This is the tech that helps a car drive on its own. It usually uses sensors and computers to “see” the road and make driving decisions. Companies have to choose how much of that they’re willing to put into the cars they sell.
In cars, connectivity means the car can “stay connected” to networks and services. That can enable things like live traffic info, remote features, and software updates without going to a shop.
Here, “market” just means the places where car companies sell their cars. The speaker is saying the U.S. is a key focus because it’s very profitable, and they have to think about what to do in other big regions too.
An auto loan is money you borrow from a bank or lender to buy a car. You pay it back over time with monthly payments, so if the payment is high, it can limit what cars and add-ons you can buy.
Term
average price paid for a new vehicle
This is the typical price people end up paying when they buy a brand-new car. It helps show whether new cars are getting more expensive in practice, not just on paper.
A base model is the simplest, lowest-priced version of a car. Many buyers don’t keep it simple because they want extra features, which often come only when you move up to a higher package.
A safety package is a bundle of extra safety features you can add to a car. Sometimes the feature you want is only available if you buy the whole bundle, which makes the car cost more.
Lane assist is a driver-assistance feature that helps keep the vehicle within its lane using steering or alerts. It’s commonly part of broader safety/driver-assistance packages, which is why buyers may end up paying for more than just that one feature.
A hybrid car uses two kinds of power: a gas engine and an electric motor. It can be more expensive to buy at first, which is part of why the monthly payment can be higher.
An internal combustion engine vehicle is a normal gas- or diesel-powered car. They’re using it as the comparison point to show how much more hybrids cost.
Term
sportier package
A “sportier package” is a bundle of upgrades you can choose when buying a car. It usually makes the car look and feel more performance-focused, and it may include extra equipment beyond the base model.
“Creature comforts” means the nice, everyday features that make driving more comfortable and convenient. Think of things like better seats, nicer interior tech, and improved climate control.
“Electrification” means automakers are moving toward electric cars instead of gas engines. It includes the whole effort to build and support electric vehicles.
“Electric vehicles” are cars that run on electricity stored in a battery. The point here is that the market will eventually want them in bigger numbers, and car companies will have to respond.
“Autonomous vehicles” are self-driving cars that use sensors and computer systems to help with driving. The question is how normal people will experience that in daily life.
“Ride share” is when you request a ride through an app and get picked up for a trip. The speaker is connecting that idea to self-driving cars as a future possibility.
This means the internet-based features in a car—things that need a connection to work. It’s more than just the car’s hardware; it’s also the services delivered through apps and networks.
Apple CarPlay lets you connect your iPhone to the car so you can use certain apps on the car’s screen. It’s one reason people expect their car to work like their phone.
Sergio Marchionne was a top auto executive who helped run a big car company and guide it through major changes. He’s mentioned because he was one of the most influential people in the auto industry at the time.
Carlos Ghosn was a famous car-industry executive who ran Nissan. The host is saying his influence on Nissan was so big that it changed how the company operated.
Person
Martin Vintercorn
Martin Winterkorn was a top executive at Volkswagen. The host is using him as an example of a once-dominant auto leader who is no longer part of the industry’s leadership today.
General Motors is one of the biggest car companies in the world. The host is saying they’re impressed with how Mary Barra has been running and changing GM.
Elon Musk is a prominent tech and car-industry figure tied to Tesla. The podcast is describing how his early ideas about batteries and manufacturing turned into something much bigger.
IPO means a company’s first big step onto the stock market, where regular investors can buy shares. The host is using it as a time marker for Tesla’s early days.
Here, “batteries” means the big rechargeable battery packs that power an electric car. If you can’t make enough batteries, you can’t build enough cars.
A gigafactory is a huge factory built to make batteries in large quantities. The idea is to have enough battery supply to support lots of electric cars.
Lithium-ion phosphate is a type of rechargeable battery. It’s a different “recipe” than other lithium batteries, and it tends to be safer and last longer, but it may store less energy per pound.
Jaguar Land Rover is the company behind brands like Jaguar and Land Rover. They’re being discussed here because they may be using EV technology from another supplier.
Stellanus is mentioned as the source of EV technology that another automaker could use. The takeaway is that companies often share or license battery/EV tech instead of building everything from scratch.
Consolidation means car companies combining or partnering more closely. The idea is that it can reduce costs, but the discussion here says it didn’t happen as much as expected.
A weak balance sheet means a company isn’t as financially strong. If the economy turns bad, those companies are more likely to need help or to merge with others.
GM is the automaker being used as an example in this discussion. They’re mentioned because the hosts say they chose to slow spending rather than keep investing blindly.
A charging standard is the “rule” for how electric cars connect to charging stations. The hosts are saying other automakers publicly agreed to use Tesla’s approach so charging would be easier and more consistent.
“Post COVID” just means the time after the pandemic. The hosts are using it to explain why the EV industry started moving and reacting differently around that period.
A “Skunk Works” project is a special, smaller team meant to move quickly and build new technology without all the usual red tape. Here it’s used to describe Ford’s push to develop the next generation of electric cars.
Jim Farley is Ford’s top executive. The hosts are saying he recognized that Tesla and other EV makers were moving faster, and that Ford needed to change how it does business.
Concept
showbiz
Here, “showbiz” means making a product launch feel like an event people want to watch. The host is saying that kind of attention is hard for most automakers to replicate.
Term
brand, the model
A “brand” is the company identity (like Toyota), and a “model” is a specific car line (like a particular pickup or sedan). The host is saying the way companies communicate affects what people notice and consider.
Toyota is presented as the world’s biggest automaker in the segment, and the host frames its advantage as consistency and predictability for buyers. The key idea is that Toyota advances technology “quietly,” without the same level of launch hype, which affects how consumers decide what to buy.
Concept
moving fast
“Moving fast” means trying to develop and launch new things quickly. The host is contrasting that with Toyota’s more gradual, steady approach.
Term
cars are sold
This is about how car companies actually sell cars to customers. The host is about to talk about different ways of selling compared with the usual dealership approach.
These are state rules that make it harder for car brands to sell straight to you. Instead, they usually have to go through local car dealers that are officially licensed.
Direct-to-consumer sales means the automaker sells the vehicle to the buyer without using a traditional franchised dealer as the middleman. The segment highlights the tradeoff: buyers worry about service access and pricing when there’s no dealer relationship.
Scout is mentioned as a newer brand that’s working on a direct-sales approach. The discussion is about how that changes buying and service compared with traditional dealers.
This is about what it’s like to use a dealership for repairs and maintenance after you buy the car. The host’s point is that a great dealer makes service easier and more trustworthy, while a bad one can be frustrating and expensive.
Carvana is a company that sells cars online and makes the process feel more convenient than going to a dealership. The host says people still want a place to go when something breaks.
The retail process is the whole set of steps for buying a car. The host is saying Carvana’s way of doing those steps makes people more comfortable buying without the usual dealership experience.
A test drive is when you drive the car yourself before buying it. The host is saying that people used to think you had to test drive, but that mindset is changing for online car buying.
Term
refactoring
Here, “refactoring” is being used like “fixing up” or “getting the car ready” so it meets a consistent standard. The host says that consistency helps Carvana sell more cars.
Tariffs are taxes on imported products. When they apply to cars or parts, they can make imports cost more and force companies to adjust where they build and buy components.
These are government rules that push car companies to make cars use less fuel. If the rules get stricter, manufacturers have to redesign cars to be more efficient.
Concept
whipsaw back and forth
It means policies keep flipping around quickly. For car companies, that’s a problem because they need stable rules to plan what to build years in advance.
USMCA is a trade agreement between the U.S., Mexico, and Canada. It affects how car parts can move across borders, which can change how companies plan where to build and source components.
EVs are cars that run mainly on electricity from a battery. The point here is that if policy changes, companies may have to change what kinds of cars they plan to build.
Hybrids use two power sources: a gas engine and an electric motor. They can help reduce fuel use compared with a purely gas car, especially when regulations are changing.
Deregulation means the government is trying to remove some rules. In cars, that can mean fewer required features or standards, which may change how much cars cost and what companies choose to include.
Driver assist tech is software in the car that helps you drive. It can warn you or even step in to prevent mistakes, like helping with lane drifting or watching your blind spots.
Blind spot monitoring is a feature that watches the areas next to and slightly behind your car that you can’t see well. If another vehicle is there, it alerts you so you don’t change lanes into it.
US specific content means a policy that pushes automakers to use more parts or materials made in the United States. That can force suppliers to change where they get components, which can affect pricing.
Volvo is a well-known car brand from Sweden. The host mentions it briefly to clarify that the U.S. situation isn’t as simple as “no Chinese influence at all.”
Geely is a car company from China. The host mentions it to show that Chinese brands are now easy to find and test drive in other countries, not just in China.
Great Wall is a Chinese car maker, especially known for SUVs and trucks. The point in the conversation is that multiple Chinese brands are showing up in the same places where people can test drive regular mainstream cars.
“Quality gap has closed” refers to the shift where Chinese-brand vehicles have improved enough that their build quality and overall refinement are closer to what buyers expect from established automakers. The speaker argues this reduces the historic reason to avoid Chinese cars.
“Consumer 101” just means the simple, everyday reasons people buy things. Here, it’s basically: Chinese cars cost less and are good enough now, so more people are willing to buy them.
“Luxury auto” means expensive, higher-end cars—usually with nicer features and a more premium brand image. The speaker is saying Chinese brands have had a harder time winning in that top tier.
Mercedes is a well-known luxury car brand from Germany. The host mentions it as an example of the kind of “premium” buyer Chinese brands are trying to reach.
In this context, “influencers” are people who post car content online and can sway what others want to buy. The host is saying car companies increasingly market through them, not just through newspapers and magazines.
Antonio Filosa is an automotive executive referenced here for his communication and interview style. The host says he previously worked at Jeep and now leads Stellantis, and that he gives thoughtful answers when asked questions.
Jeep is a well-known SUV and off-road vehicle brand under the Stellantis umbrella. In this segment, it’s used to describe Antonio Filosa’s prior role before he moved to a top leadership position at Stellantis.
The Ford F-150 Lightning is a pickup truck that runs on electricity instead of gasoline. It’s meant to do normal truck jobs, but with an electric motor and a battery you charge at home or at a public charger. People talk about it because it shows what an electric truck can be like for everyday driving and work.
Bob Lutz is a well-known former auto executive. The host is saying he’s the most fun person to interview—someone who’s entertaining and easy to talk to.
LIVE
The automobile is one of the most important inventions that revolutionize the modern world.
In America, the rich history of car culture runs deep.
Technology continues to shape the future of the industry.
Jason Stein is here to share the stories of people passionate about cars,
from industry leaders and innovators to car-obsessed celebrities.
Buckle up as Jason takes you inside the boardroom, onto the track,
and around the bend on Cars and Culture on SiriusXM Business Radio.
Welcome into episode 257 of Cars and Culture with Jason Stein,
here on SiriusXM Business Channel 132. It is wonderful to have you along for the ride again with us.
From assembly plants and earnings reports to autonomous vehicles, electric vehicles,
tariffs, and the personalities leading the world's largest automakers,
few journalists have had a front-row seat to the transformation of the auto industry,
quite like Phil LeBeau. For more than two decades,
Phil has been one of the most trusted voices covering the automotive business.
and industry crisis, broken major stories, and helped millions of viewers understand
not just what's happening in the car business, but why it matters.
And what makes Phil unique is that he covers this industry from every angle.
He understands Wall Street, he understands manufacturing, consumers,
perhaps most importantly, he gets that the automotive industry never stands still.
Today, we're going to pull back the curtain with one of the industry's most recognizable names.
We'll talk about the stories that surprised him the most, the executives who have left the
biggest impression, what he's learned covering periods of enormous disruption,
and where he believes the industry is headed next. We'll also discuss electric vehicles,
software-defined vehicles, tariffs, consolidation, the rise of China.
From the newsroom to the boardroom and everywhere in between, this is a conversation
about journalism, leadership, and one of the most dynamic industries on the planet.
I'm Jason Stein. This is Cars and Culture, and my guest is CNBC
Emmy Award-winning correspondent Phil LeBeau. Hi, I'm Phil LeBeau, and this is Cars and Culture
with Jason Stein. For more than two decades, he's been one of the most recognizable,
trusted voices covering the automotive industry. I'm thrilled to have him on my program.
He's on the other side of the microphone, if you will. Phil, it's great to have you.
It's great to be here. I'm glad to be a part of this, Jason. I've listened to the show
for a long time. I've enjoyed it. So when you said, hey, you want to come on, I thought, fantastic.
Well, wonderful. And I know you're always immersed in all kinds of things,
deadline-related and or not. But let's start with the industry as a whole,
because we don't get a lot of folks on the program here who know as much as you do about
the industry and can talk about it from different angles. They always say, Phil, that
this now is the most dramatic time in the industry, and that seems to be sort of a rolling five-year
narrative. Right. But it is, isn't it? It is. If you think about all the things that are happening
right now, if you are an automaker, if you're an auto dealer, if you're into the technology
that's out there right now, there are so many cross currents that it's really hard to say with
any certainty where we are going to see this industry. Let's just say by 2030. Let's start
first off with the automakers. Are we going to see the same type of vehicles being sold in 2030
that we see right now? Probably very similar, but they're feeling the pressure, especially when it
comes to things like autonomous vehicle technology. How much of that do you roll out to the vehicles
that you want to sell to the public? How does connectivity fit into that? At the same time,
where is your market? It's okay to say the U.S. is the market that we're focused on because it's
the largest in terms of being the most lucrative. It's not the largest relative to China, but
if you are an automaker, okay, beyond the U.S., what are you going to do? How are you going to
deal with the Chinese competition if you're in Southeast Asia or if you're in Europe? Let alone
if you're in China. We all know what's happening there. I think from the perspective of the
automakers, there's so many things that are happening that it's unclear exactly where this
industry is going to be. We have a pretty good guess, maybe by 2030, but certainly by 2035.
I don't think it's going to look anything like it looks right now. Then you take it from the
consumer standpoint, which many of our listeners are on the other end of those transactions.
Yep. There are more choices, but the expense levels and the affordability problem has never
been larger than what it is right now. They're dealing with all the implications of external
decisions that are made, decisions that have nothing to do with the consumer, whether it's
regulatory changes or whether it's wars in the Middle East. A consumer says,
I've got all of this great choice, but it's also challenging from their perspective.
I think the biggest challenge is price. I mean, you look at the average monthly payment for an
auto loan right now. It's at a record high, $770. That's the latest data from Experian. I
bet you a year from now, it's probably going to be up closer to $780, $783. It doesn't move a ton
when it moves higher, but it keeps edging higher. That's because the average price paid for a new
vehicle is just under $50,000. In fact, I was talking with Aaron Keating at Cox Automotive
about this. The automakers keep talking about affordability and I get it. I understand what
they're doing. Some of that is marketing. Some of that is also realizing that the consumer wants
a lower, more affordable vehicle. Yet at the same time, when these people go out to the showrooms
and I've been out there with friends, I've been out there shopping myself, you don't buy a base
model, you and I both know that. As a result, you add in a safety package. All right, maybe that's
another $2,500, $3,000, depending on what you want. Even though you may only want lane assist,
you got to get it all. Then you add in things like I want a hybrid model instead of internal
combustion. That's another $4,000, $5,000. On average, that's how much more expensive they are
relative to an internal combustion engine vehicle. Then one other thing that I think is
interesting and Aaron mentioned this to me last time we were talking. Increasingly, people are
saying, well, I want this vehicle to be outfitted a certain way. Maybe it's a sportier package.
Maybe it's the certain creature comforts that we're used to. Fedliners is a good example.
I mean, it used to be, okay, maybe I'll get them. Maybe I won't know. Now, people increasingly,
and I've heard this from dealers, they come in. I want this, this, and this. I don't blame them.
You're spending that much money. You want to make sure the vehicle is the way the vehicle
should be for you. Yeah, so many things to deal with. Also, we've gone from electrification
being front and center, that multiple automakers were going to go completely electric.
The consumer didn't show up to that party. Now, as a result, because of all the decision making
that has gone into the electrification effort that's now been pulled away, that development
intellectual property has been halted or stalled, if you will, for some automakers for years to come
as they refocus on the internal combustion engine. And you and I both know what's going to happen.
The world is going electric. Whether we like it or not in the United States, the world is going
electric. And that means automakers, particularly the Chinese, are advancing their EV technology,
their IP. Everything is moving at an incredible pace. And the automakers in the US, they're not
asleep at the wheel, but they're restricted. And you can't blame them because their shareholders
are saying, well, why are you focusing on that when you should be focusing on returns for us,
the shareholders? And I'm not sure when it'll happen, but you and I both know there will come a
day, whether it's 2030, 2035, at some point, there will be a real demand for electric vehicles. And
I'm curious when that's going to happen and how the automakers respond. From electrification
to software to find vehicles to AI, to autonomy, connected services, which trend do you feel is
genuinely transformative? And which trend receives maybe far more attention than it deserves?
Well, I think autonomous gets the most attention. And I wouldn't say that it's not deserved,
but I am curious to see what happens to the average consumer when it comes to autonomous
vehicles. From this perspective, there's no doubt that autonomous ride share or ride hailing,
that's the future. You see it with Waymo. Clearly Tesla has the RoboTaxi that's being
developed with the CyberCab. Uber is increasingly spending money on autonomous ride sharing.
That, I think, is going to take hold relatively quickly. I wouldn't be surprised if it takes
hold by 2030, 2032. You're already seeing it in certain cities. But what I'm curious about is,
does that put into vehicle ownership? I'm not so sure it does. I think at the end of the day,
what it cuts into is the human component of ride sharing. The Uber drivers that increasingly,
because the cost keeps coming down, a company like Uber or Lyft or anybody who does ride share
or ride hailing, and those are really the two primary ones, or Waymo gets into it,
because the cost keeps being cut lower and lower, that's the market that is most impacted.
I'm not so sure you're going to see people say, well, there's a RoboTaxi. I'm going to get that.
I'm just going to use that all the time instead of buying a vehicle. They might, but I'm not so
sure that's going to happen. And on the connected service side, I mean consumers, you just mentioned
it, consumers want more and more connectivity in their vehicles. And that pace is not slowing
at a time when margins are already rather challenged on the new vehicle side.
There's no going back on technology, but yet the ability for automakers to turn profits becomes
ever more challenging. What is your view on what the consumer will want versus
where the automakers are going to have to position themselves?
I think the consumer wants it all. They want what's in our phone in the car,
and they have a lot of that right now, but I think they want even more of it, Jason. And as a
result, I think the pressure is on the automakers to continue to see how I can deliver more
within the vehicle in terms of that connectivity. And it's come a long ways, and it's a lot better
than it used to be. I mean, you and I both know the times when you would get in a vehicle,
let's say it was a rental car and you'd be like, I don't know. Is it Apple CarPlay? Is it something
else? And you just get frustrated and you say, I'm just going to turn it off and I'll just use my
phone. I shouldn't while I'm driving, but I'm going to look down at it. And those days are quickly
fading away. And so now I think the big question becomes, how do you take that next step if you
are the automakers or the tech companies in terms of giving the consumer, giving the driver, giving
the person in the vehicle that next level of connectivity? And I think that's going to come
relatively quickly. Yeah, I believe you're right. Let's talk a little bit about you. You grew up
in Chicago. Yep. What was the young filibou like? Did you always know journalism was going to be the
bad? Oh, well, yeah, I was bitten by the bug pretty early. I was fortunate enough to work at a
high school radio station. I say work. It was, you know, it was, but it was a great high school
radio station. So I knew right away that I wanted to do this. And then I went to the University of
Missouri study journalism. And I knew I wanted to go into TV. And then from there, I went,
worked in Minneapolis, worked in Wichita, worked in Denver, got my securities license when my wife
and I came back here to Chicago and then CNBC ever since 1999. So I've been doing CNBC now for
27 years. And it's been fun to watch how the auto industry has changed. I also cover aviation
airlines. So it's fun to watch that as well. But specific to the auto industry, it's been fun to
see how much it changes, but also how similar it is now in terms of certain things are the same as
they were back then, then in terms of culture, how different companies position
themselves. And it's funny to see the people who are no longer part of the industry that were so
dominant in the industry. I sort of equate it to the Mount Rushmore of the auto industry. If you
went back 15, 10 to 15 years ago, it would have been Sergio Marchione, it would have been Carlos
Ghosn, it would have been probably Alan Mulally, maybe Martin Vintercorn at Volkswagen Group.
And all of those folks for various reasons in various ways are no longer part of this industry.
Isn't that fascinating? The industry themes continue on, but the players change.
Yes. And the cultures of the company are relatively the same. There may be, with the exception,
you might point out that Nissan has dramatically changed because Carlos Ghosn was such an oversized
influence on that company. So you could make an argument that that has changed. But you look at
a company like General Motors, I'm completely impressed by what Mary Barra has been able to do
in her tenure, not only the length of time that she has served as CEO, but the number of
obstacles, if you will, whether it's from policy, mainly policy, or the shifting dynamics
of the economies around the world. I'm blown away when you look at the consistency of the results
that she and her team have been able to deliver, given everything that has happened.
You've interviewed everyone from Alan Mulally, who used to be the head of Ford to Mary, obviously,
running General Motors. We mentioned Carlos Ghosn, Elon Musk, you have sat with. What has
surprised you the most out of those collection of individuals? Who has surprised you the most?
Well, I wouldn't say Musk, because it was pretty clear early on, and I remember being at the IPO
for Tesla, that he had a vision. I didn't think he had the vision for what he has right now,
but you could tell that it was not simply, I'm going to make an automaker, and it's going to grow.
You could tell that it was five or six levels higher than what anybody expected. In fact,
I remember one time, we were out in Fremont, and we were talking with him, and he's like,
we don't have enough batteries. We don't have enough of what we need to power us.
I have a vision that we're going to need what I call a gigafactory. I remember going on CNBC
and doing a report saying, well, he wants a gigafactory, and he wants all of these batteries
to come out of it. The anchors were like, well, that's interesting. Is that going to give him
enough batteries for the vehicles he has? His vision was way, way more advanced than that.
He's the most interesting in terms of watching the growth, watching the change,
and watching how he has developed and what he has become. I don't think anybody could have
anticipated that he would grow, and Tesla Elon incorporated, if you will, and all
of the ancillary companies, that it would become what it has become. I think that he's the most
surprising. I think when I look back at executives, and I was talking with my producer about this
not too long ago, executives who really left an impression in terms of understanding how the world
is, where it's headed, and how to address it, I think Sergio is the one that stands out. I think
he was spot on early on when he said, look, we're all killing ourselves to develop
batteries. If we were smart, we'd all work together on battery technology, and therefore,
we could focus on the top hat, if you will. What makes your vehicle different and branding
different? Now, I understand there's going to be somebody who listens to this and says, well, it's
not just that you can't use the same battery, look at the difference between lithium-ion,
lithium-ion phosphate, all of the different components in there and how it's changed now,
and those people are correct. But early on, I think Sergio had the right approach in terms of saying,
we should be cutting our costs in and working together.
Coincidentally, ironically, news today that Jaguar Land Rover is going to be possibly using
Stellanus technology. I mean, Sergio's vision comes true, and I agree with you. He talked about the
amount of capital that is wasted and his massive confessions of a capitalist junkie.
Larger than life, he also talked about consolidation within the industry.
Which really hasn't happened.
Right, exactly. We've seen that in fits and starts installs, right?
Right, and I think, you know why I don't think it's happened is because it used to be,
you'd have a recession, and then the weak balance sheets would be exposed, and the
automakers would sit there and say, oh boy, well, I need to find a dance partner,
because we got to make sure that we can be okay. And that's what would happen for consolidation.
After 2007, 2008, I think a lot of automakers said, oh no, I'm going to make sure that my balance
sheet, I'm never going to get bitten again by a bad balance sheet. And everybody carries a lot
more cash in capital than they ever did. And as a result, they can write out the bad storms.
And they're much quicker, much quicker at saying, oh no, we're going to cut back. We're not going
to overspend. And you saw that with this latest reversal when it comes to EVs. I mean, GM and
Ford could have easily said, well, look, someday it's going to come to fruition. Therefore, we're
going to keep spending this money, and then we're going to have the factories ready to go.
They're no fools. They realize that you've got to save your capital much quicker now.
And so I think that's the biggest thing that is the reason we don't see consolidation
that we've seen in the past within the auto industry.
Let's go back to Musk for a minute. Looking back, what do you think, Phil? What did the
traditional industry underestimate about Tesla? And I remember a decade ago, in every
boardroom conversation with every sea level executive in Detroit who I would talk to,
they would all ask about one person, and it was Elon Musk. What did they underestimate
about what he was doing? The speed and the gumption to try something different.
And so often I would have executives, the naysayers, I would call it, not the CEOs,
because I think they knew early on. They were like, I don't know, he's got something here.
Maybe they didn't see that it would develop the way it has, but they knew it was the real deal in
that regard. I think that the speed and the way in which Tesla said, we're going to try this.
And too often, I think the industry was stuck in the traditional methods, and as a result,
they underestimated him. Until there was that period, and I can't remember exactly when it was,
it all kind of runs together post COVID. But remember when you had a slew of automakers,
they would go and they'd do these joint press conferences with Elon where they were like,
we're going to change our charging standard to the Tesla charging standard. And it was like one
after another over a three or four month period. And it was very clear. I mean, if it was a wrestling
match, you'd have a ref going, boom, right there, he's pinned you. And that's an example of how Tesla
was just much faster, much quicker out of the gate. And it's ultimately led to Ford doing
things like the Skunk Works project out in California, which is going to give us this next
generation of electric vehicles. Jim Farley, I think at some point was one of the first to come
out and say, they're moving faster than everybody else. Not only are they moving faster, but the
Chinese are moving faster. And by golly, we better catch up with them. And if we can't do it all,
we got to figure out some way to, you know, we just can't do business as normal.
Is Tesla still primarily an automotive story or has it become something else entirely?
I think it's a tech story. I don't think it's an auto story. And look, I mentioned this to
a friend of mine. What we saw happen with the S and the X, I'm not sure we'll see you with the Y
and the three, because I think you need those kind of mass market vehicles there.
But I don't think selling to the average person is the priority for Tesla. I really don't. I think
Tesla has become a giant manufacturing operation that he is already using in Fremont to manufacture
humanoid robots when that actually starts happening. And I think ultimately he will pivot
to what he thinks is far more lucrative, which is the RoboTaxi, assuming that they can get the
level of adoption that he says they will get, which by the way, I think everybody understands,
he will make these prognostications and they're going to be wrong in terms of the timeline.
He may not be wrong, though, in terms of the ultimate influence in terms of where they are,
because you and I both remember, I think it was 2019, he said, I'm going to have a million RoboTaxi
on the road next year during the analyst call. And he does that. The question becomes,
do you ultimately sit there and say, I'm not sure there are going to be RoboTaxi. I think we all
realize we're going to see autonomous rideshares growing significantly. And now the question
becomes, is it going to be as widespread as he envisions? What has Musk changed permanently
about the way automotive companies operate and probably communicate?
Well, definitely on the communication side. I mean, that's been interesting to watch,
and I'm sure you've noticed this as well. Remember back in the day when it was all about
the auto shows and all about the big reveal, the big moment when you would have the executives come
out, you would have stars. I remember being at the Detroit Auto Show and Jay Leno was there.
I believe he was there for Fiat Chrysler. You would have recording artists, big stars,
introduce vehicles. And it was a production. It was a deal. You had CNBC there. You had all
the business news networks there. You had the regular larger TV networks there as well.
And I'll never forget when Elon Musk said, I'm just going to start introducing vehicles and
we're going to hold our own and we're going to do a webcast. And more than a few executives said
to me, well, how come we introduce a new pickup truck? Why aren't we getting the same attention
that Elon Musk is getting when he introduces a new vehicle? And I said very matter of factly,
I said, no offense, you're not Elon Musk. And that doesn't mean that you're not a great executive.
It doesn't mean that you don't have a vision. It doesn't mean that your company doesn't have
a product that people should know about. But there is an element of showbiz and interest
that comes with Elon Musk that nobody else in the auto industry can generate.
Nobody can get eyes to watch the way Elon can. And yeah, sometimes you would watch and you'd
say, yeah, that's typical Elon. He's saying things that are not going to come true or they will come
true way down the road, but you watched. You watched because you weren't sure what was going to happen.
So he's changed how companies communicate. They now realize we've got to go straight to the consumer
and that's our biggest chance to influence the brand, the model, what people are seeing.
That's his influence on the communication side. On the manufacturing side, it's all about speed
and technology. I think he has forced all of them to realize the traditional auto
that we've seen for decades, it's already changing and it's got to change even more,
even faster. And now it's forced everybody to try a new approach on what they're building
and what they're selling. And yet the most interesting thing, Jason, if you look at all of that,
who's the biggest automaker in the world right now? The steady Eddie, Toyota. And you know why
they're the steady Eddie? Because all of my friends and neighbors and people I talk with
say the same thing. I know what I'm getting with Toyota and I don't have to question it.
And now that's the counter to Elon in terms of moving fast. It doesn't mean that Toyota is stuck
in the mud. You and I both know they're advancing technology, but they quietly are upgrading,
quietly always advancing and moving forward. It may not get a ton of hoopla, but that's what they do.
Well, he's also changed the way that cars are sold and we've had Scott on this program talking
about Scout. We had him on a couple of years ago, early, early days. If I'm someone listening to
this program and I'm shopping for a car and I scratch my head and I say, well, Tesla's doing
it directly. Scout wants to do it directly. Rivian's handling it on their own. Why can't everybody?
Well, you know the franchise laws. I mean, that's the biggest reason.
And I always say to people, who are the biggest supporters of politicians in state politics?
It's automobile dealers. Whether it's your local representative, your state senator,
whoever it is, they are large backers of politicians. And these laws have been put in
place and have been in place for years. And as long as those laws are in place,
you're just not going to see Ford selling directly to consumers or General Motors
selling directly to consumers. And yes, you have Tesla, you have Rivian. Scout is in the
process of going through that right now. And I think what's interesting there is
they are selling directly. But the number one question I get from people when they're considering
buying a Tesla or Rivian or any vehicle, as opposed to going through a dealer is,
how do I know when I need service that it's going to be there?
Right. And you and I both know the really good dealers are really good with their customers.
And yeah, there's a lot of crappy dealers out there. Not all of them are, but the ones who are
crappy, you know, unfortunately, you don't know it until you you've gone through it.
But if you get a really good dealer, you know it and you go back to that dealer because you like
the service, you like the treatment. And I understand and my kids are old enough as they're
buying their own vehicles that they're like, well, nobody does that anymore. We want to just do it
online. And that's the appeal of Carvana. But at the same time, when something goes wrong,
you want that dealer who you can you can turn to and be like, I know that I'm going to get
decent service. And I know that I'm not going to, you know, pay an arm and a leg that I'm not
really sure I should be paying an arm and a leg for. And that that's the value that you still see
with GM Ford Toyota, all of the traditional automakers, it's more of a strength and a hindrance,
in my opinion, the dealership networks. Now, having said that, you and I both know,
you got to work at it. And not every dealer has that commitment to be really a great dealer.
For the break, we'll continue my conversation with CNBC's Phil LaBeau. To see more cars and
culture interviews, visit the Cars and Culture YouTube channel. Subscribe, comment, check out
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Business Radio. Walk us back to Cars and Culture on SiriusXM. I'm your host, Jason Stein. Now,
the continuation of my conversation with Phil LaBeau. To see more Cars and Culture interviews,
visit the Cars and Culture YouTube channel. Subscribe, comment, check out hundreds of
conversations with the creators, collectors and culture makers who are driving the industry forward.
We've talked on this program with Ernie Garcia, junior, the CEO of Carvana.
What's your opinion of Carvana and how Carvana has changed the world?
I'm blown away by what they do in terms of the retail process. Where it's hit me is now
I have older either relatives or friends, people who are in their early 70s, mid 70s,
maybe the last vehicle they buy, but they're going through Carvana because they've heard
enough about it. They've heard enough good things about it that they're comfortable doing it.
I think when Carvana first started, there was a lot of perception, but there was a feeling
that it was only young people who were going to do this. It was somebody who was 22 who was like,
sure, I'm going to buy this vehicle and I don't need to test drive it. I think that's gone.
I think that really, really has gone away. I think their consistency in terms of the vehicles they buy,
the refactoring of them and making sure that they are ready and deliver the quality that people
are expecting, I think that consistency is a big reason why their sales continue to grow.
Now, the interesting thing is what they're trying to do with new vehicles and with dealerships.
They have a chance here to get it right. If they do get it right, I think there's a whole market
of people who are going to say, sure, I'll buy through Carvana because I know that Joe Smith
dealership down here run by Carvana is a good dealership. That's going to be the big challenge
for Ernie and his team. How do you make sure you have a good dealership? I would suggest to them,
I would go and study who the best ones are and figure out how they got the group of dealers
together that are really, really good. Most of the time, what you find is that
they went, those who are really good, the good dealership networks, they work really hard at it.
They work hard to make sure that they have the right owners who have the right approach to it.
You've been around so many different models of business models,
Phil. You've been around so many different leaders. How much of this industry ultimately
comes down to leadership versus product? A lot. I'd say the majority of it has to be that because
if you don't have a good leader, that good product eventually becomes a mediocre product.
Mediocre product becomes kind of a crappy product. You start to hear people say, yeah,
I bought one of those. Man, was that a mistake? You and I both know we've seen the brands
that are really successful and we've seen the brands that have been successful,
and then they go into a slide. If you've got turmoil or a bad leader, it ultimately gets exposed.
There's no other way around it. You can tell that. If you have a leadership team that is just not
engaged, you definitely can see it across the board. Privately, we would sit there and say,
this person's kind of a clown who's in this particular job. We'd never say that publicly,
but you know that from talking with people in the industry and everybody knows that.
And you can tell that when you see certain brands start to flourish or start to fade.
And it's when they're fading that you realize, well, look, they don't have X, Y, and Z in charge
anymore. The bench is not as deep and it's ultimately reflected in the product.
Let's switch a little bit now and talk about tariffs which have consumed everybody over the
course of the last year. And we've talked about it so many times on this program. How much of
today's automotive strategy is being driven by Washington rather than consumer demand? And I
guess that goes both ways to tariffs as well. I think most of it. I think most of it. And I think
the challenge is for the auto industry, look, there's no certainty. When was the last time we
had certainty within this industry? And you can't tell me that two or three years is not certainty.
We know what two or three years is. Okay, we're going to reverse and we're going to go somewhere
else. And it goes back well into where it really started standing out to me was the going from
the George Bush, the second Bush in the 2000 to 2008 and then into the Obama years and the fight
over fuel economy standards and who should, does California still have that right or should they
have that right? And then you went into the Trump years and it's just been a whipsaw back and forth.
And I feel bad for the executives at the auto companies because they try to as much as possible
make a decision and then, you know, as soon as they commit billions of dollars, Washington's
going to come in and turn around. And ultimately, this is hurting our industry more than anything
else. The lack of a cohesive plan by Washington and by a cohesive plan, I'm talking about something
that's going to stretch out over a number of years, not for two or three years, because there's that
you can't do that. You can't think that way if you're an auto executive. I mean, I know you have
to think that way in terms of, all right, well, let's add a little bit of production here in the
United States because we have tariffs. The suppliers, what are they going to do with USMCA?
And that's where the Chinese auto industry, one of the primary reasons it's been able to grow around
the world. It hasn't had that same level of whipsaw back and forth. I mean, their mantra has been
crank it out and ship it out. Right. Yeah. Yeah. And I understand there are people who will hear
this and they'll say, yeah, well, they're dumping vehicles around the world. That may be. That's a
separate debate. But the fact of the matter is they've not had to sit there and say, whoop,
we're not making EVs anymore. Now we're going to focus on hybrids. Clear direction. Absolutely,
it is. Yeah. I wonder whether we've entered an era where government policy is just as important
as product planning. I mean, the two are going hand in hand. I would agree. I would agree 100%,
which is interesting because you listen to the Secretary of Transportation and he's talking about
deregulation, which is a big push for him and for the Trump administration. And one of the things
that they've talked about is, well, do we need all of the regulations that are in the vehicles
right now? And how much of that is driving up the cost of an automobile? I don't have the
data on this, but I have a strong suspicion. There's very little that is mandated that is within
a vehicle right now. That even if they stripped out some of these things, a lot of what's in the
vehicle in terms of technology, it has been conditioned in us as consumers that we wanted.
So even if Washington said, well, you don't have to have this 8S technology, driver assist
technology, you and I both know that if our neighbors went out looking for it, they'd be like,
I want that. I want blind spot monitoring. It's not mandated by the government, but I want it.
And so maybe I got a little bit off the track there. But my point being, Washington's policy,
it definitely is driving the industry more than ever before. And the ones who are really
feeling it right now are the suppliers, more than anybody else. Because we've been a regional
auto industry here and now there's a chance that it might be, no, you got to have a certain number,
certain amount of US specific content. And what that does to the auto suppliers is waiting to see.
Yeah, you've covered so many manufacturing stories, too. I wonder whether we're entering
renaissance for American manufacturing or merely talking about one. What's your view there?
I think it's a bit of a renaissance. But I don't think, you know, you hear Howard
Letnick talk about and the president said, we're going to see scores of jobs and
manufacturing plants come back to the United States. Where are they? There hasn't been a new
manufacturing plant announced since the tariffs were first announced. There has been an increase
in production in the US, because all the automakers realized, okay, well, we've got a little bit
extra at our Kansas City plant. How do we pump out more from there? And I get that. That's part
of what they do. And they should do that, because that's what the president is pushing everybody
towards. So at the end of the day, I think that Washington's policy is really what is driving
so many of the decisions for the automakers and for the auto industry. And that is front and center
right now. Let's go back to a subject that we talked about just briefly. And, you know, we've
had Michael Dunn on the program. Of course, China expert drew a lot of attention being on the show.
He is fantastic. And what is not talked about in many dealership lots or
showrooms or even in, you know, Main Street, how concerned should Americans be about
China's growing automotive influence and even the 49,000 units that are in Canada now or will
be allowed in Canada this year, every sector of the world, every portion of the industrialized world
now has a Chinese product on its streets, except the United States. And I'm not talking about Volvo.
Right. Well, two thoughts here. One is went down to Chile two years ago. And the reason we picked
doing reports in Chile was because it doesn't have any auto manufacturing. So there's no home team.
We're going to buy these guys because they manufacture here. Everything is imported.
And their dealerships in Chile are kind of cool. It's like a food court. And you can go around from,
you know, they're all within one area. And you can go around, you can test drive a Toyota.
And then right next to it, you can have a Geely that you're going to test drive.
Then you could have a Ford. Then you could have a Great Wall. They're all right there.
Every person that we talked with was interested in buying a Chinese vehicle. Why?
Because they were 34 or $5,000 cheaper than a Toyota or a Ford or a Nissan.
Anything that was not manufactured in China was dramatically cheaper. And the quality,
and you've seen this, Jason, when you go overseas, the quality gap has closed. So as a result,
when you go overseas, I'll have people every once in a while say, wow, I couldn't believe it.
I was somewhere in the Caribbean or I was in Europe. And all these vehicles
were brands I'd never heard of before. They were Chinese. And you know what? They were pretty good.
Yeah, that's because they've closed that gap. And so the consumers around the world
are buying Chinese vehicles in part because the quality is almost as good as what you see
from the traditional automakers. And the price is better. And it's consumer 101. I don't care
where you live, whether you're in Chile, Portugal, whether you are in Thailand,
if the price is cheaper and the quality is almost as good, you're going to go with the
cheaper price. Generally speaking, the one area where you can make an argument where the Chinese
really haven't cracked the nut is luxury auto. You can make an argument that you still have the
luxury consumer who is going to buy the Mercedes or the BMW or a Cadillac, whatever it might be.
But I think that's the influence that you're seeing with the Chinese overseas.
In terms of Canada, we were just there talking with people and talking with some dealers who
are hoping to sell Chinese vehicles once they're imported. The average person that we talk to on
the street, we're up in Halifax, they were for it. They've heard about these Chinese EVs. They're
like, yeah, I want to see one. And if it's the right price and it's good, I'll buy it.
If it's the right price, exactly, because that's what it all comes down to, which is no
different than the way it was in the 1970s with Toyota or with the Koreans in the 90s, 80s and
90s. It's the same thing. Yeah. Just a couple more things. Media and journalism. We didn't
even talk about this. And this is such an enormous part of culture as well as cars.
When you started covering autos, how different was automotive journalism?
Considerably different. The automakers, they kind of only dealt with the traditional media.
They realize now that the media landscape and some of it is journalism. Some of it is just
influencers. That's a big part of how they want to get their message out and they want to communicate
with the audience out there. And I get that. I mean, they're no different than any other company
and any other industry. And I would do the same thing. I think where it's a little bit
more interesting is that it changes so rapidly and so fast that stories now, the speed at which
they are developing and you were talking with executives and story will blow up and then it's
gone. They don't really kind of linger like they did in the past. And if you look at a good example,
as you remember, the Goodyear tire with Ford and that whole scandal. And it led to Jack...
Yeah, Firestone. I'm sorry. Nice at Goodyear. I meant Firestone. And it meant and it led to
Jack Nasser getting booted as the CEO. I mean, that kind of bubbled and
and then it finally crescendoed and that was it. I think if that kind of a scandal happened today,
it'd be much more accelerated. I just think that's the world we live in within the speed of journalism.
Yeah, it'd be accelerated and it would also be over and people would be moving to other things.
Yeah, 100%. Yeah. Do you think executives are more guarded now or are they more transparent now?
I think they're a little more guarded. Just a little bit more guarded. I think that they're...
I think some of that is realizing how quickly things can fly around and something could become
a bigger deal than it is. And so that's why you see automakers and not just them, but I think all
companies, if I can get my message out through social media and I don't have to have a reporter
asking me questions, I can control the messaging. And that's understandable. I understand exactly
why companies are thinking that way, which makes it all the better when you have an executive.
Antonio Filosa is a good example. I've really enjoyed getting to know him first when he was at
Jeep and now that he runs all of Stellantis. If you ask him a question, he'll give you a thoughtful
answer. He will give you a thoughtful answer. And I do think that that resonates with viewers,
readers, people who see it. Let's finish with a bit of a lightning round. Just a couple of names
that come to mind as I ask you some of these questions. Most underrated executive.
Wow. Most underrated. I would say, and this is going to sound strange, Mary Bara. And you know
why? She's not a me, me, me, look at me. She is, I'm going to deliver.
And that's what's so impressive about what she does. And so I'm thinking in that regard,
she is underrated. I bet you, if you went and talked to most people who are looking at a GM
vehicle or even, you know, they kind of have a cursory knowledge, they may not understand who
the CEO is of General Motors and look at their profits and look at their growth. I mean, that's
me coming in from the business journalism side of things. So I think in that regard,
she's one of the most underrated. Best interview that you've had, Phil?
Best I've ever had. Well, if the one in terms of fun, Bob Lutz, you can't beat Bob.
Back when he was, you know, I'm going to tell you what I think. He's great. I would not say that
Elon Musk was the best interview ever because first of all, it's kind of a halting conversation when
you talk with him. There's a lot of pauses. Things can kind of get derailed and go off in
different directions. Well, they can. I mean, sometimes that's fun. I mean, I was going to end
or go on for another two hours when I was with him. Yeah, that's the thing. You're never quite sure.
I've always enjoyed going. He was, he's always been a really fun one and Sergio. I mean, those
guys, they'll call it like they see it. And that those are the ones who did you think I was going
to say? I thought you were going to say Sergio Marchione, actually. Yeah, Sergio. I put him up
there. He's, he's on, you know, every journalist has sort of a wall of who's the people I really
enjoyed interviewing, getting to know. He's on that wall for me without a doubt. It was really
sad, you know, when he passed away. But I love the fact that he would just, he would call it the
way he sees it. Yeah. A story that you wish you'd gotten first. Oh boy. There's a ton of them because
you know, there's so many really good auto reporters around the world. And when you see it,
you know it and you're like, wow, that, that's really good. So I, nothing really jumps out at
me. There's not one where I sit there and say, man, I should have had that. But there are ones
where you read it and you read a scoop and you're like, hats off to them. Great job. Yeah.
Final thing, one word to describe today's auto industry, Phil.
Uncertained. And I know that's not a sexy word, but it really is uncertain.
There's no way of predicting aside from, yeah, look, I started by saying 2030. By 2030,
is it likely a Toyota is the largest automaker in the world? Yeah, probably. Is it likely a
General Motors is as profitable right now as they were? Yeah, probably. But there's the uncertainty
that is swirling around. Here's the thing. I don't get a sense of comfort talking with
auto executives that I may have gotten 20 years ago. I think everybody's a little bit like,
yeah, I think this, not entirely sure. Or when I talk with dealers, you know, I used to talk with,
and there's a group of dealers that I'm in touch with on a regular basis,
talk off the record, give me your thoughts on what's happening in the industry. 20 years ago,
some of the dealers that I still talk to now, who I talked to back then, they'd say, yeah,
business is really good. Things are fantastic. People are coming in, blah, blah, blah, blah.
Now it's sort of, it's good, but you know, and that's the uncertainty that is hanging out there,
whether it's because of policy, whether it's because of macroeconomic concerns, whether it's
concerns about the state of the consumer. That's sort of that. I see that more now than ever before.
He's a tremendous storyteller. He has spent decades helping audiences understand not only the
automotive industry, but the people and the decisions that shape it. I'm honored to have him
as a guest here on Cars and Culture. Thank you, Phil LeBeau. Thank you, Jason. It was fun.
I appreciate it. We'll have you back. Yeah, I would love to. Thank you. Big thanks again to my
guest, Phil LeBeau. To see more Cars and Culture interviews, visit the Cars and Culture YouTube
channel. Subscribe, comment, check out hundreds of conversations, thousands of videos with the
creators, collectors, and culture makers who are driving the industry forward. That's episode 257.
I'm your host, Jason Stein. We'll see you down the road. Every day, you make decisions, your finances,
your career, the things that power your life, and the people who make the best decisions. They
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About this episode
CNBC senior automotive correspondent Phil LeBeau joins Jason Stein to map the industry’s next decade, arguing the “dramatic” changes aren’t slowing—by 2030/2035 automakers likely won’t sell the same vehicles as today. LeBeau breaks down affordability pressures (record-high loan payments, rising transaction prices, and costly option bundling), the stalled EV push after consumer hesitation, and the accelerating challenge from China. He also weighs which tech matters most: autonomy gets attention, but ride-hailing economics may change more than car ownership, while connected services remain a profit-stressing must-have.
