Good morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the stories you need to know.
1st Gear: They’ll Get Over It?
Pretty much everyone is against the Trump administration’s planned 20 percent tariffs on imported European automobiles, from the auto industry itself to elected officials in the president’s own party. But hey! Why let little things like that get in the way of a sweet trade war?
Anyway, German automakers probably won’t wallow around in self pity for ages if the administration does impose auto tariffs and start a big trade war that harms consumers, according to a new analysis from Bloomberg. Automotive analyst Juergen Pieper told Bloomberg German companies will recover quickly from the initial “shock” of it all.
The reasoning behind that expectation is that car exports from Europe to the U.S. make up such a small portion of overall sales for these automakers, so it’s not going to make that big a dent. From Bloomberg:
Pieper notes that the German manufacturers Volkswagen AG, BMW AG and the Daimler AG subsidiary Mercedes, are exporting only about 500,000 cars from the euro zone to the US, from a total worldwide sales volume of about 15 million vehicles, according to figures of the German Association of the Automotive Industry.
“Even if - completely unrealistic - this whole amount would drop out, we speak of a volume loss of only three percent,” Pieper said. He calculates that with tariffs of 20 percent, the volume decline would be limited to 100,000 units for all three manufacturers combined.
Pieper told Bloomberg companies like Mercedes and BMW will probably be able to easily pass the tariffs onto their customers, since they’re in the mindset of paying more money for those cars anyway. Volkswagen would struggle more with its lower-priced vehicles, he expects. And as we’ve noted, it doesn’t bode well for sports cars.
“However, VW has a smaller share of business in the US anyway,” Pieper explained. “If VW lose 20 percent of their exported US sales volume, we’re talking about less than 50,000 cars, or a share of the total volume of significantly less than one percent.”
Either way, these costs are likely all going to fall back on us, the consumers. Maybe limit the car purchases to Craigstlist until this goofy spat hopefully blows over.
2nd Gear: Hyundai Denies That It Has Takeover Interest In FCA
Is Hyundai in talks to take a controlling interest in Fiat Chrysler Automobiles? Apparently, nah.
After the Asia Times reported Hyundai is waiting for an expected decline in FCA shares before making a takeover bid, a spokesperson for the Korean automaker told Bloomberg that the story was groundless. It cited sources with knowledge on the matter.
The Asia Times reported that as FCA CEO Sergio Marchionne gets ready to step down from the company, the Hyundai bid will come sometime between this summer and FCA’s annual shareholder meeting in May of next year.
From the Asia Times:
The key driver for the Fiat Chrysler Automobiles and Hyundai Motor Group merger will be Elliott Management principal Paul Singer, who is an activist shareholder in Hyundai and major player in Italian equities with the fund’s stake in Telecom Italia and de facto owner of Silvio Berlusconi’s AC Milan soccer club.
Having already amassed a US$1-billion stake in Hyundai, Elliott Management’s Singer has given himself an inside track into FCA by naming Fiat Chrysler CEO (Europe, the Middle East and Africa) Alfredo Altavilla as a board member of Telecom Italia.
While Hyundai called the report groundless, FCA declined to comment to Bloomberg on the Asia Times story. Bloomberg also reports that Marchionne said in March that FCA isn’t looking for a merger or acquisition before it finishes up its growth plan this year.
3rd Gear: EV Batteries Are Put To Work Even After They Leave The Car
In a very “Where things go when they die”-esque story, Bloomberg wrote about something that likely isn’t on most of our minds yet—where batteries go after their time in an electric car is over. It’s surprisingly not all doom and gloom, and the batteries are put to work doing other stuff for about another decade.
Bloomberg reports that estimates are for the “global stockpile” of EV batteries to be at about 3.4 million packs by 2025, and that areas like China and the European Union are placing regulations on automakers to keep the batteries out of landfills once they’re done in the cars.
There is buffer time, since Bloomberg reports that batteries have about seven to 10 more years of usefulness after they’re out of the car. From the story:
The first batches of batteries from electric and hybrid vehicles are hitting retirement age, yet they aren’t bound for landfills. Instead, they’ll spend their golden years chilling beer at 7-Elevens in Japan, powering car-charging stations in California and storing energy for homes and grids in Europe. [...]
General Motors Co., BMW AG, Toyota Motor Corp., BYD Co. and a clutch of renewable-energy storage suppliers are among those trying to create an aftermarket and extra profits for a device that only recently coalesced into its own market. Second lives generate second revenue streams for the same product, and those could help lower prices for EVs.
But if they can still be used elsewhere, you might wonder why these batteries wouldn’t just stay in the cars. Bloomberg has the simple answer:
Declining performance for an EV battery is evidenced by fewer miles of driving per charge and more frequent plug-ins by owners. The components typically will be swapped out after about a decade in family cars and four years in harder-working buses and taxis.
While those replaced batteries can’t run a passenger vehicle, they’re ideal for less-demanding tasks such as storing electricity from solar panels and wind turbines, and hoarding power from a regular grid connection when prices are low.
“A lithium-ion battery actually never dies,” said Hans Eric Melin, founder of London-based Circular Energy Storage Research and Consulting. “It’s just like you can take an alkaline battery out of your flashlight and put it into a remote control, and it’ll still be good enough.”
That lack of a time clock on the battery’s life will let automakers and battery producers profit off of batteries multiple times, according to Bloomberg.
Eh, whatever to that. The cool thing is that we’re not just pretending we’ve got green technology and lazily throwing it out after a few years, and Bloomberg has more on the process here.
4th Gear: Watch Out For Those Silverado Prices
Kind of like those giant store signs with low prices on them trying to lure you to an aisle with markups everywhere else, Automotive News reports that Chevrolet is “expanding the price range” of its 2019 Silverado. That means the base truck will cost less, and the higher-end trims of it will cost a decent chunk more.
Bringing in that sweet, sweet truck cash, Chevy is. From Automotive News:
The starting price of a 2019 Silverado Work Truck will decrease $400 to $29,795, while the LTZ will increase $700 to $44,495. The top-end High Country will start at $54,495 — $1,000 more than the outgoing model — and the high-volume LT trim will be up as much as $700 less than the current model, starting at $38,395 for 2019.
All pricing figures include a transportation charge of $1,495.
Despite increased technology, the price is in-line with the $30,195-$53,495 range for comparably priced 2018 Silverado models.
But Americans love their big trucks and driving them to their office jobs in the city, so you know an extra $1,000 isn’t going to make somebody reconsider that $56,000 luxury work vehicle.
5th Gear: U.S. Vehicle Sales Forecasts Are Turning Downward
U.S. vehicle sales have been up for the first half of the year, because people can’t get enough of these crossovers and their sporty new looks, extra space and ride height. Yay. But sales are expected to turn the other way soon.
That’s for a number of reasons, including, you guessed it, tariff threats. From Automotive News:
U.S. sales have climbed 1.2 percent this year through May, after declining in 2017 for the first time since the market collapse of 2008-09. Industry volume hit a record 17.55 million in 2016. [...]
But [analysts] also warn the market faces headwinds from rising interest rates, uncertainty over the effects of tariffs on new-vehicle prices, and a rise in late-model, used vehicles.
“Tariff threats remain at center stage,” Jeff Schuster, LMC’s senior vice president of forecasting, said in a statement. “The high level of uncertainty and expected negative effects are causing profit and volume warnings. A trade war involving vehicles would be devastating to sales volume in the United States and other key markets. No one wins when more than a million units annually are at risk in the U.S.”
Transaction prices are also up, which Automotive News reports is due to rising demand for things like crossovers. It’s probably best to get those transactions out of the way soon, before they potentially rise even higher.
Isn’t this tariff stuff great?
Reverse: Some Plane History
The Type 1101 Vickers VC10 airplane flew for the first time on June 29, 1962, according to the BAE Systems website. It later went on to set a sub-sonic record for a Trans-Atlantic flight in just over five hours.
Neutral: Would You Suck It Up And Buy A New Car, Knowing That You Were Covering The Tariffs?