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Runtime: 10:04
0:00 Tariffs Could Cost Automakers $107 Billion
0:30 Tariffs Threaten UAW Profit Sharing Checks
1:30 EU & China Negotiating to End EU Car Tariffs
2:11 China Delays Approval of BYD & Geely Expansion
2:50 Lucid Scoops Up Nikola Assets
3:27 Scania Acquires Northvolt’s Truck Battery Unit
4:27 Stellantis’ Q1 Shipments Slide 9%
5:55 Easter Jeep Safari Concepts Revealed
6:31 Stellantis Converts ICE Vans into EVs
7:15 Daimler Remanufacturing eCitaro Bus Batteries
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TARIFFS COULD COST AUTOMAKERS $107 BILLION
Here’s a quick update on the impact of Trump’s tariffs on the auto industry. According to a new study by the Center for Automotive Research they’ll lead to an increased cost of $107 billion for all automakers in the U.S. and for the Detroit 3 alone, the cost is estimated at nearly $42 billion.
TARIFFS THREATEN UAW PROFIT SHARING CHECKS
And if General Motors, Ford and Stellantis are hit hard by the tariffs, it’s going to put a big dent in union workers’ profit sharing checks, which are based on the automaker’s earnings. Last year, GM paid out up to $14,500 to union workers, Ford workers received up to $10,200 and Stellantis was at $3,700 because of a big drop in profits. But according to an estimate by the Anderson Economic Group, the tariffs could wipe out $5 billion in operating profits in North America for the Detroit automakers this year. And that could cost workers $1,000-$5,000 in profit sharing. There’s even a scenario if the automakers earnings fall below a certain level that workers won’t receive any profit sharing. Anderson says that salaried workers and executives will also see reduction in bonuses because those are tied to the company’s earnings as well.
EU & CHINA NEGOTIATING TO END EU CAR TARIFFS
And in other tariff news, the European Union and China are in talks to remove the tariffs the EU placed on Chinese-made EVs last year. The two sides said that they are looking into setting minimum prices on Chinese EV imports instead of tariffs. Last year, the EU increased tariffs on Chinese-made EVs by as much as 45% because it said they benefit from government subsidies that put EU automakers at a competitive disadvantage. But if a change is made, the EU’s trade commissioner says the minimum prices need to be as effective and enforceable as the tariffs.
CHINA DELAYS APPROVAL OF BYD & GEELY EXPANSION
And the economic uncertainty around tariffs is delaying BYD’s and Geely’s expansion into Mexico and Brazil. In February, Geely and Renault reached a deal for Geely to use Renault’s production facilities in Brazil and take a stake in Renault’s business in the country. And two years ago, BYD announced plans to open a plant in Mexico. But Reuters reports that the Chinese government has delayed approval of those plans because it’s concerned Trump’s tariffs will create global economic uncertainty that will hurt the investments. And the government is also worried that there could be technology transfer risks.
LUCID SCOOPS UP NIKOLA ASSETS
Lucid Motors announced that it is going to scoop up some of Nikola’s facilities and assets. In February, Nikola filed for bankruptcy and said it planned to sell all of its assets to pay off its debts. Now, Lucid has reached an agreement with Nikola to acquire some of those facilities and assets in Arizona but it doesn’t include Nikola’s business or technology related to its hydrogen fuel cell trucks. Lucid is also offering more than 300 former Nikola workers employment in positions including engineering, software, assembly, vehicle testing, and warehouse support.
SCANIA ACQUIRES NORTHVOLT’S TRUCK BATTERY UNIT
But Lucid isn’t the only company buying up assets from a bankrupt startup. Truck maker Scania, which is part of the Volkswagen Group, announced that it is acquiring battery maker Northvolt’s business that makes battery packs for heavy industry. Northvolt filed for bankruptcy last month because it struggled to ramp up mass production of its batteries.
STELLANTIS’ Q1 SALES SLIDE 9%
Stellantis reported its global vehicle shipments for the first quarter of the year and they dropped 9% to a little over 1.2 million units. The biggest contributors to that were an 8% slide in Europe and we think more importantly a 20% drop in North America. The company blames extended holiday downtime and ramp up of the new Ram Heavy Duty for its shipments falling off in North America. But we would add it’s also been dealing with high inventory levels, which is going to impact how many vehicles you can deliver to your dealers. Stellantis thinks it was encouraging that retail orders in March were the highest they’ve been since July of 2023, but that could have more to do with consumers rushing out to get a new vehicle before the tariffs start kicking in. So, this is something we’ll be keeping an eye on because North America is where Stellantis makes a good portion of its money and if declines like this continue to happen then 2025 is going to be a rough financial year for the company. On top of that, it’s looking more and more like Maserati is headed for some kind of major restructuring. Stellantis already hired consultancy McKinsey to help it assess options for both Maserati and Alfa Romeo and in the first quarter of the year Maserati only shipped 1,700 vehicles. That’s for the entire world and was a drop of 48% compared to last year.
EASTER JEEP SAFARI CONCEPTS REVEALED
Let’s stick with Stellantis, but on a lighter note, Jeep revealed its lineup of concepts that it’s taking to its annual Easter Jeep Safari. Like so many past years the vehicles are tricked out with custom paint and graphics, big off-road tires, light bars and winches. And a couple of unique things that caught our eye include an extended carbon-fiber Jeep Wrangler and accessories for the Gladiator that make it look like a safari vehicle. People that attend the Easter Jeep Safari, which kicks off tomorrow, can get a chance to ride in these concepts, plus much more.
STELLANTIS CONVERTS ICE VANS INTO EVs
And in one last bit of Stellantis news, it’s teaming up with a company named Qinomic to allow owners of combustion-powered vans in France to convert them to EV. Qinomic purchases all the EV components from Stellantis and then completes the conversion for the customer. This would be cheaper than buying a new electric van and could lower maintenance costs compared to the ICE powertrain as well as open up access to any emission free zones. Plus, everything that gets ripped out of the van won’t go to waste. Stellantis is going to recover the engine, transmission, fuel tank and exhaust, which will be rebuilt or sold as used to customers for less than what a new part would cost.
DAIMLER REMANUFACTURING eCITARO BUS BATTERIES
Daimler Buses is taking a similar path as well. It’s now offering to remanufacture or replace battery packs in the eCitaro bus, which has been out since 2018. And starting next year, it’s also going to start selling packs for those older buses that have its newest cell chemistry and provide more range. Daimler says the idea is to help get the longest possible life out of an electric bus, just like a diesel one.
But that brings us to the end of today’s show and this week. I hope that you have a great weekend.
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Given the Trump vs China loggerhead, it gives China an opportunity for a Great Leap Forward. While Trump burns down the trade bridges with the world, China can open up opportunities to fill the void Trump has made.
Hard to tell the players without a scorecard. In the last few weeks, we’ve heard here jobs are coming back to the US, the sky is falling because of tariffs, and just today the EU has been using tariffs on China without the sky falling. So many twists and turns.
The speculation is getting old on the tariff predictions. Could cost this or that. Just like when it’s tornado season. You could lose your house but I’m not going to fret until it happens. Things are still shaking out.
Stellantis profits will likely be down anyway as they cut their vehicles that sold in any volume relying strictly on Jeep and Ram to carry the company in sales. You said shipments are already down 9% even before the tariffs have any effect.
No mention of the Jeep with the J-10 grille?
I think most autoworkers will take the $1000 loss to a single years profit check in favor of better job security and stronger economy. I mean we can keep sending jobs to Mexico and China where they don’t get a profit sharing check at all or maybe deal with a little short term pain for long term gain.
Dford, the EU has ~45% tariff on EVs, but to my knowledge, they don’t have 145% tariff on smart phones, TVs, and computers.
Interesting about the tariffs to protect the American car industry?? Till 2009 the most American made motorcycle was the Goldwing [STX 1800,1300] now the Yamaha VMax yet when I was still riding talking to other motorcyclists especially Harley riders they were adamant that it was Harley [don’t confuse me with facts I have already made up my mind] Today the most American content automotive is Tesla yet most voters feel it is GM[Government Motors] or maybe Ford another case if Don’t confuse me with facts, and most of them are voters. Heaven help us.
Lambo, a lot of damage has already been done that will be hard to undo. Not only will prices of everything go up, but trust in US securities has been destroyed. China, and probably other countries are selling them, which will increase the cost of maintaining the trillions in debt to pay for the renewal of the Trump/Ryan tax cuts for the rich.
Yes, it’s too early to know how this will all sort out, but if I were a UAW employee, I wouldn’t take on a lot of new debt. Being laid off is more likely than tens of thousands of UAW jobs coming back to the US any time soon, or ever. A few jobs that might come back, would be Maverick, from Mexico, if the plant making Escape has extra capacity, and could be easily set up to build the truck.
Dave, I toured Honda in Marysville in 1982 or 1983, and they were building Accords, Gold Wings, and a “cruiser” motorcycle. As I remember, the cars and bikes were built in the same building.
Rather than seeing Moab in a 4×4, I suggest riding it,on a mountain bike.
All of this ‘jobs coming back’ talk is moot anyway. As production slowly goes electric, workers required will drop 40% anyway. Even if ALL imported cars went away, employment will never be higher than it is right now. The tariff mess, which has a goal of increasing auto employment, is doomed to be a failure. Why not just ban imported cars and be done with it.
Banning imported cars would be awful. No Porsche Caymans, Minis, or Priuses.
Bob Wilson:
Did you ever read a serious history book about the consequences of Mao’s “Great Leap Forward”??? From your post, it is obvious that you have not, and even if you have, you don’t remember what exactly happened.
It is the worst advice on the Planet to tell China to repeat that horror story!!!!
Instead of advancing, that hare-brained scheme of Mao and his fellow goons resulted in an ENORMOUS FAMINE that resulted in the starvation deaths of over 50,000,000 chinese.
Nobody on the planet, ever had a more idiotic and disastrous policy than the “Great Leap Forward”
And the results make the name of that policy tragically ironic.
As i said many times, if the US catches a cold due to a policy like the tariffs, the rest of the world, and especially China, catches pneumonia.
But I don’t expect you to understand. Aren’t you still claiming, with a straight face, that your Model 3 has cost you not the MSRP you paid, but that, minus the trade in for your practically new Prius Prime you gave the dealer?
Talk about American’s Math and Economics skills….
Lambo,
While Trump is fully justified to impose the RETALIATORY tariffs to the tariffs and non-tariff trade barriers other nations impose on us, and while he expects them sooner or later to ‘cry uncle’, this is a risky gamble. Many foreign nations do not act rationally. China has chosen to ‘save face’ instead of negotiating. Its people will suffer 10 times as much as Americans, but they do not have a voice, and their lives under Communism are worthless, so Shi Jing Ping can do whatever the hell he likes, starve 100 million of them to death, “Great Leap Forward 2.0”, as Bob Wilson would say and… encourage. BUT in the US, the worthless Dems and their contemptible lackeys in the media and the upcoming risk of losing Congress in the midterms are also considerations.
In short, are Americans ready to “Do what they can for their country”, as JFK, a DIFFERENT kind of Dem than the Demagogue Dems of today? I doubt it.
Regulus, Donald Trump does not act rationally. Chinese leaders are much smarter, as they dump US treasuries as those “investments” become less safe.
Thanks “Regulus”, I was slightly concerned that “The Great Leap Forward” would be too obscure.
China is the second largest holder of US Treasuries, about $760 billion. Bought for a ‘rainy day,” China might sell them to support their tariff impacted manufacturers and laid off “peasants.”
Violating the rule to never explain a joke, “The Great Leap Forward” is China replacing the rest of the world as their market (“The Great Leap”) and abandoning the failed US market (“Forward.”) I understand Musk has honorary Chinese citizenship.
I see that Trump caved on a major part of China tariffs, electronics. He realized that a lot of people wouldn’t like it if the price of iPhones went up 50-75%.
Bob, while China Is a large holder of U.S. treasuries, I often wonder how the math would work and how the world markets might reactive if the Western economies charge China for the economic costs related to COVID. COVID cost the U.S. $trillions. Negatring China’s treasuries is relatively minor compensation.
Drew, China is not likely to pay western economies for Covid, just as the US is not likely to pay native American tribes for millions of square miles of stolen land.
https://www.c-span.org/program/washington-journal/miles-yu-on-us-china-trade-tensions/658539
A very wise scholar from China, who does have a clue, explains China’s rogue economic and trade policies. Listen and learn. You have a LOT to learn from this scholar, and you will see why Trump’s ‘controversial’ policies should have been pursued 30 years ago by his Predecessors in the Oval Office.
Reg, so it would have been good to have a global economic meltdown in 1995 to go along with the one Trump is now causing? .
China can cover tariff costs by selling US Treasury Bonds. With no more US dollars coming in, China can just stop buying more US Treasury Bonds. Any country impacted by US tariffs can simply cover those expenses by selling US Treasury bonds. But the true market are humans on planet Earth.
The US market is about 4% of all the people on planet Earth. China, 17% of all earthlings, can just buy and sell with the remaining 96%.