Auto File: America’s EV Dilemma

Cars.com

30/06/2023 14:00

June 30 - Joe White 
Global Autos Correspondent 
  
 
Greetings from the Motor City! 
 
It’s the Friday before the July 4 holiday here in America, and I
know that my U.S. readers will be keeping the camera off during
video calls they’re required to attend today so no one will see
them wearing a swimsuit or holding a beer. 
 
I’m working today. No, really! But I will be taking next week
off and so will the Auto File. Have a great, and hopefully
extended, weekend!  
 
Here’s what’s happening in the World of Cars today – 
 
    * America’s crumbling EV “consensus” 
    *         All eyes on Tesla’s Q2 deliveries. 
    * VW edges toward a Tesla charging deal 

 
All in on EVs? Not so fast. 
The Biden Administration’s policies to accelerate the U.S. auto
market toward an all-EV future are now under fire from
automakers, the United Auto Workers and the President’s 
Republican detractors.  
 
This poses a challenging and expensive dilemma for the White
House and for Detroit. And that’s without factoring in
presidential politics. 
 
Let’s do that just for a minute: Michigan is a crucial 2024
swing state, and auto industry workers are swing voters across
the Midwest. GOP challengers to Biden are not waiting until next
year to start their attacks. But if the Biden administration
backtracks on one of its biggest climate initiatives, it could
lose support among voters worried by increasing signs of stress
in the environment. 
 
Ruptures in what once looked like a Washington-Auto industry
consensus on EV policy broke open on Wednesday. The Alliance for
Automotive Innovation, the trade group representing the Detroit
Three and most other major automakers in the United States,
called the Biden Administration’s proposals to push EVs to
two-thirds of the U.S. market by 2032 “neither reasonable nor
achievable.”  
 
To understand what’s behind the Alliance message, look at the $3
billion Ford says it will lose on EVs this year alone.  
 
Less than a week before, United Auto Workers union President
Shawn Fain blasted the Biden administration for giving Ford and
its battery partners $9.2 billion in low-cost,
federally-subsidized loans to build three U.S. battery
factories.  
 
Those joint venture plants, so far, are not UAW-represented and
there’s no assurance they will be given their locations in
union-optional states. 
 
Fain and the UAW have not endorsed President Joe Biden’s
re-election, citing EV policies which union workers fear
threaten their jobs. 
 
The Biden Administration is trying to calm those fears,
including proposing this week that the Energy Department deploy
$2 billion in new grants to help re-tool auto factories to build
electric cars. 
 
Between the Inflation Reduction Act and the Bipartisan
Infrastructure Bill, the Biden administration is offering
automakers billions in subsidies – by Benchmark Mineral
Intelligence’s reckoning as much as $370 billion - to offset the
capital costs of tooling up mass production of EVs and
batteries, and the operating losses the legacy automakers expect
as they ramp up. 
 
It turns out the subsidies are not enough to convince automakers
and the main U.S. auto workers union to stay on the EV bus – at
least not if the administration sticks to emissions rules that
effectively require two-thirds of new vehicles to be powered by
batteries.  
 
The Alliance proposed returning to a 50% EV goal with more
flexibility to allow for plug-in hybrids and account for
obstacles such as inadequate charging or lack of domestic
battery minerals. Read the Alliance’s summary of its position
here. 
 
U.S. consumers will be central to all this – as soon as anyone
can predict for certain how rapidly middle-income, mass market
car buyers embrace EVs. A new study from Cox Automotive finds
that 51% of consumers are considering buying a new or used EV. 
 
But when it comes time to write a check, only about 7% or so of
U.S. vehicle buyers are driving home an EV. That gap is what has
automakers and auto workers so anxious.  
 
Essential Reading 
    * Here’s Cars.com’s annual “American-made” Car index 

    * Good news for Detroit: More Americans have jobs 
    * Mystified about China’s BYD? This podcast will help 

 
Tesla’s magic number is 445,000 
Sometime during the weekend, Tesla is expected to report another
record for quarterly vehicle deliveries. Wall Street expects to
see 445,000 Teslas handed over to customers, Reuters colleagues
Hyunjoo Jin and Akash Sriram report. 
 
That number would be a 5% increase from Q1. Any less would be a
disappointment for investors whose enthusiasm has more than
doubled the price of Tesla shares since Jan. 1 and boosted its
market value by roughly $400 billion. 
 
Tesla has had to work hard to sustain growth – especially in
China where a host of rivals with fresher models present stout
competition. Analysts project Tesla’s China sales rose 13% in
the quarter that ends today.  But Tesla is losing share as
rivals grow faster. 
 
In the United States, Tesla sent out an email to potential
consumers offering three months of free Supercharging to buyers
who take delivery of a Model 3 by June 30, 2023.  
 
How big a price has Elon Musk paid to keep driving for volume
growth? The answers will come later in July with Tesla’s Q2
results. 
 
Jeep production goes “critical”  
Stellantis told workers at two factories building Jeep SUVs that
their plants are now in “critical status.”  That means they are
running behind planned production, and workers must accept
mandatory overtime through Oct. 2 to catch up. 
 
United Auto Workers union members said the move looks like an
effort to build inventory ahead of the Sept. 14 expiration of
the current Stellantis-UAW national contract, effectively a
strike deadline. 
 
Volkswagen talks charging with Tesla 
Volkswagen said it is talking with Tesla about adopting its
North American Charging Standard and gaining access for its
North American EV customers to the Tesla Supercharger network. 
 
VW’s statement came on the same day that luxury EV brand
Polestar said it would sign up to join the Tesla standard and
charging network. 
 
Volkswagen brings with it the Electrify America charging network
unit, a rival to the Tesla charging system - except that with
4,000 chargers it is a fraction of the Supercharger network’s
size. Electrify America said it will work to outfit its chargers
with Tesla NACS connectors by 2025. 
 
Meanwhile, Germany said it will invest 900 million euros in
subsidies to expand EV charging infrastructure.  
 
Mystery buyer for a German Ford plant? 
Ford said it is in talks with a major international investor
interested in buying its assembly plant in Saarlouis, Germany. 
But Ford officials would not identify the potential buyer. The
Wall Street Journal has reported that Chinese EV power BYD was
among 15 investor groups looking at the plant.  
 
    German government officials have said they are open to a
Chinese buyer taking over the plant. It’s the jobs that
matter.  
 
European incumbent automakers will be less thrilled with a deal
that gives a non-European EV maker a new production base inside
their walls. Competition from Chinese brands in Europe is
already intense – as illustrated by a new drive this week by
China’s SAIC Motor to boost European sales of its MG brand. 
 
Meet the new boss at Audi 
Volkswagen Chief Oliver Blume has moved out another senior
executive holdover from the administration of his predecessor:
Audi Chief Markus Duesmann will be replaced by VW’s strategy
chief, Gernot Doellner. 
 
    Duesmann spent most of his career outside of VW, including
stints at Daimler and BMW. Doellner has worked at Volkswagen
since joining as a doctoral student in 1993.  
 
Doellner inherits a stiff challenge: Rebuilding the Audi
business in China and catching up in the electric car race, not
just with Tesla but German rivals Mercedes and BMW. 
 
Fast Laps 
 
Ferrari debuted plug-in hybrids based on its SF90 super car.
They start at 770,000 euros. You can’t have one, however, as the
limited run is already sold out.  
 
Renault joined about 160 other companies signing a letter
warning European regulators not to go too hard on artificial
intelligence technology such as Chat GPT. The letter said
proposed EU artificial intelligence legislation would jeopardize
Europe's competitiveness and technological sovereignty. 
 
Toyota’s global sales jumped by 10% from a year ago as supply
chain bottlenecks eased allowing more production. Sales of
Toyota’s gas-electric hybrids rose by more than 25%. 
 
An IPO for Ampere, Renault’s EV unit, could come during the
first half of next year, the French automaker’s CFO said. 
 
Two people died after an experimental hybrid car funded by the
European Union exploded into flames near Naples in southern
Italy. The cause of the tragedy is under investigation. 
    
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 (Editing by Alexander Smith)