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By Joseph White, Global Automotive Correspondent

Greetings from the Motor City!

Catching up after a long weekend? Me too. I enjoyed a slow Monday reading “The Three Body Problem” – I sure hope the Netflix series is easier to understand – and wishing it was warm enough to get the ’61 Town Wagon out of storage.

That will have to wait. We have an extra day in February this year.

The good news is that spring is just around the corner, and I know this because the Detroit Tigers’ pitchers and catchers have reported to training camp in Florida!

Will the Tigers still be playing come October? Who knows. But we have news of a winning play by the Motor City Three automakers in Washington, and much, much more.

One more thing: Congratulations to my Reuters colleagues who won a George Polk award for their in-depth reporting on troubles in Elon Musk’s business empire! See the link below in Essential Reading. There’s a lot, so you can save it for later.

Today –

• • Biden will give automakers a break on EVs

  • BYD targets Germany’s luxury brands

  • Big auto suppliers slash jobs

U.S. President Joe Biden and an F-150 Lightning. REUTERS/Leah Millis

The Biden administration is expected to ease  proposed tailpipe CO2 emissions standards that would have required U.S. automakers to ramp up EV deliveries to 67% of sales by 2032, sources told Reuters and the New York Times.

The administration has not issued the final rules. But people familiar with the process said the EV sales target implied by the CO2 emissions targets could drop to less than 60% by 2030.

Automakers have said they supported Biden’s earlier target of 50% EVs by 2030, but protested that the 60% by 2030 and 67% by 2032 targets originally proposed by the Environmental Protection Agency were too steep. Those arguments have gained traction as EV sales growth has slowed.

A gentler regulatory path toward electrifying the U.S. vehicle fleet would be a significant win for General Motors, Ford and Jeep-Ram-owner Stellantis – the Motor City Three – and the United Auto Workers’ 146,000 members at the MC3.

Politics matter. UAW members are a critical voting bloc in the state of Michigan, which will be pivotal in the 2024 U.S. Presidential election contest. Biden has the UAW’s endorsement. But he needs the votes of thousands of UAW members whose livelihoods depend on building combustion trucks and SUVs.

What’s next? Watch for the final decisions on Corporate Average Fuel Economy targets proposed by the Transportation Department, and action on a proposal from the Energy Department to reduce the “petroleum-equivalent fuel economy” of EVs – which in turn could cut the emissions compliance credits automakers can generate with EV sales.

Environmental groups petitioned the administration to revisit the PEF standards and reduce the emissions compliance subsidy embodied in the current method of calculating the oil consumption avoided by an EV.

The MC3 said through a trade group they could face billions in fines if the Energy Department goes ahead with a plan to slash the compliance credits generated by selling an EV by nearly 75%.

Huawei onboard. REUTERS/Aly Song

Last week, Western automakers were freaking out about the threat low-cost EVs from China’s BYD pose to their mass market businesses.

Now, BYD has announced plans to go after the luxury vehicle franchises of BMW, Mercedes-Benz and Audi. BYD has been previewing more luxurious models for some time, even as sales of its ultra-cheap EVs such as the Seagull exploded.

BYD turned up the heat over the weekend with a new version of a plug-in hybrid priced at just over $11,000 – 20% lower than before.

Meanwhile, Chinese tech and telecom power Huawei is accelerating its foray into China’s intelligent EV market. The first EVs developed by Huawei and Chinese automaker BAIC will hit the market this year.

Huawei has other EV ventures with China’s Seres and Chery. Nobody in China needs to wait for the iSasquatch – aka the Apple Car – to get an EV with connectivity built by a smartphone company.

Given the U.S. sanctions on Huawei, it will be a while before Huawei connected vehicles arrive in the U.S. market. But they will add to the competitive challenges Tesla, GM and other Western automakers face in China.

A Cadillac Lyriq at the Detroit Auto Show. Reuters/Rebecca Cook.

After a slow start in 2023, GM’s Cadillac Lyriq electric SUV is on track to account for nearly 20% of the brand’s U.S. sales for January and potentially more in February, Cadillac brand chief John Roth told Reuters. The Lyriq accounted for about 10% of Cadillac sales in the fourth quarter of 2023.

With the phase-out of the Chevy Bolt and the software problems halting deliveries of the electric Chevy Blazer, the Lyriq could be GM’s best-selling EV in the U.S. market this quarter.

The Lyriq is one of several EVs Cadillac will launch over the next 12-18 months as it builds an electric fleet that will sell in parallel with its combustion lineup. Later this year, a compact EV called Optiq and a large Escalade IQ EV start hitting showrooms. The Vistiq, a three-row EV sized to snuggle between the Optiq and the Escalade IQ will arrive early in 2025.

Cadillac’s side-by-side combustion and EV fleets will offer a live-action test of the EV adoption curves among coastal and heartland customers who still shop legacy brands.  

European auto suppliers Forvia and Continental will cut thousands of jobs as Chinese automakers storm Europe and Western automakers demand lower costs.

Forvia said it will cut 10,000 jobs, mostly in Europe (see the presentation here .) The French company, still digesting its acquisition of lighting maker Hella, said it wants to reduce its exposure to a declining European market and address “structural overcapacities” as the European Union pushes to phase out combustion vehicles by 2035.

Continental, meanwhile, is cutting R&D in its automotive sector.

Hard-pressed Tesla rivals Rivian, Lucid and Fisker all face important dates with investors after a rugged 2023.

Rivian and Lucid report fourth quarter results and their 2024 outlooks on Wednesday. Rivian, maker of luxury trucks and SUVs and commercial Amazon vans, took a beating from investors after Q4 deliveries fell short. The company will try to regain momentum when it unveils its future R2 models, aimed to compete with the Tesla Model Y – and scores of other electric crossovers.

Lucid has also suffered as sales momentum has stalled, forcing steep price cuts for its luxury sedans.

Fisker has not scheduled its Q4 release. But it has plenty on its plate. The New York Stock Exchange last Friday warned it will delist the company’s shares unless Fisker acts to raise the price above $1 – which Fisker vowed it will do.

All three companies would benefit from stronger EV sales growth. That’s a tall order.

Market analyst Warren Browne forecasts in his latest Q1 2024 report that U.S. EV sales will increase to 9.6% of the U.S. market this year – up 2 percentage points. He projects EVs sold by brands other than Tesla will rise to 850,000 vehicles – outpacing Tesla’s U.S. sales for the first time.

But….Browne reckons there will be 102 EV models fighting over the piece of the pie that doesn’t belong to Tesla – 41 of them being launched this year. This is just one reason why EV makers are slashing prices – as Ford did Tuesday, announcing new

reductions for the Mach-E.  

For startups without the brand power or combustion truck-funded marketing warchests (see Cadillac above) it could be another tough year.

Ford and the UAW are wrangling again in a dispute that could interrupt production at the automaker’s ultra-profitable Kentucky Truck Plant . The UAW has set a deadline of midnight Friday to resolve local contract issues involving nursing staff levels and skilled trades work rules.

Tesla is no longer Wall Street’s most traded stock. That honor now belongs to super-chip developer Nvidia, which is riding the boom in artificial intelligence investment and is now the third most-valuable U.S. company. A portion of Nvidia’s success is owed to growing demand from automakers for its chips. Nvidia reports Q4 results this week – must-see TV for AI-enamored investors.

Stellantis is considering building EVs developed with Chinese partner Leapmotor in Italy. Stellantis CEO Carlos Tavares warns often of the challenge posed by Chinese EVs to European automakers. Stellantis has hedged its risk by acquiring a 21% stake in Leapmotor and forming a car-making JV.

GM temporarily stopped deliveries of 2024 Chevrolet Colorado and GMC Canyon midsize pickups because of a software glitch, Automotive News reports. GM confirmed in a statement that it had temporarily stopped deliveries “to address intermittent software quality issues identified during our continuously evolving and rigorous validation process.” Shipments restarted Monday.

Elon Musk said the human patient implanted with a Neuralink brain chip has learned how to control a computer mouse with their thoughts. Can spinning a steering wheel be far behind?

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