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Runtime: 10:54
0:00 Trump Tariffs & EV Policy Could Damage U.S. Auto Industry
1:27 $50 Billion To Move Auto Production to U.S.
2:29 EU OEMs Paying Chinese For ZEV Credits
3:21 Will VW Hit Its Cost Cutting Goals?
5:02 Tesla Brand Value Shrinks By $15 Billion
6:09 Mercedes E-Class Safest Car Tested by Euro NCAP
6:33 Volvo EX90 Priced At $80,000
7:35 Polestar 7 Will Be Made in EU
8:54 Ford Reimburses Dealers for L3 Chargers
9:35 Brembo & Michelin Cut Braking Distances
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This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.
TRUMP TARIFFS & EV POLICY COULD DAMAGE U.S. AUTO INDUSTRY
Auto industry experts are worried about the kind of disruption President Trump’s tariffs and EV policies could cause. Up until now, the auto industry was on track to build 17 million vehicles in North America by 2027. That included 2.97 million EVs, according to analyst Warren Browne at RFQ Insights. All the investment decisions have already been made, and the supply chains have already been built. Moreover, employment in the U.S. auto industry is now at its highest point since 2018, according to the U.S. Bureau of Labor Statistics. But now all that is under threat. Tariffs will raise the prices of all vehicles by thousands of dollars, and the elimination of EV incentives will cause demand to go down. All that will lead to lower capacity utilization, which will in turn raise manufacturing costs. RFQ Insights says the lost employment from lower BEV production will be felt the hardest in Michigan, Kansas, Kentucky and Tennessee. And make no mistake about it, the domestic automakers will use the tariffs to raise their own prices, which are expected to go up by $3,000 per vehicle on average.
$50 BILLION TO MOVE AUTO PRODUCTION TO U.S.
Meanwhile, TD Economics says it would cost $50 billion in new capital investment to stop all vehicle imports and to build those models in the U.S. instead. But this comes at a time when capital is tight and interest rates are high. TD Economics says just moving Canadian production to the U.S. would involve building 6 new assembly plants. Three of the best-selling cars made in Canada are the Toyota RAV4, the Honda CRV and the Chrysler Pacifica. But automakers will not be in any hurry to spend tens of billions to move production, especially if a change in administrations in 4 years ends up with those tariffs going away or getting watered down. RFQ Insights points out it took the Japanese automakers over 10 years to build assembly plants in the U.S. after the Reagan Administration imposed the Voluntary Restraint Agreement.
EU OEMS PAYING CHINESE FOR ZEV CREDITS
What we’re looking at here is the law of unintended consequences. Policies that are designed to help the auto industry could end up doing the opposite. A good example of this is in Europe where automakers face billions of euros in fines this year for missing CO2 targets. To avoid those fines, they have to buy Zero Emission Vehicle credits from automakers who are selling EVs. Tesla and Volvo have already made deals with several automakers. But unless something changes, automakers are also going to end up buying ZEV credits from Chinese automakers who are selling EVs in Europe. It’s crazy. At the same time the European automakers are fighting a threat from Chinese automakers, they could end up handing billions of euros over to their fiercest competitors.
WILL VW HIT ITS COST CUTTING GOALS?
In order to remain competitive Volkswagen said it’s going to cut 35,000 jobs and slash production by over 730,000 units in Germany by the end of the decade. But according to reports, VW is giving each factory its own cost-cutting target and then is leaving it up to labor representatives and managers to figure it all out. And so far, there hasn’t been a lot of action, which is now leading to questions if VW can hit its reduction targets at all.
TESLA BRAND VALUE SHRINKS BY $15 BILLION
Tesla’s aging lineup and CEO Elon Musk’s divisiveness put a big dent in the company’s brand value. According to research and consulting firm Brand Finance, Tesla’s brand value is now at $43 billion down from $58 billion at the beginning of 2024 and $66 billion from 2023. Tesla is now the third most valuable automaker behind Toyota at nearly $65 billion and Mercedes at $53 billion. Brand Finance looks at a company’s revenue, licensing deals, margins and more to calculate its value. The rankings also include consumer surveys. And while Tesla’s loyalty remains high, its recommendation score, which indicates whether or not people will speak favorably about a brand, has declined. But while consumers have cooled on Tesla, investors have not. Its stock price soared after Donald Trump’s re-election and it now has a market cap of $1.3 trillion.
MERCEDES E-CLASS SAFEST CAR TESTED BY EURO NCAP
The Mercedes-Benz E-Class was the safest vehicle in Europe last year. The Euro NCAP, the organization that does crash and safety testing in Europe, said the E-Class was the safest car it tested in 2024. The model received good scores in four testing areas from passive to active safety, which awarded it the overall safety title of “Best Performer.”
VOLVO EX90 PRICED AT $80,000
Volvo’s vehicle naming is getting more confusing. The XC90 is being joined by the all-electric version, the EX90. That model is now also being built in the U.S. and will go on sale soon in the U.S. with a starting price just under $80,000, not including destination charges. On top of the XC90 and EX90, the all-electric version of the XC40, called XC40 Recharged, is being renamed the EX40. But the XC40 name will live on for the mild-hybrid versions. Volvo also increased battery capacity in the EX40 from 78- to 82 kWh and bumped up the charging rate ever-so-slightly. The model will slot right above the EX30, which is also going on sale soon in the U.S. It will launch with dual motor AWD versions that start just below $45,000, not including destination charges.
POLSESTAR 7 WILL BE MADE IN EU
And staying in the family, Polestar, which is also under the Geely umbrella, but is really controlled by Chinese automaker Zeekr, another Geely brand, announced it will come out with a new premium compact SUV, called the Polestar 7. While Polestar currently has manufacturing in China, South Korea and the U.S., it says the Polestar 7 will be made in Europe. We think the model will be Polestar’s version of the Volvo EX30 and will be made alongside that vehicle in Belgium. Under its previous CEO, the 7 was supposed to be a replacement for the Polestar 2 sedan, but the new CEO says the 2 will live on. Reports say a 2nd-gen version will be made on the same platform as the 7 and be built at the same European factory. So, if we’re right the Volvo EX30 and the new Polestar 2 and 7 will be all built in Belgium, which would really help it build scale off of one platform. Oh, and talk about confusing naming. Polestar names its vehicles based on the order in which they were designed, not by size. So, smaller number vehicles are bigger than bigger number vehicles and then the other way around.
FORD REIMBURSES DEALERS FOR L3 CHARGERS
Ford is reimbursing dealers in the U.S. that installed Level 3 EV chargers. Back in 2022, the automaker launched a program that required dealers to make EV investments, including installing chargers, which gave them the right to sell EVs. But the program received a lot of pushback from dealers and last year Ford scrapped it. So, now the company is reimbursing dealers as much as $240,000 for installing the chargers. Ford’s EV sales haven’t lived up to expectations, so now it’s asking dealers to invest in EV training and spend a minimal amount on Level 2 chargers instead.
BREMBO & MICHELIN CUT BRAKING DISTANCES
Brembo and Michelin say a partnership they formed last October is already showing promising results. By providing Brembo’s by-wire braking system with real-time tire grip data from Michelin’s software, they were able to reduce braking distances by up to 13 feet during anti-lock braking events. The technology also makes braking smoother with quicker response times, reduced traction loss and improved stability. And while the companies say the system is promising, they need to do more tests and it’s too early to say when it could reach the market.
But that brings us to the end of today’s show. Thanks for making Autoline a part of your day.
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Sean, There is no need to move Canadian auto production to the US. Once the tariffs result in the Canadian government nationalizing the US auto manufacturers located in Canada and banning US auto imports into Canada, those plants will no longer be needed in the US . Just kidding, or maybe not, who knows. Also, when is is Polaris going to build a snow machine plant in Greenland, to show those involuntary citizens what they are missing? I bet Panama would love to have an ATV factory as well! Finally, if the US wants to get rid of those snowflakes in the west coast states of Washington and California, I hear that British Columbia has invited them to join Canada. Getting rid of those two would make it easier for Donald Trump to win his third term.
Sorry for that last comment. I get a little touchy when the head of the most powerful country on earth repeatedly makes jokes about destroying my country! Just like you guys did when Iranians chanted ‘Death to America’. I’m sure you don’t see the similarities.
@Autoline TV team on moving Canada-based vehicle production: to me it seems like that would lead to excess production capacity.
Please check my logic. First of all, I believe that the Ford, GM and Chrysler Group have set up production in Canada to prevent a situation in which Canada would have to import all vehicles without having any assembly employment. Just like the U.S. has required the Japanese OEMs to set up production in the U.S., Canada has done the same. Is that correct?
Canada-based vehicle production includes vehicles sold in Canada and vehicles exported to the U.S. Additionally U.S.-made vehicles are exported to Canada. If you would move the entire Canada-based vehicle production to the U.S. we would have to export to Canada. We would be in competition with 1 vehicles imported from Europe since under CETA (Canada-EU Comprehensive Economic and Trade Agreement) vehicles from the European Union have a low or zero import tariff; 2 vehicles from South Korea because under CKFTA (South Korea Canada-Korea Free Trade Agreement) vehicles have also a low or zero import tariff; 3 vehicles made in Japan, China, and India do not fall under specific FTAs with Canada for vehicle imports and therefore the standard 6.1% tariff applies. Which is relatively low in case Canada will retaliate with its own import tariffs for U.S.-made vehicles.
So my assessment is that the expected course of action by the new U.S. administration will lead to partial replacement of Ford, GM and Stellantis vehicles by European and Asian competitors in the Canadian market.
I am interested in the thoughts of the Autoline team and the fellow posters here.
@kevin a on Canada: the situation would be very different.
1 Canada would be by far the largest state in surface area
2 Canada would be the second largest in population
3 Canada would (hopefully) be highly regarded for its huge natural resources among which the world’s second largest crude oil reserve, its much lower debt per capita, its one third cheaper healthcare while having a lifespan of 82 years instead of 79 years in what may become known as the “50 Legacy States”.
4 Canada has a better outcome of its education system. It outperforms the U.S. in international assessments like PISA, particularly in reading and mathematics. It is superior in graduation rates, has a higher rate of postsecondary education participation, stronger support for equity in education, a higher teach quality because teachers in Canada tend to have more rigorous certification and better support, and to top it off lower cost of education leading to lower student debt.
So no, we, the U.S., can’t look down on Canada. Annexing it would soften many of our weaknesses which we have managed to create over the past decades. If you would ask me “What is in it for Canada?”: nothing comes to mind. I heard that one idea is to slash your income tax rates. We have found out that you can just do that, our governments since 2000 have practiced it successfully and funded the shortfalls with more government debt. It works very well for us; in 2000 we had $5 trillion of government debt and right now we have $36 trillion. No big deal.
Wim, I appreciate your well intended comments, but Canada DOES NOT WANT to be part of the US. It is offensive to even joke about the idea. For a people that value their independence, Americans are remarkably dull-witted about other people’s independence. Canada welcomes US annexation the same way that Ukraine welcomes Russian annexation. EXACTLY the same way. My Americans friends like to think that the US can do no wrong, but if you think that the way Russia mistreats it’s neighbours is a good thing that you should copy, then I would like to recommend you seek psychiatric help. Canada is a sovereign nation. Period.
If Canada became part of the U.S., it should be 10 states. That would probably mean about 15 of 20 senators would be Dems, and most of the house members. Of course, Canada is not going to become part of the U.S. Canada is much better off than the U.S. in many ways, as described by Wim above, except for winter weather.
If 25% tariffs are put in place, it would probably mean the almost immediate death of Chrysler brand. Pacifica, built in Windsor, Ontario, would not be able to compete with that price disadvantage.
So, the EU fights to keep Chinese companies out, but misinformation, lack of EV infrastructure and limited range discourageous potential customers from getting the vehicles the governments want to encourage and the only way for OEMs to meet their government’s emissions requirements, is the pay the Chinese companies they want to come out!
EU OEMS PAYING CHINESE FOR ZEV CREDITS
This right here is why the EU will deserve it when they drive their OEMs to insolvency at the green altar of the climate religion. Then they’ll be forced to allow in those Chinese cars from companies that are all subsidized by the CCP (that continues to bring many new coal burning plants on line every month.). Xi must incredulously laugh himself to sleep every night over the billions he will make selling imaginary credits to these easy marks. What happened to common sense over there?