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By Joseph White, Global Automotive Correspondent

Greetings from the Motor City!

Can’t wait to find out tomorrow night whether the United Auto Workers will conduct a never-before, three-company strike against Detroit’s automakers? No need to sit on pins and needles. Europe could be about to start a trade war with China over electric cars!

Forget the political headlines. The World of Cars is where the action is.

Today –

• • Could Europe pull up the drawbridge against China’s EVs?

  • The UAW tips its strike strategy in Detroit

  • Ford bets big on hybrid pickups

Europe wants these to stay home.

European Union regulators said Wednesday they will not calmly accept Chinese electric vehicles – including Chinese-made Teslas – boosting their share of the EU market by two percentage points a year at the expense of national champion employers such as Volkswagen, Renault and Stellantis.

The EU is launching an investigation into whether EVs imported from China benefit from excessive government subsidies that allow Chinese EV makers to sell for prices EU-made vehicles cannot match profitably. 

The inquiry could last 13 months, and it is not certain the EU will ultimately slap additional tariffs on top of the existing 10% duty. But punitive tariffs to stem a “flood” of imported Chinese EVs could be on the cards, the EU’s president said.

The EU move comes less than two weeks after Chinese EV brands stole the Munich auto show from Europe’s legacy manufacturers. That’s coincidence. Pressure from European industry executives such as Stellantis CEO Carlos Tavares has been building for months as Chinese EV makers pushed a wave of exports to cope with a softening, over-supplied home market.

On cue, Volkswagen said it is cutting EV production at a factory in Zwickau, Germany because of slow sales. And hats off to Nio CEO William Li for calling this turn in April.

Trade wars are never neat. This one surely would not be.

• Germany’s automakers could suffer if China chose to answer new EU vehicle tariffs with retaliatory duties on German-made Mercedes, BMW and Volkswagen group cars. China is the largest or second-largest market for all three German manufacturers – and many more European companies in other industries. No wonder Germany’s VDA auto trade group issued a cautious response to the EU action, while French and Italian groups (on the side of Renault and Stellantis) cheered the move.
• European consumers benefit from the downward pressure Chinese imports place on EV prices. New tariffs could allow automakers to raise the price floor for domestic vehicles. Ask U.S. truck buyers, who are paying luxury-car prices for U.S.-built pickup trucks in part because they are protected by a 25% “chicken tax” duty left over from a 1960s U.S.-Europe trade war over….chicken.
• An EU attempt to raise the drawbridges against Chinese EVs could rev up the EV price war in China. China’s EV sector is burdened with too much capacity – and more brands want to pile in. European, Korean and Japanese automakers are already struggling in China. Forcing more Chinese EVs to stay home won’t help.
• Longer-term, Chinese automakers could do in Europe what Japanese automakers did 40 years ago in response to U.S. trade barriers: Build auto plants inside the trade walls – in this case on European soil. As Detroit’s automakers (and the United Auto Workers) learned the hard way, foreign competitors with lower cost structures can transplant those advantages to new factories.  

A glimpse into Detroit’s future?

The Detroit Three automakers could face not one, large-scale strike but many, smaller job actions that cripple production if they cannot reach new contracts with the United Auto Workers by the end of the day Thursday Detroit time.

UAW President Shawn Fain stirred the pot Wednesday morning, telling ABC News that progress is slow, and the clock is ticking. Fain is whipsawing General Motors, Ford and Stellantis against each other with his public comparisons of their wage offers – just as the companies have pitted UAW factories against each other for jobs in the past.

Meantime, Fain lined up more heavyweight political support. Former U.S. House Speaker Nancy Pelosi weighed in Wednesday, reminding the Detroit automakers – as Fain has done – that after Washington bailed out General Motors and the former Chrysler in 2007, the Detroit Three have the means “to invest in their workers.”

Pelosi’s message underscored the leverage federal policy makers – led by pro-union Democrat Joe Biden – have over an industry that has signed up for billions in federal EV subsidies and has a stake in a wide range of policy decisions involving CO2 emissions and autonomous vehicle deployment.

Calling local union strikes at engine or stamping factories that supply multiple assembly plants could help the UAW conserve its strike funds – which will pay members $500 a week on picket lines.

Fain is expected to outline the union’s strategy tonight at 5:00 PM Eastern Time on the UAW’s Facebook Live channel.

Ford CEO Jim Farley.

Could a gas-electric hybrid version of the Ford F-150 pickup outsell the industry’s OG hybrid, the Toyota Prius? Quite possibly.

Ford on Tuesday mapped out plans to double production of F-150 hybrids to 20% of the model’s annual sales – a target that implies over 100,000 F-150 hybrids a year. When Jim Farley told investors last month that Ford planned to slow down EV production, and significantly increase hybrid output, this is what he was talking about.

Hybrids are out of favor with climate action advocates because they emit CO2. Ford is doubling down on hybrids anyway. Why? One reason is that the automaker’s EVs are on track to lose $4.5 billion this year.

Just as important, Ford’s core truck customers like hybrids and the functionality they offer. Among buyers of the current F-150 hybrid, more than 70% pay extra for the equipment to turn their trucks into 7.2 kWh generators, capable of powering a job site or a tailgate party. Money talks. Ford shares rose in early trading Wednesday.

The grip Chinese producers have on key parts of the EV supply chain worries governments and automakers in the West. Breaking China’s grip won’t be easy. Graphite is a case in point, as Reuters colleagues Paul Lienert and Nick Carey report.

China dominates global graphite production. A group of Western startups are challenging this with new synthetic graphite compounds. But surprise! Chinese graphite incumbents are investing heavily in synthetic graphite, too. Analysts expect China will remain dominant.

India’s government is weighing a higher tax on diesel vehicles in an explicit effort to drive the technology out of the market in the world’s most populous nation.

“Say bye to diesel soon,” a senior government official said in announcing the plan at an industry conference. The Modi government has been pushing to electrify India’s vehicle fleet as part of a wider campaign to clean up the nation’s notoriously dirty air.

Industry executives were caught off guard, Reuters colleagues Aditi Shah and Tanvi Mehta report. Diesel vehicles account for 18% of the Indian market, down from 50% a decade ago.

The Detroit Auto Show kicks off today with a comparatively thin menu of vehicle launches ahead of Saturday’s opening to the public. Cadillac will show a refreshed edition of its CT 5 gasoline sedan, for example. This year’s show cannot compete with the drama of the UAW-Detroit Three contract talks. As Detroiters say of our beloved Tigers, “Wait ‘til next year!”

Hyundai and Kia are fighting to quash litigation by various U.S. cities that seek to hold the companies liable for failing to install robust anti-theft devices, enabling a wave of auto thefts inspired by TikTok how-to videos.

Canada will need 20 years to recover the cost of subsidies provided to new Volkswagen and Stellantis EV-related ventures, a watchdog group said in a new report.

A political fight over California’s power to regulate vehicle emissions foreshadows a 2024 campaign theme: Republicans in the U.S. House want to show their party will roll back efforts to curb sales of combustion vehicles – and put Democrats, including U.S. President Joe Biden, on the defensive with voters who are worried about the climate, but aren’t ready for an EV.

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