Intel Report: The Weekly Mobility News That Matters

BY AUTOMOTIVE VENTURES | Dec 2 2024 | VIEW ONLINE ➡️

Venture Capital firms aim to maximize returns by backing startups that others overlook or undervalue.

What We're Reading:

🚗 Automotive

Volkswagen Group is reviewing whether to roll back its direct-to-customer, or agency, retail model for electric vehicles in major European markets, citing the “slow transition” to electric mobility. VW said selling EVs through an agency model while, at the same time, selling combustion-engine cars through a traditional retail operation, was complex and challenging in Europe’s current weak auto market. | Automotive News ($)Jaguar will slash its UK dealership network by around 75% as part of its radical plans to go electric-only in 2026. Managing director Rawdon Glover has confirmed that Jaguar will be slashing its network of showrooms from 80 to around 20, as it looks to target the wealthiest parts of the country with its upcoming range of premium battery models. | MSNPresident-elect Donald Trump said that he would impose additional 10% levies on goods from China and 25% on all products from Mexico and Canada – critical trade routes for the auto industry’s global supply chain. Tariffs of that magnitude on the roughly $97 billion worth of auto parts and 4 million finished vehicles that come to the U.S. from Canada and Mexico would be “devastating,” Wolfe Research analysts said. Average new-car prices would rise about $3,000, they said, adding to an almost $50,000 cost that many consumers are struggling to afford. | Bloomberg ($)Stellantis CEO Carlos Tavares is stepping down after profit slumped and U.S. sales weakened at the maker of Jeep SUVs and Fiat cars, effective immediately, the company said in a statement. The statement makes clear that Tavares and his board were not in agreement on unspecified issues. | Automotive News ($)

⚡️ Electric Vehicles (EVs)

With U.S. President-Elect Trump reportedly planning to cut federal incentives, EV sales are expected to surge in November and December. Right now, major discounts are slashing upwards of $10,000 to $20,000 off some of the most popular EV models, but that could change in 2025. | ElectrekElectric car (EV) sales could fall 27% if consumers lose the $7,500 federal tax credit, according to estimates published last week by three economics professors. Registrations of electric models are on track to hit 1.2 million this year, and estimates are that there would be about 317,000 fewer registered annually without the credit. | The New York Times ($)California is committed to zero-emission vehicles, even if the federal mood shifts. The state’s governor, Gavin Newsom, a Democrat, said Monday that if the incoming Trump administration cuts the $7,500 EV tax credit, he will propose rebates for eligible residents who buy electric vehicles. | TechCrunchElon Musk’s Tesla could miss out on lucrative tax rebates in California for electric vehicles being considered by the state’s Democratic governor, Gavin Newsom. Newsom’s spokesperson said the proposals would include a “market cap” element that could exclude larger companies such as Tesla in an attempt to encourage smaller and newer EV makers, although the exact details would be subject to negotiation with California’s legislature, he said. | Financial Times ($)Norway is on the cusp of becoming the first market in the world to all but eliminate sales of new combustion-powered cars. Despite winding back some tax benefits, EVs accounted for 94% of new car sales in October — almost double the rate in China — putting the country within reach of a goal to stop adding combustion engines next year. It’s a transition that happened with remarkable speed. While there have long been incentives to encourage EV purchases — mainly to promote short-lived domestic upstarts — adoption only started to accelerate in recent years, as a greater variety of cars became available. Once an inflection point was reached, the ramp-up was rapid. | Bloomberg ($)

🇨🇳 China

About 4,000 franchised dealerships (out of a total of 34,000) will close this year amid an intensifying price war in the new-car market and shrinking demand for fuel-powered vehicles, the China Automobile Dealers Association said. The number of stores slated to close is much higher than in recent years, when an average of 2,000 franchised dealerships closed in 2021, 2022 and 2023. Most dealerships that have gone out of business this year were stores selling fuel-powered vehicles. According to a survey released by the association in August, 51% of car dealerships were unprofitable in the first half of the year. Only 35% were profitable and the rest only broke even. Fueling the price war is a surplus of vehicle production capacity in China. | Automotive News ($)Chinese electric vehicle maker BYD is finalizing plans for a factory in Mexico, a push that will test Donald Trump’s trade policies and the Mexican government’s appetite for conflict with the president-elect. The plans put Mexico in a dilemma, made worse by Trump’s threat Monday to impose a 25% tariff on Mexican goods. The country is already a major car manufacturing center and generally welcomes foreign investment for the jobs it brings. BYD, which rivals Tesla as the biggest electric vehicle maker in the world, would normally be a prize catch. | The Wall Street Journal ($)

Just two decades ago, China had little capacity to make cars, and owning one was considered novel. Today, China produces and exports more cars than any other country in the world. | The New York Times ($)

Chinese companies offer cars with similar quality to their global rivals and at lower cost. Analysts at the bank UBS calculate that cars made by BYD cost 30% less to assemble than similar cars made by Western companies. Some of the biggest savings for Chinese companies are on batteries. China controls practically the entire supply chain for making electric car batteries. | The New York Times ($)

As China’s assault on the world’s automotive industry gathers speed, Japan’s national champions are emerging as some of the biggest victims. Japan’s reputation for production on a mass scale is also slipping. While the island nation boasted more than a fifth of global car production two decades ago, that figure has now fallen to 11%. | Bloomberg ($)

🌡️ Climate

As the planet continues to heat up, the idea of intentionally trying to block solar radiation — sometimes called solar radiation modification, solar geoengineering, or climate intervention — is gaining attention. Governments, universities, investors and even environmentalists are pouring millions of dollars into research and modeling of geoengineering systems. It could be a relatively quick way to cool the planet. But it could also unleash untold dangers. | The New York Times ($)

📚 Investing

Benedict Evans' latest presentation explores how AI may "eat the world". | Benedict Evans

🚘 Car of the Week

Our Automotive Ventures "Car of the Week": a 1954 Mercedes-Benz W 196 R Stromlinienwagen. | RM Sotheby's

Have a great week,Steve Greenfield

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Notable & New

🎤

On this week's "Future of Automotive" segment on CBT News: we explore recent research showing that EV sales could fall 27% if consumers lose the $7,500 federal tax credit. | CBT News ($)

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