TCO is the full amount you’ll spend on a car, not just the sticker price. It includes things like gas or charging costs and how much you’ll need to fix it over time.
A concept car is a prototype shown to show what future cars might look like. The type 00 Jaguar was one of those prototypes that looked very bold but may not be made into a real car.
JLR is the company that runs both Jaguar and Land Rover. It makes all their cars and decides on design and production.
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The story is in the auto industry for the past week, looking forward to what's in store in the days ahead. Joining me today are Molly Boygon, tech and innovation reporter for automotive news. Molly, welcome back to Weekendrive. And Richard Truitt, who covers engineering and JLR for us. Richard, welcome back to the show. Good to be here, Kel. So, President Trump is floating the idea of blowing up USMCA in favor of separate bilateral trade deals. Molly, what's going on here?
It has criticized the USMCA in various formats. And the most recent development is that automakers and suppliers are trying to get the White House to preserve the US, Mexico, Canada agreement. And there were hearings in DC on December 3rd through 5th, and they were seeking input from industry players. So the thing that the industry largely is asking for is to maintain the trilateral nature of the deals, rather than having the United States
negotiate separate agreements with Mexico and separate agreements with Canada. So Molly, what are automakers saying and how loud is the pushback?
There appears to be a sort of consensus from auto industry players on this. They claim that if there are two separate agreements with our Northern and Southern neighbors that it will complicate the supply chain and basically cost the automakers a lot of money to navigate those separate deals.
They're really calling for this trilateral deal with all three countries. And I will say that the notable exception to this is the UAW.
So the UAW has supported the more sort of protectionist trade policies that the Trump administration has enacted, including the tariffs. And so while the industry at large is sort of calling for one thing, the UAW is hoping for greater changes to the USMCA.
Now Richard from an engineering standpoint, how hard would it be to rebuild these supply chains?
You would be extremely difficult. When you take into consideration that a lot of the heavy duty parts and components in vehicles like engine blocks and axles are not made here any longer, they're made in South America and Mexico, moving that all back to the US and being able to produce that here economically would be probably impossible at this point.
When you consider that there are tariffs on raw materials, it would just cause an incredible amount of disruption and maybe I don't know that the auto industry could handle it.
Is there any scenario where this actually happens or is this just Trump being Trump?
I think that the past year has taught us that the Trump administration doesn't really view any trade or tariff lever as kind of off the table to bring manufacturing back to the United States.
So I think that the administration has illustrated willingness to listen to the auto industry on various things, including tariff relief and the elimination of stacking of various tariffs.
So I think that especially given the fact that there are hearings happening, the industry is expressing its concern to the administration.
It's just a matter of whether or not how much that is taken into consideration.
Interesting. Now with that said, let's pivot over to the Fed. They cut interest rates. Richard, does this actually matter for car buyers?
You know, I interviewed the dealer council chairman for Hyundai yesterday as part of our upcoming NADA special section and he said in no uncertain terms that any interest rate cut is a big help because affordability is a big deal right now.
The average sticker price of a new car is 50 grand, but I looked at a new story today on CNN and one of our competitors and they quote in bank rate is saying that the quarter point that the Fed cut would only reduce car payments by about $17 a month.
Okay, so that's not a lot, but if you also have a home equity loan, that could be $100 less a month that you would be paying.
So I wonder if that $100 that you'd save on your home equity would go to maybe financing a more expensive car.
I don't know enough about this really to say what the effect will be, but anything that lowers prices at this point is probably a good thing.
Molly, what are your thoughts?
For me, it's not so clear cut because obviously the Fed rate cut will impact new and use vehicle interest rates and dealership floor plan interest rates.
But the larger picture of vehicle affordability is so complicated and there are so many factors that drive the sticker price and the transaction price of the vehicle.
So I'm thinking for example about how the automakers have been observing a lot of the additional tariff costs because they have been able to take an offset from the elimination of fines for non-compliance with the corporate average fuel economy standard.
I'm also thinking about how the automakers have been having to kind of straddle the line for R&D for internal combustion engine vehicles and electric vehicles, then that's been a significant cost to the industry.
And then we also still have unbelievably lingering inflation from the pandemic, you know, February 2022 saw the highest ever year over year, new and used vehicle price on record.
And you know, things have really not dropped significantly from that. So I agree with Richard in that there are some ways that the rate cut will help consumers finance their purchases, but I'm not sure how impactful it's actually going to be at the end of the day on vehicle price.
And what do you guys think this means for 2026? I mean, it's a slight rate cut, but do you think we're going to see people buying cars or more people buying cars?
Well, if you take a look at where the industry is going now, there's a greater realisation that more affordable vehicles are needed.
You're seeing Ford talk about coming out with a universal car that's going to be way under the average transaction price.
And they've had a lot of success with the Ford Maverick, which has started at around 19, but now it's up to around 25,000, but they're still selling a lot.
So I know that that Molly will have something to say about this. The big challenge and tell me if I'm right Molly is to get an electric vehicle into that affordability range because people still want to buy EVs, but maybe they're just a bit too expensive right now.
Yes, EVs are on average around $9,000 more expensive than comparable ice vehicles. So EVs are definitely driving up the average transaction price.
However, the interesting thing to me is that everyone is talking about vehicle affordability and how expensive the vehicles are, and we have a need for more affordable cars.
But at the same time, people are still buying these vehicles. And like you look at the, I got the product mix sort of divide from Cox Automotive for November for a story that I was working on.
In general, automakers are still offering these really expensive vehicles, and as much as people complain, they're still behind them.
So if I'm looking at the product mix and I'm planning and trying to figure out what the next year is going to look like, I'm confused because the discourse is not really matching the ways that consumers are actually behaving.
The flip side of that coin, Molly, is that auto loans are now at the longest they've ever been like eight years and delinquency rates are really high, maybe the highest they've ever been.
So people are like, it's like maybe some sort of drug that they can't get off of you buy a vehicle you can't really afford and then when you can't pay for it, they come and take it from you.
Yes, that's true. That's true. And but it's amazing to me, even that people have the appetite for a loan payment period that long, like that would stress me out.
It's hard to tell the difference between a loan payment for a car and a house payment in some cases now.
Yeah, for sure.
Well, we reported this week that new vehicles that are under $25,000 or less have been flying off dealer lots in a day and a half for less and pickups have the largest inventory at 80 days.
Now, what lessons should product planners take from that?
This is yet another interesting sort of wrinkle because yes, new vehicles below that threshold are extremely popular.
And yet when you look out, when I look out onto the street here in New York, all I see are pickups SUVs and crossovers.
So I don't know where these people are parking their cars or driving their cars. And you know, there's just sort of, again, since the pandemic been an insatiable appetite for a bigger, you know, more robust, more fortified vehicle.
But you know, I guess this is just another signal that planners kind of have to take. I don't know how you feel about it, Richard.
Well, I think a lot of it's a regional thing, Molly. In places like California and other states that are more environmentally conscious, you still see a lot of hybrids and EVs and small cars being sold.
Many Cooper's having a pretty good year. And you know, they're making fuel efficient cars that are reasonably affordable.
So it's probably a lot of a regional thing. You might not see that in New York where, you know, but last time I was there, there was Range Rovers and everything just up and down everywhere.
So it's part of its a status symbol, you know.
Yeah, that's that's an important note.
Good stuff guys coming up. We'll talk about EV registrations, holding up better than expected.
And Richard explains why Jaguar Land Rover's problems keep piling up. That's next on Weekend Drive.
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Welcome back to Weekend Drive. I'm Kellan Walker with Molly Boygon and Richard Truitt.
So Molly, EV registrations in October were down, but not as much as analysts expected. What's the story?
Lawrence Eiliff, our own colleague at Automotive News, spoke to Tom Libby, an analyst at S&P Global Mobility,
who explained that EV buyers, despite being motivated by federal tax incentives that went away in October,
are also kind of a more stable consumer base. These are people who are not as concerned with the sort of fluctuations in price and incentives,
as we've documented in other stories, a lot of electric vehicles, buyers or two or more car households.
And so they're not as likely to swing with the regulatory adjustments that have been happening over the last year.
Another thing is that some of the manufacturers have been offering their own incentives to make up for the electric vehicle tax credit ending on September 30.
So that may have modulated some of the registrations in October, which dropped, but not as severely as expected, as you said.
While legacy automakers saw EV sales tank in many cases, pure EV makers like Tesla, Rivian, and Lucid saw big gains, Richard, any thought on why that is?
Yeah, I've got a couple. What we know about EV buyers is that those who really like EVs are never going back to gasoline powered vehicles.
Some people have tried EVs and were like completely turned off by the charging situation and maybe some early reliability problems, and there are lost cause.
But there's a big consumer base that really loves EVs. Now, I don't think that EVs sales are going to totally crater for a couple of reasons.
First of all, we have a lot of new ones that are still coming out. The Nissan Leaf just landed in. I've driven that car, and it's really good.
You would buy that car just because you like the way it drives, and you not even think about the power crane. It's a nice vehicle, and it's priced right in the sweet spot of where it needs to be.
I think it starts at like 32,000, so there's still new EVs coming out, and that's always going to drive consumer interest.
But then you have companies like Tesla who are absolutely super efficient in getting customers out of their old Teslas and into new ones for roughly the same or maybe even less of a payment.
So I think that EVs sales are probably going to remain respectable, and maybe of course they're going to dip, but they're not going to collapse.
And I'm only I'm wondering if you have any thoughts on that.
This is a really tough one because I do think that the market is kind of giving mixed signals.
You did have this pull through of people taking advantage of the tax credit, and why wouldn't you?
But the numbers from October indicate that that may not be as much of a factor for people as predicted.
And then the other thing is the industry has really suffered because of the strong link between electric vehicles and climate change policy.
And that really turned a lot of people off who I think otherwise would have been interested in electric vehicles from a performance perspective.
For example, if you look at the people who buy Teslas, they're not all necessarily like crunchy granola hippies from California.
They're like all different types of people from all across the political spectrum.
And that's partly because Tesla has this cool factor that's actually completely irrelevant to the fact that the vehicle is less imitative than a gas powered vehicle.
It's because of the performance. It's because it's yeah, like I said, it has this cool factor.
So I really wonder what's going to happen now that the automakers have sort of seen that and there's less of a tie in the public eye between federal electric vehicle incentives and emissions policy and the production of electric vehicles, which all of the automakers acknowledge is key to their long term survival.
So I'm really curious to see if actually that ends up kind of having counterintuitively a positive effect on demand as people who are previously turned off because of the kind of climate ideology tie eventually make their way over to what everyone in the industry says is kind of a better performance, you know, lower total cost of ownership vehicle.
Well, a big factor here was a pull forward of sales ahead of the death of the federal tax credit.
So if you wanted an EV anytime soon, you wanted to buy them before that went away.
Anyone want to go on a limb and predict if and when demand might pick back up if ever.
Let us not forget gas prices have reached a multi year low of an average of around $3 a gallon.
I mean, actually the projections say that gas prices are on average are going to dip below $3 a gallon in 2028 because of in part some of the investments that the Trump administration is making into oil and gas resources and all that.
But I'm really skeptical that gas prices are going to remain as low as they are right now for the indefinite future.
I think there's geopolitical concerns and other factors that are really outside of the administration's control that may ultimately drive up the cost of gasoline.
And I think once that happens, people are going to much more seriously consider some of these electric vehicle options.
I agree with that. But here's one thing I would like to add.
The automakers have already made the investment in EVs and we have a bunch of them on the market and they're not going to all just disappear.
For the next three or four years, the lineups will probably remain fairly steady and sales will probably stay between 5 and 8 or 10% of the market.
I don't think they're going to grow much more than that.
But in the next administration, if gasoline taxes go up and other things affect the price of gasoline, you could very well see EVs starting to grow again.
Cool. Let's pivot over the Jaguar Land Rover and they're mounting problems.
So Richard, you covered JLR. You told me this week that their issues are really starting to add up. What's going on?
Well, Cal, I don't know if it's too early for New Year's resolutions for PB Bellaji who is the new CEO of JLR.
But I tell you one thing, his to do list is really starting to grow.
I think the biggest problem that they're going to have is they've got to do something about their quality.
Consumer reports place them last once again on quality.
And why is that important now because they they fired their their chief of design?
Well, in the past, people have bought Jaguars and Land Rovers mostly Land Rovers now because Jaguars going through this transition.
But mostly Land Rovers because they're great to look at. They're super capable, but they're really neat looking.
I mean, a Range Rover, there's nothing it looks like a Range Rover.
Nothing looks like a Land Rover Defender. It's tough, it's mean, it's great looking.
And people bought it for that reason. Now, Jerry McGovern, who was in charge of design, he truly understood the tradition and the heritage of those both of those brands and was able to sort of with each new generation move it forward so that you still recognized it, but you knew that it was a modern vehicle.
And that is going to be the challenge for the next head of design for Jaguar Land Rover.
And to complicate the situation even more, Cal, is that their design bench at JLR is not real deep.
It looked like Jerry was going to be there forever and anybody who was second or third in succession was never going to get that job, so they left.
And so the company has got to identify somebody who can take over for for Jerry McGovern and still keep the traditional styling cues that people expect, but also marry that with with modernity.
In other words, showing that it's moving forward, but still keep it unique and recognizable as a Land Rover or a Jaguar.
And I think the problem is going to be is that if Land Rovers start to look like every other SUV, you combine that with poor quality and that's just a recipe for disaster.
So I feel sorry for Mr. Velagy, but he's got a big, big job ahead of him and I tell you the jury is out to see how this is going to work out.
Well, was the firing of McGovern the right call or escape goat move?
You know, that's a really tough question because the rollout of the type 00 Jaguar concept car was in some respects, it was, it was a total disaster because everybody from Elon Musk, the Donald Trump piled on on to him with with snide comments on Twitter and elsewhere.
But on the other hand, it got JLR more publicity than the company could have ever bought.
And what got lost in all that was the vehicle they showed was a concept car, not the finished product and concept cars tend to be wildly styled and super extravagant to get attention.
The production version of the car, if it comes out, we don't know it, that's going to come out now because JLR has gone into complete radio silence, but if it comes out, it's going to be way more tone down and way more conventional than that wild concept car.
But I have to tell you, Kel, that the vibes coming out of JLR are very strange right now, they're not really talking to the press, they've just let a bunch of rumors get into the media about is the car going to come out and what's going on with Jaguar and they're not talking about it.
So these are very difficult times for the company and they're choosing to stay out of the press, which I don't know that that's the best strategy right now.
Gotcha. Molly, Richard, thank you so much for joining me.
Thanks, Kel.
That's all for this weekend drive edition of Daily Drive. I'm Kellyn Walker.
Thanks to automotive news executive producer Jake Near for his help on today's podcast.
You can get the latest news on EV registrations, manufacturing and everything happening in the auto industry at autonews.com.
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About this episode
Discussion revolves around the potential overhaul of the USMCA trade agreement, with industry voices advocating for its preservation amid concerns over supply chain complexities. The episode also delves into the impact of recent Fed interest rate cuts on car affordability, highlighting mixed consumer behavior despite high vehicle prices. EV registrations in October showed resilience, particularly for brands like Tesla, while Jaguar Land Rover faces mounting challenges, including quality issues and leadership changes. The conversation features insights from industry experts Molly Boygon and Richard Truitt.
