Auto File: Trump tariff threats return
By Nick Carey, European Autos Correspondent
Greetings from London!
When the autos world is in such flux, and boy is it ever, sometimes it helps to focus on the positives for the industry.
The European Union’s decision last month to slap tariffs of as much as 45.3% on Chinese-made electric vehicles had raised the prospects of a tit-for-tat trade war. German automakers in particular fretted over what that could do to their already faltering sales in China.
But all hope is not lost. According to the head of the European Parliament’s trade committee, Brussels and Beijing are nearing a solution over tariffs involving minimum import prices for Chinese EVs.
That would be one less potential trade war to worry about. However, automakers may find they're moving out of the frying pan and into the fire...
Which brings us to today’s Auto File…
Trump tariff threats, again
Northvolt’s bumpy ride
Fresh Ford cuts in Europe
Trump tariff threats are back
It did not take long to find out if Donald Trump’s tariff threats would outlive his presidential campaign.
Just a few days before Americans get together to celebrate Thanksgiving, the president-elect said he will impose a 25% tariff on imports from Canada and Mexico until they clamped down on drugs, particularly fentanyl, and migrants crossing the border, giving the beleaguered auto industry one less thing to be thankful for.
Just for good measure, Trump also promised "an additional 10% tariff, above any additional tariffs" on imports from China.
Unsurprisingly, the news hit shares of Europe’s automakers because investors abhor the prospect of a global trade war.
We have been here before, but the question is which Trump is taking office. Will it be the same Trump who threatened tariffs in his first presidency if the U.S. free trade deal with Canada and Mexico were not renegotiated and then settled for a relatively minor overhaul?
Will it be the same Trump who specifically targeted Toyota, threatening tariffs if it went ahead with building a new plant in Mexico, then declared victory when it announced one in Alabama?
Although Trump has traditionally used tariff threats as leverage, the stakes are too big for automakers not to take him seriously.
It is not just that U.S., Asian and European automakers alike build cars in Mexico, but they import huge quantities of parts to support U.S. car production.
Tariffs would hurt Mexico, but economists and the Mexican government warn they would also hurt the U.S. auto industry, U.S. consumers and the U.S. economy.
More than one U.S. auto executive may end up feeling nauseous this week, but the turkey will not be to blame.
Recommended reading:
Trump’s energy plan
Exxon and LG Chem’s lithium deal
Honda’s big solid-state battery hopes
Northvolt bows to the inevitable
Sweden’s Northvolt finally bowed to reality and filed for U.S. Chapter 11 bankruptcy protection as the battery maker tries to find a way to restructure its business and survive to fight another day.
Europe’s erstwhile battery champion was seen as the continent’s best hope for creating an independent battery industry that would counter China’s dominance.
Northvolt had received more than $10 billion in equity, debt and public financing since it was founded in 2016.
If making EVs profitably at scale has proven hugely expensive and difficult for a graveyard of EV startups – Fisker, Arrival et al – that pales in comparison to the sheer complexity of making the millions of perfect battery cells that automakers require for their EVs.
No one wants a repeat of the LG battery fires that hit General Motors and Hyundai. But making perfect batteries is tough.
Northvolt has huge debts, leaving investors like Volkswagen having to write down their stakes, while its outgoing CEO says it needs up to $1.2 billion to restore its business.
The bigger cost is for Europe’s hopes of developing its own battery industry. After years of subsidized production, China controls 85% of battery cell production.
Europe still has battery startups working their way forward incrementally and with less funding than Northvolt, but at this stage its battery independence dream is a very long way from coming true.
Ford cuts in Europe, again
Ford announced a fresh round of layoffs in Europe, this time saying it would cut around 14% of its workforce on the continent blaming the slow shift to EVs and rising competition from the Chinese.
Ford said the 4,000 job cuts would mostly affect Germany and Britain. This comes after Nissan, Stellantis and GM all announced cuts and job losses in a sector struggling with the shift to electric.
German auto supplier Bosch also said it would cut 5,500 jobs and reduce the hours and pay of 10,000 others in Germany.
This, along with the historic battle Volkswagen faces with workers over cost cuts in high-wage Germany that it has warned may lead to plant closures, puts the German auto sector well on the way to a winter of discontent.
A $6.6 billion boost for Rivian
In the waning days of the Biden administration, U.S. EV maker Rivian received crucial conditional approval for a $6.6 billion government loan to build its car plant in Georgia.
Earlier this year Rivian had mothballed plans to build the plant to conserve cash while it pushed ahead with the R2, an EV seen as critical to the automaker’s success.
While Trump expected to undo many of the Biden era EV-friendly policies, it remains to be seen whether he would undo a major investment in a vital swing state that Rivian has said should employ about 7,500 operations staff by 2030.
The loan is a further boost for Rivian after it closed its $5.8 billion investment from Volkswagen as part of their technology joint venture.
Fast Laps
California governor Gavin Newsom's office says Tesla's EVs likely would not qualify for new state tax credits under a proposal in the works if Donald Trump scraps the federal tax credit for EV purchases, setting the stage for a fight with Elon Musk and an automaker that makes electric cars in California.
Chinese automaker BYD will launch a new generation of blade batteries in 2025, which Chairman Wang Chuanfu has promised will be safer than other alternatives in the market and will not catch fire.
Chinese EV maker Xpeng says it should break even sometime later in 2025, betting on strong demand for its new models as it expands into new overseas markets to boost margins.
Stellantis announced new temporary stoppages at two plants in southern Italy as the country’s government called on the automaker to commit to new investments.
Hyundai unveiled its first three-row electric SUV, joining a market for big family cars that global automakers hope will one day be a profit powerhouse.
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Editing by Alexandra Hudson
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