Greetings from London! Elon Musk's promise to focus more on Tesla and less on politics fell apart over the weekend when he announced the formation of the America Party to compete in U.S. elections against both Republicans and Democrats. Needless to say, investors hated this latest chapter in the feud between Musk and former political bestie U.S. President Donald Trump. As well they might. For starters, America's political infrastructure is designed for only two parties. And while vast sums from the world's richest man could boost the America Party, Ross Perot's 1992 independent run for president showed the limits of what wealthy men can achieve. Meanwhile, what investors want is for Musk to address Tesla's continued sales slump instead. If they get their way, the America Party will vanish soon. Which brings us to today's Auto File… |
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Workers at Zeekr's factory in Ningbo - REUTERS/Nick Carey. |
Chinese carmakers, built for speed |
In Europe and the United States, a lot of attention has been devoted to the subsidies Chinese automakers have received from China's government – the European Union has imposed tariffs on Chinese-made EVs because it says subsidies give them an unfair advantage. But, as Reuters found through in-depth reporting, what traditional global automakers fear more is the speed with which Chinese automakers develop new cars – in as little as 18 months. You can read all about it in a special report here. Traditional automakers have essentially developed cars the same way for decades with lengthy processes and heavy on prototypes because, well, that's just how it's been done. Chinese automakers are unshackled by legacy processes. They have embraced digital simulation, backed by swift decision making and long hours by Chinese developers. Traditional behemoths like Volkswagen and Stellantis are now trying to be more like the Chinese. That push to cut development times is increasingly urgent when you look at how rapidly Chinese automakers are expanding. Take the UK market, with announcements in the last week alone that the Geely and Chery brands, plus Changan's Deepal brand, are all gearing up for sales. Last week, I took a spin in a number of Chinese EVs at a test drive event organized by Octopus Electric Vehicles – including Changan's Deepal S07 electric SUV – and all of them were great, smooth rides with solid tech. Traditional automakers have a major fight on their hands. |
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China wants these to drive themselves - REUTERS/Aly Song. |
China pushes self-driving limits |
China's government has for years pushed its automakers to be at the forefront of the shift to electric cars and is now urging them to lead the way in adopting more self-driving features. Unlike the U.S. market, where automakers have been complaining of a lack of government urgency in setting up regulations for autonomous vehicles, China's government is pushing to more closely regulate driver assistance features while simultaneously drafting rules that will allow cars to drive themselves under certain conditions. You can read more about it here. Chinese automakers are responding to the government's push, with a number signed up for testing to validate their technology. China's consumers have embraced driver assistance features far more quickly than Americans or Europeans, so autonomous driving features will be key in the next big battle for market share there. |
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Bye bye, U.S. EV tax credit - REUTERS/Mike Blake |
EV tax credits, meet the dodo |
It's official, it's the end of the line for U.S. electric vehicle tax credits. Trump's sweeping tax legislation approved by Congress means $7,500 tax credits for new EV and a $4,000 used EV credit will end on September 30. The bill also eliminates penalties for failing to meet U.S. emissions targets, making it easier for automakers to build combustion engine cars. A Harvard University study in March forecast that ending the EV tax credits would reduce EV penetration by 6% by 2030, while saving the U.S. government $169 billion in EV tax credits over a decade. It's an interesting moment for Detroit's automakers, who can continue to print rivers of cash from making highly profitable pickup trucks. But in a world where EVs are seen as the future, the big question is how will those automakers compete outside the U.S. market in the long term. |
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Xiaomi going beyond China? |
It has only been a little over a year since Chinese smartphone maker Xiaomi launched its first EV, the SU7, which has been followed in short order by its YU7 SUV. But CEO Lei Jun says Xiaomi will only consider selling cars outside China from 2027 as it tries to keep up with demand for those EVs. The company sparked a fresh wave of complaints after telling customers they will have to wait more than a year to receive their new YU7. The company has been grappling with a consumer backlash since a fatal crash involving an SU7 in March. It has also faced complaints over confusion surrounding vehicle delivery times, as well as optional features. Xiaomi received roughly 240,000 orders for the YU7 in the first 18 hours after the SUV went on sale, but only a handful were available for immediate delivery. The need for Xiaomi to scale up to meet demand gives potential rivals overseas breathing room to launch their own models. |
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China's BYD will start assembling EVs at its new factory in Brazil as early as this month, a top executive said, reducing imports as tariffs start to rise in the automaker's largest foreign market. Fiat plans to make over 100,000 units annually of its new low-cost hybrid Fiat 500 small car, a model parent Stellantis is banking on to revive its falling production in Italy. Polestar will make its Polestar 7 SUV model at a Volvo Cars factory in Slovakia, as the EV maker shifts more production from China and tries to cut its exposure to heavy European and U.S. tariffs. Meanwhile, Volvo Cars has pushed back the start of large-scale production at that same Slovak plant to early 2027 from 2026 to optimise the automaker's product launch timeline, a spokesperson said. U.S. EV maker Rivian reported a sharp fall in second-quarter deliveries, as demand for its vehicles took a hit from stiff competition and tariff-driven economic uncertainty. U.S. EV maker Lucid reported a 38% rise in second-quarter deliveries, but missed Wall Street expectations amid economic uncertainty. Think your friend or colleague should know about us? Forward this newsletter to them. They can also subscribe here. |
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