General Motors is making a significant investment of $5.5 billion to boost gasoline engine production, while Mercedes-Benz aims to reclaim its luxury market dominance with ambitious sales targets and a diverse powertrain strategy. The episode features insights from Michael Barrabe, CEO of CalStart, who discusses the need for better consumer education on EVs and the role of government and nonprofits in facilitating this transition. The conversation highlights the challenges faced by dealers in moving EVs and the importance of stable policies and infrastructure.
General Motors is investing $550 million dollars at two component plants to support expanded U.S. vehicle production in 2027. Mercedes plots a comeback to retake America’s luxury crown. Plus, Michael Berube, CEO of Calstart, talks about how the public sector should be helping educate consumers about EVs.
"Well, Irvash, how are dealers feeling about ramping up core SUV supply and new EVs? Is there any inventory risk, especially after recent struggles with EQ models sitting on lots?"
EQ models are Mercedes-Benz cars that run on electricity instead of gasoline. They’re part of the company’s electric car family.
Mercedes-Benz’s EQ brand refers to its line of electric and plug‑in hybrid vehicles, such as the EQC SUV.
"They have struggled for the past five years under a previous regime that, you know, underwent a controversial field reorganization and they kind of botched the EV rollout."
EV rollout means the company is trying to start selling electric cars. It involves making sure there are enough cars and that people know how to buy them.
The process of introducing electric vehicles (EVs) into the market, including production, distribution, and dealer support.
"That's been a big switch from Mercedes where a few years ago, Mercedes was all in on EVs and they had developed this EV only line called the EQ line..."
EQ is Mercedes-Benz's name for their electric cars, like a special line that only uses batteries.
Mercedes-Benz's EQ line is a dedicated electric vehicle brand, encompassing models that are fully battery-powered.
"I think we're at an inflection point where we had a lot of experiment. We had multiple charging standards."
Charging standards are the rules that tell an electric car how to plug into a charger. They decide what kind of plug you need and how fast the car can charge.
Charging standards refer to the specifications and protocols that define how electric vehicles (EVs) connect to charging stations, including power levels, connector types, and communication between the vehicle and charger. Common standards include Level 1 (120 V), Level 2 (240 V), and DC fast charging standards like CCS, CHAdeMO, and Tesla Supercharger.
"I mean, I was responsible for development of batteries across the United States when I was at the Department of Energy. Battery cost have continued to drop every single year."
Battery cost is how much it costs to buy the batteries that power an electric car. Cheaper batteries help make EVs cheaper.
Battery cost refers to the price of the rechargeable batteries that power electric vehicles. Lower battery costs make EVs more affordable.
"I would be remiss if I didn't point out today, depending where you live in the country right on average is over $600 of fuel savings per year for driving an EV."
Fuel savings means you spend less money on gas because the car uses electricity instead of gasoline.
Fuel savings is the amount of money saved by using less gasoline or diesel, often highlighted for electric vehicles.
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Visit Route1.com on gas engines with a $5.5 billion spending plan. Mercedes plots a comeback to retake America's luxury crown, and a Michigan dealer group sets its sights on 40 stores in seven years. Plus, Michael Barrabe, CEO of CalStar, talks about how the public sector should be helping educate consumers about EVs.
Let's run through all the news you need to know to keep up in the auto industry. General Motors is investing $550 million at two component plants to support expanded US vehicle production in 2027. GM will spend $250 million at its Parma Metal Center near Cleveland for sheep metal stampings.
And $300 million at Romulus Populsion Systems outside Detroit to boost output of 10 speed transmissions for full-size trucks and SUVs. The investments are tied to GM's plan to increase production of internal combustion vehicles. They bring total spending connected to the production increases to nearly $5.5 billion. Mercedes-Benz has an ambitious plan to reclaim the top spot among US luxury brands.
With 400,000 annual retail sales by the end of the decade, that's 100,000 more vehicles than it delivered last year. Mercedes-Benz USA CEO, Adam Chamberlain laid out the strategy at a dealer meeting calling it aspirational but achievable.
Chamberlain tells us that automotive news the plan hinges on the brand's largest ever product offensive, including high horsepower electric AMG models and upgraded SUVs.
It's not either or it's both.
Chamberlain says Mercedes will offer a diversified powertrain mix after seeing little return from its EV-only strategy. We're on this story in a minute with our own Irvash Kakaria.
And Coleman Automotive Group is partnering with Prime Dealer Equity Fund to fuel Rapid Expansion. The company's closed their third joint dealership acquisition in October.
The partnership pairs CEO Kyle Coleman's dealership expertise with Ralph Marco-Cellys' Private Equity Fund backed by 12 investors.
Together, they're targeting 40 stores over seven years, focusing on underserved Midwest markets where larger groups haven't established dominance yet.
And those are today's headlines. You can find more details on all those stories at autonews.com. Here to talk more about Mercedes comeback ambitions in the US is our own Irvash Kakaria who covers the automaker for us at Automotive News and spoke with its US CEO, Adam Chamberlain. Irvash, welcome back to Daily Drive.
Hi, Kyle. Thanks for having me back.
Well, Irvash, how are dealers feeling about ramping up core SUV supply and new EVs? Is there any inventory risk, especially after recent struggles with EQ models sitting on lots?
So, you know, Mercedes Benz had their national dealer meeting in Vegas on Saturday. And the dealers I spoke with were unusually optimistic about the brand.
They have struggled for the past five years under a previous regime that, you know, underwent a controversial field reorganization and they kind of botched the EV rollout.
And now we have Adam Chamberlain who used to be the Mercedes Benz USA head of sales. He's come back. He was at Lithium Motors most recently.
So he's a known entity which has given the dealers a lot of confidence. One of the dealers I spoke with, I asked him, you know, how did you leave the meeting?
What was your sentiment? And he was like, this is, you know, not even a question how much of a, you know, night and day difference it is under the new regime at Mercedes Benz USA that it was at the last.
And during the meeting, the CEO Adam Chamberlain basically laid out a very ambitious growth plan.
They want to essentially get to 400,000 in annual sales by the end of the decade. That's about a third more than the number of cars they retailed last year.
And they're going to do it with a kind of a massive product blitz. The Mercedes has talked about globally. Mercedes has talked about, you know, bringing 40 new and redesigned or updated models to the US over the next five years.
And so that is going to drive the growth. But Chamberlain also mentioned something that the retailers I'm sure are going to be excited about. And that is, you know, being more consistent with sales programs and with incentives.
He says he's talked to Stuttgart to the headquarters in Germany. And he's got a commitment from them to essentially have a incentive plan for the entire year, which means that for dealers, it means that they will have more of a uniform or a more long term plan of the incentives that they can expect throughout the year.
So they're not constantly, you know, planning for incentives one month and then no incentive program the next month. So it's kind of smoothens out their business planning as well.
So these were some of the reasons why dealers were very enthusiastic with the meeting.
Well, is Mercedes concerned about asking dealers to wait until late 2026 or 2027 for key products while BMW and Lexus continue gaining ground?
In 2026, they're going to get several important products throughout the year. In fact, the electric CLA, which is their first sort of next generation model, which is, you know, it's the same car, but now it's offered with different powertrains.
That's been a big switch from Mercedes where a few years ago, Mercedes was all in on EVs and they had developed this EV only line called the EQ line, which really didn't sell well.
It was overpriced over designed. So they're going to get the CLA at the end of this year.
Next year, I believe in the first half of next year, they're going to get significant refreshes of their two most important vehicles, the GLE and the GLS.
So these are both the GLS as an SUV, the GLE is across over. So it's, it's not like all the products going to come at the end of 2026.
The two big AMGs will start coming at the end of next year, but dealers can expect a lot of strong new product or updated product to come throughout the year.
Perfect. Urbosh, thank you so much for joining me.
Thank you. Have a great Thanksgiving coming up.
Cal Start CEO, Michael Barrabe talks about how the government and nonprofits can help dealers move EVs off their lots.
That's next on Daily Drive.
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Welcome back to Daily Drive. I'm Kevin Walker.
Federal tax credits are gone, EV demand is stagnating and automakers are shifting gears.
That all leaves dealers wondering how they're going to move EVs after lots and avoid a vicious cycle of four-plan cost.
Michael Barrabe is a former Department of Energy official in the new CEO of CalStart.
He spoke with Ron Molly Boygon on the automotive news shift podcast about how the government and nonprofits can help through customer education.
He's a piece of their conversation.
Do you feel like the industry up until this point has basically done what you're saying needs to be done advocating for supportive policies?
You know, it's a big industry. Lots of different players out there.
Every one I talk to is aligned with they need stability.
I think there's still a discussion about how do we get there? How do we do that?
I think they're aligned with that need to get to stability.
And as you said, it's a complex regulatory environment in the US.
Federal, California as well. I think what I hear from industry folks.
And we have to be clear, this is not just a policy question as well.
It's a question of readiness of the technology is good, but readiness of the entire system.
Do we have enough charging out there? Is there enough signage for charging?
Some of this is not, does that be the overly sexy stuff, but literally do we have some of the basics out there?
It is all growing and industry is certainly, I think, investing a lot of money on deployment of charging.
Public sector has, you know, restarted that deployment of public charging as well.
So I think, you know, the industry sees like we need to do that.
One other thing I think I hear from all the time is they want groups like Cal start to be working on Casey.
What are the barriers? What are the things that are a challenge?
And it's difficult sometimes for any one company to address those unknown.
They can address their own products. They're great at making their products selling and marketing their product.
But some of these things cut across the industry.
And they need groups that can step up.
Any one in quite honestly as the federal government maybe is saying that's less of their role at the moment.
That's where nonprofits like Hal start can come in and say, how do we build those things?
Whether it's, what's the right education? What's the right messaging? What's the right planning?
You know, just laying out a plan for where does charging have to be? Where are the gaps?
Those are things that transcend any one, one automaker.
On the education piece, I was at electrify expo a couple of weeks ago out on Long Island moderating a panel.
And this came up so many times, you know, people in the industry really well equipped to develop the technology and understanding the kind of interconnectedness of infrastructure and affordability and, you know, access and all these other issues.
But there was sort of a consensus that the way that the industry has gone about educating people about electric vehicles has not been successful.
And the example that I thought was most poignant was the fact that companies and the government are expecting people to talk in terms of kilowatt hours, which is like a term that just makes your eyes glaze over.
Why do you think that? Well, first of all, do you agree with that? And if so, why do you think that education has been such a challenge?
I absolutely think as a challenge, I actually point out there is a group, a federal advisory community called the EV work in group that was set up and their set of recommendations that they put out and it covered light duty, heavy duty.
The top recommendations all had to do with, well, one set of the top recommendations, all had to do with education.
And that was light duty and medium heavy duty. It was for dealers and consumers.
So that group EV work was made up of industry folks, stakeholders across the spectrum. So everyone I think agrees.
And we shouldn't be too hard in ourselves. It's a new technology. It's a new area. There are some learning how to talk about it.
I think one of the challenges here, and I was like, I think dealers get a bad rap.
Sometimes people blame and put on dealers dealers, dealers sell what they have for product. There's a lot of turnover at dealers.
You have to train people, different cars, you know, different technologies evolving. So it's a little different for each one.
So I think we need to provide a little bit more consistent tools.
We're also now, you know, we're matured, right? When I say we're at an inflection point, kind of the starting point, you brought up.
I think we're at an inflection point where we had a lot of experiment. We had multiple charging standards.
Well, the industry in the US has coalesced around a single approach to charging.
So now we can talk about that more consistently and go forward.
There's a little messiness right now, right? As you have some of the old and some of the new stuff out there.
But things like that allow a little more stability. I do think we have to be putting the consumer first.
It's, you know, as technology been evolving, it's been more about the technology.
Now it's just we've got to be, I don't even make it simple for consumers.
You know, the range used to be a big issue. Now new cars have the range consumers need generally.
They have multiple range options, typically. So they don't need to worry about that as much.
Yeah, that's an interesting point.
And you were also talking earlier about, you know, examining the challenges to adoption.
And one of the persistent ones has been affordability.
And I have heard some really interesting perspectives on the end of the individual EV tax credit
for new and used electric vehicles. There was a piece in one mainstream news outlet just this week about
whether or not this will kind of the end of the tax credit will force the industry to really examine
and make sacrifices and figure out price for EVs.
I wonder what you're hearing from members about what the impact of the end of the individual EV tax credit will be on vehicle price.
Yeah, there's definitely going to be some sorting out that that happens.
But and you know, I got much prefer the tax credit stay there.
I do think we have to remember that the production tax credit for batteries is still in place.
That provides, you know, up to if you look at 100 kilowatt hour vehicle,
that'd be almost $5,000 of vehicle in credit.
So that will continue help. I think it will force the pricing issue to have to sort of self out.
The other thing they have to think of that if you look at what the investment tax credit has been,
it is largely paid for the over $100 billion of investment that companies have announced in new battery plants and in facilities.
A number of those plants have built some of those commitments made once those get up and running.
I do believe some of that money help flow into offsetting that cost delta.
And the other thing we got to look at is that cost are coming down.
I mean, I was responsible for development of batteries across the United States when I was at the Department of Energy.
Battery cost have continued to drop every single year.
We are continuing to hit our battery cost targets.
And so we look over the next few years.
I think you see that plus that production tax rate allowing that affordability equation to remain.
And I would be remiss if I didn't point out today,
depending where you live in the country right on average is over $600 of fuel savings per year for driving an EV.
$6,000 in lower maintenance repair over the life of the vehicle.
And when you think about that maintenance repair, that helps use vehicles, especially a lot.
When you buy a used vehicle, a bigger chunk of your overall cost is in the maintenance repair side.
So that will help to use vehicle market, more used vehicles are out there,
which then helps the overall ecosystem.
So I do think that the economics actually do work largely,
but it's still being worked out, like you said, and people understanding what that is.
I have to say, vehicle prices overall, all vehicles, right,
forget about you have gone up a lot right through the time of COVID production was way down.
Prices came way up.
I think we're still put, you know, electrification side.
We're still sorting that out as a overall industry.
I think you listen to JD Powers, there's going to be some sorting out on the pricing volume still happening.
And that's a much bigger trend than electrification, but I think electrification will benefit from that.
You can hear Michael Barrabe's full conversation with our own Molly Boygon on the latest episode of the Automotive News Shift Podcast.
That's available now, wherever you get your podcasts.
That's daily drive for today. I'm Kellan Walker.
Thanks to Automotive News executive producer Jake Near, as well as our own Irvash Kakaria, Lindsey VanHully,
and Paige Hodder for their reporting for today's podcast.
You can get the latest news on EV sales, manufacturing investments,
and everything happening in the auto industry at autonews.com.
Come back tomorrow for our interview with Randy Parker, CEO of Hyundai MotorAmerica.
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like the Adventure Ready, Policy and XRT Pro as an example,
we'll give you a good sense of where the brand may be headed in the future.
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