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Runtime: 9:32
0:00 Bill in Congress Vaporizes EV Subsidies, Adds EV Tax
1:08 Nissan to Fire Employees & Close Plants
2:08 KKR Expresses Interest in Nissan
2:54 Trump Tariffs Would Raise Repair Costs
4:09 Robots Poised to Eliminate Factory Jobs
5:23 China Tells Media Don’t Criticize Tesla
6:34 ZF Develops Heel Airbag for AVs
7:11 Baidu Claims Robotaxis 10X Safer Than Humans
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BILL IN CONGRESS VAPORIZES EV SUBSIDIES, ADDS $1,000 EV TAX
Republicans in Congress are introducing legislation to kill off most EV subsidies at the same time they’re adding a new tax to make it more expensive to buy an EV. 15 Senate Republicans introduced a bill yesterday that eliminates the $7,500 federal tax credit for purchasing a new EV, the $4,000 credit for buying a used EV, the tax credit for EV charging stations and the credit for leasing an EV. And a separate bill was introduced that imposes a $1,000 tax for buying an EV that will go towards road repairs. Most repairs are funded through gas and diesel taxes that EVs don’t pay. The majority of states have imposed registration fees to EVs to pay for road repair. But not the federal government. The Senators say the thousand bucks is about the same as what a gas-powered owner pays in federal gas taxes for highway funds over 10 years.
NISSAN TO FIRE EMPLOYEES & CLOSE PLANTS. ANALYSTS SHRUG
If I were Honda, I’d be glad I didn’t end up in a merger with Nissan. Honda just reported a 5% improvement in its quarterly operating profit, while Nissan reported a 78% drop. Nissan also lowered its outlook for 2025, the third time it has done so. To boost its factory utilization, Nissan will close three plants over the next two years which will eliminate 6,500 jobs, on top of another 9,000 jobs that were already announced. It will also start eliminating shifts at other factories, including those in the U.S. All told, Nissan plans to chop a million vehicles of capacity. And it’s going to get rid of 20% of its executive staff. Even so, Automotive News reports that some analysts don’t think it’s enough. They think Nissan is just nibbling around the edges instead of taking big bites to deal with its problems once and for all.
KKR EXPRESSES INTEREST IN NISSAN
Another thing that Nissan wants to do is find new partners. Foxconn, the giant Taiwanese manufacturing company, says it’s interested. And KKR, the giant U.S. private equity company, says it might be interested, too. KKR is doing its due diligence to decide if it will invest in Nissan. And if it does, we can expect it to put a lot more pressure on Nissan’s managment to move a lot faster.
TRUMP TARIFFS WOULD RAISE REPAIR COSTS
People are already complaining about the cost to service or repair their cars, but it could get worse. President Trump says he wants to slap a 25% tariff on imported steel and aluminum from Canada and Mexico. That would immediately raise costs for automakers and suppliers, but consumers would also likely feel the effects of the tariffs. Those increased costs are usually passed down to the consumer in the form of higher car prices. On top of that, the price to import service parts would probably go up, which means that car repairs would be more expensive as well. Those two things would drive up demand and prices for used cars, so the cost to replace a car would go up, which would also make insurance prices higher. And insurance and repair costs were already up this year. The cost to fix a car in January was up 7.4% compared to last year, while insurance prices were up by 11.8%. But as we said the other day when the tariffs were first reported, let’s see how this plays out. Trump imposed the same 25% tariffs in his first term, but then dumped them as part of the USMCA free-trade agreement.
ROBOTS POISED TO ELIMINATE THOUSANDS OF FACTORY JOBS
They say that 2025 is the year of the humanoid robot, so could we be on the verge of robots replacing a significant number of factory workers? As we reported earlier this week, Lear Corporation, the giant seating supplier, is in the process of getting rid of 30,000 factory workers and replacing them with robots and automation. Moreover, companies like Tesla, BMW, BYD, Hyundai, Toyota and Honda are all experimenting with humanoid robots, and BMW is already using them in small numbers at its assembly plant in South Carolina. Now comes word of a startup in China that’s coming out with a humanoid robot for the automotive sector. A robot company called Galbot teamed up with another called Miracle Automation that specializes in applying AI to factory automation. And that’s really saying something since China has some of the lowest labor costs in the world. As the cost of these robots come down, the threat to factory workers grows, since these robots don’t get tired, don’t take breaks, don’t take vacations, don’t go on strike, don’t mind working overtime, and can work multiple shifts every single day.
CHINA TELLS MEDIA: DON’T CRITICIZE TESLA
Do you remember the woman that made headlines a few years ago by jumping on the roof of a Tesla at the Shanghai auto show and shouting about how the brakes fail? Well, the Associated Press has a whole report detailing what led up to that and what followed after. And the AP claims that Tesla is using a legal strategy to defend itself in China that is much more aggressive than any other automaker. It says Tesla has sued customers, bloggers and Chinese media for being critical of the company. And it almost always wins. Of 14 defamation cases reviewed by the AP, Tesla won 11, two are still on appeal and one was settled out of court. It also has similar success when someone tries to sue the company. Owners only won 9 out of 81 civil lawsuits against Tesla for safety and quality issues and contract disputes. The AP claims that Tesla has been able to limit its accountability because of support from powerful leaders in China’s ruling Communist Party and it says that some journalists have even been told to avoid negative reports about the EV maker.
ZF DEVELOPS FOOT AIRBAG FOR AVs
ZF developed a new heel airbag to prevent serious leg and foot injuries, but it’s actually designed for autonomous vehicles. To be more comfortable, people riding in AVs will likely have their seats pushed further back, but doing that makes it harder to protect their legs and feet, which is why ZF created the heel airbag. It says it can be adapted to almost any vehicle without the need for any additional space in the footwell. ZF says the airbag will be available in 2028 for automakers that plan on offering seats with extra comfort positions.
BAIDU CLAIMS ROBOTAXIS 10X SAFER THAN HUMANS
And speaking of autonomous vehicles, the CEO of tech giant Baidu, Robin Li, says that robotaxis are safer than human drivers. Baidu currently operates a robotaxi service called Apollo Go in 11 cities in China and as of November, it has provided 8 million rides. Li says as of today, the robotaxis are 10 times safer than humans and that its insurance claim rate is only 1/14 of that from a regular taxi or a regular driver.
And that brings us to the end of today’s show. Thanks for tuning in.
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Can’t help but feel that the Japanese government used some sort of coercion on Honda to get them to buy Nissan to keep it all very Japanese but then Honda came to their senses and said Noooooo!!! Will find out in the future stay tuned, for the next chapter of Nissan another cliffhanger!
KKR’s interest in Nissan is like the Cerberus Capital Management takeover of Chrysler. These companies love investing in general merchandise, ripping out excess middle management and moving on with a tidy profit.
Auto manufacturing is very complex with hundreds of balls in the air and decisions that need to be made years in advance. They are not even that profitable. Like it always happens, someone at KKR with more money than brains and an ego bigger than the outdoors thinks they can do the impossible. And if they can, the reward is break even. Fun to watch.
Sean, Maybe the Japanese government should offer Carlos Ghosn a pardon if he agrees to rescue Nissan again!
Dave, I completely agree. The Ministry of Economics, Trade & Industry has (or had) its fingerprints all over this deal. Kudos to Honda for figuring out how to torpedo it.
I’m not sure why Nissan is in such bad shape. Rogue, their best selling product in the US has had “average” reliability in CRs surveys, and did ok in their road tests. My only recent experience with a Nissan was an Altima. I didn’t like its horribly loud turn signal noise, and the fake shifts with the CVT, but it drove ok. I think some Nissan products are relative bargains. They could easily fix the turn signal noise. I don’t like fake shifts with CVTs, but some people do. Cars that have them should have a switch to turn them on or off, with a caveat that the fake shifts will cost you x mpg, and in some cases x seconds in 0-60 time. Those numbers would be small, but not zero.
Anyway, things as they are, with Nissan’s reputation, sales, and (lack of) profitability being awful, Honda should be very glad the merger, or whatever it was to be, didn’t happen.
It seems Honda was being pushed into a merger by the Japanese government, and decided the way to avoid it was to impose stipulations on Nissan that they knew Nissan management would not agree to. Then Honda management can say: well, we tried.
I had the same thought about Carlos Ghosn, though even if he was guaranteed immunity, he might not be interested. He is quite a bit older now and the world automotive market has gotten considerably more complex. My guess is that he is enjoying his retirement/isolation and may enjoy seeing Nissan circle the drain and the associated embarrassment of the Japanese government.
This comment was from yesterday, but I think it still has merit with today’s report:
“I think the disconnect with the tariffs, is the administration’s reason for them with the country’s neighbors to the north and south. Not only was Trump responsible for the new trade agreement between the three countries (which came out of nowhere to some), to get Canada and Mexico to do more to control illegal drugs and immigrants from entering the US, he added a tariff on goods coming from them? What does one have to do with the other? If he felt the leaders of those countries could do more in those areas, why couldn’t they focus negotiations on that. Instead, he puts tariffs on goods! So, let’s say Canada and Mexico place ball, do the tariffs on goods go away? While many say the tariffs are to bring jobs back, to the US, but Trump has gone the record as saying that the tariffs, on the Canada and Mexico at least, are because of illegal drugs and immigrants that are coming into the US illegally. So why the attack on businesses when the focus is on the policies and actions of his few leaders? These auto OEMs have already invested heavily on something the new administration has done an about face on, should they spend the money to move these things to the US and the leaders work their differences out, will the Trump administration change course again? To KITs point, how does an organization move forward in step with new direction from policy makers, when the changes come fast and furious, are highly punitive, and flip-flop with little rhyme or reason? As if to say ‘they will address this problem, by coming down heavy on something that has nothing to do with the actual problem they want to fix’!”
What I’m a confused about is the push to bring back jobs to the US, while at the same time ending new jobs at the same time. One of the campaign promises was to build/make/manufacture products here. Yet, it seems that, in the case of automobiles, the only vehicle type that is being encouraged is ICE. While it is the government’s right to support what they feel is in the national interest of its country, the world in general is adding BEVs to the powertrain choices for consumers. And one of the world’s biggest markets is making a big push and currently is the leader in that type of transportation. If US leaders wanted the customer tax incentives to go away, fine, that’s their business. Yet, why bring an end to or discourage investment in this this new technology, when it brings advances jobs with it? It’s like being a country that builds and uses the most type writers. As the world moves to the use of keyboards and computers, since this country has a vested interest in seeing that type writers remain viable, they put tariffs on imports of new type writers and computers! They then create laws and policies to make it more difficult to restrict/limit computers in the country and want all type writer used in the country, to be manufactured in the country! All that really does is slow the development of that country’s technological growth, as the rest of the world speeds through the use of table top computers, to laptops, then iPad and tablets. While that country is introducing the next generation, ink-less type writer, the rest of the world is enjoying the tri-fold tablet, with AI support and iCloud back up!
While robots may not get sick, call off or go on vacation, they still break down and need repairs and have to be upgraded and have to wait for repair parts.
Nissan did just put in a 9 speed transmission into the new Murano. I think once they get rid of the CVT on their cars, they will be just fine. The problem is that they likely don’t have the cash to last through the time it will take to update their line up with that 9 speed transmission. Foxconn would be a reasonable buyer as they would share the vision to make it a success. KKR will just slash people and slap new paint on the buildings and try to sell it on, likely to Foxconn.
Trying to understand what is happening is impossible. Explaining it is very difficult. That’s where Autoline comes in; keeping us informed about the current situation and its impact on the auto industry. Thank you very much John et al. You sure don’t have to worry about slow news these days!
The US could and should be a leader in new technology. Interesting how we are regressive in size of what we build compared to all of the rest of the world. We we just build fuel hungry large truck types while the rest of the world builds more efficient new tech cars, where is our future?
There has been lots of complaints about the EV incentives and now complaints about cutting them. Should the gov be involved in promoting a private industry to lure buyers toward a new tech? That’s the real question. If EVs were a better product they would sell themselves without the need for incentives. However due to costs involved in launching new tech like battery production maybe the gov should get involved. I think most Americans could support EV charging station installation but I personally don’t believe that’s going to help sell cars. People don’t want to buy an EV if they have to charge at a location for 30 min. So infrastructure isn’t going to make them that much more attractive.
The thing government could do to encourage me to buy an EV would be to pay for, or subsidize chargers in my condo parking lot that could be used at utility rates, or a little more. The new regime is intent on encouraging the purchase of bigger and thirstier trucks.
MERKUR DRIVER, Nissan’s problems are apparently much deeper than their use of CVTs. Subaru is doing quite well for a smaller company with a limited dealer network, and they use nothing but CVTs, except for BRZ and WRX.
Totally understand Kit. There is nothing wrong with CVTs being used in cars. I have one in my personal car. The problem is the CVT that Nissan uses is unreliable and has been since they started using it. Them switching to a stepped transmission in and of itself is not what will save them. Them getting rid of unreliable technology, such as their CVT, is what will save them and that is what the move to the 9 speed represents…hopefully.