Nissan is revamping its dealer compensation program after backlash over unrealistic sales targets, while the EU is expected to reverse its ban on combustion engines due to pressure from automakers. The Trump administration's proposed relaxation of CAFE standards is framed as a move for vehicle affordability, but analysis reveals consumers may end up paying more in fuel costs over time. Discussions with David Kennedy highlight the complexities of USMCA negotiations and the implications for Canada. The episode features insights from Molly Boygon on the potential legal challenges to the new fuel economy standards.
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"Today on the show, Nissan revamps its stair-step bonuses after a dealer uproar. The EU yields to pressure from automakers on its ice band, and JLR says it did not in fact fire its design chief."
JLR makes fancy cars like the Jaguar XJ and SUVs like the Land Rover Discovery.
Jaguar Land Rover is a British automotive company that produces luxury cars (Jaguar) and SUVs (Land Rover).
"The European Commission is expected to reverse the EU's 2035 ban on combustion engine vehicles, bowing to pressure from Germany, Italy and automakers battling Chinese competitors."
Europe wanted to stop selling new gasoline and diesel cars by 2035, but the plan might be changed.
The European Union had planned to ban the sale of new internal combustion engine (ICE) cars by 2035, but this policy may be delayed or softened.
"Traditional automakers like Volkswagen and Stellantis pushed for relief amid weak EV demand and fierce Chinese competition."
Stellantis owns many car brands, such as Jeep and Peugeot.
Stellantis is a multinational automotive group formed from the merger of Fiat Chrysler Automobiles and PSA Group, owning brands like Jeep, Peugeot, and Dodge.
Concept
small EVs regulatory category
"Ford CEO Jim Farley says industry needs are not well balanced with EU CO2 targets. The Commission may allow sustainable fuels and create a new regulatory category for small EVs."
A new rule could make it easier for tiny electric cars to meet regulations.
A proposed EU classification that would give small electric vehicles special status, potentially easing compliance and encouraging adoption.
"Ford CEO Jim Farley says industry needs are not well balanced with EU CO2 targets. The Commission may allow sustainable fuels and create a new regulatory category for small EVs."
Sustainable fuels are cleaner energy sources for cars, like biofuel made from plants.
Alternative fuels that produce fewer emissions than conventional gasoline or diesel, such as biofuels or synthetic hydrocarbons.
"So there's a sort of footnote where NHTSA says we actually don't know 100% how automakers reflect these additional investments..."
NHTSA is a government group that makes sure cars are safe and meet rules about how much gas they use.
The National Highway Traffic Safety Administration (NHTSA) is a U.S. federal agency that sets and enforces safety standards for vehicles, including fuel‑economy rules.
"So assuming that these fuel economy regulation loosening does save the automakers money..."
Fuel economy regulation is a law that tells car makers how good their cars need to be at using gas. It helps keep the planet cleaner and saves money on fuel.
Fuel economy regulation refers to government rules that require vehicles to achieve certain fuel‑efficiency levels, often measured in miles per gallon or liters per 100 km. These rules aim to reduce fuel consumption and emissions.
"So let's talk about cafe sort of in its existential state. I mean, thinking about what cafe was designed to do in the first place..."
CAFE is a rule that says car makers have to make their cars use less gas on average. If they meet the goal, they can keep selling cars; if not, they might have to pay penalties.
CAFE is a federal regulation that sets minimum fuel‑efficiency standards for new cars and light trucks sold in the United States. Manufacturers must meet an average fuel‑economy target across their entire fleet each year.
"Come back tomorrow for an excerpt from part two of our exclusive interview with Rivian CEO, RJ Scarinj, who talks about competition from China and the importance of the R2 as the EV makers first mass market vehicle."
Rivian R2 is a new electric SUV that the company wants to sell many of, hoping it will be a popular choice for everyday drivers.
The Rivian R2 is an all-electric SUV that Rivian plans to produce in large volumes as its first mass‑market vehicle, aiming to compete with other mainstream electric cars.
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This podcast is brought to you by Reynolds and Reynolds, the industry leader and automotive technology. Learn how Spark AI Reynolds Unified AI Data Layer can help you unlock your full potential by visiting rayray.com-spark-AI. Welcome to Daily Drive from Monday, December 15th, 2025. I'm Kellan Walker in Las Vegas.
Today on the show, Nissan revamps its stair-step bonuses after a dealer uproar. The EU yields to pressure from automakers on its ice band, and JLR says it did not in fact fire its design chief. Plus, the Trump administration says affordability is the driving force behind relaxing cafe standards. But the fine print might suggest otherwise, our own Molly Boygon joins the show to explain.
Overall, consumers will be paying more over the lifetime of the vehicle, even including that estimated $925 savings per vehicle.
Let's run through all the news you need to know to keep up in the auto industry. Nissan is overhauling its six-month-old dealer compensation program. That's after retailers pushed back, saying the sales targets are unrealistic and have destroyed profitability.
The automakers Nissan One program launched in June. It tied nearly all incentives to one single goal, boosting market share through higher volume. But aggressive targets have forced dealers to discount heavily, pushing October return on sales to less than 1%, about $38,000 per store. Only half of dealers are meeting volume objectives.
Nissan America's Chairman Christian Mune says the company will simplify the incentive structure by early January. The move will likely eliminate the top bonus tier to make goals more achievable, while still targeting 5.5% retail share by early 2027.
The European Commission is expected to reverse the EU's 2035 ban on combustion engine vehicles, bowing to pressure from Germany, Italy and automakers battling Chinese competitors. The move is expected on Tuesday. It could delay the ban by 5 years or soften it indefinitely.
That would mark Europe's biggest retreat from green policies in recent years. Traditional automakers like Volkswagen and Stellantis pushed for relief amid weak EV demand and fierce Chinese competition. But EV makers warned the reversal will further benefit China's electrification lead.
Ford CEO Jim Farley says industry needs are not well balanced with EU CO2 targets. The Commission may allow sustainable fuels and create a new regulatory category for small EVs.
In a strange twist in the saga of JLR's controversial design chief, the automaker is denying that it fired Jerry McGovern despite widespread reports of his termination amid a leadership shakeup by new CEO PBBology.
JLR said in a statement, quote, it is untrue that we have terminated Jerry McGovern's employment. It declined to confirm whether he still works there.
The denial came after auto car India reported McGovern was fired and escorted out of the office. It cited sources inside parent company Tata Motors.
And those are today's headlines. You can find more details on all those stories at autonews.com.
If US President Donald Trump wants to play chicken with the North American economy, the Canadian government should play along.
That's what David Kennedy of our sibling publication Automotive News Canada wrote in a recent column. He joins me now to talk about it. David, welcome back to Daily Drive.
Thanks for having me.
So David, why do you think Canada should indulge President Trump if he wants to turn USMCA into a game of chicken?
Well, it comes down to this. Basically, President Trump, we can expect to ramp up the rhetoric over the next six months as we kind of get into serious negotiations about renewing the USMCA.
And we're already seeing its start with a couple of weeks ago, you know, Trump coming out and starting to threaten to pull out of the USMCA, his trade representative kind of doing the same.
And we're going to see more and more of that as the months get wear into 2026.
But the reality is they probably could have pulled out already if they wanted to. You know, you know, we need six months notice to pull out of the USMCA.
It's been written into the rules since Trump originally signed the agreement back in his first presidency.
So we've known that they could have done it then and they haven't initiated it.
So it makes you wonder why and the reality is there's a lot riding on this for the United States as well as for Canada and Mexico.
There's trillions of dollars in trade between the three countries every year, and it's putting a lot on the line for the US as well as Canada.
Just for automotive, for instance, you know, Canada is the largest buyer of US made vehicles tens of billions of dollars every year.
In US vehicles coming to Canada about half of what we buy by value and about 40% of what we buy by volume or number of vehicles are American.
So there's a lot to put on the line, and it's worth giving him a run for his money and making sure that Canada gets the best deal it can.
Well, in your column, you note that it's telling that Trump hasn't already tried to kickstart the process of withdrawing from USMCA citing RBC senior economist Claire Fan.
Can you explain that?
Sure. Well, she really hit the nail on the head speaking a month or so ago.
And you know, it's been something that's come up in conversations many times and we've all kind of been wondering this.
You know, if Trump hates the USMCA so much, if it is administration hates the USMCA as much as they say they do.
Why not rip it up earlier?
You don't have to wait for the 2026 review.
There's been nothing stopping them from initiating the process previously.
So ultimately comes back to the question, do they really want to get rid of the USMCA or God?
And I think it's worth indulging Donald Trump if he wants to play this game to say, you know, sure, let's go down this road, let's negotiate, let's talk about making it better as you trash it on the sidelines of our negotiation.
That's just fine. We all know it's a little bit of a game when it comes to these negotiations.
Trump's going to paint Canada and Mexico in the most negative light he can.
But the reality on our side of the border is I think most people understand that the US is getting some significant value out of the USMCA.
Otherwise, we would have seen it have been torn up previously.
There's been opportunity and it hasn't happened.
So it's time to move forward. And if we need to change it, great.
I think there's some things Canada would like to get out of it too.
And I think there's probably some things Canada is willing to put on the table to get the deal done.
It's just a matter of, you know, sitting down and hammering it out.
Good stuff. You can find David's column online at autonews.com or in this week's print edition of Automotive News.
David Kennedy, thank you so much for joining me.
Thanks.
Coming up, our on Molly Boygon joins the show to talk about the true cost of President Trump's plan to relax cafe standards.
That's next on Daily Drive.
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Welcome back to Daily Drive. I'm Kellan Walker.
The Trump administration pitched its changes to the corporate average fuel economy standards as a vehicle affordability play.
But the fine print shows that NHTSA expects consumers to pay more in fuel and expense that will top the predicted savings on transaction price.
Our own Jake Nears spoke with Automotive News reporter Molly Boygon about it. You reached her at our offices in New York City.
Molly Boygon, welcome back to Daily Drive.
Thanks for having me, Jake.
All right, so this is a really interesting piece. What surprised you the most when you started digging into that fine print of NHTSA's proposal?
Yes, so I started looking for some answer to the question, given that the fuel economy standards were being loosened, the expectation would be that consumers would be spending more to fuel their vehicles.
And I was looking actually for some previous government estimate of the relationship between fuel economy and fuel savings.
And I actually found much to my pleasant surprise an appendix to the NHTSA proposal that had the math that NHTSA assumed about how much more consumers were going to pay at the pump given these regulatory changes.
So NHTSA did its own math to figure out how much consumers would have to pay more at the pump.
And the interesting thing is the government has been really emphasizing these changes as an affordability play, the whole conversation at the Oval Office, the press release, all of the other materials from the government talk about how for the combined fleet passenger cars and light trucks fleet consumers can expect to save $925 on the sticker price of the vehicle.
Well, it turns out that the fuel cost increased to consumers over the lifetime of the vehicle will actually exceed that savings.
So overall, consumers will be paying more over the lifetime of the vehicle, even including that estimated $925 savings per vehicle.
Interesting, you know, it sounds like NHTSA already had known this, but they didn't, they definitely didn't put it in the press release.
Yes.
So have automakers, regulators, does anyone address this publicly as far as, you know, other than deep of that appendix?
Have people, you know, behind this said anything about why they're celebrating despite the fact that this might cost consumers more?
The automakers have not addressed this publicly. I did reach out to NHTSA and the agency emphasized that to their belief, the Biden administration's fuel economy standards increased to the price of vehicles and this analysis, which is NHTSA's own analysis, does not consider the savings that the Trump administration has enabled for gas prices by paving the way for additional oil and gas extraction.
The caveats that I'll say to that is that number one, there are many complex factors that led to price increases for vehicles.
It's true that some Biden administrations, like for example, if people can remember way back when the personal stimulus checks during the pandemic are thought to have contributed to inflation, but during the pandemic, consumers significantly upsize their vehicles.
And as people will remember, there were significant supply chains, snarls and perch shortages that also increase the cost of vehicles.
And then the other thing I'll say is that NHTSA's calculus actually does include gas prices at their current price, which is around $3 a gallon, and it also includes an assumption that gas prices are going to dip below $3 a gallon in 2028.
So in fact, the analysis actually does include the savings that the Trump administration policies or whatever sort of regulatory decisions have reduced the price of gas.
It's interesting to me, too, because I think I've said this before that saving almost $1,000 sounds great to anybody, especially when you're paying if you're taking out a car loan, you're paying interest on that savings.
But at the end of the day, it seems to me like, you know, with the average vehicle transaction price around 50 grand now that I don't know if $925, even if giving NHTSA all the benefit of the doubt here really moves the needle when it comes to affordability, I won't make use, you know, do any editorializing on that.
It is, I think, interesting to consider that even under the best case scenario for this, this, you know, savings, it still seems like kind of a drop in the bucket.
Yes, that's one thing. And then also there are some really important caveats that NHTSA lines out in its analysis. So number one, as I said, this is assuming that gas prices stay at and then eventually dip below $3 a gallon. We're at a multi year low for gas prices.
So these are based on projections from the international energy agency. And I don't actually know kind of what thought process went into that. The projection is that gas prices will remain low, but if the last few years have taught us anything, it's that you really can't predict with any type of certainty, these types of things.
Another important caveat is that the government acknowledged that in calculating that $925 savings, it assumes that there's a direct relationship between the more expensive fuel economy improvements to the vehicle and the increase in price.
So there's a sort of footnote where NHTSA says we actually don't know 100% how automakers reflect these additional investments or to what extent they reflect these additional investments in sticker price.
And then lastly, the $925 savings is predicated on automakers actually passing on those cost savings to consumers.
So assuming that these fuel economy regulation loosening does save the automakers money, they still have to actually opt to pass those savings on to consumers. So there's lots of kind of moving parts to this. And as you say, best case scenario, the price sticker saving is swamped by the additional fuel cost.
And there are lots of other things to consider about whether that $925 savings actually is guaranteed.
So let's talk about cafe sort of in its existential state. I mean, thinking about what cafe was designed to do in the first place, what is the disconnect between that and sort of using cafe as a cost savings tool.
Yes, so the energy policy and confirmation act is the thing that established cafe, which stands for the corporate fuel economy standard.
And it's described as an act to increase domestic energy supplies and availability to restrain energy demand to prepare for energy emergencies and for other purposes.
So really this, this is all about the preservation of energy resources and the savings of energy resources for the country.
There are some other statutory things that should be considered. So cafe requires that the Secretary of Transportation prescribe the quote maximum feasible average fuel economy level.
So it has to be the maximum that is actually doable. That's one thing and I'm going to come back to that in a moment.
The Secretary also has to consider four things, the technological feasibility so can companies actually do this, the economic practicality.
So basically what is this going to cost consumers and the effective other standard. So it does it is it sort of in harmony with other motor vehicle standards and the need of the United States to conserve energy.
An analyst that I spoke to suggested that the heavy emphasis on the affordability issue here may open the administration up to legal challenge because, as I said at the beginning, cafe is all about the conservation of energy.
This change actually loosens federal fuel economy standards and the emphasis in all of the written materials on affordability is ammo for people who want to challenge the standard on the basis that the Secretary is not considering equally all of these other things and that it's not imposing the maximum feasible fuel economy standard.
Now, speaking of opening the administration up to lawsuits on this, what happens next, especially when it comes to that legal that that likelihood of legal challenges.
There's a 45 day comment period, so different stakeholders will be able to make their comments to the government. It's just a proposal at this point.
So it's likely that the government will take feedback. There are actually three options outlined in the proposal and NITSA has recommended alternative to, which is the one that I've been using for all of these different calculations and that's basically what's going to happen next in terms of the procedure for legal challenges.
I don't have a crystal ball, but given the way that different advocacy groups have approached previous Trump administration regulations related to the auto industry related to different polluting industries that contribute to human made climate change, it's likely that this will experience a legal challenge.
And again, the analyst that I spoke to predicted that this affordability emphasis and what he described as a kind of over indexing on affordability will be an important part of litigation if advocacy groups do do take that tack against the administration.
All right. Well, we will be following it closely. I know you will be Molly. Thank you so much for being on top of this. And thanks for joining us on Daily Drive.
Thanks for having me, Jake.
That's Daily Drive for today. I'm Kellen Walker. Thanks to automotive news executive producer Jake near, as well as our own Erbosh Kakariev is reporting for today's podcast.
We also had reporting from NIT Gibbs of our sibling publication, automotive news Europe.
You can get the latest news on emissions regulations, retail and everything happening in the auto industry at autonews.com.
Come back tomorrow for an excerpt from part two of our exclusive interview with Rivian CEO, RJ Scarinj, who talks about competition from China and the importance of the R2 as the EV makers first mass market vehicle.
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