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By Joseph White, Global Automotive Correspondent

Greetings from the Motor City!

This week got off to a quiet start in the World of Cars, but the storm is threatening now.

Chinese leader Xi Jinping is touring Europe trying to tamp down fears that his nation’s automakers want to flood its markets with EVs. Perhaps not the best time for one of China’s auto trade groups to report record-high monthly exports.

In Washington, the Biden administration plans to slap bigger tariffs on Chinese EVs, and U.S. officials are floating plans to ban Chinese “connected vehicle” technology – which could affect a wider population of brands and push up EV prices.

Not enough for you? The U.S. Justice Department is investigating whether Tesla committed fraud with exaggerated claims for its Autopilot assisted driving system. And Elon Musk’s firing of Tesla’s Supercharger operation staff could monkey wrench Washington’s ambitious plans to expand EV fast-charging.

That’s a lot. But don’t forget to have a great weekend!

Today –

• • Chinese auto exports surge

  • Tesla’s Superchargers on Autopilot

  • Washington tries to build an EV Wall

BYD vehicles headed overseas. China Daily via Reuters

So much for Beijing’s efforts to allay fears that the Chinese auto industry plans to swamp overseas rivals with low-cost EVs.

China’s EV exports in April surged by 38% over a year ago, hitting a record as domestic demand sagged, the China Passenger Car Association reported.

Chinese leader Xi Jinping arrived in Hungary, where China’s top EV maker BYD plans to build a factory. A senior BYD executive told the FT’s Future of the Car conference the company is looking to build a second European production plant.

BYD wants to be Europe’s No. 1 EV manufacturer by 2030, Europe chief Michael Shu said.

Pause on that: BYD wants to build more EVs in Europe than Volkswagen or Tesla or Stellantis or Renault. Either the European vehicle market is going to grow substantially over the next six years, or someone is going to get stuck with plants and people that aren’t needed.

BYD’s European factory-building ambitions are a reminder that automotive tariff barriers only keep competition at bay for so long. Ask the Motor City Three how useful tariffs and import quotas were when Toyota and Honda started building competitive midsize sedans and utility vehicles inside the North American market.

That history isn’t stopping the Biden Administration from reaching for the bricks and mortar to build new tariff barriers against Chinese EVs. The Biden Administration is also considering “extreme action” to keep Chinese connected vehicles and networked vehicle technology out of the U.S. market on national security grounds.

Such action could backfire if China decides to take its own action to block Tesla’s robotaxi ambitions, undercut General Motors’ China operations or curtail shipments of luxury German SUVs from U.S. Red State factories to China. Chinese retaliation is a big worry for German automakers who depend on the world’s largest car market.

Washington’s tough talk did not stop Chinese EV brand Zeekr, an offshoot of Geely, from launching a U.S. IPO on Friday at the top of the targeted price range. Zeekr shares jumped as much as 19% as trading opened in New York.

The Zeekr share sale – the first U.S. IPO for a Chinese company since 2021 – valued the company at $5.5 billion, down from the $13 billion valuation set in an earlier funding round.

Superchargers in Kentucky. Reuters/Joe White

Elon Musk’s decision to fire the staff of Tesla’s Supercharger business threatens U.S. President Joe Biden’s effort to electrify America’s highways.

Tesla was the biggest winner of grants under a $5 billion federal program to build more EV charging. Now, Tesla is pulling out of deals to construct charging stations, according to property owners and rival charging network operators.

The White House effort to increase the number of EV fast chargers was already off to a slow start. Jim Motovalli reported in AutoWeek that just eight chargers have been installed under the Biden Administration program since 2021.

But Tesla’s retreat could be an opening for rival charging networks. BP, the oil major, is now looking at expanding its charging efforts in the U.S. market.

Elon Musk mending fences in Washington. Reuters/Julia Nikhinson

The U.S. Justice Department is investigating whether Tesla committed wire and securities fraud in its promotion of the Autopilot and Full Self-Driving assisted driving technology, Reuters reported.

No charges have been filed – and it is not clear that prosecutors will find sufficient evidence to bring a case. Tesla had previously disclosed that the Justice Department had asked for information about Autopilot and FSD.

The criminal investigation parallels intensifying scrutiny by U.S. vehicle safety regulators of Autopilot – and Tesla’s handling of Autopilot safety recalls.

The federal investigations of Autopilot, and civil litigation challenging the technology, are a cloud over Elon Musk’s efforts to charge premium prices for “Full Self Driving” technology and expand its deployment to China.

Ford will keep combustion and petrol-electric hybrid vehicles in its European lineup past 2030, reversing earlier commitments to go all-electric.

Ford said it is responding to slowing demand for EVs in Europe and a lack of charging infrastructure. Ford is also increasing production of hybrids and combustion vehicles in North America, and scaling back investments in EVs.

Earlier this week, the FT reported that Ford could restrict sales of petrol vehicles in the UK if it could not meet government EV sales targets. Such statements are aimed at galvanizing customers and dealers to put pressure on policymakers to back off.

Stellantis said it would curtail shipments of Jeeps to California and cut jobs in Michigan – a 2024 Presidential election swing state – amid a fight over California EV quotas. The dispute was settled earlier this year.

Investors punished EV startup Rivian after the company stuck to a forecast that it will build just 57,000 of its electric trucks and SUVS – short of the number analysts had predicted.

Rivian has had a bumpy ride over the past few months. The company got a boost when it hired a seasoned Volvo executive as COO. It also won $827 million in tax subsidies from the state of Illinois to help expand its Normal, Ill. assembly plant.

CEO RJ Scaringe got a rousing reception from investors in March when he unveiled prototypes for new, less expensive Rivian models and deferred spending for a new factory.

Overshadowing all that is the fact that Rivian lost nearly $39,000 on every vehicle it delivered in Q1. Average selling prices for Rivian’s pricey e-trucks are falling and its cash balance is dwindling.

Scaringe said recent retooling of production systems and supply chains for the current R1 lineup will yield lower costs. Investors will hold him to that.

Ford CFO John Lawler will take a new position as Vice Chair overseeing “the next phase of Ford’s strategic development” including “all current and future global partnerships, which are increasingly vital to Ford’s customer insight, technological capabilities and competitiveness,” the automaker said. Lawler will also take broader responsibility for policy. Former Lucid CFO Sherry House will join Ford and step into the CFO job early next year. House brings both auto industry and tech industry experience along with lessons learned at a high-profile EV startup.

Toyota forecast profit for the coming fiscal year would drop by 20% after reporting blockbuster profits for the fiscal year that ended March 31. Toyota said heavier investments in new models, technology and its supply chain will bring results back to earth. To put that in perspective: Toyota said it earned 5.35 trillion yen – equivalent to $34.5 billion – in the just-finished fiscal year – the first time a Japanese company has earned more than 5 trillion yen.

Siemens and Ford have collaborated on a new generation of factory robot controllers that can be updated from a central location like smartphones. The process of recalibrating an assembly line for a new model or a new pace of production – which has been happening a lot as EV volumes have gyrated – can be done overnight instead of taking days, Siemens said.

Honda will boost R&D spending by nearly 25% to accelerate new hybrid and electric vehicles, the automaker told investors.

BMW warned investors to expect lower pre-tax profit this year because of higher investment costs and lower used car prices, which hit profits on leased vehicles.

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