The Tesla Model X is a big electric car that can carry a lot of people and has cool doors that open up like wings. It's important because it shows how electric cars can be fancy and high-tech.
The Tesla Cybertruck is a new electric truck from Tesla that looks very different from regular trucks. It’s designed to be tough and has a futuristic shape.
The Hyundai Santa Cruz is a smaller truck that combines features of a truck and an SUV. It's designed for people who want something that can carry stuff but is also easy to drive around town.
The Ford Maverick is a small pickup truck that is known for being affordable and practical. It sold a lot more than the Hyundai Santa Cruz, which means many people prefer it.
The Ford Ranger is a midsize pickup truck that is known for being versatile and capable. It competes with other trucks like the Toyota Tacoma and the new one from Hyundai.
Operating profit is the money a company makes from its main business activities, not counting other income. It shows how well the company is doing financially.
The Toyota Crown is a fancy car made by Toyota that has been around for a long time. It's important because it shows how Toyota is trying to stay at the top of car sales worldwide.
Capital expenditures are the money a company spends to buy or improve things like factories and equipment. For car companies, this can mean spending on new technology or building new plants.
K cars are tiny cars made in Japan that are cheaper to buy and run. They are popular in Japan, but people in the US might not want them as much because they prefer bigger cars.
Safety concerns are worries about how safe a car is to drive. K cars might be considered less safe because they are smaller and may not protect you as well in an accident compared to bigger cars.
Lane keep assist is a technology in cars that helps you stay in your lane while driving. If you start to drift out of your lane, the car will gently steer itself back into the lane.
Adaptive cruise control is a feature that helps your car maintain a set speed while also keeping a safe distance from the car ahead. If the car in front slows down, your car will slow down too.
Auto pre-crash safety braking is a system in some cars that can sense if a crash is about to happen and will automatically apply the brakes to help avoid or lessen the crash.
The Toyota Camry is a well-known car that many people drive. It's a midsize sedan that is comfortable, reliable, and good on gas, making it a popular choice for families.
The Honda Fit EV is an electric version of a small car called the Honda Fit. It's good for the environment and has a lot of space inside, making it great for city driving.
The Toyota Yaris iA is a small car that is easy to drive and saves on gas. It's a good option for people who want a reliable car without spending too much money.
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Welcome to Daily Drive. For Thursday, January 29, 2026, I'm Kellan Walker in Las Vegas. Today on
the show, Tesla is ending production of its Model S and Model X to make way for robots. Hyundai is
pulling the plug on the Santa Cruz pickup after one generation and Toyota post-record global sales
powered by surging hybrid demand. Plus, automotive news Asia editor Hans Grimel explains why he
doesn't think Japanese K cars will work in the U.S. market despite President Trump's push.
There is a body structure to these cars, but it's closer to a tin can than to a tank.
Let's run through all the news you need to know to keep up in the auto industry.
Tesla is ending production of its Model S sedan and Model X crossover next quarter
to make room for something radically different, a humanoid robot factory. CEO Elon Musk announced
the move is part of Tesla's shift from car maker to what he calls a physical AI provider.
The Model S launched in 2012 and put Tesla on the map. The Model X followed in 2015,
but combined with the Cybertruck, sales for those models dropped 40% last year to just over 50,000
units. Musk says Tesla will convert the Fremont factory space into an Optimus robot assembly line
targeting a million units annually. The move comes as Tesla reported its first ever annual
revenue decline down 3% in 2025 and a 61% drop in fourth quarter net income. We'll hear more on
this story in a minute with our own Lawrence Eiliff. Hyundai is also taking the axe to part
of its lineup. The Korean automakers pulling the plug on its Santa Cruz compact pickup
after just one generation. Sources tell Automotive News the move comes as sales plunged
20% to 25,500 units last year, outsold 6 to 1 by Ford's Maverick.
Admins director Ivan Drury says Hyundai pushed too far in the direction of oddity versus conformity
with design choices that hurt functionality. The automaker isn't abandoning trucks though,
a larger body on frame midsize pickup targeting the Tacoma and Ranger launches in summer 2029.
Meanwhile, Hyundai's fourth quarter operating profit crashed 40% on U.S. tariffs and EV incentive
cuts. Tariffs cost the company $4.1 trillion last year. That's about $2.8 billion at today's exchange
rate. But investors are betting on Hyundai's humanoid robot plans. Shares jumped 7% despite
the weak earnings. And Toyota just posted record global sales 11.3 million vehicles in 2025.
That's up nearly 5%. The big story? Strong U.S. demand helped Toyota blow past the 15%
tariff on Japanese imports. Sales there climbed 8% powered by surging hybrid demand. Toyota ramped
up both U.S. production hitting a record 1.4 million units and exports from Japan to meet that
demand. Hybrids are carrying the load 4.4 million sold worldwide while EVs barely moved just under
$200,000. Toyota stayed ahead of Volkswagen and Hyundai to keep its global sales crown in 2025.
And those are today's headlines. You can find more details on all those stories at autonews.com.
Joining me now to discuss Tesla's decision to end Model S and Model X production is automotive news
reporter Lawrence Eiliff, who covers Tesla for us. Lonnie, welcome back to Daily Drive.
It's great to be here. So Lonnie, what is ending these flagship model signal for Tesla's future
product strategy? Okay, so they've been talking a lot about making this transition from being
an automaker to being a physical IA maker, which means robotexies and robots and transportation
as a service. And what's really striking about this is this is really them putting the money
where their mouth is. One analyst said they're burning their bridges, which I think he meant
burning their boats, you know, like this is it, you know, we can't go back. And so they're
canceling next quarter the Model S and the Model X. Now it's both operationally important because
now they get that factory space in the Bay Area in AI central to build their robots.
But it's also symbolically important. Remember, this is the Model S was their first
volume vehicle after the handmade roadsters. But this was the one that launched them into
becoming a real automaker and not just kind of a dreamy startup. And then the Model X came in 2015,
three, three row SUV. And so, you know, it's, it's important, but it's really a very strong signal
rather than just talking about it, that they're making this transition. Well, we've talked many
times about how Tesla's aging lineup seems to be hurting sales. Now it's simply tossing out,
almost I'd say what half of that lineup. Is there any plan or expectation to replace them
with something new? Now, it's important to remember this is intentional. They had the
opportunity three years ago, and they talked about it three years ago to create a $25,000 car.
They were going to start with the factory in Mexico, right, lower labor cost, lower supply base,
and then have these factories all over the world. And if there was going to be like, you know,
just insane millions of these $25,000 cars, they changed route. Elon Musk, the CEO said,
nope, okay, we're going to go all in on autonomy. Everything is autonomy. Everything is AI. And so,
their next car coming before the end of the first half is the cyber cab, which has no steering wheel,
no pedals for human controls, completely autonomous. Elon Musk said yesterday on the earnings call,
if it doesn't drive a Katana's misle, it doesn't drive. So this is their direction. This is where
they're going. They've made, you know, a decision to do this. And somebody was joking and it's like,
we used to say Tesla's were fast sleek cars, you know, faster than a Lamborghini. And now we're
going to be saying, oh, look at my airport transportation pod. And so, you know, there's
kind of some joking about how they are really becoming a transportation as a service company.
And that's not quite as sexy as Tesla, which, if you know, the S three X, Y, their core cars
spell out sexy. Well, Tesla reported its first ever annual revenue decline and a 61% drop in
fourth quarter net income. What's going on there? And this is really part of the same narrative.
And that is that when they sold less cars last year for a second year in a row, their revenue
went down for their first year ever. And that's because they're selling less cars, they're putting
more discounts on the cars and they're transferring money, capital expenditures to their new programs,
right? So that costs money. And it's interesting because what they said yesterday, which is kind
of surprising is that their capital expenditures are going to go to $20 billion this year from
$8.5 billion last year. And that's AI, that's Robo taxis, that's robots, that's chips, that's
computers. And they're also making a $2 billion investment in Elon Musk's artificial intelligence
startup X AI. Perfect. Lonnie, always good stuff. Thank you so much for joining me.
Okay, thank you very much. You can read Lauren Siliff's reporting on Tesla at AutoNews.com.
Coming up next, automotive news Asia editor Hans Grimel explains why he thinks Japanese
K cars are doomed to flop in the US despite Trump's push to bring them here. That's next on Daily Drive.
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Welcome back to Daily Drive. I'm Kellan Walker. President Trump floated the idea of bringing
Japanese K cars to the U.S. market after his visit to Japan last October. The tiny vehicles are
engineered for dense urban areas and affordability. But automotive news Asia editor Hans Grimow says
they're doomed to flop in America. In his latest column, Hans outlines eight reasons why. From
safety concerns to performance issues to structural integrity. Our own Jake Nier reached Hans at his
home office in Tokyo. Hans Grimow, welcome back to Daily Drive. It's been too long.
Yes, it has been. Thanks for having me on.
So when I heard that you were writing a piece, eight reasons Japanese K cars won't make it here
in the United States, my question was this. Only eight?
Man, my own beer is there. Yes, I see what you're saying.
My own cynicism kicking things off here. But in all seriousness, we'll let people go and read
your article on autonews.com and see all eight. But if you had to pick one or two, what are the
biggest barriers for these kinds of cars for the United States market?
Well, I shouldn't be too hard on these K cars, these Japanese mini cars, because they are
kind of ingenious. They're kind of a masterclass in packaging. They're interesting designs. They're
not Mike up of tea, but they really do a lot with a little. In Japan, they're quite functional
and convenient. And the people who love their K cars love their K cars here. So there is an
audience for it. And there probably is a customer base for them in the United States, but a very
small one, I would guess. That's largely because of the reasons that they're probably not appealing
to the majority of Americans. It starts with everything from their tiny size to their tiny
engines and their underperformance on freeways, their slow, slow speeds. They're not especially
cheap. They're low price, but they're not especially considered a bargain for what you're
getting in terms of a car. The design is a little bit off for Americans as well. And then
there's just kind of the safety concern about driving this kind of lunchbox on a modern American
freeway surrounded by semi trucks and Ford 150 pickups. So there are a lot of things I can imagine
that would keep these off American shopping lists. Now, don't get me wrong. I actually think that
these are very, in a lot of ways, like you said, they're pretty ingenious for a lot of markets,
especially really, really dense urbanized areas of the world. You know, they're inexpensive,
which is a huge issue here in the United States. But as you said, it's mostly for me just knowing
the American car buyer in 2026. I can see why it would be tough road ahead. Now, remind us why
we're talking about K cars again. They peaked President Trump's interest recently. Why was that?
He had a summit meeting here in Japan last October, where he came to meet the new prime minister.
And he was in Japan traveling around for a bit. And after returning to the United States, he was
looking for ways to increase, let's say, Japanese investment in the auto industry in the United
States. That was one of the big themes he was talking about here. And he saw the K cars. He
learned that they were affordable. Affordability is a big issue in the United States as well.
So he thought, why not kill two birds with one stone? Invite the Japanese to America to build
their affordable K cars in the USA? And what could go wrong? There are lots of people car buffs in
the United States who are enamored with these small K cars. But I can't see them ever catching
on in a serious way or at serious volumes. So let's talk a little bit more about the safety
aspect of this. You mentioned that K cars, they have a lot of safety, like latest safety tech
in them. So there's one thing, but when it comes to physics, can you kind of elaborate on the
scenario here in the United States, maybe a collision with an F 150 or something like that?
It seems like for one thing, it would obviously consumers care about safety, but also regulators
would probably have a lot of questions too. Well, let's talk about safety a little bit because
these cars, at least the top trim versions of these cars have all this modern safety
you know, doodads. They've got the automatic lane keep assist, adaptive cruise control,
auto pre-crash, safety braking and everything that you think you'd want probably in a even
in a bigger car like a Toyota Camry or something. But you know, people here drive differently on
different roads than they do in the United States. People here drive very slowly on the speed limits
are very low compared to the United States, even on the interstate. And perhaps more importantly,
people here drive very politely and they almost never break their rules. They're not cutting
each other off. They're not racing each other from from the stop lights. It's a very rule
abiding society in Japan. And you don't have the streets as a kind of a wild west kind of
mentality among the drivers on the streets here. So when these cars crash, when a car crashes into
a cake car at 30 miles per hour, you're going to have a fender bender. But in the United States,
if you bring your cake car up to 50, 60 miles per hour on the highway and you intertwine with
anything a little bigger than it, which will be everything else on the highway, you're going
to be in a world of hurt. The overhangs on these cars are basically nonexistence, especially in
the rear. It's just like the rear seat backs where the kids are is literally the backup against the
door. And then the front has almost no space as well, because usually they try to push the driver
as far to the front as possible, almost so that they're sitting right over the engine. So there's
not a lot of structural integrity to these cars to keep you safe. I kind of think of the old-fashioned
Volvo with the giant steel cage inside there to protect the driver. There is a body structure
to these cars, but it's closer to a tin can than to a tank. You compare it in the piece to a UGO.
Talk about why you make that comparison and why you think it's fair.
Well, it's partly fair just because of the size of the car, the size of the engine, the acceleration
speed, the performance of the cars. But it's probably not fair because the UGO, while as the UGO
was a rattle trap, poor quality car made in the eastern block, these cars have all the benefits
of world first class Japanese manufacturing and quality control. So you're not going to have to
worry about your K-car breaking down or not starting one morning or having bad fit and finish
and things like that. But in terms of performance, the average American is going to be a little
disappointed. Yeah, I think you said in the piece about 64 horsepower or 660 cc engines,
is that about right for these? That's right, that's what they're limited to. The idea of bringing
them to the United States, if you were going to make them there, I don't know what kind of K-car
they're talking about. Maybe they have a US spec K-car, for example, in which case they can maybe
wiggle with the dimensions maybe or with this engine specifications maybe or other technical
dictates to the car. I can't see them bringing lock, stock and barrel the exact same K-car that
they sell here and trying to sell it in the United States. Maybe they'd have to tweak it some way to
make it a little bit bigger, a little wider, put a bigger engine in it, increase the overhangs for
some crash, some crash zones on the front and back. Maybe then they could create a new class called
an American K-car or something like that. But it's a lot different from just a Japanese one.
Yeah, that's such an interesting idea that maybe this says something about the direction that
automakers are seeing here in the US market or maybe sort of an aspirational direction that
maybe it's not like we need to start offering these sort of, well, okay, this might not be fair,
but I was going to say glorified golf golf carts on the roads, but maybe we can learn
some things from these models that would work for the US. Do you think that that's a possible
realistic expectation that, again, maybe not as small and boxy, but maybe we get closer to
something like that that still fits American taste?
They could. They could do that. I know that the Japanese apply a lot of the
manufacturing techniques that they learn from mini cars or some of the packaging ideas that they
learn in mini cars. They take to the regular cars as well. So there is some learning, cross
fertilization of the learning there. But Japan has a whole class of cars one step up that are
even considered two and that were once sold in the United States, but are now considered even
too small for the United States. We're talking cars like the, remember the Honda Fit or the
Toyota Yaris or even something like the Mazda 2, but those were deemed too cheap or too
underperforming or too small even for American audiences because they have grown into loving
SUVs basically. There's a crossover culture there now, and those small cars, the small
hatchbacks, the small sedans don't appeal. So even if the Japanese were to go one step up,
basically mean a whole class of cars that they already make but decided to give up in the US.
All right, Hans, any last words on the K cars before we wrap up here?
Well, one of the things that I often get frustrated with with K cars is that if you go into the
countryside, especially, they're everywhere like cockroaches. That's the car of the countryside
because people just want something like a small functional thing to take them down the road to
the grocery store and back or farmers use them a lot. And so if you're on vacation in Japan
and driving out in the countryside, it's a great place to be driving until you get behind one of
these K cars. They go so slow that it's very aggravated to be stuck behind one of them,
especially when you're out in the countryside trying to enjoy the winding roads and have a
little bit of driving fun on vacation. That's so different than the US. You think of the countryside
here in America and it's nothing but F-150s and Silverados and all the above. So thank you very
much, Hans. Really appreciate this. Really loved the column. It's called Eight Reasons Japanese K
cars are doomed to flop at the US despite Trump's push. You can find that at AutoNews.com. Thanks
again, Hans. Thanks a lot, Jake. Have a good one. That's Daily Drive for today. I'm Kellan Walker.
Thanks to Automotive News Journalists Lauren Siliff and Irvash Kakaria for their reporting for
today's podcast. You can get the latest news on vehicle affordability, automaker product shifts,
and everything happening in the auto industry at AutoNews.com. Come back tomorrow for a conversation
with Cox Automotive's Jessica Stafford about the company's latest car buyer journey study.
We're seeing record high satisfaction across all buyers, but particularly new car buyers.
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About this episode
Tesla's decision to end production of the Model S and Model X marks a significant shift towards becoming a physical AI provider, as they pivot to humanoid robot manufacturing. Meanwhile, Hyundai is discontinuing the Santa Cruz pickup after disappointing sales, while Toyota celebrates record global sales driven by hybrid demand. Automotive news Asia editor Hans Grimel discusses the challenges Japanese K cars face in the U.S. market, citing safety concerns and performance issues as major barriers. The episode dives into the implications of these industry changes and expert insights.
Tesla is ending production of its Model S and Model X to make room for a humanoid robot factory as the company shifts from being a carmaker to a “physical-AI provider.” Hyundai axes the Santa Cruz pickup after just one generation. Plus, Automotive News Asia Editor Hans Greimel explains the eight reasons Japanese kei cars are “doomed to flop” in the U.S. despite President Donald Trump’s push to bring them here.
