Two things are objectively true: cars are safer than they were a decade ago, but also, more people in America are dying because of them. Pedestrian and cyclist deaths in particular have skyrocketed over the past decade and change. How is that possible? More tech features in cars are almost certainly leading to more driver distraction, but the big problem is literally a "big" problem.
Today on our Critical Materials morning news roundup, we'll look at what potential new federal safety regulations targeting larger cars might mean for the electric transition. Plus, investors are pretty down on Europe's automakers, and China's got the same urban-rural EV divide that we do. It's Friday, so let's close out the week strong, shall we?
30%: Feds May Crack Down On Cars' Weight Problem, But What It Means For EVs Is TBD
When you think about how much more safety equipment and tech a new car has today when compared to one from 2010, it's baffling that this chart above indicates vehicle-related deaths are actually rising instead of falling. But the data is pretty clear: the rise in heavier trucks and SUVs in America is having fatal consequences. As the U.S. car market has shifted almost entirely away from sedans and smaller vehicles to pickup trucks and large SUVs—driven by both personal taste and automakers who run on those big profits—more people are paying the ultimate price if they happen to be on the receiving end of those huge machines.
But federal safety regulators may actually be doing something about this, finally. These new "proposed rules" from America's auto safety regulator, the National Highway Traffic Safety Administration, can take forever to implement but they may mean big changes.
For the first time ever in America, automakers would be required to study impacts on crash test dummies hit outside of vehicles and simulate a "head-to-hood impact" that would assess the risk of serious or fatal head injury if a pedestrian gets struck. "The rules would likely change the design of what America drives permanently," is how the Chicago Sun-Times put it.
And here's NPR as well:
“We have a crisis of roadway deaths, and it’s even worse among vulnerable road users like pedestrians,” said Sophie Shulman, NHTSA’s deputy administrator, in a statement announcing the proposed regulation. “This proposed rule will ensure that vehicles will be designed to protect those inside and outside from serious injury or death.”
Safety advocates and even the insurance industry welcomed the move. The auto industry's biggest lobbying group hasn't yet responded to the 200-page proposal. It may well balk at being forced to implement such drastic changes (especially for U.S.-market trucks and SUVs.) But it also would bring our safety standards more in line with what's done in Europe and Asia, which could bring down the costs of tailoring cars to our market's rules; automakers tend to like one set of standards to play by.
So what does this mean for EVs? No one's brought that up yet, so we might as well.
Electric vehicles already have a weight problem. Batteries are just heavier altogether than the components that make up an internal combustion vehicle. Your average Hyundai Ioniq 5 has about 1,000 pounds on a Hyundai Tucson gas or hybrid model. If we're going to transition to a zero-emission future, no one has addressed what that weight penalty might mean for traffic deaths (or road infrastructure, too, but that's another matter.)
I think one potential upside to this lies in design. EVs are still built to meet the same safety standards as gas cars, and are generally designed along those parameters too. But if you don't have an engine to account for, perhaps there are novel and safer ways to design hoods, windshields, you name it—all in the name of better pedestrian safety. Vehicles with shorter hood heights and more sloping front ends are safer than the blunt instruments that are tall, flat-front pickup trucks and SUVs.
That will require a lot of things, from regulations to design innovations to automakers being willing to break from decades of designing trucks and big SUVs a certain way. But it's going to have to be addressed at some point.
60%: 'A Toxic Cocktail' For Europe's Automakers
In recent days, we've devoted a lot of internet ink to the woes facing Europe's automakers right now. I won't recap all of them, but it's a vicious combination of factors like Europe's new car market being drastically less than it was years ago; falling sales in China; high, uncompetitive labor costs; tough new EU rules pushing zero-emission cars that the automakers may or may not be able to make profitably; and the rising threat of cheap EVs coming in from China too.
Other than all that, things are great. (Yes, that was sarcasm.)
So now European auto stocks are trading at fire-sale prices, but even analysts are warning investors to say "Nein" instead of "Ja." Here's Reuters:
"This toxic cocktail that you have - weakness in China, pricing that has fallen off the peak level, volume growth not happening anymore, higher labour costs - leaves room for some of these stocks to easily drop by another 10-20% if things sour," said Rolf Ganter, head CIO for European equities at UBS Global Wealth Management. "Valuations are really cheap, but we're not pushing the sector at all."
Shares in Volkswagen, BMW, Mercedes-Benz, Renault and Stellantis have fallen by as much as 29-50% from this year's peaks, to multi-month and even multi-year lows.
"The Western auto industry is facing a huge challenge because of the advantage of the Chinese and people don't want to spend as much money on EVs as they did a couple of years ago," said Gilles Guibout, head of European equity strategy at AXA Investment Managers.
"Either you can raise your prices and justify a premium to customers, meaning your brand deserves it, or you have to cut costs - there's no other option".
That last quote says a lot about Volkswagen and Stellantis' mainstream brands especially. In theory, they're the ones most at risk of getting undercut completely by new players from China. I'd say companies like Mercedes-Benz are "safer," but things aren't going great for them either.
90%: China's Electric Revolution Has The Same Divide We Do
Once again, do not think that China's auto industry is somehow invincible. Even in the world's EV capital, the same barriers faced by North America and Europe—charging infrastructure, range, use cases beyond city driving and so on—are keeping more rural buyers from making the switch.
So far, most of China's EV transition has been seen in the wealthier, more coastal areas. Sound familiar?
Here's Bloomberg with more:
But it might not be that simple. Exclusive Bloomberg analysis paints a less-than-rosy picture of China’s EV landscape, one where huge swathes of the country are still wedded to gas guzzlers.
Perhaps unsurprisingly, demand is concentrated in wealthy coastal areas and megacities such as Shanghai, Shenzhen and Beijing. But EV penetration is lagging in poorer, rural areas, where about 800 million Chinese people live. And it’s that vast sea of potential buyers that carmakers need to tap to keep sales humming as large cities speed toward saturation.
The challenges China faces in driving EV uptake beyond the rich — such as in areas where there’s low spending power, range anxiety and sometimes unsuitable climate or geography — are also seen in the US. There, nearly one-third of EV deliveries are going to just three states: California, Florida and Texas, which are also the most populated regions. California, the birthplace of Tesla Inc., with a progressive culture, tech-minded workers and sunny weather, has the highest number of EV registrations.
“A slowdown in China means a slowdown for the world,” BloombergNEF analyst Siyi Mi said. “It’s challenging now to push EV adoption into small towns and cities,” she said. “From a policy perspective, there’s not many tools left the government can use to stimulate the EV market, and that includes this campaign for uptake in rural areas.”
As should this, including a quote from a local businessman in a smaller city:
To be sure, China remains the key driver for the global EV market and the segment, although slowing, continues to grow. Plug-ins’ average share of new car sales grew from 34% in 2023 to 42% in the first seven months of 2024. The penetration rate in medium-sized cities is catching up to metropolitan centers, narrowing the gap. And the EV market still reached a major milestone in July and August when deliveries of EVs and hybrids outnumbered gasoline cars, buoyed by the government subsidy for trading in old vehicles for new EVs.
Regardless, it'll take some persuading to change Zhang’s mind. “If EVs get their range up to 1,500 kilometers, then I’d think about it,” he said.
Same thing, no matter where you go.
100%: How Would You Make EVs And Large Cars Safer?
What's your prescription for a safer era of car design that also accounts for the unfortunate fact of additional battery weight? No wrong answers here, let's brainstorm.
Contact the author: patrick.george@insideevs.com
