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Welcome to this weekend drive edition of Daily Drive for the first week of September 2025.
I'm Kellan Walker in Las Vegas. We're breaking down some of the biggest stories
in the auto industry from the past week and looking forward to what's in store in the days ahead.
Joining me today, Larry Velikwet is back in action on weekend drive. He covers Toyota and Sudru for
us at Automotive News. Larry, welcome back. Hazar, how you doing? I'm good. And Hannah Lutz
is director of technology and innovation coverage at Automotive News. Hannah, welcome back to
Daily Drive. Hi, Kellan. Thanks for having me. All right. So guys, we got a lot to talk about.
Let's get it rolling. So some red meat for our audience here. Tesla's board is offering CEO Elon
Musk a pay package that can be worth up to a trillion dollars. And we've never seen anything like it.
First off, what were each of your reactions when you heard about this first?
To say that we've never seen anything like it, Kell, is an understatement. No one has
ever seen anything like it. No one should ever see anything like it. This is insanity
encapsulated. But hey, it makes good headline, doesn't it? Let us know how you really feel, Larry.
What about you, Hannah? Oh, just wait. Just wait. It does. That's a jaw dropper,
but it gives Musk more incentive to build out the robotexy business. That's one of the
benchmarks that he has to hit to get this pay package, along with growing the company's
market value to 8.5 trillion dollars, which is a tall order. It's one trillion right now.
And it might guide him to staying focused on Tesla, despite all the other business
ventures that he has. So if that is the intent to keep him strategy focused on Tesla and
make that priority, we'll see if it works. Let's think about this, right? Let's do some numbers.
Do you think that what was his last pay package? $56 billion? That didn't keep his
attention on Tesla. So now we have to make that exponentially larger in order to capture
his attention. Long enough, I mean, these are insane numbers, and we need to put these numbers
in perspective. I looked this up. This is my fun with math moment for the weekend.
There are more than 200 nations on earth right now, right? Do you know how many
have gross domestic products of at least $1 trillion out of that 200?
Two. Anybody want to take a guess? 19. They're 19 countries out of 200, so about 10 percent,
that have gross domestic products above $1 trillion. The last of the number 19 of those 19
Saudi Arabia. Wow. That has just over $1 trillion of GDP. So and the other thing that the other
fun part of this math is if you take all of the gross domestic products of all of those countries
and you add them up, what's the gross domestic product of one person on the earth, right?
You got an idea? Anybody want to take a guess? The total, if I add up all the GDPs per capital
GDP. It's your turn, Hannah. I don't know. This is too much math for me. We're journalists,
Larry. We're not mathematicians. You don't get paid to add. I'm not a mathematician either,
but damn it. This is important math. So the total GDP per capital GDP of the earth
is just over $3 million. It's about $3.2 million, right? Now, let's put Elon Musk's pay package
in perspective. They believe this board is saying with this compensation package
that the guy who has consistently overpromised and underdelivered for how many years is worth
an exponential amount of money, like a large exponent amount of money than any other person
on earth. That is insane. And collectively, half the population of the earth combined.
That's insane. It might just show that it doesn't really matter anymore. The numbers
don't matter anymore because he already has everything. What more money is he going to buy?
I mean, but Larry, at the same time, this isn't liquid, right? So a lot of it is stock. So it's
just about control, essentially, right? Like how much control he has of the direction of the
company. You know what? I hope he gets it because I hope he has to pay the taxes on us.
Well, knowing someone like him is probably taking loans against his stock. So he's
probably not paying much taxes on it to begin with. You know, that's the loophole. But okay.
Viva la revolución, man. I see where you were going. Okay. This comes though as Tesla's
auto sales are steady declining over several months. Is this a sign that the company's
board is all in on robotics and AI? And if so, where does this leave personal EVs?
So, yeah, I mean, Musk is definitely all in on robotics and AI. That's clear. He's going to
be all in on that no matter what. And Tesla sales have declined. But I don't think that
means much for personal EVs. I mean, other EVs are entering the market and they're doing pretty
well. We'll talk about some challenges they might face later. And the Tesla sales are
still strong, too. They're just declining. So, and now Tesla is making a real effort in
the robotaxi world with its rollout in Austin. So even though he is all in on robotics and AI,
there's still a lot happening for Tesla in the vehicle space.
What do you think, Larry?
Yeah, I'm just going to say this. I'm not a fan.
A fan of what?
Any of that.
Okay. Well, Larry, what do you think are the wider possible impacts on the auto industry
and beyond if the pay package stands?
You know, there is no other company in the auto industry that is going to say,
hey, this seems reasonable. And we're going to have to compete. Because, hey, they can't.
They just can't. And they can make pie in the sky promises an eight-fold increase
in the company's net worth. And there's no way he's going to get to a trillion-dollar
pay package. Let's just be honest with ourselves. It's a nice headline for a company whose stock is
having some troubles and whose operations are having some troubles and whose sales
are having some troubles. But I will tell you, as somebody who has watched large personalities
roll through this industry, when you put every last egg in one basket of a person who,
by their definition, is mortal and you want the company that you're supposed to be guiding
to be all wrapped in, that is a huge, huge risk in and of itself. I think it's a great
headline and it's a jaw-dropping headline, as Hannah aptly put it. But it's just outside
reality in the scope of everything in this real world.
Yeah. Well, look, we are just halfway through the show and I have already pitted out my t-shirt.
So the second half should be even more interesting. All right. Coming up, not one, not two,
but three automakers all announced to EV production cutbacks or staffing cuts this week.
What does that say about the market? We'll talk about that and more next on Weekend Drive.
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Welcome back to Weekend Drive. I'm Kellan Walker with Larry Velikwet and Hannah Lutz.
U.S. auto sales stayed healthy in August. Most major automakers that report their
monthly sales results saw gains. But we continue to see import dependent automakers feeling the
tear of pain. Honda, Subaru, and Mazda all reported fewer deliveries than a year ago.
Larry, how do those automakers adapt? Well, this tariff deal is going to make some impact
to help them adapt. Those companies have products that are subject to tariffs,
a lot of their products that they sell in the U.S. Not all the products, but some of them.
The impacts are not going to be good. As we've discussed before, these tariffs
are going to come in and their prices are going to go up, even if it's only 15%.
At 15% on a $40,000 or $50,000 vehicle, that's real damn money. I can see why sales are going
down. Subaru, for example, started raising its prices in advance of the full tariff deal because
it's not in a position where it can absorb it like Toyota can. Toyota, if you remember,
took a $9 billion hit for the year because of tariffs that's just coming off the books.
These smaller automakers that don't have Toyota money, they can't do that. They have to pass that
along to their customers. That, in turn, makes their products less competitive, especially those
lower-end products. There's only so much they can do. They can only adjust trim levels and
decontent so much. If affordability was already a problem, this is making it worse.
What are your thoughts, Hannah?
Yeah, it seems like we'll see the effect of the tariffs as the year goes on and into next year.
There was some news this week, a US appeals court ruled some of the Trump tariffs illegal on August
29th. To be clear, for most of the auto industry, the high tariff rates will be
staking around because the ruling applied to those country-level reciprocal tariffs
and the fentanyl tariffs on Canada, Mexico, and China,
those do not apply to most of the auto industry. The auto industry falls under sectoral tariffs that
covers vehicles, many automotive parts, and steel and aluminum. Those tariffs are not affected by
this ruling and are still about 25% for the most part. Larry mentioned 15%. That executive order
was signed for Japan so far and will likely come for some other regions, too. Right now,
it's still 25% for the most part. Thankfully, I only have to worry about Japan.
And also, General Motors, Volkswagen, and Rivian all said this week they're cutting some
EV production or staffing. As they say, two could be a coincidence, but three is a trend.
What should we make of this, Hannah?
Well, selling EVs and buying EVs is about to get a lot harder because the federal EV tax
credit goes away on September 30th. That's right around the corner. And that $7,500 that
is available right now is a big driver of EV demand. And it's something that automakers have been able
to count on, at least the ones that qualify for it. So it helps get closer to price parity with
gas vehicles and just has really helped the market grow, even if it's not major growth.
So 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. And I think
this will continue across the board for the industry beyond September 30th and those credits go away.
Yeah. And if you look at the inventory situation, we mentioned this a couple of weekends ago, right?
The day supply is right now for EVs is in excess of September 30th. And if you can't
sell an EV, a brand new EV on September 30th, sell or lease that's going to qualify for $7,500
from the government. How are you going to sell that same vehicle for $7,500 more out of a consumer's
pocket on Tuesday, October 1st? Yeah, it's going to put dealers in a tough position. They still
have to pay the floor plan on it. It's going to be, we'll see what happens, see how, what
that inventory level is after September 30th, see how bad it actually gets, but it could get pretty
bad. Yeah, it'll get, well, they'll go pretty quickly this month. You'll see a big, big spike
in EV sales. And I got to tell you, if you're looking for a used car, this month is the time
to go grab a used EV because you are never, ever going to be able to touch for this little
money. Well, we live in some interesting times. Hannah Lutz, Larry Bellaquette. We are cursed.
Thank you so much for joining me. Thanks, Cal. Thanks, Cal. That's all for this weekend
drive edition of Daily Drive. I'm Kellan Walker. Thanks to Automotive News executive producer
Jake Nier for his help on today's podcast. You can get the latest news on the EV market,
CEO compensation and everything happening in the auto industry at AutoNews.com.
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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