AD #4001 – ‘Chicken Tax’ Strikes Kia’s U.S. EV Plans; Nissan to Drop Top Executives; GM Boosts Shareholder Dividend

This is Autoline Daily, the show dedicated to enthusiasts of the global automotive industry.

NISSAN TO SHAKE OUT EXECUTIVE SUITE
Nissan is in deep trouble, and it’s about to get rid of some of its top executives. Reportedly that will happen in a few weeks, but there’s conflicting reports about whether CEO Makoto Uchida will keep his job. Bloomberg says Nissan’s directors are considering replacing Uchida but other sources say he’ll stay on. Uchida has been CEO since 2019. Earlier this month, Nissan called off merger talks with Honda because Nissan refused Honda’s demand to become a subsidiary. Later, it was reported Honda would resume talks if Nissan got rid of Uchida. So if Uchida keeps his job, we think it’s a sure sign that Nissan has no interest in merging with Honda.

UK AUTO PRODUCTION DOWN
Economically speaking, the UK seems to be doing better than the EU. Even so, it’s not immune to the weak automotive market in Europe. While production of BEVs, PHEVs and hybrids were up 1.5%, accounting for 42% of all the vehicles made last month. According to the Society of Motor Manufacturers and Traders, automakers in England built just over 78,000 passenger and commercial vehicles in January, which was down about 18% compared to a year ago. And more than 80% of the cars produced were for export. Production declined because automakers have delayed models due to slow demand and because they’re retooling plants to build EVs.

MERCEDES CUTTING BACK IN CHINA
Foreign automakers in China have watched their sales plummet over the last 5 years and are finally moving to cut back on their operations there. General Motors already hinted it will likely close a plant there this year. Porsche and BMW have been cutting headcount. And now Reuters reports that Mercedes-Benz is going to cut 10-15% of its sales and finance staff there. China is still Mercedes-Benz’s biggest market, but sales continue to slide. Last year they slipped 7% to around 687,000 cars.

VW SLASHES PRICE OF ID.4 IN CHINA
Meanwhile, Volkswagen keeps cutting prices of its EVs in China to try and boost sales. It just cut the price of the ID.4 X by $2,700 which drops it to about $19,300. That’s $7,400 below the price of the car when it launched in 2021. And that shows the double whammy that’s hitting foreign automakers in China right now. Not only are their sales falling, they keep having to cut prices to try and hold onto what they’ve got.

CHINA AUTO MARKET IS NOT GROWING
But the whole Chinese auto industry is facing a day of reckoning because, as unbelievable as it sounds, the Chinese car market really isn’t growing. When you strip out sales of commercial trucks, buses and vans, and strip out exports of cars, the number of retail passenger vehicle sales in China are the same today as they were a decade ago. Though there is year to year variation, about 22 million Chinese have been buying a new car every year on average. And with China’s population declining, sales will likely start to drop in the future. We posted a video on what’s happening called “Has China Hit Peak Auto?” and we’ll provide a link if you’d like to check it out.

  

TRUMP TARIFFS UPSET KIA’S U.S. EV PLANS
The ‘chicken tax’ strikes again. The U.S. tariff, which was first implemented in 1964 in response to European tariffs on American chickens, slaps an additional 25% duty on light duty trucks coming into the country. The definition of light duty trucks also includes commercial vans and trucks and that means Kia’s new PV5 van fits into the category. So, now the automaker is exploring workarounds to the ‘chicken tax,’ even though it will have no problem selling the Korean-made van in Canada later this year or next. It says it could work with a local partner to offer custom and modified versions of the PV5 in the U.S., which we would hope look like the off-road concept it showed off at SEMA. But we think Kia might be able to get around the tax by selling versions for personal use, which are only subject to a 2.5% import tariff, rather than versions meant for businesses. However, that could be a moot point if the Trump Administration goes through with its threat to slap a 25% import tariff on all vehicles coming into the country. But that’s just in the U.S. The PV5 will first go on sale in Korea and Europe in the second half of this year. Customers will be able to choose from Passenger, Cargo, Family, Chassis Cab and wheelchair accessible versions of the van, which can be converted into Crew, Drop Side, Box Van, Freezer Box, Prime and Light Camper configurations. Three batteries will be available; 51.5 kWh, 71.2 kWh and a 43.3 kWh pack for the Cargo model. Kia says the largest pack in the Passenger version will provide up to 400 kilometers or about 250 miles of range on the WLTP test cycle. All models are powered by a front mounted electric motor that produces 120 kW or roughly 160 horsepower. The PV5 is the first of what’s scheduled to be an entire lineup of electric vans both bigger and smaller.

KIA’S EV2 CONCEPT FOR AFFORDABLE SMALL CUV
And speaking of Kia EVs, and this time ones that will actually be sold around the world, including the U.S., the automaker also revealed the EV4 sedan and hatchback as well as the concept of a new small crossover, called the EV2. It’s a little unclear if the hatchback version of the EV4 will be coming to the U.S. It just says the model will be produced only in Slovakia, “primarily” targeting sales in Europe. But the sedan will be for sure sold in the country. The EV4 is built on the same 400-volt platform as Hyundai Group’s current EVs and two battery packs will be available; 58.3 and 81.4 kWh. The larger provides up to 620 kilometers or 385 miles of range on the WLTP cycle. A 150 kW or roughly 200 horsepower electric motor drives the front wheels. A couple of other highlights include a 30-inch display screen, OTA updates and ADAS, but not hands-free driving functions. The EV4 sedan will be made in Korea and goes on sale in the country in March. That will be followed in the second half of this year by the hatchback for Europe. And then production for North America and other regions is planned for later in the year. Now let’s move over to the EV2 Concept, which is the company’s vision for a future B-segment crossover. It looks like it’s meant to be a more entry-level model that still offers decent tech and tries to get the most out of its available space. Kia says it expects to launch the production version for Europe and other countries next year.

VW ID.4 SALES SKYROCKET IN U.S.
VW may have had to cut the price of the ID.4 in China to try and boost sales, but in the US of A it’s a different story. Sales of the Volkswagen ID.4 exploded in January. According to Cox Automotive, VW sold just under 5,000 ID.4’s in the U.S. last month, which was up an eye-popping 653%. Overall, more than 102,000 pure electric vehicles were sold in January, which was up about 30% compared to last year but down 23% from December. The top five selling models were the Tesla Model Y, Model 3, VW ID.4, the Cybertruck and the Honda Prologue. The average transaction price for an EV in January was just over $55,000, a decrease of 1.4% from a year ago but it’s nearly $7,500 more than the average transaction price for an ICE vehicle.

GM BOOSTS DIVIDEND 25%
Last year General Motors generated $12.4 billion in free cash flow and it’s giving a big chunk of that back to shareholders. It’s going to boost its dividend by 25% to 15¢ a share, and it’s going to buy back $6 billion worth of shares, with $2 billion of that being spent in the first half of this year. As GM buys back shares and retires them, that helps to boost the price of the stock. Over the last decade, it’s up about 36%

BOB LEE OF LG ENERGY ON AAH
With sales of EVs not where they were expected to be just a few years ago, everybody is scrambling to make adjustments, especially battery suppliers. So what does the future look like for EV batteries? What about LFP, solid state and maybe even sulfur batteries? We have so many questions, which is why we’re going to have Bob Lee, the president for LG Energy Solutions in North America coming on Autoline After Hours today. He’ll help us get to the bottom of what’s really going on. John and Gary will also give their insights on the latest industry news and we invite you to join them when the show goes live at 3 pm eastern time.

But that’s a wrap for this show. And I hope to see you later today.