AD #3966 - Trump Could Erase 38% of Tesla's Profits; Scout Confident It Can Bypass Dealers; Afeela Likely to Face Dealer Lawsuits
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Speaker 1: This is autolined daily, the show dedicated to enthusiasts of the global automotive industry. President elect Trump's tariff threats are
forcing auto suppliers to consider moving some production to the US or close to it. Trump has vowed to impose
a ten percent tariff on all global imports and a higher sixty percent tariff on Chinese goods. He's also threatened
to slap twenty five percent tariffs on Canadian and Mexican imports when he takes office. Reuters spoke to several supplier
executives at cs who say those threats have them looking into how much production they can bring to the US because the cost of the tariffs would be too much to pass on to consumers and make most car parts produced in low cost markets uneconomical. Industry analysts have been
predicting a shakeout in the Chinese auto industry, and it looks like it's already started. Out Of the one one
hundred and twelve brands that sell any these, twenty three of them either folded or were consolidated with another automaker in twenty twenty four. Taken as a whole, the Chinese
industry is operating below fifty percent capacity utilization. The CEO
of Japung predicts that the Chinese industry has entered the quote elimination round, where a lot more automakers will disappear over the next two years. The largest state owned automakers
like SEIC and FAW are expected to survive, and so are the large independent companies like byd li Otto, great Wall and Neo, But the smaller companies won't be able to compete with them and will start to go out of business. Not only is the price war in China
spreading to more makes and models, the export market is stalling out. The China Passenger Car Association says it sees
no growth in exports for evs this year. Tariffs on
Chinese EVY exports to the European Union will hurt demand there, and exports to Russia are expected to drop ten percent.
For many Chinese automakers, twenty twenty five is going to be a really tough year. Even so, the ones that
survive are going to be extremely competitive, and that will make the Chinese auto industry even stronger than it is today.
Tesla's stock price shot up ninety percent in the weeks after Trump's reelection and Elon Musk getting the NOD to run what he's calling the Department of Government Efficiency. But
analysts at JP Morgan say that Trump's EV policies could slash nearly forty percent of Tesla's profits. They say that
Tesla benefited from one point two billion dollars in sales subsidies to American consumers who bought its cars, and it got two billion dollars from selling ZEV credits to other automakers to meet the EPA's in California's emission standards. Trump
has promised to wipe out those sales subsidies and ZEB requirements, and that could blow a big hole in Tesla's bottom line.
Renowned Italian auto design firm atal Design announced it will open a new office in Metro Detroit for its US headquarters.
The company will invest twenty million dollars and will create twenty four jobs in engineering, sales and marketing. The head
of its US operations set Having its headquarters in Michigan is quote essential to effectively support our American customers. Atal
Design employees around one thousand people in Germany, Italy, Spain and China.
Speaker 2: This year at ces Intrepid will be showcasing our new cloud based tools for OEM fleet management. We'll be sharing
our y Fi Analytics cloud platform and how it integrates with Intrepid products, revolutionizing remote access fleet management, increasing the depth for individual data points during testing, and accelerating product development time. Catch us at Booth four sixty sixty four
in the West Hall January seventh through the tenth at CEES twenty twenty five to learn more.
Speaker 1: Scout Motors is confident it will be able to sell it to vehicles directly to customers. It's told Inside Evs
that it doesn't think there's any validity to claims from VW dealers and their lobbying groups that it can't sell direct because Scout sees itself as independent from owner Volkswagen.
US Franchise laws say that if a car company has used franchise dealers in the past, it cannot legally drop them to sell direct vas. Few dealers have said they
want Scout vehicles on their lots, and the National Auto Dealers Association is already preparing a legal strategy to oppose the direct sales, but Scout says it wants to let the market decide, and even if it doesn't get a dealer's license, it can still sell directly to customers. It
would be just like some test the buyers who had to complete their transaction in their home state, but then take delivery of the car in another nearby state. And
another evy startup that's facing similar pushback is a Fela, which is a joint venture between Honda and Sony. It
also plans to sell vehicles directly to customers. Afela says
the entire process from the reservation to the final sale will all be handled through its website, and it said it will have two showrooms in California where customers can take delivery of their car as well. But Automotive News
reports that Honda dealers have already voiced concerned about how Fila will sell its vehicles, and Afila might have a harder time claiming independence from Honda since the Afila Sedan will be built at a Hanta factory in Ohio, and then there's the issue of service. Without dealers on your side,
it will be harder for Scout and Afila to build up a repair network. The slowdown in ev demand put
a big dent in battery maker LG Energy Solutions profits.
Analysts expected the company to post an eleven million dollar profit in the most recent quarter, but LG reported on one hundred and fifty four million dollar operating loss. Many automakers,
including General Motors, one of LG's biggest customers, scaled back EV plans due to softening demand, which contributed to the loss, as well as a twenty percent drop in EV battery prices last year due to overcapacity. Tesla has officially appealed
Elon muss rejected pay package. The roughly fifty five billion
dollar payout was originally opposed by some shareholders who felt misled about how the package was approved by the board and then presented to them. A Delaware judge agreed and
rejected it. Tesla then held a shareholder vote and they
solidly approved the pay package, but then the same judge rejected it again. So now Tesla has filed with Delaware
Supreme Court, arguing the judge took away shareholders' rights to decide for themselves. But here's something that doesn't really help
Tesla's case. A judge has officially approved a settlement where
Tesla board members from twenty seventeen to twenty twenty have to pay the company back nearly a billion dollars in cash and stock options. Some shareholders sued the company, claiming
board members were compensating themselves excessively. Tesla decided to settle,
and while they have to give up the cash and stock options, they don't have to admit any wrongdoing. Have
you checked out the videos we're posting from cees yet.
There's some wild technology we saw there, everything from autonomous boats to your own personal drone, to a robot for your garage that will plug in your electric car so you don't have to. We've got a number of videos
that are already up and more are on the way.
You can find them on the Autoline website as well as our YouTube channel, and then be sure to check out Autoline after Hours later today, when we'll have Alison Malik as our special guest. She helped launch me Mobility,
the autonomous right hailing company that counts Toyota as a major investor, and she now has her own consulting firm called Middle Third. She's got some strong opinions on where
all this mobility stuff is going, or whether it's going at all. We'll also have Norah Notton from Business Insider
on the show. So join John and Gary when it
all goes live at three pm Eastern Time. But that's
a wrap for this show and I hope to see you later today.
Speaker 3: Auto Line Daily is brought to you by Bridge Stone Solutions for your journey, Intrepid Control Systems, over the air engineering boost your game, and by Tajan Automotive Technologies the formula for better mobility, making a life.
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