Does this surprise you? Is this big news?

Yes.

I mean, not to get too into the politics, but the announcement of it was definitely a surprise.

Doing it at a political rally, you know, was was fairly controversial and not not what you would normally expect.

Usually just for even just practical purposes, the automakers want to control their own environment when they're putting a mess, making the biggest news possible.

frankly, Audi's ever made in the United States.

They would normally want to own their own space, have their own event, let the politicians be their props, not the other way around.

Now, do you know, is the Volkswagen plant in Chattanooga, is that pretty much 100% utilized?

So when we look at what's in place now, right now, how big of an impact, if at all, have the tariffs that are currently in place impacting auto cars, auto parts, the business in its entirety?

Oh, significant, right? The Detroit 3 have paid...

Billions in tariffs, and a lot of that is on the trade with Canada.

They make vehicles in Canada.

They make big, expensive powertrain components, engines or transmissions.

So every time they cross the border, they make them there and bring them here to sell.

They cost more.

Do we know what the big three says privately? Do they see the tariffs as an opportunity to bring manufacturing home, or do they just see it as an expensive disruption to the business?

So when we look at what's in place now, right now, how big of an impact, if at all, have the tariffs that are currently in place impacting auto cars, auto parts, the business in its entirety?

Oh, significant, right? The Detroit 3 have paid...

Billions in tariffs, and a lot of that is on the trade with Canada.

They make vehicles in Canada.

They make big, expensive powertrain components, engines or transmissions.

So every time they cross the border, they make them there and bring them here to sell.

They cost more.

Do we know what the big three says privately? Do they see the tariffs as an opportunity to bring manufacturing home or do they just see it as an expensive disruption to the business?

So is GM becoming leaner? Are they becoming more efficient?

Yes.

I mean, look, the whole EV episode was very costly and challenging.

And GM put billions and billions of dollars into EVs that continued to lose money.

They are, you know, kind of an industry leader.

They're number two in this market in EVs, trying to get them to be profitable.

But EV sales are down, and that means money losing is down.

Is it also good news for people who build cars, or is it a mixed bag for people who build cars, for the factory workers and the suppliers?

GM becoming leaner? Are they becoming more efficient?

Yes.

I mean, look, the whole EV episode was very costly and challenging.

And GM put billions and billions of dollars into EVs that continued to lose money.

They are, you know, kind of an industry leader.

They're number two in this market in EVs, trying to get them to be profitable.

But EV sales are down, and that means money losing is down.

it sounds like it's uh good news for people who own the stock is it also good news for people who build cars or is it a mixed bag for people who build cars for the the factory workers and the suppliers

Are they saying what kind of car they're going to put out for 2028? You're not going to be able to start jumping your car over traffic in Woodward in 2028, are you?

I wouldn't expect that.

They're saying they've got three levels of the car.

I think Performance is the base version.

And it'll have some of those, uh, uh, like the suction abilities.

So you can really hug the ground as you're making corners.

They'll have the, then the thrust version, which does that zero to 60 has just rocket boosters in the back.

But what do you think the people over at GM or Ford or Stellantis were thinking as they watched the video?

Are they saying what kind of car they're going to put out for 2028? You're not going to be able to start jumping your car over traffic in Woodward in 2028, are you?

I wouldn't expect that.

They're saying they've got three levels of the car.

I think Performance is the base version.

And it'll have some of those, uh, uh, like the suction abilities.

So you can really hug the ground as you're making corners.

They'll have the, then the thrust version, which does that zero to 60 has just rocket boosters in the back.

But what do you think the people over at GM or Ford or Stellantis were thinking as they watched the video?

Is it long term or is it short term, do you think?

Uh, probably pretty long term.

It really depends how things go [laughs] in the longer term.

But look, you know, people are worried about gas prices, and hybrids are a really cost-effective way to save money at the pump.

And you're right, they don't require the huge lifestyle change that an EV does.

You know, I mean, EVs can be easy for people if they have a home with a garage and they can put in a charger.

Some people really love it.

Right.

So what do you think is, is driving this? Is it the f- the cost of gas now that people are looking at it going, "I, I don't wanna do this anymore," or is it a long-term shift because they might not wanna fully adopt the EV lifestyle, they're looking for something in between? Is it long-term or is it short-term, do you think?

Uh, probably pretty long-term.

It really depends how things go [laughs] in the longer term.

But look, you know, people are worried about gas prices, and hybrids are a really cost-effective way to save money at the pump.

And you're right, they don't require the huge lifestyle change that an EV does.

You know, I mean, EVs can be easy for people if they have a home with a garage and they can put in a charger.

Some people really love it.

Right.

It's broader than that, right?

I think you said in the intro, the software and hardware, you know, there's really two main elements to the opposition to Chinese cars in the U.S. One is that they're just going to underprice anything that's on the market, steal a bunch of market share, force a bunch of auto factories to close.

The other part is that with the connected software and hardware that, you know, connects to your phone or you create your own account within the brand, there's a ton of personal data, a ton of access to cameras and control of the vehicle that all funnels back to a Chinese entity.

And the Chinese government can have access to any data they want from any Chinese company.

They have no, you know, first amendment or privacy rights, uh, to, to keep them out.

So there's a lot of risk to, you know, the society and to individuals.

You look at China itself, right? I don't know if everyone remembers this or not, but Tesla started gaining a lot of share in China, and then China said, well, wait a minute.

How good are they at making cars? If BYD and other Chinese companies were allowed to compete freely in America, would Ford, GM, Stellantis, would we be able to compete with them on quality or price?

It's broader than that, right?

I think you said in the intro, the software and hardware, you know, there's really two main elements to the opposition to Chinese cars in the U.S. One is that they're just going to underprice anything that's on the market, steal a bunch of market share, force a bunch of auto factories to close.

The other part is that with the connected software and hardware that, you know, connects to your phone or you create your own account within the brand, there's a ton of personal data, a ton of access to cameras and control of the vehicle that all funnels back to a Chinese entity.

And the Chinese government can have access to any data they want from any Chinese company.

They have no First Amendment or privacy rights to keep them out.

So there's a lot of risk to the society and to individuals You look at China itself, and I don't know if everyone remembers this or not, but Tesla started gaining a lot of share in China, and then China said, well, wait a minute.

These cars have cameras and sensors and advanced computers, and they're a U.S. company.

How good are they at making cars? If BYD and other Chinese companies were allowed to compete freely in America, would Ford, GM, Stellantis, would we be able to compete with them on quality or price? It'd be really

Well, do we think it's a legitimate concern or at least open for conversation?

Oh, it's a huge concern because just for just thinking about the politics, uh, that Ford and everybody is trying to navigate.

Look, Stellantis has close relations with China.

They have a JV with Leap Motor.

GM has a big operation in China.

They've done a lot of work there over the decades.

So Ford has these projects in places.

Does that hold true, do you think? And if so, should they be pushing that?

Well, do we think it's a legitimate concern or at least open for conversation?

Oh, it's a huge concern because just thinking about the politics that Ford and everybody is trying to navigate.

You know, look, Stellantis has close relations with China.

They have a JV with Leap Motor.

GM has a big operation in China.

They've done a lot of work there over the decades.

And so Ford has these projects in places.

Does that hold true, do you think? And if so, should they be pushing that?

Mm-hmm.

And I think what people are seeing now is the success Carvana's been having.

Is that just limited to Carvana, or can other people use the same recipe? And consumers aren't all the same, right? Some of them really want the engagement.

Some of them appreciate the help the salesperson can give them, understanding the product or whatever.

Other people are really intimidated by it.

If you can offer both or at least see what works in your market, uh, you know, we always talk about it, the resiliency of auto dealers.

And what it really is, is responding to messages in the market, reacting and-

Mm-hmm

Yeah.

So even less than a decade, but it's just been, it's been so bizarre.

So, um, you know, the current thing, the, uh, well, the thought leadership position, right, in these days is to argue that affordability is not such a big problem in autos.

You know, that the inflation on new vehicles is comparable to the CPI, and when you factor in the improved technology, you know, people are arguably getting a, a better value on a Honda CR-V or a RAV4 today than they were 10 years ago.

And, and probably you could make the same case on a, uh, you know, F-150 or something like that.

But the problem is, [laughs] okay, compared to everything else, car prices have only gone up about the same.

Maybe they went up extra more during COVID and then it kind of flattened out for a while.

Yeah.

All of the above, right?

The other thing with it, I would say, and this is the really important part, a big part of how China got where it is in EVs, is that they've spent decades developing supply chains for the minerals industry, You know, and I'm sorry, I don't mean to be like going on and on about like USMCA kind of stuff, but like we need Canada because they have the more of the lithium, the graphite, they have the minerals up in their mountains.

If we could get that out and it takes, of course, you know how long it takes, whether it's in the US or Canada to get a mine going, to get a place to refine dirty minerals, people don't really like them.

It's hard to get those things going.

It takes years and years.

That's what we have to do as an economy, U.S., North America, however you want to scale it.

We have to find a way to make sure that we're not dependent on China for graphite, for lithium, for simple chips and things that they can control the whole supply chain of the globe.

it.

All of the above, right?

The other thing with it, I would say, and this is the really important part, a big part of how China got where it is in EVs, is that they've spent decades developing supply chains for the minerals, You know, and I'm sorry, I don't mean to be like going on and on about like USMCA kind of stuff, but like we need Canada because they have the more of the lithium, the graphite, they have the minerals up in their mountains.

If we could get that out and it takes, of course, you know how long it takes, whether it's in the US or Canada to get a mine going, to get a place to refine dirty minerals.

People don't really like them there.

It's hard to get those things going.

It takes years and years.

That's what we have to do as an economy, U.S., North America, however you want to scale it.

it.

Of course, it would be much better news if it was happening here in Michigan, but we'll take the win wherever it happens, right?

Yeah.

I mean, it's a win for the U.S.

It might be a little bit of a...

Not the best news for GM and Ford and Stellantis.

If Toyota's ramping up Tacoma production, it's already the number one midsize pickup.

If they're adding more capacity or even bringing costs down by making it in the U.S. instead of in Mexico, I'm not sure if the cost comes down with that these days.

The reason for the move, is it mostly tariffs? Can we say that?

Of course, it would be much better news if it was happening here in Michigan, but we'll take the win wherever it happens, right?

Yeah.

I mean, it's a win for the U.S.

It might be a little bit of a...

Not the best news for GM and Ford and Stellantis.

If Toyota's ramping up Tacoma production, it's already the number one midsize pickup.

If they're adding more capacity or even bringing costs down by making it in the U.S. instead of in Mexico, I'm not sure if the cost comes down with that these days.

The reason for the move, is it mostly tariffs? Can we say that?

So where do you read that in terms of attitudes about China? Because I'm sure that's spoken about everywhere in boardrooms and probably outside of them.

Yeah, it really is.

All the conferences and all the discussions that are going on in the auto industry, especially here around Detroit, we're looking at the China threat.

How do we compete? How do we find a way to coexist with these companies that are so heavily subsidized and other things, other supports they have that make them really uncompetitive, unfair competition? But they're still in the world, whether we think it's fair or not.

And there's a lot of talk, especially in Detroit, that if we're going to have a chance, to get to the EV future and to really be able to compete, that we really need a strong North American trading bloc.

So the USMCA is up for renegotiation now, or it's formally reviewed July 1st.

Of course, as you said, the relations with Canada have been very tense ever since the president got back into office.

So when you look at especially American automakers who maybe have mixed hybrid portfolios, how do you look at being able to respond to this market shift? And do you think people are willing to jump in both feet saying, hey, this is a good business? Or do you think people are concerned if we all kind of know electrification is the eventual long term future? How much time do we really want to spend here?

We thought we might have lost you.

I'm glad we were able to make the connection.

How you doing,

Tell us about Autotown.

Oh, man, it's been so much fun.

This is the new show I have on Saturday mornings at 7 o'clock.

uh you know my old co-host used to call me the mayor of autotown so when i got the chance to create a show of my own like let's let's create autotown so i have a co-host we drive around the block which you know we talk about the news this week my co-host was mike martinez from automotive news but we've had elizabeth creer and Other folks from the Center for Automotive Research and really fun things.

We do the Stop at the Coffee Shop, which is the interview segment.

Where would you say we are?

Yeah, I mean, it's been...

it has been the most turbulent time that anybody has ever seen who's still alive now in the industry.

You know, I think back a few years ago during the EV revolution and autonomous driving was starting out and Mary Barra said the industry was going through more change than at any time in a century.

And it's going through more than that even now.

That almost seems quaint.

So we've had all this policy turmoil, the tariffs, the EV support going away.

haven't even touched on AI, what that is doing to these companies.

Right.

So we've had all this policy turmoil, the tariffs, the EV support is going away.

Now we have this war, and gas prices are high, oil prices are projected to go even higher.

And yet, you know what? Americans keep buying cars.

We're going to get May sales results next week, at least from a few companies.

Generally, the expectation is that it was a pretty good month.

Actually, I asked Lance about it.

we haven't even touched on AI, what that is doing to these companies.

Do we want to or do we have to?

Whether we want to or not.

Interesting developments today with the president announcing that no, he's not going to blow up the energy system just yet.

That brought the price of oil down considerably.

I guess the markets were taking that threat pretty seriously.

So we'll see where it goes from here over the next five days.

But I've come across some interesting data.

Okay.

Why is it you think that we haven't done this before? What's going on there?

We have done it before, but it was really forced by regulation.

When you had a more traditional cafe, and I merely mean like pre-Obama cafe standards, then you needed a certain number of small cars.

You needed to sell some small cars, and so then you had cheap, affordable cars to compete with, with the Japanese mostly, and then later the Koreans.

Over time, that changed, and you could just make fewer and fewer small ones as long as your big vehicles got a little more efficient each year.

And that has skewed the outcome.

It's lowered the overall efficiency.

How do you see tariffs in the future?