Automotive media highlights - May 2024

Automotive media highlights - May 2024

The Briefing

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27 May 2024
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10 minute read
  Key highlights
  • The Biden administration recently announced new tariffs on Chinese imports, with particularly high tariffs on Chinese electric vehicles. 
  • Some researchers are exploring infrastructure changes to accommodate self-driving cars, but these vehicles are still struggling with safety. 
  • Tesla recently laid off hundreds of employees, including top executives and a large portion of the Supercharger department. 
  • The EV market is cooling off, and manufacturers are looking for ways to combat slowing sales. 
  • Recent investigations have found that automakers have shared car location data with the police. 

The Biden administration has increased tariffs on Chinese electric vehicles. 

Amid rising tensions between the US and China, the Biden administration has opted to increase tariffs on Chinese imports. Some of the largest tariffs will affect Chinese electric cars, which now face a whopping 100 percent tariff

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Chinese electric vehicles aren’t currently sold in the US, and they previously faced a 25 percent tariff. However, at the beginning of 2024, Chinese automaker BYD was exploring the possibility of opening an EV factory in Mexico, with the aim of serving the North American market. Other Chinese manufacturers were considering the possibility as well. 

However, due to mounting pressure from the Biden administration, the Mexican government has removed incentives for Chinese EV makers to expand their operations. The Biden administration has expressed concerns about Chinese manufacturers selling severely underpriced EVs in the United States, which would undercut American manufacturers and could result in a loss of jobs. Chinese manufacturers are already flooding the EV market in parts of Europe and southeast Asia. 

Tariff increases will also apply to Chinese-produced lithium-ion batteries and EV parts. Tariffs for these items will increase from 7.5% to 25%. This could make things challenging for American EV manufacturers as well, as China controls approximately 80% of the global EV supply chain. Without access to low-cost Chinese batteries, we could see dramatic EV price increases. Manufacturers based in the US will need to look for alternative sourcing options to keep their EV operations afloat. 

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Self-driving cars could lead to significant infrastructure changes — once they meet safety standards. 

While autonomous vehicles haven’t been widely adopted yet, they are one of the most exciting current developments in the auto industry. As consumer autonomous vehicles get closer to becoming a reality, many experts are considering how this could change our driving infrastructure. 

It’s possible that widespread autonomous vehicles could lead to changes in our traffic lights. Some experts at North Carolina State University are exploring the possibility of a fourth traffic light in addition to the traditional red, green, and yellow. This light would indicate that there are enough autonomous vehicles at the intersection to influence traffic patterns. This traffic light would be connected to the vehicles using autonomous technology, and would need it to be widely adopted to work. 

Of course, changes to traffic lights to accommodate autonomous vehicles are still many years away. Many autonomous vehicle companies are still struggling with safety issues, particularly when it comes to robotaxis. GM’s Cruise division recently paid an $8 million settlement after a particularly violent incident regarding a robotaxi in San Francisco. Amazon’s robotaxi unit, Zoox, is also under investigation due to two rear-end crashes. 

Frequent crashes and other safety incidents with robotaxis over the past few years have changed the public’s perception of autonomous vehicles. However, this hasn’t stopped tech companies from working on them. In fact, Cruise recently announced a new testing program in the Phoenix metro area, albeit with human safety drivers on board. 

 


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Concerns rise at Tesla with mass layoffs in the organization’s Supercharger division. 

Tesla is one of the buzziest companies in the car industry, known for its sleek and innovative electric vehicles. But lately, it seems like the Elon Must-fronted company is struggling. The company faced criticism early in 2024 when winter weather caused drivers to abandon their Teslas at charging stations. The newly-released Cybertruck also failed to make as much of an impact as expected. To top it off, Tesla experienced poor first-quarter earnings as sales slowed. 

Now, the company is facing mass layoffs from Musk, which have reportedly included many senior executives. Musk has also reportedly gutted Tesla’s Supercharger division. Layoffs will likely total around 14,000 people.

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These layoffs made waves in the EV community, as Tesla has been rapidly expanding its proprietary Supercharger network. Many other EV manufacturers have even made agreements to adopt Tesla’s charging technology

Musk claims that Tesla is moving forward with plans to grow the Supercharger network, but the pace will slow down. Early reports indicate that the Supercharger layoffs were not an indication of problems with the technology, but rather a conflict between Musk and Tesla’s former head of charging, Rebecca Tinucci. After Tesla’s poor Q1 earnings announcement, Musk started requesting high-volume layoffs, which Tinucci pushed back on. 

It’s unclear what will happen next, with so many other manufacturers relying on Tesla’s proprietary technology. While Musk has backtracked in some of his public statements, the company will likely still need to rebuild the team to keep the network running. 

 

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The EV market is cooling off, and auto companies are exploring alternative technologies. 

The electric vehicle market has experienced a notable slowdown over the past few months, and automakers are pivoting to avoid financial losses. Despite pushes from the Biden administration and other government leaders around the world, many EV manufacturers have experienced declining sales

The share of EV sales to the total auto market dropped from 8.1% in Q4 2023 to 7% in Q1 2024. This indicates that there are industry-wide challenges, rather than issues among individual manufacturers. Many smaller EV startups are facing potential bankruptcy due to these challenges. 

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There isn’t a clear primary cause for this sudden shift in the industry. However, increased competition, inconvenient charging options, and high prices have all been cited as reasons why the market has shifted. While many governments offer robust tax credits for EVs, the price tag is still too high for many consumers, especially given current inflation rates. 

As a result, auto manufacturers have had to pivot quickly to avoid further losses. Many are switching their focus back to hybrid vehicles, which don’t come with the same charging challenges as fully electric vehicles. In the UK, the CEO of Ineos has also urged the government to focus on hydrogen-powered cars and other sustainable alternatives amid slowing EV sales. 

 

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New concerns arise regarding data sharing in consumer vehicles. 

Last month, reports revealed that driver safety tools like OnStar were collecting extensive amounts of data from drivers regarding their driving behaviors. This has prompted broader privacy concerns as manufacturers continue to add smart technology to consumer vehicles. 

Now, an investigation from the Federal Trade Commission has found that eight automakers have engaged in deceptive practices regarding consumer data collection and privacy. These manufacturers include BMW, Kia, Nissan, Mazda, Mercedes-Benz, Toyota, Subaru, and Volkswagen. 

The report found that these companies have shared car locations and other consumer data with the police without a warrant. While the manufacturers have defended this practice, an agreement from 2014 forbids them from sharing data with the police without an official warrant. It remains to be seen how the US government will address these new concerns and if the auto manufacturers will face consequences. 

Questions to Stay One Step Ahead

The auto market is currently dealing with the growing pains of introducing new technology. Auto consultants will need to understand consumer perceptions and concerns to develop solutions that work for them. Questions to consider include: 

  • Electric vehicles: Why aren’t consumers spending money on electric vehicles? What incentives would be necessary to make these sustainable options more attractive? 
  • Data privacy: Do customers trust auto manufacturers to keep their data safe? Would consumers consent to data-sharing agreements with their auto manufacturers? 
  • Autonomous vehicles: Do consumers feel safe riding or sharing the road with autonomous vehicles? 

Interested in launching a study on these topics? Reach out to Potloc today to jumpstart a market research study for your strategic projects. 

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