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Runtime: 9:59
0:00 U.S. To Slap 100% Tariff on Chinese Cars
1:09 China New Car Sales Fall, Exports Soar
1:46 Zeekr IPO Soars on NYSE
2:27 Tesla Invests Half a Billion in Chargers
3:23 UAW Targets Mercedes This Week
4:25 Porsche 911 Hybrid Is Wicked Fast
5:01 Porsche Cayman GT4 Is 6 Seconds Faster at Nurburgring
6:04 EV Slowdown Boosts Platinum Demand
6:41 Lyten Ships Sulfur Batteries to Stella
7:44 Official Pics of BYD Shark EV Pickup
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U.S. TO SLAP 100% TARIFF ON CHINESE CARS
Last week we reported that the Biden Administration was looking at raising tariffs on Chinese cars. Now it looks like that will become official policy tomorrow. The Wall Street Journal reports that the Administration will quadruple the existing 25% tariff, which means it will go to 100%. And then there’s another 2.5% tariff on all imported cars, which also existed before, but it means the total would be 102.5%. The only Chinese-made cars coming into the U.S. at the moment are the Buick Envista and Envision, the Polestar models, the upcoming Volvo EX30, and the upcoming Lincoln Nautilus. And no doubt there’s a few more we’re missing. So the higher tariff will not have much of an immediate impact on the Chinese auto industry. It’s more of a pre-emptive move. But it does not address the possibility that Chinese automakers could start making cars in Mexico and export them to the U.S.
CHINA NEW CAR SALES FALL, EXPORTS SOAR
Many countries around the world are worried that China is exporting its excess capacity to keep its auto industry healthy. Last month sales of new cars in China fell 5.7% compared to a year ago, and fell 9.4% compared to the month before. Meanwhile exports shot up 38% to 417,000 vehicles. While Mercedes-Benz and Stellantis are not in favor of raising tariffs on Chinese cars in Europe, we’re starting to see a political groundswell in the EU to prevent Chinese automakers from making major inroads.
ZEEKR IPO SOARS ON NYSE
And yet, all this anti-China talk has not prevented Chinese automakers from tapping into U.S. capital markets to fuel future growth. Zeekr, which is a premium EV brand of Geely, launched a successful IPO on Friday on the New York Stock Exchange. Shares shot up 38% over the initial offering price of $21 a share. One reason why investors are bullish on Zeekr is that it’s now selling more cars than NIO and XPeng. And while the stock prices of other EV companies like Tesla, Lucid and Rivian have fallen sharply, they think that Zeekr could buck the trend.
TESLA INVESTS HALF A BILLION IN CHARGERS
A few weeks back Tesla surprised the auto industry when it laid off most of its Supercharger team. At the time, Elon Musk also said that it would build out its charging network at a slower pace and focus on expanding existing sites. But now, it looks like Musk is backtracking on that decision. On Friday, he posted on X that Tesla will spend $500 million this year to expand its Supercharger network. He says that’s on new sites, “not counting operations costs, which are much higher.” Tesla’s decision to cut its Supercharger team was seen as a blow to the Biden Administration’s plan to grow national EV charging because it operates the largest network in the country. According to EVAdoption, Tesla installed more than 1,500 charging ports in the first quarter, which is four times as many as its closest competitor.
UAW TARGETS MERCEDES THIS WEEK
The effort to organize Mercedes’ plant in Alabama starts today. Workers at the plant will vote this week on whether or not they want to join the United Auto Workers union. The UAW is hoping to replicate the success it had last month, when workers at Volkswagen’s plant in Tennessee voted to join the union. And while the UAW says it got a supermajority of Mercedes’ Alabama workers to sign authorization cards to hold a vote, the union is facing pushback from the automaker, business leaders and politicians, who are discouraging workers from joining. The National Labor Relations Board will start counting votes on Friday and we can’t wait to see what will happen.
PORSCHE 911 HYBRID IS WICKED FAST
The first-ever electrified Porsche 911 is ready for production. A 911 hybrid, it almost feels a little wrong just saying it, but there was also a time when I said the same about a Porsche SUV. And the company has put the powertrain to the test; from the extreme heat to the freezing cold; and claims the 911 hybrid has more grip and significantly more power. In fact, Porsche says it lapped the Nurburgring 8.7 seconds faster than a corresponding version of the current car. The official debut for the new 911 will take place on May 28th.
PORSCHE CAYMAN GT4 IS 6 SECONDS FASTER AT NURBURGRING
But speaking of Porsches lapping the Nurburgring, it’s bringing a performance kit for the GT4 RS version of the Cayman to the U.S. that slashes over 6 seconds off its time around the famous race track. And that’s saying something because even without the kit the car has a nearly 500 horsepower 4.0L 6-cylinder engine and a laundry list of performance upgrades. But the $54,000 Manthey kit steps that up with adjustable coilover suspension that increases the front spring rate by 20%, unique wheels and additional aero parts, which nearly double the downforce. Or for another almost $6,000 you can add carbon fiber fender louvers and replace the rear spoiler for a larger gurney flap. Manthey started out as a German racing team in 1996 and also did upgrades for individuals. Porsche now owns 51% of the company and has come with several Manthey kits for its cars.
EV SLOWDOWN BOOSTS PLATINUM DEMAND
The slowdown in EV sales is causing a shortage of platinum. The World Platinum Investment Council is forecasting a platinum deficit of 476,000 ounces this year because of increased demand for catalytic converters used in ICE vehicles. Demand is at its highest level since 2017. Automakers have been using platinum as a substitute for palladium in catalytic converters because it was cheaper. But now platinum is more expensive, so analysts believe that automakers will go back to palladium.
LYTEN SHIPS SULFUR BATTERIES TO STELLA
Materials technology company Lyten has come a long way since we first spoke to CEO Dan Cook about its lithium sulfur batteries in 2021. It’s now sending pouch cells that were made at its pilot line in California to major U.S. and European automakers for commercial testing. Later this year it will start delivering cylindrical cells and is also designing a larger factory to build batteries. There’s several advantages to a lithium sulfur chemistry. First, it doesn’t use any nickel, manganese or cobalt. And it’s more energy dense than lithium batteries that do use those kinds of materials. It’s also not as prone to thermal runaway and the cells can be made using the same manufacturing equipment. There’s been questions and concerns around the lifecycle of sulfur batteries, but Lyten thinks its solved that problem by using 3-dimensional graphene on the cathode side and a lithium metal composite for the anode to improve stability and efficiency.
OFFICIAL PICS OF BYD SHARK EV PICKUP
Here’s the first official un-camouflage pictures we’ve seen of the BYD Shark. The Chinese automaker’s first-ever pickup truck will offer a plug-in hybrid powertrain with up to 480 horsepower and will also feature an active suspension system. Gasgoo reports the Shark will launch in Mexico tomorrow.
But that brings us to the end of today’s show. Thanks for tuning in.
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I suppose those Chinese cars will just be dropped from the US market, for however long it takes to move production to Mexico. Some Envistas are made in South Korea, so maybe they can source all US bound ones from there.
Tariffs are just a Federal sales tax on us, the buyers. Cheaper or affordable cars along with reduced Prime interest rate would be the fastest way to electrify the fleet.
IMHO, the Chinese tariffs should go down 5-10% per year to give us, the customers, a break.
It will be interesting to know more about the 911 hybrid. It might be a “through the ground” hybrid like E-Ray.
Not sure how the China Tariff bill was worded but if it only applies to cars and trucks you can bet the Chinese will be looking to import a bunch or 3-wheeled EVs. Those are classified as motorcycles and could be super cheap. Plus, if they are designed where a retro kit can be ordered to convert it to 4 wheels they will try and get around the tariff.
However, it does seem contradictory that this administration really wants Americans to be driving electric cars and if they truly believe that cost is the biggest barrier, then let China flood our shores with EVs. What they would likely find out, is that the interest just isn’t there at any price. Plus, that move would likely be the end of Tesla and while Biden doesn’t seem to have much care for Elon anyway, he is safe for now. Either way I’m ok with the tariffs as I wouldn’t be buying any Chinese cars anyhow.
Who can build a charging network better than our own government? Tesla. Well to be fair, most times private industry can be more efficient at just about anything the government tries to accomplish.
330 million people are paying to keep 400,000 auto workers in excellent paying jobs. Who says selective socialism doesn’t work?
Sean you should remember that the Chinese government is subsidizing the Chinese car makers to the tune of Billion of dollars. That is why they can sell cars so cheaply, never mind that they pay their workers nothing per hour or close to it…
Generally, no one wins trade wars. As Bob Wilson alludes, the tariff will show up a price increase, not just for Envision, Nautilus, et. al., but it will be averaged out over all GM, Ford, and Volvo vehicles. Either that, or the companies will just drop those vehicles, and maybe move production to Mexico or Korea.
Price seems to be over-rated as a barrier to EV adoption. There are about a half dozen Lexus CUVs at my condo, which would cost more than a lot of EVs. Then there are the many millions of expensive big pickups and SUVs, only a small percentage of which are used to tow or haul. People don’t mind spending money on vehicles, when the vehicle is what they want. I buy sports cars that are totally irrational purchases.
The biggest barriers to EV adoption are lack of home charging, and inconvenience for road trips. Also, a lot of people just don’t know how well an EV would work as a commuter car for multi-vehicle households with home charging available.
Here’s a good article about China’s EV policies, subsidies, etc.
https://www.technologyreview.com/2023/02/21/1068880/how-did-china-dominate-electric-cars-policy/
Buick Envista and Chevy Trak are made in South Korea, not China
Thanks Kit, good read.
I’m consistenly amazed at how here in Switzerland, I can buy American sweet potatoes for about 2 CHF per kilo(gram). Which translates to just about $1 per pound for a very low-value added, heavy bulk product. The competition mainly comes from Egypt.
It’s not sustainable for the US to import the majority of its cars from China, and the long-term damage would be tremendous. Just to satisfy some personal grudge against a specific set of workers (and/or management)?
It’s also worth reflecting on the long-term, repeat costs of ditching the country’s principal mass-manufacturing industry in exchange for somewhat cheaper cars (all EVs too) if you’re ever so slightly wary of a world-bestriding totalitarian dictatorship with a plan.
In other news, Bloomberg reports Tesla’s ‘Director of charging for North America returns to carmaker’. Slowing the very competently executed worldwide rollout of SuperChargers is one thing, ditching the entire, clearly effective team responsible for it another.
Also worth remembering too that those mooted $500 million (for investment in a profitable business essential) cover Europe, the US, and Asian networks. There are Tesla SuperChargers around Iceland, into Tibet, in Israel and Australia. Never mind the locations in well-traveled areas.
Albemarle- How exactly are 330 Million Americans paying to keep autoworkers working? I can see how a tariff might appear as a protectionism tax. However free trade isn’t free trade when the Chinese Gov is subsidizing an already lop-sided work force. I’ve said it for years and if people want a global economy and free trade then you have to take the entire world as a whole and basically figure out the average for everything. We had it pretty good here in the US and so we will have our wages, benefits, quality of life equal to the rest of the world. The cost of propping up developing countries so we can buy cheap products only works for a while.
Competition is a good thing as evidence of the 1970’s auto industry. Back in 62 when GM had over 50% of the US market and got lazy. Gas prices went up and it appeared the Big three had no idea how to build a fuel-efficient vehicle. Japan steps in and pulls the rug out from under their feet. By 1978 imports accounted for 20% of the market. That forced GM and Ford to get better. Build good quality vehicles. The Japanese showed us how to make small fuel-efficient vehicles that lasted 100,000 miles and more and were cheap. They upped the bar. But we paid the price with lay-offs and factory closings. Reagan tried to build the industry back and Tokyo implemented a voluntary export limit of 1.68 million vehicles annually through fiscal 1984. Those restrictions were renewed until 1994. Which persuaded Honda, Nissan and Toyota to all build plants in the US by 1984. Will China build plants in the US? Which would at least make their cars a bit more on a level playing field.
Its silly to think we can continue to buy foreign products and let all our manufacturing jobs slip away and have any middle class left in the US. People need jobs and there is already enough content creators and influencers to go around. Without manufacturing we are left with service industry jobs. But I’m not sure who will be shopping or going out to eat when they don’t have a job to pay for anything.
In 1960 Manufacturing jobs accounted for 26% of the workforce in the US that’s only 8% today. We are not headed in the right direction.
Couldn’t find the number of manufacturing jobs exclusive to China but they have the largest in the world accounting for 28.4% of the worlds manufacturing jobs.
Lambo,
I think a more nuanced tariff for all goods is required in a global economy. If the goods coming into the USA are produced with the same environmental, health, safety, and pay controls then the base tariff should apply. This includes that the item can not arrive to the USA shores by producing more environmental damage than would have been done by making the same product within the USA borders. For line workers, pay and benefits should be inline with their USA counterparts. Not in terms of absolute dollars, but equivalent dollars. I.E., if a line worker is in the middle class of the USA, then their counterparts in another country must be solidly middle class in their respective country. Vacation time, health benefits, retirement benefits, and all other benefits need to be equivalent between the 2 countries. The country of origin also has to have the same environmental controls, social safety nets, cannot exceed subsidies given to companies in the USA, and any other form of controls as found in the USA. No dumping of trash and chemicals into oceans and waterways as China and others are oft to do. If all things being equivalent, then let the base tariff apply. If not, apply a 500% or even 1000% tariff to those goods.
We should not be a nation that accepts goods from other countries made under poor conditions for both the worker and the environment just because we want cheap throw away goods. Anyone thinking that it is OK to accept such goods without condition because they want to save a few pennies is the problem.
People think we have high inflation now. Imagine what the inflation rate would be if we placed a 500% tariff on iPhones, TVs, textiles, computers, and all of the other stuff that comes from China.
As far as the vehicle business, it seems to me that the “Detroit 3” are being very short sighted, in dropping all of their cars, just because trucks and SUVs are “hot” at this time. If that changes, how long would it take for them to come close to competing with Toyota, Honda, and Hyundai/Kia as a “full line” car company?
If such a tariff design was implemented, iphones would be made in the north america region. There would be zero inflation impact.