AD #4379 – Toyota Asks Dealers to Lobby Against Tariffs; Car Loans & Lease Rates Going Up; Volvo Wants to Double Market Share

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

CAR LOANS & LEASE RATES GOING UP
In a unanimous vote yesterday, the U.S. Federal Reserve raised interest rates by a quarter point, bringing the prime rate to 4%. That’s going to raise the cost of car loans and lease rates, and automakers are either going to have to raise incentives or watch sales drop, or both. The average new car loan before the rate hike was 7% for a 60-month loan. Used cars are in the 9-11% range. Car sales were already dropping before the Fed’s move. They fell 6.3% last month. And when you add the soaring cost of gasoline and diesel on top of higher interest rates and the cost of tariffs, there’s tough times ahead for the automotive industry.

AM RADIO MANDATE FOR VEHICLES HAS STRONG SUPPORT
It looks like AM radio in automobiles will survive for years to come. The U.S. House just approved a bipartisan bill to mandate AM radio in all vehicles. The legislation now heads to the Senate where a similar bill has 60 co-sponsors and strong bipartisan support. Some automakers began removing AM radio from EVs about a decade ago because they claim currents from electric motors can interfere with AM broadcast signals. An industry-funded study by the Center for Automotive Research found it would cost automakers $3.8 billion to fix that interference. But others say the industry just does a lousy job of containing electromagnetic interference and that it’s a relatively easy fix. Government officials and advocates say it’s necessary to keep AM radio in vehciles for government emergency broadcasts when the power goes out. Automakers say AM radio is no longer widely used and there’s other options for drivers to get emergency warnings.

VOLVO LAUNCHES BIGGEST PRODUCT PUSH IN ITS HISTORY
Volvo wants to double its EV and hybrid market share by 2030 with the biggest product push in the company’s history. It will roll out 13 new models in the next four years, relying on Geely for the platforms. That’s a pretty ambitious goal and Volvo isn’t the only one thinking this way. Remember, Ford says it will have 5 all new nameplates by then. Toyota and Lexus have 30 BEVs coming. Nissan has 30 new models in the pipeline. Stellantis has 60, and the Hyundai Group has 100. And those are just the ones that have been publicly announced. So we’re about to see a tsunami of new products hitting the market by the end of the decade. All of these automakers are sure they’re going to boost sales and market share, but that’s a mathematical impossibility. So there’s going to be a war and someone’s going to lose.

 

TOYOTA ASKS DEALERS TO LOBBY AGAINST TARIFFS
Toyota is asking its U.S. dealers to help lobby against tariffs. Even though its sales were up 8% last year and are up slightly this year, Toyota is losing money in North America because of tariffs. The company posted a $1.2 billion operating loss in North America in its most recent fiscal year, which was a nearly $2 billion drop from the previous year. So, Toyota is asking dealers to communicate with regulators and law makers about the impacts of tariffs on prices and affordability.

EUROPE WANTS TO LIMIT CHINESE HYBRID IMPORTS
Chinese automakers are ramping up exports to help offset slumping sales in China. And now the EU is asking China to voluntarily restrict exports of hybrid cars to the region to avoid a trade war. Europe wants to limit Chinese hybrid sales to around 15% of the market.

    

EU WANTS “MADE IN EUROPE” RULES
In addition to trying to limit imports of Chinese-made cars, the EU is also crafting new “Made in Europe” rules, which set local content requirements for EVs. As a result, Chinese automakers are searching for existing plants in Europe to buy in order to meet the new rules. BYD’s European adviser says buying a plant instead of building a new one will allow it to start production more quickly.

MERCEDES UPDATES VEHICLE SOFTWARE ON THE PRODUCTION LINE
Mercedes’ new Operating System that’s debuting in models like the new GLA allows vehicles to get software updates when they’re being built, rather than embedding it in the hardware, which means each vehicle rolls off the line with the latest software. But there’s a couple other reasons Mercedes and likely other automakers want to update software right on the production line. With software already embedded in hardware, which comes from suppliers a lot of the time, there’s a level of uncertainty about what an automaker is actually installing in its vehicle. But updating right on the line gives the automaker more control over the software, which will improve security and could also cut down on vehicle defects.

WAVE OF OLD BATTERIES ABOUT TO HIT CHINA
It’s estimated that if you added up all the EV batteries that China has ever produced it would come to about 1,200 GWh. And since the first serious EVs started coming out around 2018 it means a wave of end-of-life batteries are about to hit the country. So, China has issued new guidelines that aim to set 50 new standards in battery recycling by 2030. But even though the country produces and sells more EVs than anywhere else, Gasgoo reports that China’s current battery recycling industry isn’t big enough to handle all the old packs that are coming.

PORSCHE RECYCLES OLD BATTERIES FOR RAW MATERIALS
So maybe we’ll see more Chinese automakers doing the same as Porsche. It’s working with a recycling company to break down end-of-life batteries into raw materials, like lithium, nickel, cobalt and manganese, which are then used to make cathode active material for new batteries. Porsche says the batteries are now going through extensive testing and in 2028 it will start supplying the recycled materials for new battery cell production.

MORE AUTOMAKER CONSOLIDATION IN CHINA
China’s auto industry is reaching a tipping point. It has too many companies making too many cars in too many factories. Several government agencies have warned automakers that they’re headed for disaster. And we’re starting to see some of the first moves to restructure before it becomes a full-blown crisis. This week we reported on how Beijing is forcing government-owned FAW and GAC to consolidate some of their operations. Today we learned that FAW is also teaming up with Leapmotor. And Aito, which is a joint venture between Huawei and Seres Motor, will see Huawei back out of the JV and just become a tech provider, while Aito becomes a sub-brand to Seres. Don’t worry if you can’t keep track of that all. The point is, the Chinese auto industry is starting to show some serious cracks and we’ll be documenting it all as it happens.

Be sure to join us for Autoline After Hours later today. Wow is there a lot to talk about, like, is President Trump really going to let Chinese automakers into the American market? We’ll have Joe White from High Speed Rodeo and Liam Rappleye from the Detroit Free Press on the show. And you can watch it live on the Autoline website or our YouTube channel at 3 pm eastern time.

But that’s a wrap for this show. Thanks for tuning in and I hope to see you later.