Intel Report: The Weekly Mobility News That Matters

BY AUTOMOTIVE VENTURES | Feb 3 2025 | VIEW ONLINE

What We're Reading:

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Automotive

President Donald Trump signed executive orders to implement 25% tariffs on imported vehicles, parts and virtually all other goods from Canada and Mexico — a move that threatens to upend the North American auto supply chain, spark a regional trade war and raise costs for consumers, automakers and suppliers. Trump also enacted a 10% import tax on goods from China. The executive orders include retaliation clauses that would lead to further tariffs if countries decide to retaliate, as they have indicated they would. Trump has said the tariffs are designed to force the nation’s largest trading partners to reduce the flow of migrants and fentanyl into the U.S., to reduce trade deficits and to incentivize manufacturers to open domestic factories. | Automotive News ($)

Tariffs of 25% on almost all goods imported into the United States from Canada and Mexico could halt production at assembly and parts plants in all three countries within a week, as the industry’s thin margins make continued production untenable. The tariff rate is “15% higher than anybody’s profit margin,” and neither automakers nor suppliers will be prepared to take those losses, resulting in idled plants, said Flavio Volpe, C.M., CEO of the Automotive Parts Manufacturers' Association (APMA). | Automotive News ($)

There are approximately 5.3m light vehicles built in Canada and Mexico, with about 70% of these destined for the US. Further, many U.S.-built vehicles use Canadian or Mexican-sourced propulsion systems and component sets; those components would see a tariff as well, increasing costs for vehicles produced in the US. Virtually no OEM or supplier operating under the USMCA is immune. | S&P Global MobilitySean Duffy was sworn in as U.S. Secretary of Transportation on January 28, 2025, and immediately signed a memorandum to reset Corporate Average Fuel Economy (CAFE) standards. This action aims to reduce car prices by eliminating restrictive fuel standards and the electric vehicle mandate. Duffy's decision is designed to make cars more affordable, addressing rising vehicle costs and giving Americans more choices without government overreach. | U.S. DOT

The global auto industry is perceived as the “most disrupted” industry across the economic landscape, according to a new AlixPartners survey of business executives. It marks the first time in the six-year history of the consulting firm’s annual disruption index that automotive has risen to the top of the list. The industry scored a 76.7 on the firm’s 100-point scale, a 4.7 point jump from last year. Automotive eclipsed media and entertainment for the top spot. | Automotive News ($)

The average dealership is expected to have a 2% to 2.5% return on sales over the next 10 years, a slight drop from current levels, according to a study commissioned by the National Automobile Dealers Association (NADA). Glenn Mercer, president of Cleveland consulting firm GM Automotive, conducted the dealership profitability Back to Basics study and presented some results Jan. 25 at the NADA Show in New Orleans. Mercer estimated dealerships’ return on sales currently is 3%, lower than during the COVID-19 pandemic and microchip shortage, when it ranged from 4% to 6%, but about the same as pre-pandemic levels, he said. | Automotive News ($)The Presidio Group-NCM Associates Average Dealership Performance Benchmark summarizes U.S. Franchise auto dealership KPIs for full year 2024. | The Presidio GroupCDK Global has agreed to pay $630 million to settle an 8-year-old class-action lawsuit alleging the dealership management system company had conspired with a rival to inflate data-access fees for third-party vendors. A judge still must approve the proposed settlement, which was filed in U.S. District Court for the Western District of Wisconsin. The settlement amount represents 130% of the actual damages claimed collectively by more than 200 vendors. CDK admitted no wrongdoing in the settlement agreement. “The bottom line is resolving this dispute is a good outcome, not just for CDK but for all players in the industry,” CDK CEO Brian MacDonald said in a Jan. 28 video about the settlement. “Now we can have a singular focus on innovation to benefit our customers and the entire industry.” | Automotive News ($)Four years after a pandemic inventory crunch sent car prices to record highs, the number of drivers who can't afford their car loans is on the rise, worrying dealers who say this will only compound a growing affordability problem in the market. The share of trade-ins with "negative equity" — meaning the owner owes much more on their loan than their car is worth — was hovering at about 25% at the end of 2024, according to data from the car-shopping website Edmunds. That was up from about 20% in 2023. The amount these customers are underwater on their loans is also on the rise, a concerning data point for dealers and car companies looking to stoke demand among increasingly budget-conscious shoppers. According to Edmunds, the average amount owed reached an all-time high of $6,838 at the end of 2024, while about one in four car owners with negative equity owed more than $10,000. | Business Insider ($)From 2020 to 2024, new car prices across all segments jumped more than 20%. But the most expensive vehicles have gained the most ground. In the fourth quarter of 2024, a record-high 18.9% of consumers took out loans for new vehicles with monthly payments of at least $1,000. And sales of cars that cost at least $80,000 increased 37% in December compared to the previous year. Within that group, the average price of a vehicle was $102,000. | Bloomberg ($)

A U.S. appeals court threw out consumer protection rules adopted by the Biden administration to ban bait-and-switch tactics and prohibit auto dealers charging for add-on costs that do not benefit new car buyers. In response to legal challenges brought by the National Automobile Dealers Association (NADA) and a Texas dealer group, the 5th Circuit Court of Appeals said in a 2-1 decision that the Federal Trade Commission (FTC) had violated procedural rules in writing the regulation without giving advance notice of the planned regulation. The rule required up-front pricing in dealers' advertising and sales discussions and informed consent from consumers before charging for any item. It was proposed in 2022 and finalized in January 2024 but put on hold pending the legal challenge. The FTC had said the new rules would bar junk fees like a service contract for an oil change for an electric vehicle or a duplicative warranty and estimated it would save consumers more than $3.4 billion and 72 million hours annually shopping for vehicles. | Reuters ($)

Roughly a quarter of Tesla’s earnings last quarter were due to recognizing a $600 million gain on Bitcoin. Tesla recorded a $600 million mark-to-market gain, accounting for a significant part of its $2.3 billion net income in Q4, which was already down 70% year-over-year. | Electrek

The practice of allowing right turns on red lights dates to the energy crisis of the early 1970s, following a disruption in oil supplies from Arab state members of OPEC. The Energy Policy and Conservation Act, enacted in 1975, required states to permit these maneuvers as an energy-saving measure. But, right turns on red traffic lights put pedestrians and bicyclists at risk, a Mineta Transportation Institute report issued in December says. The study noted that “most drivers do not come to a complete stop and instead roll through” the red light, creating a safety hazard for pedestrians in the crosswalk. The study’s authors recommend that states should allow cities to prohibit right turns on red as the default practice and only allow such maneuvers at select intersections. Cities could allow right turns on red based on intersection design, the amount of pedestrians and bicyclists at specific intersections and their proximity to transit stations. | Smart Cities Dive

The morning commute into Manhattan is getting shorter for most people, with travel times down on most major crossings after the start of New York City’s congestion pricing toll earlier this month. Average morning travel times into Manhattan fell by nearly half on the Holland Tunnel, which connects New Jersey to lower Manhattan, and by 30% on both the Queensboro Bridge and the Williamsburg Bridge, which links Brooklyn to the island, according to data from the Metropolitan Transportation Authority, which runs the city’s transit system and is implementing the new toll. | Bloomberg ($)Florida’s Palm Beach International Raceway (PBIR) has long been in limbo, and though it looked destined for demolition in 2022, the local zoning commission shot down the high bidder’s proposal to develop the property. It’s for sale again now, and the CBRE real estate firm has it listed without a price in hopes someone will make an offer worth taking. It’s 174.4 acres of commercial land located in Jupiter, Florida, with a quarter-mile drag strip, a two-mile road course, a 7/10-mile kart track, some space for mud runs, and a clubhouse measuring 13,000 square feet. | The DriveOf the top 20 slowest-moving cities, 12 are in Asia—a mark of fast growth and mismanaged urban development. The fix is no mystery. Cities with good traffic make private cars less desirable to own and use. Singapore has punishingly expensive ownership quotas, as well as congestion pricing. Tokyo has fees and tolls, and tough limits on parking space. Both cities also have world-class public transport systems, and housing built near stations. Yet, politicians often opt to build more roads instead. Expanding road infrastructure alone nearly always fails. Drivers end up driving more and moving farther from the city center. The city sprawls, but congestion is little changed. | The Economist ($)

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Electric Vehicles (EVs)

Global sales of fully electric and plug-in hybrid vehicles will rise by at least 17% this year to over 20 million cars, helped by an extension of China's auto trade-in subsidies, according to research firm Rho Motion. Europe, the world's second-biggest EV market, will return to sales growth as CO2 emission targets come into effect and cheaper models become available, but the pace will remain slower than in 2023, Rho Motion Head of Research, Iola Hughes, said. | Reuters ($)

It’s a turbulent time for the American EV market. On the one hand, the sector is coming off of record-high sales, and a bunch of newer, better models are becoming available. On the other hand, manufacturers are walking back their EV plans, anti-EV sentiments are spreading around, and President Donald Trump is taking a sledgehammer to the Biden administration’s pro-EV policies. Despite the headwinds, analysts say that 2025 could be a strong year for EV sales in the U.S., building on what was a clearly — and perhaps unexpectedly — positive 2024 for EV adoption. | Canary MediaAt least 39 states make people pay a premium for driving electric, including $50 in Hawaii and $200 in Texas. That’s up from no states a few years ago. The fees are an attempt to make up for declining revenue from gasoline taxes that electric cars, for obvious reasons, don’t pay. They’re an example of how governments are struggling to adjust to technological upheaval in the auto industry. | The New York Times ($)

BMW benefits from its longer history with EVs, beginning with the development of the i3 electric city car and i8. BMW launched the i3 in 2013 and for several years it was one of the top three EVs sold worldwide. Since ending i3 production, BMW has pursued what it calls a multi-drivetrain strategy, offering its bestsellers not only with combustion engines but also as plug-in hybrids and BEVs to address a variety of customers. That has helped BMW achieve a higher share of BEVs in its overall sales than several traditional premium automakers, with about 17% of its sales coming from BEVs. | Automotive News ($)

Electric Vehicles (EVs) on Britain’s roads are lasting as long as petrol and diesel cars, according to a study that has found a rapid improvement in electric vehicle reliability. An international team of researchers has estimated that an electric car will have a lifespan of 18.4 years, compared with 18.7 years for petrol cars and 16.8 years for diesels, according to a peer-reviewed study published in the journal Nature Energy. The findings were based on 300m records from compulsory annual MOT tests of roadworthiness. Automotive engineers have long suspected electric cars will be more reliable than petrol or diesel cars, because they contain many fewer moving parts. Data has been limited, however, because the earliest mass-market electric cars are only just reaching the end of their lives. | The Guardian

🇨🇳 China

China is intent on dominating the global automotive industry and has already begun to do so, but the threat is underappreciated in the U.S. because “we don’t see Chinese cars on our streets right now,” Michael Dunne, CEO of Dunne Insights, said. Dunne said China has the ability to manufacture 50 million vehicles per year, uses half of that capacity to meet domestic demand and exported 6 million vehicles in 2024. That leaves enough excess capacity to “blindside” global automakers in their own markets, especially if Chinese automakers are able to gain access to the U.S. He said most American perceptions of Chinese vehicles are out of date: They are no longer cheap with low quality but instead compare to offerings from other global automakers at price points that are markedly lower. | Automotive News ($)China broke its own record in installing renewable power in 2024, as the world’s top polluter continues to push its energy transition while the U.S. shifts away from fighting climate change. The world’s second-largest economy added roughly 277 gigawatts of solar last year, surpassing the previous year’s record of 217 gigawatts, the National Energy Administration said in a statement on Tuesday. It also added nearly 80 gigawatts of wind, according to the statement. The record installation means China has hit its 2030 renewables target six years early. This stands in contrast to the US, the world’s second-biggest emitter of greenhouse gases, where new President Donald Trump has started implementing a hard pivot back to fossil fuels and withdrawn from the Paris climate pact. | Bloomberg ($)

🤖 Autonomy & Robotics

Tesla CEO Elon Musk said his company will launch a paid ride-hailing robotaxi service in Austin, Texas using its own fleet vehicles this coming June — the latest in a long line of sky-high promises he has yet to meet about autonomy. Musk was otherwise unsurprisingly light on details. During an earnings call, Musk said there will be no drivers in the cars, which will use the yet-to-be-released “unsupervised” version of its Full Self-Driving software. He also said he expects the unsupervised FSD software to be released to owners in California and “many regions of the U.S.” this year. But the idea of owners adding their own cars to the Tesla ride-hail fleet won’t happen until at least next year, Musk said. The CEO then called 2025 “maybe the most important year in Tesla’s history.” | TechCrunch ($)

Waymo plans to start testing autonomous vehicles in 10 new cities this year, starting with Las Vegas and San Diego. However, this doesn’t mean the company will launch commercial operations in any of these cities — or even test them in autonomous mode. Waymo told The Verge it will send less than 10 AVs to each city, where they will be manually driven. | TechCrunch ($)

Commercializing autonomous vehicles wasn’t a focal point of the Biden administration, although there was some relevant movement around the issue at the 11th hour. Days before Christmas, the National Highway Traffic Safety Administration (NHTSA) proposed a national program for the evaluation and oversight of vehicles equipped with automated driving systems. Under the agency’s framework, companies running these vehicles would provide detailed data on fleet performance and safety. Trump reportedly wants to not only set up a framework, but quash an order that required automakers to report crashes involving cars with automated-driving systems. That would be convenient for Tesla, which reported vastly more crashes involving its driver-assistance systems than any other automaker. NHTSA has conducted multiple investigations into whether the features Tesla markets as Autopilot and Full Self-Driving are defective, and several of its probes are ongoing. There’s no mystery as to why Musk would want a national approval process. Roughly half a dozen states have bills proposing their own sets of requirements around self-driving vehicles. A patchwork of rules would stall progress and deployments, even for cars that already have demonstrated safety in other jurisdictions. | Bloomberg ($)

Robot vs. Robot: the future of warfare? | Interesting Engineering

Elon Musk says that Tesla aims to build 10,000 Optimus robots this year, but he admits that it is an ambitious goal. With Tesla’s automotive business being down last year, Tesla CEO Elon Musk turned again to humanoid robots to stoke positivity amongst investors. During the conference call following the release of its Q4 2024 earnings, Musk claimed that Tesla is aiming to build 10,000 Optimus robots in 2025: "The normal internal plan calls for roughly 10,000 Optimus robots to be built this year." However, he highlighted that it is an internal goal and it’s more likely that Tesla will end up building a few thousand units. | Electrek

General Motors is charting a technological future focused on its Super Cruise driver assistance technology, similar to Tesla's Autopilot, with the expectation of bringing in billions of dollars in revenue. GM's push towards hands-off driving system Super Cruise comes as the automaker exits its multi-billion-dollar-losing robotaxi business Cruise, which focused on self-driving vehicles hailed by an app. GM forecast on Tuesday that Super Cruise would bring in about $2 billion in total annual revenue within five years, aiding in its efforts to be known like Tesla for technology as much as it is for vehicles. | Yahoo! Finance

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Aviation & Space

Boom Supersonic’s XB-1 demonstrator plane just went supersonic in the skies over California’s Mojave Desert, making it the first civil aircraft to break the sound barrier. The American startup’s plane notched the historic achievement in its 12th test flight. It cleared Mach 1 and stayed supersonic for around four minutes, reaching Mach 1.1. Test pilot Tristan Brandenburg broke the sound barrier two more times before receiving the call to bring the XB-1 back to the Mojave Air & Space Port. | TechCrunch ($)

General Atomics Electromagnetic Systems (GA-EMS) just hit a massive milestone that could alter the future of space exploration. The company has successfully trialed a nuclear fuel that could one day drastically cut down the travel time to Mars and beyond. The tests showed the fuel can withstand the harsh conditions of a nuclear thermal propulsion reactor. In other words, it has the capability to one day power a nuclear rocket that could fire humans into deep space at unprecedented speeds. NASA - National Aeronautics and Space Administration and other organizations have long looked at nuclear propulsion as a faster space travel alternative. Estimates suggest the method could fly a spacecraft to Mars in approximately a month, massively cutting down travel times when compared with conventional rocket systems. | Interesting Engineering

📚 Investing

AngelList has published their "The State of Venture 2024" report. | AngelList

🚘 Car of the Week

Our Automotive Ventures "Car of the Week": a 1954 Jaguar D-Type "OKV 2" Works Competition. | Broad Arrow Auctions

Have a great week,Steve Greenfield

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In The News

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Great to see Andrea Amico from Privacy4Cars in PBS' MotorWeek. | MotorWeek

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On this week's "Future of Automotive" segment on CBT News, we recap the week at the National Automobile Dealers Association (NADA) Convention in New Orleans. | CBT News ($)

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