EVs Face Political Uncertainty Just As Sales Find Their Footing

Good morning! It’s Friday, August 2, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

New York Joins California, Banning Non-Electric Vehicles After 2035

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1st Gear: U.S. Election Means Everything To EVs

The automotive industry is paying close attention to the November U.S. presidential election. Depending on who wins — former President Donald Trump or Vice President Kamala Harris — the world of EVs could look a lot different to start 2025.

The midyear Market Outlook Report from the Dave Cantin Group and Kaiser Associates said a fed-up public may end up pressing the next administration to do something about high vehicle prices. Right now, Americans are spending an average of $47,000 on a new vehicle. That’s a lot of money. It could lead to cheaper offerings from overseas heading to our shores. From Automotive New:

Public coercion “opens the market for disruptors” — including cheaper foreign vehicle manufacturers — willing to offer lower-cost vehicles, the report said.

There also could be reversals of Biden administration vehicle pollution standards. The U.S. Supreme Court ruled in June to end the 1984 Chevron deference, which is widely expected to limit the power of agencies such as the EPA and NHTSA, which regulate tailpipe emissions and corporate average fuel economy standards on ambiguous statutes. The ruling could set off a chain reaction of rollbacks in alternative energy policies, reducing federal funding for infrastructure and lowering EV tax credits, according to the report.

Tesla is primed to benefit from such a scenario. If EV tax credits are diminished, traditional automakers might opt to buy carbon credits from Tesla rather than rather than ramp up their own electric vehicle operations, the report said.

This news comes right as electric vehicles are cementing their place and driving growth in the industry.

The EV sector may seem underwhelming compared with initial media reports and high expectations, but the report finds it’s progressing at a rate similar to other consumer products.

“The industry is still doing well, but the easy money is long gone,” Dave Cantin, CEO of Dave Cantin Group, an automotive mergers and acquisitions company, said in a statement. “Dealers are having to adapt to selling battery-electric and hybrid-electric vehicles, rising inventories, persistently high interest rates and new challenges like cybersecurity.”

[…]

EVs are becoming a key part of major automakers’ vehicle lineups; GM’s EV sales in the second quarter were more than 21,000, surpassing its previous record of 20,000, the report said.

According to the report, dealers said EVs and hybrids were expected to increase vehicle share by roughly 2 percentage points in 2024 vs. 2023, though that growth was expected to be mostly driven by hybrids. Dealers prioritizing these sales say they do so mainly to diversify their offerings and take advantage of tax incentives, according to the report.

[…]

Tesla’s second-quarter earnings might have raised concerns — global vehicle sales fell 4.8 percent compared with the same quarter a year earlier — but the report advised not to count the automaker out, as it could benefit if other manufacturers buy carbon credits from it.

It’ll be interesting to see how the November electric shapes the future of EVs. You sort of know what’ll happen with a Harris win, but a Trump win would be much more uncertain. He’s railed against EVs in the past, but he has now also recently aligned himself with CEO Elon Musk. Time will tell.

2nd Gear: Honda, Nissan Team Up On Software

Japanese automakers Nissan and Honda will conduct joint research into tech for a next-generation software program, the two companies said in a statement earlier this week. They also signed a memorandum of understanding to expand their strategic partnership that was originally announced in March. The two automakers pledged cooperation in areas like batteries, e-axels and vehicle complementation. From Reuters:

The automakers signed another memorandum of understanding with Mitsubishi Motors, which is 34% owned by Nissan, to discuss a framework to collaborate on vehicle electrification based on Honda’s and Nissan’s agreement from March, they said in a separate statement.

Nissan and Honda aim to conduct the basic research into technologies for the next-generation software platform in about a year, they said in their joint statement.

The push comes as both companies, Japan’s third and second biggest automakers after Toyota, still have to significantly step up electric-vehicle sales and have been losing share in key market China where both have made large investments.

The pair, which had combined global sales of 7.4 million vehicles in 2023, face growing competition from legacy global brands that have rolled out EVs at a swifter pace and players such as Tesla and China’s BYD.

Nissan and Honda will benefit from the cooperation on software as factors such as the ability to process data and the number of engineers working in the area boost competitiveness, Honda CEO Toshihiro Mibe said.

They will seek to standardise the specifications of EV battery cell modules from a mid- to long-term perspective, aiming to make it possible to use the batteries they plan to procure in vehicles from both companies, they said.

The two automakers said they will look into whether lithium-ion EV batteries made by L-H Battery Company, a joint venture between Honda and LG Energy Solutions, can be supplied to Nissan in Northern America starting in 2028 or later. The pair will also aim to standardize e-axle specifications that they will use in future generations of battery-powered vehicles.

I’ll tell ya what, I am absolutely loving this enemies-to-lovers arc Honda and Nissan are going through right now.

3rd Gear: Uber Partners With BYD To Get 100,000 Drivers In EVs

Uber is teaming up with Chinese automaker BYD to put 100,000 electric vehicles on the ride-hailing company’s platform. The major deal between the American and Chinese businesses excludes the U.S.

The multi-year partnership will offer drivers lower vehicle pricing and financing, and the program will start in Europe and Latin America. It’ll then head to the Middle East, Canada, Australia and New Zealand. From Bloomberg:

The alliance bolsters Uber’s efforts to transition the fleet of vehicles on its ride service to EVs — an initiative Chief Executive Officer Dara Khosrowshahi warned early this year was running off track. It’s also a boon to BYD, which has been one of the world’s fastest-growing automakers the last few years. That expansion has largely been driven by climbing the sales ranks within China’s massive car market, and the company is now embarking on an expansion into countries where its brand is less established.

“We look forward to seeing our cutting-edge EVs become a common sight on the streets of cities worldwide,” said Stella Li, the executive vice president of BYD and chief executive officer of BYD Americas.

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The pairing up cuts against increasing tensions between Washington and Beijing over the future of the automotive industry. China has built a formidable lead in batteries and the EV supply chain, and the US has been trying to push back against that dominance with a combination of punitive tariffs and tens of billions of dollars in tax credits for companies and consumers.

Of course, this program isn’t coming to the U.S.

Uber and BYD make no mention of the US in their statement, likely because the market is virtually closed off to the carmaker. President Joe Biden has vowed to increase tariffs on Chinese EVs to 102.5% this year, ratcheting up a rate that former president Donald Trump raised to 27.5% during his four years in the White House.

The European Union and countries including Canada have since followed suit in adopting or considering higher duties on Chinese EV imports, which could further complicate Uber’s objective for 100% of its rides in US, Canadian and European cities to take place in electric vehicles by 2030.

One of the company’s challenges has been the dearth of affordable, long-range and relatively spacious EVs to compete with low-cost cars powered by combustion engines that are popular among ride-hail drivers, such as the Toyota Prius.

Bloomberg says the deal could also include discounts on leasing and financing offers, charging, vehicle maintenance and insurance. Depending on how steep these discounts are, they could be a screaming good deal for rideshare drivers looking to upgrade their cars.

4th Gear: Audi EVs Going Ringless In China

Audi’s new lineup of electric vehicles developed in China for the Chinese market will not come with the automaker’s iconic four-ring logo because of “brand image considerations.” This is according to a person with direct knowledge of Audi’s plans for China. The move will also apparently reflect the use of an automotive architecture co-developed with Chinese partner SAIC as well as a reliance on local suppliers and technologies. From Reuters:

Reuters was not able to learn if the new series, codenamed “Purple” internally, would have a different logo or would just carry the name Audi on the vehicles.

A concept car for the series is due to be unveiled in November when Audi will also explain the series’ “brand story”, the two people said.

A third person who was briefed on the matter said nine models are planned by 2030.

The sources declined to be identified as the automaker has not made the plans public.

Audi declined to comment on what it called speculation. SAIC said in a statement to Reuters that the EVs would be “true Audi with authentic Audi DNA”.

Chinese automakers are increasingly taking share in their home market – the world’s largest – with tech-savvy EVs. That’s led to sinking sales for foreign automakers, many of which are much more reliant on gasoline-engine models, pushing them into forming new partnerships.

Back in May, Audi and SAIC, a long-time partner of VW, said they would be jointly developing a platform for Chinese market EVs. It’s a strategic move that’ll allow the foreign automaker to come to grips with the latest features in EVs and Chinese tastes.

The move makes sense since Audi sold less than 10,000 EVs in China in the first six months of 2024. Other comparable EV brands like Nio and Zeekr sold eight times more.