AD #4331 – It’s Official: U.S. Will Not Renew USMCA; U.S. Car Sales Only Up 0.4%; BYD Wants Legacy EU Plant

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

IT’S OFFICIAL: U.S. WILL NOT RENEW USMCA
Well, we said it could happen. Then we said it will happen. And now it has happened. It’s official. The United States will not renew the USMCA trade agreement. Instead, the Trump Administration will conduct annual reviews of the pact, which is exactly what all the automakers and suppliers in North America did not want to see happen. All they see is years and years of arguments and negotiations over tariffs and rules of origin that will continue to leave their supply chains in chaos. Yesterday, every single automotive trade and industry group representing automakers, suppliers, car dealers and consumers, came out with a joint statement urging the Administration to extend the USMCA, calling it “a success story for the entire U.S. auto industry.” Just weeks ago, Swami Kotagiri, the CEO of Magna, said he wanted a new USMCA agreement to provide stability and visibility so Magna would know when and where to invest its capital. Obviously, he’s not getting that, which leaves those investments in limbo. We commend the Trump Administration for wanting to revive manufacturing jobs in America. But the way it’s going about doing it is leaving the industry in chaos, facing uncertainty, tangled up in red tape and dealing with higher costs.

U.S. CAR SALES ONLY UP 0.4%
So how are sales of new cars and trucks doing in the American market, what with high gasoline prices, high interest rates, the cost of tariffs and everything else going on? Barely treading water, but at least they’re not down. According to the investment bank Stephens Incorporated, Q2 sales were up 0.4% compared to a year ago. Automakers sold 4.2 million vehicles. But here’s the interesting thing. In the last quarter, the NYSE, S&P 500 and NASDAQ all posted double digit gains, as AI and microchip mania drove the markets up. That was supposed to generate a wealth effect, but if it did, that did not show up in new car sales, at least not for a good chunk of the luxury brands. BMW and Mercedes did well, but Lexus, Audi, Acura, Cadillac, Jaguar Land Rover and Porsche all reported lower sales. One interesting point about Cadillac. Its sales were down 19%, but its EVs were up 3.5%. And 34% of Cadillac’s sales were EVs. Meanwhile, anyone who had hybrids to sell had a field day. Toyota, Honda, Hyundai and Kia saw their sales go up, and every dealer in the country wishes they had more hybrids to sell.

MINING, NOT REFINING, THE BIG BOTTLENECK FOR BATTERIES
The U.S. and Europe are scrambling to find new sources of the raw materials that go into making EV batteries and electric motors. It’s all about reducing their reliance on China. But it’s not going to be easy. CATL, the Chinese company that dominates the battery industry, says that mining raw materials, not refining them, is the biggest bottleneck it faces. It’s dealing with a shortage of lithium that’s driving prices up. And that’s why it’s so keen on making sodium batteries. It may not be as efficient as lithium, but it’s cheap and easy to get.

 

ROBOTAXI COMPANIES WILL STRUGGLE TO SCALE
Waymo seems to be in the lead with robotaxis. But that doesn’t mean it’s going to keep that lead. More and more robotaxi companies are expanding their services in more cities, but experts say scaling their networks will be just as difficult as solving the technical issues. Part of the issue is AI doesn’t have the capability to handle edge cases and can’t respond to unique driving situations. Another issue with trying to scale is the lack of federal regulations for robotaxis, though NHTSA is working on that. In the meantime, robotaxi companies aren’t profitable and are not expected to be until the 2030s. Experts say the best tech stack will win the day.

BYD WANTS LEGACY EU PLANT
BYD says it’s nearing a decision on a second plant in Europe. The automaker’s head of Europe, Alfredo Altavilla, who used to run Fiat Chrysler’s European operations, says it is looking at sites in France and Spain to acquire an existing factory from a traditional automaker. That’s a politically astute move. BYD has a plant in Hungary that will begin production in the fourth quarter. BYD’s sales are exploding in Europe. Last year, they soared 270% to nearly 188,000 vehicles and through the first five months of this year, sales have more than doubled to over 100,000 units. By making cars in Europe, BYD can avoid tariffs, and by using an existing plant, it can avoid the political backlash of Chinese automakers wiping out European jobs.

CHINA SETS NEW SAFETY RULES FOR BATTERIES
China just set new safety rules for EV batteries. The standard requires no fire or explosion within a 2-hour period after thermal runaway. Smoke must not cause harm to passengers. The battery must pass an impact test and the rule requires no ignition or explosion after 300 fast-charging cycles. Chinese automaker Chery says its new Rhino batteries meet that standard and it’s so confident in their safety that it’s offering a lifetime warranty to the first owner of the car, which covers the batteries, electric motors and control units. Chery says that if any model sold or currently on sale suffers thermal runaway damage due to a non-human-caused faulty power battery, it will compensate the owner with a new vehicle of the same model. But that only applies to owners in China.

VW TO SELL STAKES IN FUTBOL CLUBS
Volkswagen is desperate to slash costs. It reportedly wants to cut 100,000 jobs and close four plants in Germany. But it’s not stopping there. Bloomberg reports that VW is considering the sale of stakes it has in soccer teams or football clubs for our international viewers. The company holds shares in Bayern Munich and VfB Stuttgart, which it owns through Audi and Porsche. VW declined to comment on the report but shows how desperate it is to sell off assets and raise cash.

AUTOLINE HELPS FORD MUSEUM GET CAR IT WANTS
Here’s an interesting little sideline. Last year we had Matt Anderson, the transportation curator of the Henry Ford Museum on Autoline After Hours. The museum has an incredible collection of cars, but in the course of the conversation we asked Matt if there was something out there that he really wanted to add to the collection. Yes, he said, he really wanted one of the first Saturns ever built, because it was an important part of the history of the industry. Well, one of our viewers, Eric Vance, contacted us to say he had exactly what Matt Anderson was looking for. We put him in touch with Matt and I’m happy to report that the Henry Ford Museum now has a 1991 Saturn SC in its collection. And I’m so pleased to report that Autoline played a role in placing a car in the Henry Ford Museum.

Speaking of Autoline After Hours, we’ve got one of Toyota’s top safety researchers, Jason Hallman, coming on the show later this afternoon. Jamie Butters, who does the Autotown podcasts will also be on. So join John and Gary when the show goes live at 3 pm eastern.

And remember, Autoline will start its summer break tomorrow and will be off all next week. But we’ll be back on July 13th to bring you the latest news and developments in the global automotive industry.