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Runtime: 10:29
0:00 Trump to Hit Canada, Mexico With Steel & Aluminum Tariffs
1:04 Big Shakeout About to Begin in China
2:09 EU OEMs Get Some CO2 Relief, Sorta
2:59 Nikola Teetering on Bankruptcy
3:59 Russians Complain of Crummy Chinese Quality
5:08 DeepSeek Taking China Cars by Storm
5:52 Nio Battery Swapping Almost Profitable
6:51 Renault-Volvo Unveil EV Vans
7:55 Ford Launches New Tech to Help Delivery Drivers
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TRUMP TO HIT CANADA, MEXICO WITH STEEL & ALUMINUM TARIFFS
President Trump’s tariff threats are back. He says he’s going to slap 25% tariffs on imported steel and aluminum, particularly on Mexico and Canada. The U.S. imports more steel from those two countries than anywhere else. And when it comes to aluminum the U.S. imports about half of all the aluminum it uses, of which Canada is Number One and Mexico is Number Three, behind the United Arab Emirates. Though Trump did not say when the tariffs will go into effect, they would immediately raise prices across the industry, and that would have a significant impact on automakers and suppliers. But let’s see how this plays out. Trump imposed the same 25% tariffs in his first term, but then got rid of them as part of the negotiations for the USMCA free-trade deal.
BIG SHAKEOUT ABOUT TO BEGIN IN CHINA
Now let’s move over to China, where we could be seeing signs of a major shakeout of the auto industry. China has too many car companies, making too many cars, with too many brands and too many models. This is a key reason why a price war broke out and why automakers are leaning so heavily on exports. The domestic market simply can’t absorb all that production, and even more worrying is that sales trends suggest the Chinese market is no longer growing. Now two state-owned automakers, Dongfeng and Changan, have announced that they are restructuring and are exploring mergers with other state-owned automakers. Since these statements came at the same time there’s speculation that they’re going to merge with each other. And since the central Chinese government owns both companies, it would undoubtedly be the force pushing for the merger. This could be a sign that the big shakeout in the Chinese industry that everyone’s been expecting for years is starting to happen.
EU OEMs GET SOME CO2 RELIEF, SORTA
European automakers have been begging for relief over massive CO2 fines they face this year. And it looks like they could get some help, thanks to some tricky regulatory massaging. Rather than cut back on CO2 standards, the EU is proposing a change in the way that automakers can bank and borrow emission credits. It would give them more flexibility to try and avoid fines this year, but it also kicks the ramp up down the road. Automakers would have to reduce emissions even more in future years to make up for their shortfall now. And with EV demand slowing in Europe, that will be difficult to do. It seems very likely that the EU will have to come up with yet another solution sometime next year.
NIKOLA TEETERING ON BANKRUPTCY
Electric semi-truck startup Nikola is in trouble. Last month we reported that the company is exploring a number of possibilities to raise cash including selling part or all of the company and it’s also considering partnerships. But it doesn’t look like Nikola is having much luck because Bloomberg reports that the company is now working with a law firm and financial advisors to potentially file for Chapter 11 bankruptcy. But the company hasn’t made a final decision yet. Nikola needs to find a solution fast though, because last October, it revealed it only has enough funds to operate through the first quarter of this year.
RUSSIANS COMPLAIN OF CRUMMY CHINESE QUALITY
After Russia’s invasion of Ukraine in 2022, most Western automakers left the market. And Chinese car companies quickly filled the void. There are now 60 Chinese brands selling vehicles in Russia and they account for nearly half of all car sales in the country. But a Russian newspaper reports that owners of Chinese cars aren’t happy with their vehicles. 70% have issues with continuously variable transmissions. Owners also have complaints about the engines, faulty warranties and difficulty getting spare parts. Taxi drivers say they don’t last as long as well. They say that the service life of Chinese vehicles is only about 93,200 miles or 150,000 kilometers compared to up to 186,000 miles or 300,000 kilometers for Western brands. Russian car buyers are also unhappy with relatively high prices for Chinese vehicles, which average around $22,000. And the cost of maintaining a Chinese car after five years of operation is more than the cost of a new vehicle.
DEEPSEEK TAKING CHINA CARS BY STORM
Automakers in China are racing to integrate DeepSeek AI into their vehicles. As we reported last week, Geely and Dongfeng were the first car companies to announce they’ll adopt the generative AI program for their vehicles. And since then Changan, Leapmotor, IM Motors, Baojun, GAC and Great Wall have all announced they’ll do the same. The technology will be used to improve the voice assistant in vehicles to have a more natural conversation. DeepSeek was only introduced a few weeks ago but it has gained a lot of attention because it’s cheaper to operate than ChatGPT and it runs on lower tech chips.
NIO BATTERY SWAPPING ALMOST PROFITABLE
The CEO of NIO says that the Chinese automaker is close to making a profit with its battery swapping business. While he didn’t provide any details or reveal when that would happen, there were reports last week that NIO performed a record number of swaps in a single day. That total was about 136,700, which means that each of NIO’s roughly 3,100 swapping stations changed out 44 battery packs. The automaker has really seen good growth with its battery swapping business, especially over the last year and a half. In that time, it’s added well over 1,000 swapping stations, it has at least 5 new automakers as partners and NIO’s newest brand, ONVO, is about to get access to its swapping network as well. If swapping catches on in a big way it sure would eliminate all those complaints about the time it takes to charge an EV.
RENAULT-VOLVO UNVEIL EV VANS
Flexis, the commercial vehicle joint venture between Renault and Volvo, revealed the names of the EV vans it just showed off at the end of January. One will be the all-electric version of the Renault Trafic, a van that’s sold over 2.5 million copies since its release in the 1980’s. The others are called the Goelette and Estafette, which fans of the Renault brand might recognize as previous models that first debuted in the 1950’s. You might also remember the Estafette concept that Renault debuted in September of last year. All three are built on a Software Defined Vehicle architecture, called FlexEVan, that was developed by Renault’s EV division, Ampere. It says the platform is capable of charging to 80% in less than 20 minutes and offers up to 450 kilometers or about 280 miles of range on the WLTP test cycle. The vans will be produced at a Renault factory in France and are scheduled to hit the market sometime next year.
FORD LAUNCHES NEW TECH TO HELP DELIVERY DRIVERS
In other commercial van news, Ford’s commercial division, Ford Pro, is helping out delivery drivers in Europe. Electric and ICE versions of the Transit and Transit Custom will come out with a new feature this summer, called Delivery Assist that automatically turns off the engine if it’s ICE, closes the windows, locks doors and switches on the hazard lights anytime the driver stops and gets out. After the delivery is complete and the driver unlocks the door and steps on the brake, the engine starts back up and the windows go back to their previous position. Ford Pro says the tech reduces the number of tasks, which should speed up deliveries and also provides more peace-of-mind to fleet operators.
But that brings us to the end of today’s show. Thanks for tuning in.
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The new tariffs make no sense. The companies affected are all US owned. In the case of the aluminum business, that business is in Quebec because of extremely low electricity prices resulting from hydro-electric dams. That low electricity cost cannot be duplicated anywhere in the US. However, that aluminum CAN be sold to lots of other countries. The mostly likely outcome is the company involved will be nationalized by either Quebec or Canada. Why would the US want that? It would be nice if the logic behind the tariffs could be explained so that it does not sound like the rantings of a dementia patient, which is what it sounds like now. Also, as far as Canada becoming a US state, why does the US think that that is THEIR decision to make. Does he US not understand that No means No? A forced annexation of Canada is no different than an invasion. If the US does that, they are just another Russia.
Sean, could you give a little more company information on the Volvo and Renault you mentioned. I’m assuming that this is Volvo truck, the Swedish company, not Volvo car the Chinese company. Also, are we talking Renault truck? Renault EV, Renault ICE, or the old Renault powertrain group that I thought was sold to Geely.
Trump is just out to cause chaos, even if it means Canada and Denmark forming alliances with China to defend themselves. Since smelting aluminum is so energy intensive, cheap electricity is crucial in locating facilities. Canada is not going to become part of the US, but if it did, it should be 10 states, not one, most of which would vote heavily Dem.
It looks like the Volvo in the Renault-Volvo van project is the truck, rather than the Geely version of Volvo.
I suspect most of the Chinese cars going to Russia are older design, mostly ICE vehicles. If so, it’s no surprise that they are substandard compared to the Mercedes, Ford, and GM, etc. products that had been built in Russia for the local market. From what we are reading, the newer design Chinese EVs, at least some of them, are probably competitive on a global basis.
Why doesn’t the EU auto industry threaten to cut back the ICE production of vehicles to the level of EV versus ICE that puts the automakers in compliance? The auto makers can point out that dozens of plants will have to close and probably hundreds of thousands of workers will be laid off. This may cost the EU auto industry less than the 15B euros in fines so it could even make economic sense. The optics of the threat of all these workers laid off and plant closures may have the EU rethink the speed of emission reductions they are forcing the industry to make.
I think like all companies Chinese manufacturers build for the market they sell into. In Russia’s case I expect there to be precious little safety requirements and no pollution or fuel economy standards. They might not even have EGR valves.
There would also be no government standards to protect consumers.
Something tells me nobody is coming to save Nikola. I am surprised that they have held on for this long.
MERKUR —
No one may be in a hurry to save Nikola, due to the original shenanikins there CEO of the time was involved in. Maybe no one trusts the company enough to take the risk of a startup EV semi company AND the change in direction of the new administration. Then there is the thought that if they go under, when their IP is auctioned off, they’ll get it for pennies on the dollar.
Mike —
I think that if the EU OEMs took that approach, they would loose even more money then the cost of the emission penalties. IMHO, if the law makers want the OEMs to build these vehicles, they must do a better job of educating the public, so that they would be more inclined to make the purchase!
…I mean, it seems the EU legislatures are forcing/penalizing the OEMs, but the messaging to the public is spotty at best! Which leaves room for misinformation and only makes potential customers more hesitant. Financial incentives can only go so far, especially if you trust what you’re being asked to invest in! The difference with the US and the EU, is that you have one country with law makers on different side of the emissions/EV equation. In the EU, you have several countries in lock step on what they want OEMs to do and build and serious about beating the fines out of them on the one hand, but seem perfectly okay with not communicating that message to the buying public. I not suggesting that they strong arm their citizens and force them to buy or lease what they don’t want, but doing more to cut through the noise and nonsense. So that when buyers are ready to make a purchase, they have a clear understanding of what they’re getting. Buyer’s know what to expect when the getting an ICE vehicle, even though they can be expensive, have technical issues, fuel can also be expensive, they brake down, etc., all of which can and have happened to EVs too!
You’ve all heard me rail on the insane EU penalties that are literally bankrupting their OEMs. Because they must do this to save the planet, right? We only have two years left (again) since our final last 10 years we were warned we had left passed us by and the ice caps totally melted back in 2013 just like Al Gore predicted.
Now that they’ve finally pushed their industry to the brink, with BYD circling like vultures, they loosen the standards and push it down the road. So what this means is THEY DO NOT REALLY BELIEVE IT. All this damage wrought on their economies for virtue signaling the climate religion. For what? To impress China and their weekly brand new coal fire plants? Don’t forget to cut China that check you owe them under the Paris accords, EU.
Anyway, as far as steel and aluminum, if
Denmark, Canada, and China are all exporters, exactly what kind of alliance will they form? Musical chair shipments of steel and aluminum to each other? Brilliant!
Canada and Denmark might need a military alliance with China or another country to prevent being invaded by Trumpland.
The “trade deficit” is an artificial accounting contruct. It only makes sense to have aluminum smeltering where it’s cheapest. The way to compete in this high-science world is to apply it to competitive products, and cheap materials are vital to that end. Labor is actually less of an input.
Something like the very nice Cadillac Lyriq has world-wide potential, but then gm should actually be updating the software regularly. Lucid would also be a great brand for Ford to take global.
I last worried about the “trade deficit” in my teens. Since then, the US has created all the trillion-dollar companies that bestride the planet. And also nurtured a culture of (delinquent, short-term) corporate governance that nearly destroyed even Boeing (which might still come to pass).
Pumping more cash through corporate husks only focused on short-term profits will not help. It does saddle the American taxpayers with enormous new deficits, as happened the first time round.
Now I’m watching Tesla slowly beginning that slow, insidious downward spin, but I forgot – it’s no longer a car company! Who needs a solid lineup of attractive products. Robocars are just around the corner, and only Tesla will make multi-trillions. When as we’ve seen, the underlying technology is no secret at all. Autonomy will become as cheap as mobile connectivity.
It’s sad when you put a real-estate goon in the nation’s highest executive office, and one who has zero qualms about aggressively lying to undermine our storied mode of government.
Kevin,
You’re absolutely right, we were referring to the Volvo Group, which makes trucks, not Volvo Car. The Group has a JV with Renault called Flexis, and it makes those vans.