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Welcome to Daily Drive for Friday, September 5th, 2025. I'm Kellan Walker in Las Vegas.
Today on the show, ICE raids Hyundai's EV plant in Georgia and detains 450 workers.
Canada delays its EV mandate by one year, and Tesla offers Elon Musk an unprecedented $1 trillion
pay package. Plus, David Frontera, of Informative, talks about what's driving up cases of synthetic
identity fraud in F&I. Let's run through all the news you need to know to keep up in the auto industry.
US immigration authorities carried out a raid at Hyundai Motor Group's massive electric vehicle
complex outside Savannah, Georgia. The Associated Press reports that the raid halted construction
at an adjacent battery plant under development. A US Immigration and Customs Enforcement spokesperson
said federal agents and local law enforcement, quote, executed a judicial search warrant as part of an
ongoing criminal investigation into allegations of unlawful employment practices and other
serious federal crimes. A Hyundai spokesperson acknowledged the raid at the construction
site and said, quote, we are cooperating with law enforcement and are committed to abiding
by all labor and immigration regulations. Canadian Prime Minister Mark Carney says the federal government
will waive its electric vehicle sales target for 2026 models. The EV sales mandate would have
required 20% of all new vehicles sold in Canada next year to be electric. Instead,
Carney is delaying the mandate for a year and launching a full 60-day review of the program
to make it more cost-efficient. And Tesla's board is proposing a new compensation agreement for CEO
Elon Musk that could be worth around $1 trillion. The long-awaited proposal is designed to
incentivize Musk to lead Tesla for years to come. It sets a series of ambitious benchmarks
he must meet to earn the full payout, including expanding Tesla's robotaxi business
and growing the company's market value to at least $8.5 trillion. It sits at $1 trillion today.
The plan spans 10 years. And those are today's headlines. You can find more details on all those
stories at AutoNews.com. Joining me now to talk about Tesla's unprecedented compensation offer
to Elon Musk and more is automotive news staff reporter Lawrence Iliff. Lonnie, welcome back to
Daily Drive. It's great to be here. So Lonnie, how likely is it that Musk will actually receive
anywhere close to a trillion dollars? Well, what's interesting here is we have some history,
right? His original pay package back in 2018, which was worth $50 billion, had very, very
difficult markers along the way for him to get his money in the form of stock. And he hit them all.
It's kind of crazy. It was basically take this tiny little EV startup and scale it
profitably in 10 years. And he did it like in five. And so the history is that he had
what they call a moonshot and he got it to the moon. We all know what Tesla is now.
And the way that I've seen it characterized the new one is a Mars shot, right? Because
everything is just super sized. It's so big. It's not taking an EV company that's tiny
and scaling it to a big profitable EV company. It's creating industries that don't exist,
like humanoid robots and millions of robot axes taking people around the world. And so
I think that it's possible because it's always possible with Elon Musk, theoretically, right?
But very, very difficult. Another story you've been following involves EV competitor Rivian.
It's laying off 200 workers at its plant in normal Illinois as it retools for new models.
It's the latest EV maker to cut production recently following GM and VW. So what do you
make of this? I think we're going to see a lot of this. And I think we already
seen a lot of this. There are other examples that aren't necessarily layoffs or slowdowns,
but in terms of delaying new EV models to a point in the future where the market might be better,
right? And I think it's kind of retrenchment. We're kind of going into an EV winter where
things are going to be very hard. They're going to be good in the third quarter because
everybody's rushing to get the tax credit. And in the fourth quarter, people bought their EVs.
And then why would you buy one when the money's gone unless there's some good deals out there?
But I think everybody's expecting three or four quarters of difficult times for EVs as it all
gets settled out. And Rivian is in an interesting spot, right? They expect their sales to fall
for their current vehicles, right? For three quarters, but they're coming out with their new
high-volume lower-priced vehicle. So this is like a defensive posture, right?
I'm going to have to spend all this money to ramp up this thing, but I don't have a lot of
income right now. So I need to trim. I need to kind of get my financial ducks in a row. There we go.
And I think that's what's happening. And we're going to see it at GM and stuff. And Rivian,
I just want to make a point, Rivian can't say like GM and these other people, well,
I'll just sell V8. I'll just sell hybrid. Why not? I'll just shift my production to the
Hemi. And that's not going to happen for EVs. They don't really have a choice. Good point.
Lonnie, thank you so much for joining me. It's been a pleasure.
Coming up, automotive F&I fraud is on the rise. Informatives David Frontera joins the show to
talk about what dealers can do to protect themselves and customers next on Daily Drive.
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Welcome back to Daily Drive. I'm Kellen Walker. Dealers ships only catch about one in five
fraud attempts. That's according to David Frontera, Director of National Compliance at
Informative. Frontera spoke with automotive news senior retail editor, Dan Shine,
about why fraud and dealerships is the new normal. David, great to have you with us on
the FNI Friday edition of Daily Drive. Hey, thank you so much for having me, Dan. Appreciate it.
So you were kind enough to write a guest column for automotive news online right now
at autonews.com about FNI fraud. It's something we talk about here on the FNI Friday edition of
Daily Drive, but I think we can't talk about enough. It's, as you kind of wrote in the
article, it's kind of the new normal of what FNI managers face. Talk a little bit about,
you kind of mentioned the four faces of fraud, kind of outlined those for us.
Yeah, you know, been in the industry a long time, right? And as we all have, I'm sure,
fraud used to be this monolithic thing. It was this one thing. And you know what? You might catch it,
maybe you'll lose a car here and there, but you catch it, you try to catch it. It's changing.
Fraud is now taken on this multiple, you know, interconnected forms. And every one of them
is unique, right? We've got identity fraud and that's obviously where somebody has a fake
driver's license. They try to pass off as real. Oftentimes, these things are high quality
enough where the untrained eye, the gut feeling isn't going to catch that anymore.
Then you got synthetic fraud. And as we all know, that's when somebody cobbles together
a lot of information, some of it real, some of it fake, to create somebody that looks perfect
on paper. And then you've got document fraud. These next two are the ones that people don't
really think about very much. You've got document fraud where people manipulate or
fabricate pay stubs and proof of residence and things like that. And it's super simple,
right? We did this webinar with NADA a couple of weeks ago and I was able to illustrate,
you know, it's super easy. You go to Google and you can pay $12.99 and you can have them
generate a fake pay stub for you. And then finally, you've got internal fraud. And this
one's unique because sometimes it's completely benign and on accident. And then other times
it's malicious. And this could be as simple as one of your employees altering a credit
application without knowledge that that's, you know, outside of the norm. It could be
something as complex as somebody manipulating the deal for their own personal gain. And
it's something that we have to look out for. So this fraud that used to be this singular
thing, right, has become really multilayered. Yeah, it's interesting. We're talking about
insider fraud and internal fraud. You know, I think a lot of folks are focused on the
forces coming in to the, you know, coming into the showroom with, you know,
and are nice people legit? Is that a real license? Are those real pay stubs?
But so that maybe gives you a little bit of blinders that you ought to be,
you have to be careful about the people inside your team too.
You really do. And you know, look, years ago, it was ID IDs because they were easy
to fake. It was done. And more recently, you're seeing synthetic fraud is absolutely
booming, right? Because synthetic fraud really does exploit the gap between traditional
credit checks and ID verification processes, right? We're a huge target because we've
got high ticket values, the transactions are really fast. And we work in an industry that's
kind of historically relied on these gut checks, right? We need to put some technology in place.
And when we do that, not only are we going to catch that synthetic fraud that's just
blowing up right now, but the internal fraud, that technology is going to catch
that internal fraud as well. When you have a process that is outlined and enforceable
by technology, whether it's on purpose or not, you're going to catch those changes
in the documentation as the deal goes. I guess I should admit that I probably
did some ID fraud back in the day when I was changing my license so I could drink,
you know, before I was 21. But I think statute of limitations has expired on that.
But all seriousness, you mentioned synthetic fraud up 98% from a year ago,
and that's near the $8 billion in losses for lenders and dealerships. And dealerships are
catching like one in five of these synthetic frauds. Those are scary numbers.
Yeah, 19.5% is what they're catching, right? So like you said, four out of every five people
are moving through a sales process in a fraudulent manner. And that is really,
that's an assault on the industry, right? That when you get into losses that are in the billions,
it's no longer a cost of doing business. We've got precedents that are being sent
set by courts now, where the dealer is going to be on the hook as opposed to the insurance
company. This is something that isn't going away. The numbers unfortunately are moving in
the wrong direction. And you know, dealers got to get savvy to it. We got to get creative and we
got to put processes and technology in place that make it impossible. That's the key.
We talk a bit about, you know, AI and AI for good, AI for bad. And you kind of point that,
you know, the spike is kind of due to generative AI. And this is kind of why now that it's
become this multi-layered assault. Let's talk a little bit about how generative AI is a key factor
in all this. Yeah. And you know, look, I should preface, I am an avid user of artificial intelligence.
I think it's fantastic. And I think dealerships should embrace AI as well. There are some
phenomenal tools within generative AI that can make doing business easier. They can make,
you know, the lead process go better. But we've got to embrace it responsibly.
Artificial intelligence can be used in so many good ways, right? But for as many good ways as it
can be used, it can also be used in terrible ways. Fraudsters are using it to create these
Frankenstein identities. They're using it to create better paper so that, you know, they can
utilize those to create fake IDs. It's really critical that we kind of fight fire with fire.
You need to find some technology that leverages AI to detect these patterns and data anomalies
and flag these suspicious behaviors. The more you can automate these verification processes and make
your approach to fraud detection as multi-layered as the fraud itself, those are the, those are
the dealers that are going to combat this and win. It's right. It's, you know, we want to combat
it. It's, it is like you're talking about it's technology, it's different kind of new tools,
it's processes. And it's just, and I would imagine training as well.
Yeah. And again, this kind of goes back to this multi-layered approach that we always talk about.
Training is temporary. Turnover is a fact of life. That's just how our industry works.
But that doesn't mean we stop training, right? We have to train everybody. A process without
the ability to enforce that process becomes a suggestion. So not only do we need the training,
but we need a process that is enforceable. And the way we enforce that process is,
you know, one of two ways. Either you can have a compliance director inside your dealership that's
got a constant headache for eight and a half hours a day, or you can put some technology in there
to catch what you might miss. And that proactive multi-layered approach has proven to really
help dealers stop fraud in its tracks because you're measuring for fraud at multiple levels of
the deal. From the minute the customer walks in the door to that license scan to a synthetic
ID fraud check to the technology letting you know there's something you miss with regard to
credit compliance or permissible purpose, the red flags come into play. You know, you can do all
of these things as you go. It's not going to slow down the deal. It's just going to make you
feel a lot better and hopefully let those dealer principles sleep a little bit better at night.
David, great stuff. Great information. Really appreciated that guest colony wrote for us.
We really enjoyed this conversation. Important things to talk about. Thanks so much.
You're very welcome. I appreciate you letting me be here. Have a great day.
David Frontera is Informative's Director of National Compliance. He spoke with our own Dan
Shine. That's Daily Drive for today. I'm Kellan Walker. Thanks to Automotive News executive
producer Jake Neer, as well as our own Lauren Siliff and Carly Shofner for their reporting
for today's podcast. You can get the latest news on retail F&I, manufacturing,
and everything happening in the auto industry at AutoNews.com. Come back over the weekend for
our weekend drive edition of the show. Our own Larry Veliquette and Hannah Lutz join me to talk
about the biggest news stories of the past week. GM Volkswagen and Rivian have unique situations
that came out this week, but the bottom line is the same. They all expect lower EV sales and
they're taking steps to prepare for it either with production cuts or staffing cuts.
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 DailyDrive at AutoNews.com or leave us a voicemail at 313-444-2774.
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