Auto File: Elon's power play
12/11/2024 16:00
Nov 12 - By Nick Carey, European Autos Correspondent
Greetings from London!
The last week has brought a lot for the auto industry to digest,
not least of all the stunning comeback of Donald Trump in the
U.S. presidential election. The last time he was in the White
House, automakers lived through a great period of uncertainty as
his administration renegotiated what was then NAFTA.
This time, president-elect Trump has promised more
disruption for the industry. That includes tariffs for everyone,
which would be relatively easy for him to impose. But as that
would mean higher prices for an electorate that backed him in
part because of anger over inflation, what tariffs and where
remain to be seen.
The same day as Trump was declared the winner across the
pond, Germany’s wobbly coalition government finally crumbled,
bringing uncertainty to Europe’s biggest economy when it already
faces tough times and Volkswagen is battling unions as it
considers shutting German plants.
Which brings us to today’s Auto File…
* Regulatory pay day for Musk
* Toyota plots a China comeback
* China dings Poland with Leapmotor
Muscle for Musk in Trump 2.0
In retrospect, Elon Musk’s long-derided purchase of Twitter,
which saw the awkwardly renamed “X” lurch far to the right and
lose much of its value as advertisers fled, now looks like a
good investment in all things Musk related.
That plus the $119 million he kicked into a pro-Trump
spending group and his vigorous campaigning on Trump’s behalf in
the latter days of the presidential campaign now place Musk in a
place of power to remove regulatory barriers or gain government
support for his business ventures.
Musk's interests - from Tesla’s EVs to SpaceX rockets or
Neuralink brain chips - depend heavily on government regulation,
subsidies and policy.
As my Reuters colleagues Marisa Taylor, Rachael Levy and
Chris Kirkham report here, Musk’s goals include getting the U.S.
National Highway Traffic Safety Administration (NHTSA) to back
off potential enforcement actions involving the safety of
Tesla’s "Autopilot" and "Full Self-Driving" driver-assistance
systems.
He could also push for favorable regulation of autonomous
vehicles and robotaxis that Tesla plans. For his artificial
intelligence startup xAI, Musk could shape nascent rules or a
new agency.
Aware that Musk now has leverage to get sweet deals from
president-elect Trump, investors have sent Tesla stock soaring,
in a rally that pushed the automaker’s market cap above $1
trillion and has continued into this week.
For buried treasure it seems, “X” still marks the spot.
Recommended reading:
* Shell wins climate ruling appeal
* Canada oil a shield against Trump tariffs?
* EV battery recycler gets $475 million U.S. loan
China redux for Toyota
Toyota is planning a big comeback in China, according to this
piece by my Reuters colleague Maki Shiraki.
Like other major global automakers, Toyota has been
wrongfooted by the rise of fast-moving Chinese rivals like BYD,
offering cars with all the latest consumer-facing functions.
Even Toyota’s joint venture partners are outperforming the
Japanese giant. FAW Group's Hongqi brand and GAC Group's Aion EV
both outsell respective models from FAW Toyota Motor and GAC
Toyota Motor.
Now Toyota wants to make at least 2.5 million cars a year in
China by 2030, 63% above its peak production of 1.84 million
cars which it made there in 2022.
According to sources, Toyota intends to transfer as much of
the responsibility for developing new cars as possible to
China-based staff with a better grasp of local market
preferences, particularly around electrified and connected-car
technology.
Volkswagen has already embarked on a plan to remake its cars
for China, buying a stake in China’s Xpeng to jointly-develop
EVs and promising to slash its vehicle development time to
closer to that of its rising Chinese rivals.
The real question is, now that they appear to have lost
their mojo in China, can Toyota and VW get it back? Toyota says
it wants “ever-better cars” for the Chinese, but have the
Chinese already moved on?
China’s Polish Leapmotor surprise
Sources say Leapmotor and Stellantis have scrapped plans to make
a second EV model at a plant in Poland, in a sign that China’s
targeted tit-for-tat measures against those EU member states
that voted for tariffs on Chinese-made EVs have already started
to bite. You can read about it here.
Poland voted for tariffs. The B10 electric crossover may
instead be made at a Stellantis factory in Germany or at a plant
in Slovakia, both of which voted against tariffs.
Stellantis' Tychy plant in Poland has been producing the T03
compact EV with components shipped from China and it is not
clear whether that production is also now under review.
Production in Germany would be more expensive than Poland
because of higher utility and labour costs, undermining the
advantage Stellantis hoped to gain from making more affordable
Leapmotors for European car buyers.
Fresh bailout for VinFast
VinFast will get fresh cash injections from its founder and
parent company worth $3.4 billion by 2026 to keep the lights on
at the Vietnamese EV maker. You can read about it here.
Like other EV startups, VinFast has been struggling with
getting to scale and has already pushed back a planned $2
billion plant in North Carolina until 2028.
Many of the smaller startups that faced the same struggles
yet could not raise money have fallen by the wayside. But Saudi
Arabia’s PIF has kept the money flowing for Lucid and
Volkswagen’s $5 billion investment in Rivian have kept those EV
makers in the game.
Since it was founded in 2017 and including the latest
topup, VinFast has received capital injections totalling $7
billion from its parent company Vingroup, its affiliates, and
founder tycoon Pham Nhat Vuong.
Vuong alone will pour in around another $2 billion, granting
VinFast more time to get the hang of scale and beef up sales.
Fast Laps
China's car sales jumped 11.2% in October, led by domestic
champion BYD, as automakers raced to meet annual sales
targets.
U.S. regulator the National Highway Traffic Safety
Administration raised concerns about Tesla social media posts
suggesting its Full Self-Driving software can be used as a
robotaxi and does not need driver attention.
Stellantis will halt car production again at its Mirafiori
plant in Italy, which makes the electric Fiat 500 and two
Maserati models.
Australian battery materials maker Novonix has signed a binding
off-take agreement with Stellantis to supply high-performance
synthetic graphite material for the automaker’s EV batteries in
North America.
HOLON, a unit of German automotive supplier Benteler Group
asked U.S. auto safety regulators for approval to deploy up to
2,500 autonomous electric buses annually that are operated
without steering wheels and other human controls.
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(Editing by Alexandra Hudson)