BY AUTOMOTIVE VENTURES | Oct 6 2025 | VIEW ONLINE

Automotive Ventures is excited to add Phillip Battista as our new Operating Partner. | LINK

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Automotive

The Center for Automotive Research has put a new price tag on the financial impact of President Donald Trump’s tariff regimen on the U.S. auto industry: $188 billion over the next three years. And CAR says that staggering number is probably a low estimate. That cost is not sustainable, helpful or absorbable, and it does nothing to aid one of the industry’s greatest challenges: vehicle affordability. To put the cost into perspective, that gigantic number is more than the combined market capitalization of General Motors, Ford Motor Company, Stellantis, Honda and Mazda ($178.7 billion). CAR’s update came this month during the industry research group’s annual Management Briefing Seminars, this year held in Detroit. CAR estimates that the industry will pay $56 billion in tariff-related added costs this year, rising to $61 billion in 2026 and $72 billion in 2027. | Automotive News ($)

U.S. credit markets are running hot—maybe too hot. Investors are gobbling up corporate debt like it is going out of style—even though the rewards, by some measures, are lower than they have been in decades. The frothy mood has some on Wall Street worried that the market is priced for perfection and ripe for a fall. One sign of weakness was the quick collapse of Tricolor Holdings, which supplied auto loans to low-income buyers who lacked a credit history. The company filed for bankruptcy this month and began to liquidate after one of its securitization partners, Fifth Third Bank, publicly disclosed a roughly $200 million loss tied to alleged fraud by a warehouse lending client, which was soon identified as Tricolor. Lawyers representing Tricolor’s liquidation trustee couldn’t be reached for comment. | The Wall Street Journal ($)

President Donald Trump frequently describes a booming U.S. auto industry, fueled by new factories from Canada, Mexico and Europe that he says will soon be producing American-made vehicles for global markets - from Tokyo to Paris. “We have so many car company factories under construction or being designed right now. And they're coming from China. They're coming from Mexico,” Trump said at a White House event earlier this month. A few days later, he lamented the loss of U.S. car production over the years, and proclaimed: "Car factories are coming back." But there is little evidence of a construction binge of new U.S. car factories. Instead, auto companies are making tactical moves at existing plants as they adapt to the two pillars of Trump’s second-term business agenda: tariffs, and policies hostile toward electric vehicles. To sidestep tariffs, some automakers are retooling existing, idle factory space in the U.S. to build vehicles that they have been importing, and which now face levies. | Reuters ($)

J.P. Morgan Global Research estimates the combined tariffs on vehicles and parts will be around $41 billion in the first year. This will rise to $45 billion in year two and $52 billion in year three. In response, manufacturers are expected to increase localization of products in the U.S. and carry out low-single-digit price increases in the region. Automakers and consumers are expected to share the burden equally, with a projected 3% increase to new vehicle price inflation. | J.P. Morgan

Bankruptcies among German suppliers are climbing sharply, with 30% more expected in 2025 compared with last year, according to a report from consultancy FalkenSteg. Between January and August, Falkensteg recorded 36 supplier bankruptcies, up from 33 the previous year. The report tracked suppliers with revenue of at least €20 million ($23.5 million) until 2024. In the second quarter, the automotive supply and electrical engineering industries each recorded 11 corporate insolvencies, the highest number across all sectors, according to the survey, which was reported in Automotive News Europe’s sibling publication Automobilwoche. In the first quarter, 18 supplier bankruptcies were registered. | Automotive News ($)

Some suppliers are under major financial pressure as automakers alter product plans to account for lower-than-expected North American electric vehicle demand and rapidly shifting trade policies. Automakers are extending the life cycles of profitable gasoline-powered vehicles and delaying or canceling some electrification plans. It’s a dynamic that has split the supply base, said Mark Barrott, Plante Moran’s automotive practice leader. “The supply base is really bifurcated right now,” Barrott told Automotive News. Suppliers that are more reliant on selling parts for gasoline-powered vehicles have embraced their customers’ moves, while those that made major investments in EV parts production are worried they won’t get the return on investment they were banking on, he said. And the supply base is split not only between suppliers who have invested more in electrification and those who have invested less, but also between larger and smaller suppliers, Barrott said. | Automotive News ($)

Elon Musk’s business empire has been hit by a wave of senior departures over the past year, as the billionaire’s relentless demands and political activism accelerate turnover among his top ranks. Key members of Tesla’s U.S. sales team, battery and power-train operations, public affairs arm, and its chief information officer have all recently departed, as well as core members of the Optimus robot and AI teams on which Musk has bet the future of the company. Churn has been even more rapid at xAI, Musk’s two-year-old artificial intelligence start-up, which he merged with his social network X in March. Its chief financial officer and general counsel recently departed after short stints, within a week of each other. The moves are part of an exodus from the conglomerate of the world’s richest man, as he juggles five companies from SpaceX to Tesla with more than 140,000 employees. The Financial Times spoke to more than a dozen current and former employees to gain an insight into the tumult. | Ars Technica

The Lucid Air Sapphire now has godlike grip to go with its hellfire 1,234 horsepower. Armed with Lucid’s new Track Tire package, the three-motor EV leapfrogged to the top of MotorTrend Group’s all-time 0–60-mph leaderboard with a 1.881-second blitz. The Sapphire’s other big rival, the Porsche AG Taycan Turbo GT Weissach, is the reason they're reporting the time to three decimals. MotorTrend's previous 0–60 record holder—with four doors, two seats, and 1,019 horsepower—now sits in second place just 0.006 second behind the Lucid. | MotorTrend

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EVs

The repeal of the U.S. electric vehicle tax credit won’t just crash EV sales in the fourth quarter, it could slow the pace of adoption for years to come, according to industry forecasts. Market share for new battery-electric vehicles was already stuck in single digits before the $7,500 tax incentive expired after Sept. 30. Now, forecasters are scaling back their targets as affordability worries deepen. | Automotive News ($)

Ford CEO Jim Farley on Tuesday said he wouldn't be surprised if electric vehicle sales in the United States fall by half after the expiration of the federal tax credit for plug-in vehicles. Tuesday was the last day consumers could take advantage of the up-to-$7,500 tax credit, though Ford and General Motors have found a workaround to continue offering taxpayer-funded discounts beyond the deadline. But that won't last forever, Farley said, and the impact of the end of the tax credit will be significant, especially with the U.S. Environmental Protection Agency ordered to roll back greenhouse gas emissions targets — opening opportunities for Ford in the mix of vehicles the Dearborn automaker can sell. | The Detroit News ($)

Across the country, thousands of people have taken advantage of the federal tax credit's elimination, leading to a surge in electric car sales. In August, sales jumped 18%, to 146,332 vehicles, and analysts expect another big increase in September. But the demise of the tax credit will probably bring the party to an end. Sales of electric models are expected to plummet in the last three months of the year and then remain sluggish for some time. “Next year could be a pretty dreadful year for E.V.s in this country,” Adam Jonas, who covers the auto industry at Morgan Stanley, said earlier this month at a conference hosted by his firm. Bracing for this new environment, automakers are slowing production of battery-powered cars, delaying or scrapping new models and shifting capital and other resources into gasoline and hybrid vehicles. It all marks a stark turnaround from the heady days a few years ago when many automakers believed electric vehicles were poised to take off.  | The New York Times ($)

Automakers and investors are about to find out what the “natural demand” is for new all-electric vehicles in the U.S., starting this week. Amid what’s set to be a record year for EV sales, including a record for units sold in the third quarter, demand for EVs is expected to decline. That’s because federal incentives of up to $7,500 to purchase a plug-in vehicle are getting discontinued after Tuesday. Many automakers have relied on the incentives to boost consumer demand for EVs, which they’ve spent billions of dollars developing even as the vehicles remain largely unprofitable. | CNBC

Tesla set a new sales record in the third quarter in a surprise reversal of the steep declines that have plagued the electric-vehicle maker this year. Global EV deliveries grew 7.4% in the period that ended Sept. 30 from a year earlier thanks in large part to U.S. customers who rushed to take advantage of the $7,500 federal EV credit, which expired at the end of the quarter. The sales turnaround, after two quarters of sharp declines, isn’t likely to last. Chief Executive Elon Musk has laid out his vision for pivoting the company away from human-driven cars toward autonomous vehicles and robots. Musk has said he sees a more promising future in more advanced technologies than competing against Chinese and other global automakers in the EV market where companies like BYD, China’s biggest automaker, are driving down the cost of vehicles. | The Wall Street Journal ($)

Not long ago, Chief Executive Mary Barra declared that General Motors was a decade away from quitting gas-powered cars, setting the course for a new mission, one that would safeguard the planet for generations. “We have an opportunity and frankly a responsibility to create a better future,” Barra said in a 2022 speech. She promised to launch 30 electric-vehicle models globally within a few years and, soon after, convert more than half of GM’s North American plants to EV production. Her ambitious quest to command new markets and save the Earth has since stalled. GM has gone from one of the industry’s loudest EV champions to a leading opponent of government emissions rules and fuel-economy standards that for decades fueled the consumer market for cleaner, more fuel-efficient vehicles. Many car companies, faced with softening EV sales and a Trump administration hostile to green-energy initiatives, have called for looser regulations. None has backtracked as quickly and dramatically as GM. “GM sold us out. Mary Barra sold us out,” California Gov. Gavin Newsom said at a recent news conference. He was still fuming over GM’s successful campaign to help strip the state of its authority to set clean-air regulations more strict than the rest of the nation. | The Wall Street Journal ($)

Written-off vehicles typically earn little attention, with the main buyers usually being auto wreckers seeking parts or car enthusiasts hunting for restoration projects. But at salvage auctions across Australia, a new type of buyer is emerging, and they are interested in one thing: the high-powered batteries inside electric vehicles. The demand for secondhand EV batteries is surging, with buyers repurposing them for everything from solar storage units to off-grid energy systems that can replace diesel generators. | The Guardian

E.V. fast-charging stations in the United States have soared in number from around 1,000 a decade ago to 12,000 today, according to federal government data. And despite the Trump administration’s hostility toward electric vehicles, and its attempts to end federal funding for public chargers, new stations are still going up — around 2,000 so far this year. The cumulative effect of that boom means that large portions of the country are now within reach of a fast charger, though some rural regions and smaller roadways lag behind. | The New York Times ($)

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China

For about a decade, the United States has been comforted by the notion that China had lost its way. After 35 years of astonishing growth, Beijing stumbled internally and abroad. Its leaders cracked down on some of the country’s most innovative sectors, from technology to education, driving entrepreneurs into exile or silence. Its “wolf warrior” diplomacy alienated its neighbors from India to Australia to Vietnam. That era is over. China’s leaders have corrected their course. Last month, while President Donald Trump accused nations at the U.N. General Assembly of being hopeless failures and harangued the United Nations for not hiring him to renovate its headquarters decades ago, President Xi Jinping put forward a Global Governance Initiative, to commemorate the 80th anniversary of the U.N.’s founding. He proposed strengthening the multilateral system along a series of dimensions, positioning Beijing as the constructive, agenda-setting superpower. As America doubles down on increasingly idiosyncratic protectionism (threatening 100 percent levies on foreign-made movies), China announced last week that it would no longer take advantage of any special privileges of being a “developing country,” a major concession sought for decades by free-trade advocates. As the U.S. levies crippling tariffs on poor countries in Africa and Asia, China has offered zero tariff-based trade to any least-developed country and some middle-income countries with which it has diplomatic relations, including 53 African nations. | The Washington Post ($)

China’s automotive sector is targeting annual sales surpassing 40 million vehicles within the next five years, as forecast by the China Passenger Car Association (CPCA) secretary general, Cui Dongshu. The projections also include exports, which are expected to reach ten million units in the international market. Additionally, Dongshu’s projections suggest a potential doubling of China’s auto exports by 2030. | Just Auto

China has issued a guideline to accelerate the integration of artificial intelligence into the transport sector, setting goals for widespread adoption by 2027 and deeper integration by 2030. The document, released by the Ministry of Transport and six other government agencies on Friday, outlines measures to expand AI applications across roads, railways, aviation, shipping, and postal services. It aims to build a modern, intelligent, and safe transport system that supports high-quality development. By 2027, AI technologies are expected to be widely used in typical scenarios, with transport-focused AI models in place and landmark innovation projects launched. By 2030, AI will be deeply embedded in the country's comprehensive transport network, supporting smart mobility, logistics, and infrastructure management at a world-leading level. The guideline also calls for breakthroughs in core technologies such as dynamic scene perception, autonomous decision-making, and real-time navigation. It encourages the development of intelligent products, including smart trains, autonomous ships, drones, and AI-enabled inspection robots. | China Daily

While Washington fixates on advanced AI semiconductors, Beijing is quietly cornering the market in so-called foundational chips that power everything from cars to medical devices to defence systems. American supply chain security potentially hangs on the decisions taken in response to pending investigations by the Office of the United States Trade Representative and the U.S. Department of Commerce into China’s bid for dominance of the sector. The numbers are stark. China already accounts for close to 40% of global chip capacity — a trajectory that points to even greater dominance by the late 2020s. Yet this crisis remains fatally overshadowed by the more glamorous race for AI supremacy. | Financial Times ($)

For years, Chinese billionaire Xiaopeng He has been pegged as an Elon Musk wannabe, and his electric vehicle company, XPENG, as a mere Tesla copycat. And until recently the company seemed laggardly, raising questions about whether it would survive. All of that is changing quickly. In other words, XPeng has moved up a stair from the realm of mere novelty to unignorable player with intimidating products and shrewd commercial instincts. He may soon be a force that Silicon Valley and Detroit alike must reckon with. The 12-year-old company is on a roll: Its car sales are on track to more than double year on year in 2025 to more than 400,000 units, driven by demand for the Mona M03, a $17,000 EV; its share price has more than doubled year to date; and it seems to be on track to notch its first profitable quarter. XPeng has just released a knock-your-socks-off $30,700 luxury sedan, and it could end the year as the world’s sixth or seventh largest EV seller, neck and neck with Hyundai Motor Company, regarded as one of the industry’s best EV makers. | The Information ($)

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Autonomy, Robotics & AI

A century ago, a deluge of automobiles swept across the United States, upending city life in its wake. Pedestrian deaths surged. Streetcars, unable to navigate the choking traffic, collapsed. Car owners infuriated residents with their klaxons’ ear-splitting awooogah! Scrambling to accommodate the swarm of motor vehicles, local officials paved over green space, whittled down sidewalks to install parking, and criminalized jaywalking to banish pedestrians from their own streets. Generations of drivers grew accustomed to unfettered dominance of the road. America was remade in the automobile’s image, degrading urban vibrancy and quality of life. Today, the incipient rise of self-driving cars promises to bring the most tumultuous shift in transportation since cars first rumbled their way into the scene. Just a few years ago, driverless cars were a technological marvel available to a select few in San Francisco and Phoenix, but now, companies including Waymo, Tesla, and Zoox collectively transport hundreds of thousands of passengers weekly in autonomous vehicles (AVs) across expanding swaths of Austin, Texas; Los Angeles; and Las Vegas, with future service announced in a lengthening list of cities, including Dallas, New York City, Philadelphia, and Miami. | Vox

AI is reshaping both soft power and hard power around the globe. The United States, to its credit, has an early lead with the former. The leading LLMs are trained on Western text, global training and inference are still dominated by American companies, and we are ahead in the global race for market share of total tokens generated. But as it stands, China is running away with the hard power part of AI – robotics. As the incredible progress in AI continues, we start seeing intelligence embedded in the physical world – culminating in generalist robots that perform a wide variety of tasks across applications, from manufacturing to services to defense. This will redefine every aspect of our society and reshape daily life. The country betting on that future is China, not the US. In the 10 years since the CCP released its “Made in China 2025” strategy, Chinese companies have leapfrogged the rest of the world’s density of robots per capita. They passed the United States in 2021, then the famously automated economics of Japan and Germany in 2024, and will soon eclipse Singapore and South Korea, their last remaining contenders. In short order China has become the world’s central robotics power. Entirely autonomous “dark factories,” like those of smartphone and automobile manufacturer Xiaomi Technology, operate in complete darkness with no humans present. | A16Z

"Most taxi drivers whose cars smell bad actually live in their cars," explains 36-year-old driver, Shao Wei. "I can understand them. They just want to save some money to help their families live a little better." The economic hardship is in part the result of millions of Chinese being thrown out of work by the coronavirus pandemic and China's slowing economy. Many have piled into the ride-hailing business and the wider gig economy. | NPRTesla released a new video showing its humanoid robot, Optimus, learning Kung Fu. The 36-second clip shows the robot being put through its paces with a human Kung Fu partner in Tesla’s robot lab. | Interesting Engineering

A side effect of the AI boom is that energy-hungry data centers are sending power costs to records in much of the US, pulling everyday households into paying for the digital economy. The power needs of the massive complexes are rapidly driving up electricity bills — piling onto the rising prices for food, housing and other essentials already straining consumers. That’s starting to have economic and political reverberations across the country as utilities and local officials wrestle over how to divvy up the costs. Yet those same facilities are a linchpin of US leadership in the global AI race. A Bloomberg News analysis of wholesale electricity prices for tens of thousands of locations across the country reveals the effects of the AI boom on the power market with unprecedented granularity. The prices were tracked and aggregated monthly by Grid Status, an energy data analytics platform. Bloomberg analyzed this data in relation to data center locations, from DC Byte, and found that electricity now costs as much as 267% more for a single month than it did five years ago in areas located near significant data center activity. | Bloomberg ($)

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Vehicle Connectivity

Despite years of effort and the outlay of billions of dollars, none of the world’s automakers have yet to match Tesla’s prowess in delivering over-the-air (OTA) software updates. Just like with your phone and laptop, these operating system refreshes allow owners to upgrade their cars remotely. Tesla introduced OTAs in 2012, but now Elon Musk’s company pumps out these updates like no other automaker. “Tesla once issued 42 updates within six months,” Jean-Marie Lapeyre, Capgemini’s CTO for automotive, tells WIRED. But for many other automakers, says Lapeyre, OTAs ship “maybe once a year.” For traditional car companies, software remains, or has been until very recently, merely one bolt-on component among many. In contrast, for Tesla and other digital-native automakers—among them Rivian, Lucid Motors, Polestar, and Chinese brands such as BYD, XPENG, and Xiaomi Technology—it’s almost the whole shebang. | WIRED ($)

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Aviation & Space

SpaceX’s $17 billion acquisition of telecom company EchoStar’s spectrum rights enables something unprecedented: direct satellite-to-smartphone connectivity without any terrestrial infrastructure. We’re not there yet, but the direction is clear: For the first time, a private company will be able to provide global communications services that bypass national networks, government oversight and geographic boundaries. Earlier versions of satellite phones needed line of sight to the satellite. They required bulky terminals or modified devices. EchoStar’s spectrum, by contrast, operates in frequencies that can penetrate buildings and work with standard smartphone antennas. It allows direct communication with the billions of phones already in people’s pockets. More critically, SpaceX now controls enough spectrum to offer commercial-grade mobile services globally — and the company is positioning itself to replace every other mobile operator with a service that operates entirely beyond national jurisdiction. | The Washington Post ($)

Carta tracks founder dilution by investment stage. | Carta

Our Automotive Ventures "Car of the Week": a 2024 Porsche 911 GT3 R Rennsport. | Bring A Trailer

Have a great week,Steve Greenfield

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 Steve was featured on CNBC this week to discuss the potential disruption of the Amazon Autos initiative to both franchised auto dealers and

 wholesale auto auctions. | CNBC

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Thanks, Auto Remarketing, for announcing Phillip Battista as our newest Operating Partner at Automotive Ventures. | Auto Remarketing

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On this week's "Future of Automotive" segment on CBT News, we discuss the automotive tariffs and what they might mean for automakers, dealers and for consumers. Will they raise prices? Will they reduce demand? And how long can the industry absorb the hit?  | CBT News ($)

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