Auto File: Trump tariff threats return

LG Chem

26/11/2024 16:00

By Nick Carey, European Autos Correspondent 
    
Greetings from London! 
    
When the autos world is in such flux, and boy is it ever,
sometimes it helps to focus on the positives for the industry. 
The European Union’s decision last month to slap tariffs of as
much as 45.3% on Chinese-made electric vehicles had raised the
prospects of a tit-for-tat trade war. German automakers in
particular fretted over what that could do to their already
faltering sales in China. 
But all hope is not lost. According to the head of the European
Parliament’s trade committee, Brussels and Beijing are nearing a
solution over tariffs involving minimum import prices for
Chinese EVs.  
That would be one less potential trade war to worry about.
However, automakers may find they're moving out of the frying
pan and into the fire... 
 
Which brings us to today’s Auto File… 
    * Trump tariff threats, again  

    * Northvolt’s bumpy ride 

    * Fresh Ford cuts in Europe  

 
    Trump tariff threats are back  
It did not take long to find out if Donald Trump’s tariff
threats would outlive his presidential campaign. 
Just a few days before Americans get together to celebrate
Thanksgiving, the president-elect said he will impose a 25%
tariff on imports from Canada and Mexico until they clamped down
on drugs, particularly fentanyl, and migrants crossing the
border, giving the beleaguered auto industry one less thing to
be thankful for. 
Just for good measure, Trump also promised "an additional 10%
tariff, above any additional tariffs" on imports from China. 
Unsurprisingly, the news hit shares of Europe’s automakers
because investors abhor the prospect of a global trade war.  
We have been here before, but the question is which Trump is
taking office. Will it be the same Trump who threatened tariffs
in his first presidency if the U.S. free trade deal with Canada
and Mexico were not renegotiated and then settled for a
relatively minor overhaul?  
Will it be the same Trump who specifically targeted Toyota,
threatening tariffs if it went ahead with building a new plant
in Mexico, then declared victory when it announced one in
Alabama? 
Although Trump has traditionally used tariff threats as
leverage, the stakes are too big for automakers not to take him
seriously.  
It is not just that U.S., Asian and European automakers alike
build cars in Mexico, but they import huge quantities of parts
to support U.S. car production.  
Tariffs would hurt Mexico, but economists and the Mexican
government warn they would also hurt the U.S. auto industry,
U.S. consumers and the U.S. economy. 
More than one U.S. auto executive may end up feeling nauseous
this week, but the turkey will not be to blame. 
 
Recommended reading: 
    * Trump’s energy plan  

    * Exxon and LG Chem’s lithium deal  

    * Honda’s big solid-state battery hopes  

 
    Northvolt bows to the inevitable  
Sweden’s Northvolt finally bowed to reality and filed for U.S.
Chapter 11 bankruptcy protection as the battery maker tries to
find a way to restructure its business and survive to fight
another day. 
Europe’s erstwhile battery champion was seen as the continent’s
best hope for creating an independent battery industry that
would counter China’s dominance.  
    Northvolt had received more than $10 billion in equity, debt
and public financing since it was founded in 2016.  
If making EVs profitably at scale has proven hugely expensive
and difficult for a graveyard of EV startups – Fisker, Arrival
et al – that pales in comparison to the sheer complexity of
making the millions of perfect battery cells that automakers
require for their EVs. 
No one wants a repeat of the LG battery fires that hit General
Motors and Hyundai. But making perfect batteries is tough. 
Northvolt has huge debts, leaving investors like Volkswagen
having to write down their stakes, while its outgoing CEO says
it needs up to $1.2 billion to restore its business.  
The bigger cost is for Europe’s hopes of developing its own
battery industry. After years of subsidized production, China
controls 85% of battery cell production.  
Europe still has battery startups working their way forward
incrementally and with less funding than Northvolt, but at this
stage its battery independence dream is a very long way from
coming true. 
 
    Ford cuts in Europe, again 
Ford announced a fresh round of layoffs in Europe, this time
saying it would cut around 14% of its workforce on the continent
blaming the slow shift to EVs and rising competition from the
Chinese. 
Ford said the 4,000 job cuts would mostly affect Germany and
Britain. This comes after Nissan, Stellantis and GM  all
announced cuts and job losses in a sector struggling with the
shift to electric. 
German auto supplier Bosch also said it would cut 5,500 jobs and
reduce the hours and pay of 10,000 others in Germany.  
This, along with the historic battle Volkswagen faces with
workers over cost cuts in high-wage Germany that it has warned
may lead to plant closures, puts the German auto sector well on
the way to a winter of discontent. 
 
    A $6.6 billion boost for Rivian 
In the waning days of the Biden administration, U.S. EV maker
Rivian received crucial conditional approval for a $6.6 billion
government loan to build its car plant in Georgia.  
Earlier this year Rivian had mothballed plans to build the plant
to conserve cash while it pushed ahead with the R2, an EV seen
as critical to the automaker’s success. 
While Trump expected to undo many of the Biden era EV-friendly
policies, it remains to be seen whether he would undo a major
investment in a vital swing state that Rivian has said should
employ about 7,500 operations staff by 2030. 
The loan is a further boost for Rivian after it closed its $5.8
billion investment from Volkswagen as part of their technology
joint venture. 
 
    Fast Laps 
California governor Gavin Newsom's office says Tesla's EVs
likely would not qualify for new state tax credits under a
proposal in the works if Donald Trump scraps the federal tax
credit for EV purchases, setting the stage for a fight with Elon
Musk and an automaker that makes electric cars in California. 
Chinese automaker BYD  will launch a new generation of blade
batteries in 2025, which Chairman Wang Chuanfu has promised will
be safer than other alternatives in the market and will not
catch fire. 
Chinese EV maker Xpeng says it should break even sometime later
in 2025, betting on strong demand for its new models as it
expands into new overseas markets to boost margins. 
    Stellantis announced new temporary stoppages at two plants
in southern Italy as the country’s government called on the
automaker to commit to new investments. 
    Hyundai unveiled its first three-row electric SUV, joining a
market for big family cars that global automakers hope will one
day be a profit powerhouse. 
 
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 (Editing by Alexandra Hudson)