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The cost of new product to jumpstart U.S. sales, GM makes a leadership change in China, and Scout Motors chooses Charlotte for its headquarters. Plus, Colin Hendrix of the Peterson Institute for International Economics talks about whether the U.S. can catch up to China on rare earth mining and processing.

If people thought that there was a gold mine at the end of this, like fracking technology, this problem would have been solved by the market several years ago.

Let's run through all the news you need to know to keep up in the auto industry. Nissan is readying a slew of new products for next year. It's part of a plan to restart U.S. sales growth and shift the automakers' focus from cost-cutting to expansion.

CEO Ivan Espinosa tells us at Automotive News that sales should rebound in 2026, thanks to the addition of the e-power road crossover and increased supply of the Nissan Armada and Infinity QX80 SUVs.

The fact that we have these new product lines coming in and having full blast next year, he's definitely something that's going to help.

Espinosa says Nissan will rapidly expand its hybrid line up through 2030, with electrified options coming to compact, mid-size and full-size vehicles, and even the possibility of a V6 hybrid truck setup.

General Motors has a new head of its China business. Cadillac Global Vice President John Roth will take over as president of GM China on December 1, replacing Steve Hill.

Roth is a 30-year veteran of GM. He was vice president for sales marketing and services for GM Canada and lead operations in Africa and the Middle East.

Hill moves into a new role overseeing global exports and retail innovation. The shift comes as GM works to rebuild its footing in the world's largest auto market after years of restructuring and declining sales.

And Scout Motors is setting up its new headquarters in Charlotte, North Carolina, bringing 1200 jobs and more than $200 million in investment to the city.

The Volkswagen-backed EV Startup says the move puts its leadership close to its future self-carolina assembly plant operations are set to begin in 2026.

And those are today's headlines. You can find more details on all of those stories at autonews.com.

Here to talk more about Scout's decision to put its headquarters in Charlotte is Jack Wallsworth, who covers Volkswagen and its subsidiaries for us at Automotive News.

Jack, welcome back to Daily Drive.

All right, Jake, great to be here.

All right, so Jack, why Charlotte?

Yeah, it's a good question. I think the most pressing answer might be money. So the Charlotte Business Journal reported that Scout got incentives of about 70 million from local and state incentives.

So that's probably part of the role I would imagine. I think we've seen a lot when companies are looking to establish offices that local governments will offer incentives or the economic development groups have a bidding war type thing.

How to imagine that was probably a part of the conversation. The other thing, another big thing is the proximity to life with South Carolina. That is obviously where Scout is building its new factory.

That's about a 90 minute drive from Charlotte Givertake. It's just down I-77.

It's a relatively easy access for the executive team and employees to go from Charlotte to life with. That would probably another big role.

It does seem like Charlotte's an attractive place for people to be. Scout and their release yesterday pointed to proximity to universities and a large employee talent pool.

You obviously want to go where the people are and it definitely seems like Charlotte has some of that going on.

I know anecdotally I have a good buddy from college has younger brother went to college in North Carolina moved away from Charlotte for about a year and then moved back after like a year.

So obviously people like it and seems like Scouts can try to tap into the talent pool.

And we have seen more automotive investments into North Carolina, obviously Toyota just opened up a battery factory there.

The rest eventually wants to have an assembly point there. Son of automotive, huge public retailer is based in Charlotte and LA financial also has a huge presence in the city.

Definitely not maybe a traditional automotive region of the country but somewhere that's growing especially with what we see here from Scout.

Yes, Scout CEO Scott Kio said that right now he's working out of the DC area which is where VW group of America is based.

And he will be relocating as you say in your story to Charlotte.

Now this gets into this thing in the background right there's been a lot of questions about how close Scout will be to VW there's a lot of tricky issues surrounding that relationship.

What does this choice for Scouts HQ say or symbolize if anything about its relationship with Volkswagen Group?

Sure, I think it definitely symbolizes the physical distance.

So like as you mentioned, Volkswagen Group of America is based outside of DC that are in rest in Virginia.

They have been in the DC area I think since about 2008.

So that's, you know, we're also a long time and all the brands are there.

Horses North America is in Atlanta so that's also a little bit further out.

But you know, it kind of seems like picking Charlotte is like a fresh start or it blanks late.

That's that, a Volkswagen Group, happen by any means.

It kind of seems like a way for Scout to be in their own, not an island but in their own area.

I think if they had picked Northern Virginia and were super close to Volkswagen Group of America, that would be like a super easy thing all out.

You know, that's, that's really close to the other companies and you know Scout is always so independent.

So it definitely feels like it symbolizes the physical distance and letting and let Scout kind of be in its own, its own spot.

While also still being close to the factory, which they definitely made a huge part of their company identity too.

All right. Well, thanks, Jack, for the report. Really appreciate you joining us today on Daily Drive.

Sure. Thanks for having me, Drake.

Coming up, could the U.S. catch up to China on rare earths if it tried?

Colin Hendrix of the Peterson Institute for International Economics joins the show next to talk about it here on Daily Drive.

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Welcome back to Daily Drive. I'm Jake Near.

On yesterday's show, automotive news, tech and innovation reporter Molly Boygon talked about her look this week at the U.S. Dependence on China for Rare Earth Minerals,

which are key components of any modern vehicle.

For those reports, she spoke with Colin Hendrix, senior fellow at the Peterson Institute for International Economics.

Hendrix outlines the history of the issue and challenges facing any attempt to catch back up, none of which are simple to solve.

Colin Hendrix, a senior fellow at the Peterson Institute for International Economics. Thanks so much for joining us.

My pleasure.

So let's start a little bit of a ways back, pre-deal that was struck between China's President Xi Jinping and President Trump of the United States.

What was the sort of problem that these world leaders were trying to work out as far as Rare Earth materials export restrictions?

Sure. So the most important kind of background piece of information to have to kind of situate this discussion and this deal in context is to understand that China has a remarkably strong and dominant position in the markets for most processed critical minerals.

And in particular kind of the heavy rare earths that were at the center of these export restrictions that were announced on October 9th.

And I think we're really the precipitating event for kind of driving the United States and China together to give some sort of immediacy and some urgency to really hammering out a deal that had been a notional discussion for many, many months, but on which we'd seen relatively little movement.

And you spoke about China's dominance in the area of rare earth minerals. Why was that dominance such a threat to the United States and such a useful bargaining chip for China in terms of attempting to lower the tariffs imposed by the Trump administration?

Sure. So China as part of its industrial policy and industrialization going on for several decades now has made these really big investments in these incredibly unglamorous parts of the economy in particular rare earth mining and processing that are on their own not particularly lucrative industries, but they're necessary to feed into all of these downstream industries.

I know that your listeners are particularly interested in the automotive sector, but the thing that was really I think driving the Trump administration's rapid response and search for an off ramp in this escalation cycle that the trade war has been in is the fact that these heavy rare earths and the downstream products.

Some of these are semiconductor supply chain oriented, but many of them are national defense oriented right. So these are used in advanced radar raise they're used in missile systems they're used in a variety of different applications that are got to have it mission critical national security uses.

For that reason, you know, the automotive sector is sort of benefiting from a core national security vulnerability in the sense that it was very worried about having supplies of these minerals choked off and then having to scramble to find alternate suppliers.

What was hammered out was essentially a one year carve out so that the people's Republic of China will not begin enforcing these export restrictions for a year.

Extensibly to give the United States some time to diversify its supply chains. We'll see how that plays out in practice.

Yeah, and we'll turn back to diversifying the supply chain in a moment. One thing that I've been trying to parse is, you know, there were the original export restrictions, which are established in April. And then, as you said, the sort of rapid response by the Trump administration was triggered by new export restrictions that were slated that were announced in October.

And one thing I'm trying to sort of clarify is if the pause impacts both the earlier export restrictions from April and the export restrictions, you know, announced in October.

So my understanding is that the pause in the implementation of these export restrictions applies to those restrictions that were announced on October 9.

So the heavy rare earths, turbium, disprosium, a variety of other materials in addition to permanent magnets that are made with these inputs as well as the technology for separating these heavy rare earths and turning them into an industrial input that can actually be used in industrial applications.

The April restrictions to the best of my understanding are still continuing in place. And the fact that they are continuing in place but have not snarled US supply chains either in the automotive sector or in the defense industry or in renewable energy to the extent that was probably anticipated when they were announced is a sign that the United States has been at least somewhat effective in diversifying those supply chains and muting the impact of these export restrictions.

In a paradoxical sense, it helps also that the supports for renewable energy deployment and EV adoption under the second Trump administration have gone away.

And so it's actually suppressed demand for these bulk commodities that go into EV supply chains and renewable energy supply chains.

And so we're not seeing kind of the super aggressive kind of market response that we might have anticipated because demand for these minerals was beginning to go down a little bit as well.

So that my understanding to answer the specific question, the October 9 is what's been paused and the earlier April export restrictions are still in effect.

Great. And you know, it's a really interesting point that you make about the fact that the federal government rolling back support for electric vehicles has basically softened demand for the very materials that the US is trying to shore up a alternate supply chain for in terms of trying to develop that alternate supply chain.

My understanding is that while there are other countries in which rare earths can be accessed, a lot of the processing capacity at this point happens in China and even if it doesn't happen in China is being done by Chinese companies.

So I wonder what you think about the sort of likelihood and the speed with which the United States might be able to develop those alternate sources of rare earths specifically for processing capacity and as I understand it for rare earth magnets.

So my, I mean, I talk a lot with people in industry about this and other investors obviously my best guess for what under a kind of, you know, five alarm fire scenario we've got to have these things right now.

The United States government putting its shoulder into this for a period of two to four years might be sufficient to develop X China processing capacity for most of the most vulnerable minerals.

And as you point out, the stranglehold is really on the processing more than it is on the mining of these heavy rare earths.

Now, I believe it's it's Turbium or Disprosium, I'll have to go back and check my notes, but there, there, there is one of these materials that is effectively only sourced from clay deposits within China and then also Myanmar actually in rebel held territory.

So that there is at least one material for which diversifying these is going to be incredibly difficult at the mine for others.

The real problem is going to be finding municipalities in the United States that are willing to onboard what is an incredibly energy intensive water intensive and not particularly lucrative or high margin kind of process.

You know, most people, I think, would imagine that it would be good news to find out that maybe an EV battery assembly factory was coming to their town, right?

If you've seen images of these or you visited them, right, these are super modern manufacturing facilities.

The processes that refine these heavy rare earths into the industrial inputs that we can use do not have that same kind of sort of positive kind of footprint or have floors that you could eat off of the way that some of these other kind of manufacturing facilities do, right?

This is heavy, unglamorous, dirty polluting industry. So I often say that what's rare about rare earths and China's processing capacity stranglehold, it's not rare that China has, you know, mana from heaven in the form of this huge endowment of these minerals.

What it does have in spades is the tolerance for the environmental and energy draws and pollution is created in this processing.

And also the government is willing to subsidize these sectors relatively heavily and force consolidation in some of their producers in order to drive margins, either razor thin or net negative, which is, which is really, I think, the biggest stumbling block for diversification.

If people thought that there was a gold mine at the end of this, like fracking technology, this problem would have been solved by the market several years ago.

I think what has happened is that not only the private sector, but also the Trump administration has come around to the position that no one is likely to get rich processing very small volume, small margin, critical minerals.

However, to get rich doing a bunch of other things, right, elaborating data centers, pushing forward the AI revolution, you need to have these kind of critical inputs that are at the absolute, you know, base of the pyramid in terms of developing these apex technologies.

And so for that reason, I think two to four years, if they really needed to do it, the real question that I'm facing right now, and I think a lot of other analysts are trying to figure out is that is this year long reprieve, just going to be an instance in which the can is just going to progressively keep being kicked down the road.

So that China still effectively has a choke chain on the US economy that it can let slack out on, but you know, pain is just a flick of the wrist away.

And these promises in the context of this trade war will be trivially easy to step back from because it is highly likely that both parties are going to be attempting to evade most of the promises that they made in this trade deal, almost as soon as the ink was dried.

And we know from studying the first Trump administration and the way the trade war was elaborated during that, we know that because of work by my colleague Chad Bound, trying to promise to buy hundreds of billions of dollars of US products and exports, and it bought effectively none of the additional products it had put itself on the hook to purchase from the US economy.

So I expect that compliance with this and this promise is subject to perceived good behavior on the part of the United States vis-a-vis Chinese interests and that this is subject to change.

Another really interesting question that I'm trying to figure out the answer to is, were these export controls paused globally because they were announced globally so that they would hit the US economy the same way that they would hit say the European Union.

Or Japan or Korea for instance. My understanding is that the way that the deal was elaborated was that it would be a pause on the enforcement of these export restrictions for US companies and companies that feed into US supply chains.

Now conceivably, that could be a huge swath of the global economy. Construed very narrowly though, it could mean that the United States and most of its suppliers in third countries are going to maintain access to these materials without export restrictions but that Japan, Korea, the European Union are all going to have to negotiate their own separate piece with China.

You know, one of the things that China might want out of a deal like that would be to say to the EU, hey, you know, you slapped these anti-dumping kind of tariffs in the vicinity of 20 to 30% on EVs. How about we see a little bit of a reduction on those, right? China is holding a lot of cards here because it has this strangle hold on the strategic resource that no one else seems to be stepping forward to provide.

There, there have been some movements in this space, right? One of the ironies of the announcement of this deal with China is it came one day after the G7 joint communicate that these Western, you know, liberal democracies getting more and more hesitant about using that term, but these Western countries, these advanced economies, we're going to get together and co-finance these kinds of operations.

Whether or not they will have the desire to continue to funnel money into what is not a inherently kind of high margin sector is going to be an open question now that China has signal that it's willing to play ball and willing to act strategically and remove some of the barriers to exports that had put in place as a negotiating chip and it was a very strong negotiating chip.

Come back on Sunday for our bonus episode of Daily Drive for more of that conversation between our own Molly Boygon and Peterson Institute senior fellow Colin Hendrix.

That's Daily Drive for today. I'm Jake Near in for Helen Walker. Thanks to automotive news journalist Hans Grimell, young John and Jack Wallsworth for their reporting for today's podcast, you can get the latest news on rare earth supply chains, future product plans, and everything happening in the auto industry at auto news.

Come back tomorrow for a conversation with Tim Yalich of Carlton about the challenges dealerships face to quote accurate lease payments these days.

As lease penetration grows, dealerships must adopt technology capable of handling this complexity with precision.

We'd love to hear from you. Let us know what you think of the show and the topics we covered today. Send us an email at DailyDryThatAutoNews.com or leave us a voicemail at 313-444-2774.

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