Steve caught up with Corey Lystone, from our portfolio company CarGenius.ai, to discuss how AI is likely to reshape car shopping. | LINK

🚗 Automotive

Ford CEO Jim Farley recently suggested vehicle repairs should be done at a ‘reasonable cost’ but discourages DIY repairs due to vehicle complexity. Restricting repairs to dealerships could eliminate independent options, raising service costs. Without legal protection, consumers could face limited repair choices and higher expenses. His remarks suggest Ford’s preference to control repair processes, raising questions about consumer rights. | The Drive

Carvana launched a pilot new-vehicle test-drive center at its Dallas Chrysler-Dodge-Jeep-Ram dealership. The store eliminates salespeople, sales managers and F&I staff entirely. Instead, there are hands-off customer advocates to help customers with questions and online ordering, but they aren’t there to sell vehicles. Its new-vehicle, no-haggle pricing which it describes as below market, is consistent across the U.S. Carvana doesn’t charge any document fees and offers a seven-day money-back policy and same-day delivery. The store in May sold 248 new vehicles, making it the nation’s fifth-best Stellantis store. Carvana’s Casa Grande, Ariz., store was the No. 1 Stellantis store nationally, selling 706 new vehicles in May. | Automotive News ($)

The formula for developing a vehicle has been pretty much the same since the 1970s. As Chinese automakers have matured, they’ve shifted the equation, introducing artificial intelligence, pushing for rapid engineering evolution and quickly implementing new technologies. Other country’s automakers have been slow to evolve their development timelines. Some are doing it better than others, including Mercedes-Benz, which has been vocal about its research and development ecosystem redo. American automakers have begun changing their century-old development pipelines. Among them, General Motors has been a leading the way, employing methods and practices from the Chinese automaker playbook. | Newsweek

Detroit is making moves toward reclaiming its once-prolific role supporting the U.S. military as President Donald Trump calls for more weapons and more factories to build them. Multiple wars and Trump's dream of a manufacturing renaissance are fueling demand for the U.S. defense industry and contractors. Known as the Arsenal of Democracy for building weapons and militarized vehicles during World War II, Detroit and hometown automakers Ford Motor Company and General Motors Co. are once again emerging as potential defense powerhouses. | The Detroit News ($)

For decades, automakers have treated warranty risk as a manageable by-product of scale and innovation. That assumption is becoming harder to sustain. Warranty-related costs have nearly doubled since 2012, reaching roughly $58 billion globally in 2024—about 2.2 percent of industry sales. For some OEMs, warranty costs now exceed 4 percent of revenue, rivaling annual R&D spending. The scale of these costs signals a structural shift in how vehicle quality risks emerge and propagate. Development cycles have shortened as automakers race to deliver electrification, advanced driver-assistance systems, and, increasingly, software-defined architectures amid intensifying global competition. At the same time, supply chains have grown more intricate and regulatory requirements have tightened, increasing the cost of delays. Together, these forces increase both the likelihood of defects and their potential to spread rapidly across fleets. But most automotive OEMs continue to manage quality largely through retrospective, warranty-led processes, despite having access to unprecedented volumes of vehicle and customer information. Fragmented data and siloed expertise mean that issues are often identified only after failures occur in the field, triggering time-consuming investigations that further delay containment. The result is a widening gap between the scale and speed of quality risks and the processes used to manage them. | McKinsey & Company

Ferrari is using orders for its Luce electric car as a loyalty test for wealthy clients, signaling that support for the poorly received model may help preserve access to more desirable cars, people familiar with the matter said. The message that purchasing the €550,000 ($636,000) Ferrari Luce is a stepping stone to other, exclusive models has been delivered across parts of Ferrari’s collector network, the people said, asking not to be identified for privacy reasons. Ferrari has long used this allocation system to give repeat buyers of its standard models priority access to limited editions like the $2.1 million LaFerrari Aperta. | Bloomberg ($)

A month after the debut of the much-discussed Ferrari Luce—the Marenello's first electric vehicle—rumors continue to swirl. The latest report, published by Bloomberg, claimed that some dealers were pressuring customers to place orders for the Luce to avoid losing their top-client status or jeopardizing future access to Ferrari's most exclusive limited-run models. But that's simply not the case. Ferrari Chief Marketing Officer Enrico Galliera directly denied those claims in an interview with our colleagues at Automoto.it, offering a straightforward response. Speaking with Automoto, Galliera made it abundantly clear: 'Many rumors circulate about the Ferrari market, but this one is false. Our position has been clear from the beginning: the Luce was designed for a different type of customer, not necessarily for long-time Ferrari owners—although they are, of course, welcome to buy one.' Galliera added that such a strategy would ultimately hurt Ferrari. For one, unhappy customers would become "bad ambassadors" for the brand, spreading negative opinions and damaging Ferrari's reputation. He also noted that dissatisfied owners might quickly resell their Luce models, hurting resale values and potentially creating a downward spiral in the used market. Asked about demand for the Luce, Galliera declined to share specific order figures but said sales are meeting the company's expectations. He added that orders are currently split roughly evenly between new and existing Ferrari customers. | Motor1

⚡️ EVs

U.S. electric vehicle registrations are recovering from the loss of federal tax credits, with April’s 9.8% decline marking the smallest year-over-year drop so far this year and a signal the market is stabilizing. The EV share of the U.S. light-vehicle market held steady at 6.2%, the same as in March, but down from 6.6% a year ago. Automakers are increasing their mix of models and propulsion systems, and their vehicles better match what consumers are willing to buy. | Automotive News ($)

The war in Iran has changed the math around electric cars. Even though the Strait of Hormuz is set to reopen and gas prices are falling, it still costs almost three times as much to fuel a typical gas car as an E.V., at average gas and electricity prices. That’s a much wider gap than there was at the start of the year — a gap that isn’t likely to disappear anytime soon. Driving 100 miles in a typical gas car that gets 25 miles per gallon now costs more than $16 on average. The war pushed up average U.S. gas prices to a high of $4.50 in May, from below $3 in January. Gas has since fallen back closer to $4 per gallon, but it’s still so expensive that even recharging an E.V. at a pricey fast charger is roughly on par with refueling a 25-m.p.g. gas car. And an E.V. charged at home, on average, significantly beats refueling a 52-m.p.g. Toyota Prius hybrid. Before the war, efficient hybrids were much more competitive with E.V.s per mile. | The New York Times ($)

RJ Scaringe got his PhD from MIT studying internal combustion engines. Then he founded a company to make them obsolete. In 2009, fresh out of grad school, he launched what would become Rivian. The company spent nearly a decade in stealth mode before arriving at the 2018 LA Auto Show with two electric rides nobody had seen coming. The road, however, hasn't been easy. Rivian lost $3.6 billion in 2025, and has burned through nearly $25 billion in the past eight years. It has spent more money over the same period than almost every other pure EV maker. Rivian's IPO was the largest worldwide in 2021, and one of the largest in US history, within days valuing the company at over $100 billion. Its stock has dropped from a high of $130 to around $16. Since the R1 went on sale in 2021, Rivian has sold 175,000 cars. In the same time, Tesla has sold 8 million. But in 2024, Volkswagen Group committed up to $5.8 billion to co-develop software and electrical architecture technology with Rivian in a huge joint venture. This year, Uber announced it will invest up to $1.25 billion in Rivian to build and deploy up to 50,000 fully autonomous robotaxis. | Wired ($)

BYD plans to spend nearly €2bn to develop infrastructure in Europe needed to bring its five-minute “flash-charging” technology to all of its mainstream models over the next few years. The world’s largest electric vehicle maker is banking on ultrarapid charging to take market share from legacy rivals, but the expansion of the technology will hinge on how fast it can roll out charging stations across the continent. “It’s a lot of money [since] per station, it’s almost like half a million pounds,” Stella Li, the Chinese group’s top international executive, said as BYD launched its first flash-charging station in the UK. “First we need to build a very strong infrastructure network.” Each station would cost about €580,000. The group plans to roll out 20,000 flash chargers in China by the end of this year and 3,000 in Europe by 2027, including 600 in the UK. | Financial Times ($)

🇨🇳 China

America’s tariffs and regulatory fixes have favored gas-guzzlers over the electric vehicles gaining popularity elsewhere. Detroit dominates the making of the giant pickup trucks and monster SUVs that Americans love, and which are highly profitable. But in relying on petrol power behind protectionist barriers, America’s carmakers risk falling behind competitors—mainly from China—in an industry that EVs will one day take over. The Big Three have a recent “history of retrenchment”, says Philippe Houchois of Jefferies, a bank. In 1950 three-quarters of the world’s cars were made in America; now barely an eighth are. General Motors quit Europe in 2017, selling chronically lossmaking Opel to Groupe PSA, now part of Stellantis. Ford Motor Company’s share of the European market collapsed after it discontinued popular smaller models and failed to excite motorists with its evs. In China, ultra-competitive locals have routed both GM, whose market share has fallen by roughly half in a decade, and Ford, which has lost two-thirds. In 2004 GM was the world’s biggest carmaker, selling 8.4m vehicles. Last year it was fourth, with 6.2m. Ford has slid from third to seventh. Even at home, the Big Three’s share has dwindled from over 90% in 1965 to 40% or so. Stellantis, a mix of American and European brands formed by the merger of Fiat-Chrysler and PSA in 2021, sold just 1.3m cars in America last year, less than half the tally in 2004. | The Economist ($)

Australians have a reputation for favoring big, tough-guy combustion pickups and SUVs. Not recently, though. In May, for the first time, Australia’s top-selling car was an electric vehicle—the Tesla Model Y, whose sales grew 57% year on year, soaring past ordinarily favored combustion vehicles. The triumph of Tesla’s flagship EV, however, obscured another, perhaps more notable highlight of Australia’s evolving car market: In May, for the second straight month, China’s BYD, selling solely EVs and plug-in hybrids, was the country’s second most popular car brand overall, rising from eighth place last year, topped only by longtime leader Toyota. BYD’s rise to near the top of Australia’s car market reflects a surge of global EV sales, especially Chinese ones. Chinese EV exports soared 94% last month year on year, and they appear likely to grow even more, posing an increasing threat to traditional Western carmakers. Which is to say we are back in the 1970s: Again we have serious upheaval in the Middle East, soaring gasoline prices, and an upstart Asian exporting economy offering consumers cheap personal transportation. And again, the impact is—at least for now—a transformation in what kind of vehicles consumers buy. The sale of pure combustion vehicles has plummeted virtually everywhere since the Iran war began, replaced by a surging popularity of EVs, plug-in hybrids and mild hybrids, which have a small added battery and no plug. | The Information ($)

China’s passenger car exports jumped 73% year-on-year in May to around 809,000 vehicles, an industry group reported Wednesday, as higher gasoline and diesel prices due to the war in Iran raised interest in electric vehicles. Exports of new energy vehicles, including pure EVs and plug-in hybrids, more than doubled in May from a year earlier to about 435,000 passenger cars, or more than half the total. Chinese automakers such as BYD have been stepping up their overseas expansions, targeting markets including in Latin America, Asia and Europe at a time when domestic demand is coming under pressure, partly due to scaled-back government incentives for drivers to switch to EVs. Domestic passenger car sales in May fell 23.4% from a year earlier to 1.44 million vehicles, the China Association of Automobile Manufacturers said, the seventh straight month of year-on-year declines. Sales of cars with internal combustion engines — including gasoline and diesel vehicles — fell almost 42% from the year before as the share of EVs grew. | AP

China’s popular electric vehicles have a weight problem. And it’s spurring a potential government backlash and even talk of new auto taxes. The heavy EVs, with ever-bigger batteries for ever-longer ranges, are tearing up China’s roads and gobbling resources. But EV drivers dodge the road-maintenance taxes built into fuel prices paid at gasoline stations. Now critics, including the country’s powerful state-run media and a top automotive trade group, are demanding EV drivers pay their fair share. | Automotive News ($)

Chinese automakers are racing against the clock to secure European factory space before new European Union rules go into effect that could make it far harder to invest. The moves could reshape the bloc’s industrial footprint and cement the presence of Chinese brands in Europe. Experts and executives say the sudden wave of deals is partly connected to the proposed Industrial Accelerator Act (IAA), an EU measure that aims to preserve Europe’s industrial base by imposing conditions on direct foreign investment and “Made in Europe” content rules. Chinese automakers would also benefit by avoiding EU tariffs on imports that start at 10 percent and go up to 45 percent for electric vehicles for certain brands. | Automotive News ($)

Europe’s automakers have progressively been squeezed out of the Chinese market: cheaper, domestically produced electric vehicles have been gaining share at the expense of the premium traditional cars in which companies like BMW, Mercedes-Benz, Volkswagen and Stellantis specialize. As a result, sales have been crushed. Porsche AG’s revenue from China, for instance, fell by roughly two-thirds between 2022 and 2025, according to S&P Capital IQ. And the Chinese profit pool — which in peak years accounted for about half of the operating profit at BMW and Mercedes-Benz, according to Citigroup analysts — has shrunk to a puddle, or dried up completely. VW’s operating profit from its Chinese joint ventures almost halved last year, to €958mn. Worse, the Chinese market is itself now shrinking, as the economy splutters and subsidies are phased out. With electric vehicles continuing to gain share, that further squeezes European carmakers. It also leaves their Chinese rivals with lots of spare capacity to export their cheap EVs abroad. That’s where things go from extremely uncomfortable to actually threatening for the likes of Stellantis, Renault, VW and BMW. Chinese manufacturers have grown their market share in Europe from virtually nothing in 2021 to just shy of 10 percent, reckon Jefferies’ analysts. European carmakers’ sales may have revived a bit this year, thanks to a slew of new, lower-priced models. But the region is far from a growth market, and cannot accommodate aggressive new entrants without shrinking locals’ sales. That’s really bad news for an industry that only makes use of about 70 percent of its production capacity, by S&P Global’s reckoning, meaning it already bears outsize costs compared with its sales. European carmakers are meanwhile putting additional money into their plants to produce electric vehicles: making a decent return on all this new capital is going to get progressively harder, and every bump in the road — from U.S. tariffs to disruption in the Middle East — will result in a nasty jolt. | Financial Times ($)

🤖 Autonomy, Robotics

Waymo is increasingly facing political roadblocks as it tries to roll out its self-driving taxis powered by artificial intelligence nationwide. After early successes winning over politicians in California — its home state — and elsewhere, Waymo has stumbled in unlocking some of the biggest markets in the country. New York abandoned its proposal to allow self-driving taxis earlier this year. New York City’s new mayor, Zohran Mamdani, has said he would heavily weigh the interests of taxi drivers in deciding on rules for the technology. In Illinois, legislation to authorize the service stalled after labor unions protested. And in Washington, the city’s Council has for years delayed a decision about whether to allow robo-taxis. Those cities and others are central to Waymo’s expansion plans as the company pushes its vehicles onto new roads, according to industry analysts and experts. Waymo recently received $16 billion in new funding from investors for expansion, and the company is far ahead of competitors. But in a vacuum of federal rules governing the technology, the company must continue to win over local and state officials to expand. | The New York Times ($)

General Motors may have shut down its dedicated robotaxi division, but it hasn't bowed out of the race. Sterling Anderson, the former head of Tesla's Autopilot program and GM's chief product officer, told Business Insider in an interview that the company's focus on autonomy in personal cars could be applied to driverless ride-hailing services in the future. Anderson said GM's approach is to develop self-driving technology by breaking the driving experience into pieces and examining where autonomy is most useful to car owners. That means first tackling long stretches of highway driving before expanding to arterial roads and urban centers. Over time, the executive said GM's autonomous driving systems will be able to operate in enough regions to make a viable robotaxi service. | Business Insider ($)

In China, for just $30, you can have Dwayne Johnson drive your Tesla for you. Sounds too cheap to be true? Well, it is. What you’re actually buying is a tiny replica of The Rock's head, designed to sit above the rearview mirror and trick Tesla into thinking an attentive driver is behind the wheel. Tesla’s self-driving system appears unable to tell the difference between the figurines and a real person, allowing the actual driver to look away from the road, scroll through their phone, or even doze off—activities that are supposed to be prohibited while assisted-driving features are engaged. | Wired ($)

Waymo has tapped fleet management company Element Fleet Management to help keep its robotaxis charged, maintained, and on the road as the company expands into more cities. The multi-year partnership will start in San Diego and could expand to additional markets over time. While Waymo continues to run its driverless ride-hailing service through the Waymo app and oversees the performance of its autonomous driving system, Element will handle much of the behind-the-scenes work that keeps the fleet running. That includes vehicle lifecycle management, charging infrastructure, energy management, maintenance coordination, and fleet optimization. As Waymo grows, managing thousands of vehicles across multiple cities becomes a massive operational challenge. It’s not just about the self-driving technology – the cars need to be charged, maintained, repaired, and kept in service. The deal gives Waymo a partner focused on fleet operations while it concentrates on expanding its robotaxi service and refining the Waymo Driver autonomous driving system. | Electrek

Automakers and workers are teed up for what each side views as a fight for existence — with cobots in the middle and already operating inside General Motors Co's Factory ZERO in Detroit. Artificial intelligence, robots and automation took center stage in Detroit during this week's UAW Constitutional Convention and Reindustrialize, an industry conference focused on tech, manufacturing and defense. The reason: They're real, not just a theoretical talking point. For factory workers, cobots — shorthand for "collaborative robots" that work alongside humans — threaten jobs. UAW President Shawn Fain told workers gathered for their convention in this historic union stronghold that artificial intelligence and humanoid robots pose a "profound threat" to their livelihoods and humanity. For automakers, cobots and other forms of automation are critical to staying competitive globally, especially against speed-driven China. | The Detroit News ($)

🤖 AI

The economics of AI hyperscalers | Andrew Singleton

Jeff Bezos has dismissed predictions that AI will lead to mass job destruction, arguing instead that the technology will help usher in “multiple golden ages”. Outlining his vision for Prometheus, the first company he has led since stepping down as head of Amazon in 2021, Bezos fired back at warnings that AI would decimate the employment market. “The people who are jumping to the conclusion that the jobs are all going to go away . . . I think these people are just wrong,” said Bezos, the world’s fourth-richest person. Bezos is betting that AI will be a boon across his sprawling business empire, spanning space exploration, robotics, delivery, cloud computing and longevity research. “All of the things that I work on today have something to do with AI,” he said. “We’re in the middle of multiple golden ages right now, certainly with AI . . . But I think it’s true of space also, and other areas like biotech,” said Bezos. “I think you’re going to see a whole bunch of incredible miracles unfold here in the next decade.” | Financial Times ($)

Vinod Khosla believes AI will cause mass unemployment and tax systems should be changed in response, taxing capital gains the same as income, cutting rates for people with low incomes and adding new taxes on AI compute and robots. | Financial Times ($)

✈️ Aviation & Space

SpaceX held the biggest initial public offering of all time, but Wall Street may be expecting something even bigger from Elon Musk, the rocket company’s chief executive. Many of his fans and investors expect him to merge SpaceX with Tesla, the maker of electric cars, where he is also chief executive, joining most of his businesses into a roughly $4 trillion tech conglomerate, a sort of Elon Inc. Investors, analysts and even a top SpaceX executive have talked about the merits of such a deal on social media, in research notes and in a TV interview. The two companies have long shared executives and other resources and are jointly developing multibillion-dollar projects. Because Mr. Musk controls SpaceX and is Tesla’s largest shareholder, he would essentially be making a deal with himself. That would raise legal issues and probably prompt lawsuits claiming that he ran roughshod over the interests of other shareholders. But no legal action is likely to stop Mr. Musk, legal experts say. Corporate law in Texas, where Tesla and SpaceX have their corporate domiciles, makes it very difficult for unhappy investors to challenge management decisions. | The New York Times ($)

After the biggest initial public offering in history, why not the biggest acquisition? Since SpaceX went public at the end of last week, Wall Street has been simmering with the idea that a union with Tesla, long seen as likely, will be the next step. But if a deal is indeed on the cards, it probably will not be for the reasons usually given. The potential combination is generally viewed as an inevitable industrial convergence of Elon Musk’s various business interests, with AI as the glue holding it all together. But if that is a reason for combining space rockets, electric vehicles, humanoid robots and a social network under a single roof, almost any collection of assets might seem to belong in a new age industrial conglomerate. In the companies that together make up the Muskverse, meanwhile, there has always been an overriding force driving synergy: whatever he cares most about in that particular moment. It has not required a full merger, for instance, for Tesla and SpaceX to join forces on important strategic projects. These include investing in a chip fabrication plant or working together on building an enterprise AI platform. Would these things be easier if they all happened inside one corporate entity? Probably. But ownership structure has not been an impediment so far. Rather, other considerations are more important in determining the likelihood and timing of any union, if Musk’s record of dealmaking is any guide. | Financial Times ($)

🚘 Car of the Week

Our Automotive Ventures “Car of the Week”: a 1954 Maserati 250F by Cameron Millar. | Broad Arrow

📰 In The News

Steve caught up with Paul Daly on Automotive State of the Union to discuss: Who owns the risk when vehicle pricing moves through dozens of systems, vendors, websites, marketplaces, and OEM programs before it reaches the customer? | Automotive State of the Union

👀 Automotive Ventures Company to Watch

PRZM provides the data and workflow layer powering the auto salvage economy.
Towers create efficient dispatch and impound workflows with an AI enabled system of record. Insurers and cities unlock real-time visibility from the moment of tow. | PRZM