AD #3892 – Russia May Hike Tariffs on Chinese Cars; EU OEMs Want To Delay 2025 Emission Targets; Used EV Prices Down 25%

This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.

U.S. LOCKS IN CHINESE TARIFF HIKES
The U.S. is sticking to most of the strict new tariffs it proposed on Chinese imports. That includes a 100% tariff on Chinese EVs, 50% on solar cells and 25% on steel, aluminum, EV batteries and key battery materials. This will all be on top of an existing 2.5% import tariff on all goods. The new rates lock in on the 27th of this month and Reuters reports that a 50% duty on Chinese semiconductors goes into effect at the beginning of next year as well. China responded to tariff hikes in Europe by imposing its own import increase on certain European goods. So, some sort of retaliation against the U.S. is highly likely. But the increases on batteries, battery materials and semiconductors will also impact most automakers that sell cars in the U.S. since so many current and future EVs, including their software, uses Chinese tech. 

GM TO BUY EV BATTERIES MADE IN U.S. WITH CATL TECHNOLOGY
That’s probably part of the reason General Motors is in talks to buy EV batteries produced in the U.S. from CATL tech. Bloomberg reports that Japanese consumer electronics company, TDK, would actually fund and operate the plant, which is expected to be located in the south and create 1,000 jobs. TDK would license the battery tech from CATL to make LFP batteries and then GM would buy the batteries at a fixed price over a long-term contract but it wouldn’t have a stake in the venture. Nothing is official yet and the companies declined to comment on the speculation. This is similar to the deals the Chinese battery maker has with Ford and Tesla. 

RUSSIA MAY IMPOSE NEW TARIFFS ON CHINESE CARS
Now back to Chinese import tariffs because more countries could jump on the bandwagon. There’s the U.S. and Europe. Canada looks like it’s going to follow a similar path as the U.S. And now also Russia could impose new Chinese import tariffs. Not too long after Russia’s invasion of Ukraine all Western automakers completely pulled their operations from the country, which crippled Russian auto production and as a result sales, too. So, Russia welcomed Chinese imports with open arms and sales took off. It’s hard to find exact numbers but several brands, including Chery, Geely and Great Wall, have all sold several hundred thousand vehicles so far this year in Russia. But now that there’s no shortage of cars on the market, domestic automakers say it’s not competitive for them to produce cars. So, at the beginning of October it’s raising a fee on car imports, depending on the size of the engine and it’s also considering a tariff on Chinese imports. It’s all about trying to get them to produce locally in Russia.

CHINESE AUTOMAKERS CONTINUE GLOBAL EXPANSION
And it could work to some degree. BYD opened its first plant in Thailand in July and according to reports it’s moving ahead with its plant in Turkey, despite warnings from China about “geopolitical risks” of overseas investments. But we’re more likely to see more of what Chinese automakers have already been doing. Expanding, expanding, expanding. Great Wall just introduced a new hybrid pickup in South Africa that it also plans to sell globally, probably in other strong truck markets like Australia and Mexico. Speaking of Mexico, Neta has signed partnerships to start selling its vehicles in the country before the end of the year. Geely is also launching an electric SUV in Norway, Australia, Thailand, Indonesia, and other markets. The same model has a roughly $16,000 or 14,400 euro starting price in China, but that will be significantly higher by the time it’s shipped. And lastly, SAIC is taking one of its Baojun models, slapping some MG badges on it and selling it in India. 

EU OEMs WANT TWO-YEAR DELAY FOR 2025 EMISSION TARGETS
As we reported earlier in the week, European automakers could be fined €15 billion next year for missing CO2 targets. That’s according to Luca de Meo, the CEO of Renault and president of the European Automobile Manufacturers Association, or ACEA, a group that represents most automakers in Europe. And now Bloomberg reports that the ACEA is considering lobbying for a two-year delay of the EU’s 2025 emission targets. Next year, vehicle emissions must average 95 grams per kilometer, down from 116 g/km this year. But the ACEA figures automakers would have to cut production by 2 million vehicles just to meet the target. And it says that van manufacturers face fines of €3 billion next year as well. In order to meet targets, EV sales need to be in the 20-22% range but they’re currently below 15%, so more time would save money and jobs.

DRIVING AND CONGESTION INCREASE IN THE U.S.
Vehicle travel plunged in the U.S. during the Covid pandemic but now it’s higher than before people locked themselves inside. According to StreetLight Data, a transportation analytics firm, total miles driven in the U.S. increased 12% from 2019 to May of this year. Of the 100 largest metro areas in the country, only 10 saw a decrease in vehicle miles traveled compared to 2019 levels. New York City saw the biggest increase in average daily vehicle miles traveled at nearly 15%. But more cars mean congestion is also getting worse. Only 6 metro areas saw a decrease in congestion compared to 2019.

GM & EVGO PLAN MORE PUBLIC FAST CHARGERS
GM is expanding its partnership with EVgo to build more public fast chargers across the U.S. The companies will install 400 fast chargers at what they call “flagship” stations, which will be located near shopping centers and dining spots in metropolitan areas. Each station will feature up to 20 stalls and it says they’ll have plenty of lighting as well as canopies and security cameras. The first location is expected to open next year. These “flagship” sites are part of a total of 2,850 fast chargers that GM and EVgo plan to build in the U.S. And they expect to have 2,000 by the end of the year.

VOLVO GETS OUT OF CAR SUBSCRIPTION BUSINESS
Volvo is getting out of the vehicle subscription business in both the U.S. and Europe. Automotive News reports that the company is transferring its Care by Volvo service in Germany, the Netherlands, Sweden and Norway to new financial providers while phasing it out in the UK. And the service is no longer being offered in the 40 U.S. states where it was available. Launched in 2017, Care by Volvo charged a monthly fee that included all the maintenance, insurance, roadside assistance and other services. As of last year, the program had around 6,500 customers in Europe. Volvo didn’t say how many customers it had in the U.S. but it did say that 80% of them were new to the brand. Other luxury brands like Cadillac, Porsche, BMW, Mercedes and Lincoln have also tried out car subscriptions with mixed success.

USED EV PRICES DOWN 25%
Prices of used EVs continue to tumble in the U.S. According to ISeeCars, the average used EV sold for just under $27,000 in August, down from more than $35,000 a year ago or a 25% drop in price. That compares to a 4% decrease for used gas vehicles and a 6% decline for hybrids. The average gas and hybrid vehicle now cost about $30,000 on average. The Tesla Model 3 saw the biggest percentage drop among all used cars, selling for just under $26,000 on average, a price drop of about $8,500 or 25% less than a year ago.

And that brings us to the end of today’s show. Thanks for making Autoline a part of your day and I hope that you have a great weekend.