It's an election year, which means politics are in full swing and no Thanksgiving table will be safe come November. I'm sure you're tired of it—and so are automakers. Except they're not worried about Uncle Ron's takes on foreign policy, they're just tired of not knowing how fleeced they might feel if their billions of dollars in electric vehicle investments are for nothing.
Welcome back to Critical Materials, your daily roundup for all things EV and automotive tech. Today, we're chatting about the call from automakers for politicians to be less drastic with EV policy, an expected Chinese software ban for autonomous cars in the U.S., and the Germans restarting spending on combustion engine R&D. Let's jump in.
30%: The Auto Industry Is Tired Of EVs Being Political
Automakers and suppliers are growing tired of politics creating an uncertain future for electric cars. Not because regulation is a problem, necessarily, but because the electric car has been weaponized as a political armament.
Basically, the Biden Administration's policies are driving a robust EV manufacturing ecosystem in North America, even if volume and profits will take a while to achieve. But all of that could vanish if President Donald Trump is re-elected, as he's promised to reverse those things on "day one"—although his newfound friendship with Elon Musk may adjust his thinking. Meanwhile, EVs themselves have become intensely partisan.
You get the idea. It's hard for car companies to plan for the future when things are so wildly inconsistent, and could change every four years.
Industry leaders and lobbyists recently held a panel at the 2024 CAR Management Briefing Seminars where they opened up about certain pain points in the industry. At the top of the list is politics, which are causing an upheaval in the way that automakers can plan for the future of EVs. (And, it should be noted, an all-electric future isn't even something all of them want.)
Automotive News captured some great viewpoints from the executives:
Tom Stricker, Toyota Motor North America's group vice president of sustainability and regulatory affairs, urged the government to avoid a patchwork system of regulations geared only toward boosting battery electric vehicle adoption. Instead, regulation and policy should be aimed at boosting sales and production of all electrified vehicles, including hybrids and plug-in hybrids, he said.
Rivian, meanwhile, sees an all-electric future, and regulations and policy will only serve to either speed up or slow that future while also determining how competitive the U.S. is globally, said Chris Nevers, senior director of public policy at the EV maker.
He said Rivian welcomes efforts to boost EV adoption while also cautioning against swift changes in policy in one direction or another.
Because the automotive supply chain reacts to the industry demand for EVs, the future is looking rocky for many leading suppliers. Simply put, these suppliers are unable to accurately gauge how the industry might affect EV adoption in the near future.
This is especially painful for many of the suppliers that have had to ramp up and adjust component output coming out of COVID-19 shortages that not only drove up demand-related component and vehicle pricing but also contributed to the sharp uptick in global inflation.
With threats of rolling back non-existent EV mandates, a vice presidential candidate who introduced legislation to shift EV subsidies to certain combustion cars, and a team-up with the world's richest man (who also happens to be the CEO of Tesla) who wants all industries to lose government subsidies, many industry experts are simply unsure of what could happen with the outcome of November's presidential election. In fact, some automakers are even throwing huge piles of cash at lobbying to help set a more concrete foundation and protect their investment in EVs.
The industry's ask is one simple thing: just slow down.
"Any quick changes can have some really negative consequences," said Chris Nevers, Senior Director of Policy at Rivian. "Realizing that it takes manufacturers some time to, for example, source products or change product lines—that goes way beyond consumer acceptance."
60%: U.S. Expected To Propose Chinese Software Ban For Autonomous Cars
The U.S. Department of Commerce is expected to push forward with the proposal of a ban on Chinese software in any U.S.-operated Autonomous Vehicle (AV) that operates with Level 3 automated driving features and above.
The news follows an early report last month that U.S. regulators were planning on potentially issuing some restrictions on Chinese software in AVs. Previously, the Department of Commerce said that the agency was considering a "few components and some software" though we now understand a more refined scope of what the department is considering in its ruling. Via Reuters:
The Biden administration plans to issue a proposed rule that would bar Chinese software in vehicles in the United States with Level 3 automation and above, which would have the effect of also banning testing on U.S. roads of autonomous vehicles produced by Chinese companies.
The administration, in plans first reported by Reuters, will also propose barring vehicles with Chinese-developed advanced wireless communications abilities modules from U.S. roads, the sources added.
Under the proposal, automakers and suppliers would need to verify that none of their connected vehicle or advanced autonomous vehicle software was developed in a "foreign entity of concern" like China, the sources said.
Concerns from the Department of Commerce surround the U.S. infrastructure, as well as consumer safety and privacy. According to Alan Estevez, the Under Secretary of Commerce for Industry and Security, the concern is that the vehicles could collect sensitive information about consumers. The White House also has looming worries about these types of vehicles collecting data on the U.S. infrastructure and the ability to be controlled or stopped remotely.
Meanwhile, a spokesperson for the Chinese Embassy said that EVs are a globalized industry that requires cooperation to "bring mutual benefits" and "fair competition" to market.
The U.S. held a summit last week with Australia, Canada, Germany, India, Japan, South Korea, Spain, the European Union, and the United Kingdom to discuss connected vehicles and "certain components." During the meeting, representatives from the countries discussed cybersecurity risks and exchanged data about these vehicles in order to shape policy around them.
During the meeting, the participants affirmed that connected vehicles are "emerging as a key node in critical infrastructure," which means that countries around the world may soon begin to closely protect and regulate these types of vehicles, especially as the technology matures and drivers can begin taking their hands off the wheels.
90%: German Automakers About-Face On ICE To Combat Cooling EV Demand
As the age of electrification draws ever nearer, Germany's automotive industry thought it could drop spending on the research and development of combustion engines. It was wrong.
Most German marques that have once pledged to go battery-only by the top of the decade have since reversed course on any respective plans to completely cut out spending on new combustion engine tech today. Instead, the automakers will continue developing these gas and diesel-powered platforms into the foreseeable future, or at least in some markets while conditions permit.
Here's what Automotive News has to say:
Mercedes-Benz had vowed to go all-electric by 2030 "where market conditions allowed." But with its EV sales muted in key markets, the brand plans to develop internal combustion and electric cars in parallel for longer than originally thought.
[...]
In contrast, rival BMW's long-term strategy of spreading its investments across ICE, hybrid, BEV and even hydrogen has proven prescient. BMW will update key gasoline-powered crossover models in the next few years, while it pushes ahead on the electrification front.
BMW and Mercedes aren't alone, either. Volkswagen's luxury arm, Audi, signaled this alarm last month noting that its perfect plan was to remain flexible. In a recent interview with Top Gear, Audi CEO Gernot Döllner confirmed that while all its models will have a plug-in hybrid version, the bridge to electrification won't be completed as quickly as it initially thought.
"We thought that PHEV technology would serve as a bridge to 100% electric mobility," said Döllner. Now we understand that the bridge has to be longer than initially planned."
Automakers are pointing the finger at the cooling of the EV hype cycle. While many brands anticipated that the globe would be on track for worldwide electrification by 2030, reality has moved a bit more slowly. Instead, they have decided to follow the market, which is treating the race to electrification like a marathon rather than an all-out sprint.
Perhaps the slow-and-steady approach is a good thing, though, especially since the price of lithium is becoming influenced by constrained demand and is now helping to push down the cost of the most expensive component in EVs.
100%: What ICE-Powered Masterpiece Should Be Reborn With An EV Powertrain?
With all of this talk on ICE sticking around for a bit longer, my inner child is admittedly a bit giddy. I still love the roar of an engine and silly turbo noises. But I also love being able to mash the gas and feel the instant torque of an EV.
But the biggest conundrum, for me at least, is the lack of emotion in most EVs today. I mean, what EV on the market today is comparable to getting behind the wheel of a GR Supra? Maybe the upcoming Dodge Daytona, but that'll cost you a pretty penny when it hits dealer lots.
If you were in charge at any major automaker, I want to know which vehicle you were sending your engineers to electrify while still retaining its ICE-powered emotion. Let me know in the comments.
