deficit has ballooned so far out of control.
Several US states have EV surcharges, and some have punitive surcharges, more than than gas tax for a similar gas car driven an average number of miles.
https://www.consumerreports.org/hybrids-evs/more-states-hitting-electric-vehicle-owners-with-high-fees/#:~:text=A%20new%20Consumer%20Reports%20analysis,more%20than%20twice%20the%20amount.
I’d think EVs could be taxed by mileage driven, either by the car sending the info electronically or with an annual odometer check, as long as the system could be made cheat proof.
No matter what-we will be paying the same or more to drive,despite what you drive
I’d like to see vehicles taxed by how much they weigh because that is a real indicator of how much they are deteriorating our roads, and we all know that EVs weigh a lot more than their ICE counterparts everything else being equal. Pickup trucks and large SUVs could do their fair share in this regard too.
I hope we can keep or perhaps increase the number of cars we build,and send to the USA from Canada.
One of the most obscene laws ever is “Section 179” which gives real estate agents an extra tax deduction if they use, say, an Escalade rather than XT5 to take people to look at houses.
While I think weight of an EV might the best/easiest case for a road tax. They could weight the vehicles as they leave the factor, it’s not like the vehicle would get any lighter. It would also be a quantifiable number at the time of purchase and allow a buyer to know how much one would pay for the life of the ownership experience. That said, we all can agree that EVs weight more then their ICE counter parts today, I can’t imagine, though, that they weight more then many of the vehicles from the 40s, 50s, 60s and 70s, mostly vehicles built before and during the oil/energy crisis! Those were big heavy vehicles, mostly cars, long before too much attention was given to the weight of passenger vehicles then. If most of today’s road building technology has stayed pretty much the same as then (I don’t know, I’m asking mainly), I can’t see that heavy EV would do anymore damage to the roads, as vehicles of that day? The only real different, is the amount of vehicles on the road, since there are more vehicles on our highways today, than there were then! Even if that were true, with newer, lighter and more powerful batteries suggested to be on the market by the end of this decade, the weight of EVs as a result of their batteries, may in the next 10 to 20 years be on par or weight less then the comparable ICE vehicle.
“I can’t imagine, though, that they weight more then many of the vehicles from the 40s, 50s, 60s and 70s”
Actually, older cars are much lighter than they appear. A 1955 Chevy is about the same weight as a current Camry. A 1959 Cadillac, the quintessential long finned machine weighs about the same as a Chevy Traverse, ~4700 pounds. A 1949 Ford coupe weighed barely more than a current Civic. Their lightness is why those ’50s cars weren’t nearly as crashworthy as today’s vehicles.
VW has 2 years to turn things around or what?
Lambo, from what I can gather listening to various people (obviously a hot topic of conversation in Germany), they’re thinking the core VW brand must be set on a path to build and sell cheaper, affordable EVs that can compete with what’s coming out of China. VAG makes more than half their profit there, and has failed to come up with attractive products to go with the extremely rapid, wholesale shift in motorization.
Kit — Looks like I was wrong. Sadly, it’s not the first time and, Sadler still, it probably won’t be the last! What is interesting, though, while it made since to get away from the big, gas guzzling engines of the time. It’s funny that the Big Detroit Three and the rest of the industry’s efforts at downsizing from the late 70s, 80s and 90s (to emulate and compete with vehicles from Japan), only to end up with (sub) compact (?) vehicles that weight the same as the huge behemoth of yesterday. All with smaller and more powerful four cylinder engines to boot!
I’m not sure taxing by weight would be such a good idea. As the damage to the roads is mainly done by the very heavy trucks 30,000+ lbs and the freezing and thawing temps. The difference between a 3000lb car and a 6000 SUV likely has little impact on the roads. All that really does is punish families that must have 3 row vehicles to meet proper seatbelt laws. I think maybe a better way would be a percentage of the vehicles MSRP with a 5% reduction each year until its 10 years old and then goes to a set fee. The government could waive that fee the first year to encourage people to buy new and NEVs. Or if the government really wants to use the public’s money to get more affordable NEVs into the market they could waive the tax fee for two years encouraging people to buy or lease NEVs for two years flooding the market with used 2 year old NEVs.
wmb, I was surprised when, several years ago, I learned that my friend’s 1951 Mercury weighed only about 300 pounds more than my VW Jetta wagon. The engine would probably account for most of that 300 pounds.