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By Joseph White, Global Automotive Correspondent

Greetings from the Motor City!

We’ve had a busy couple of days here in Detroit, the new official epicenter of the 2024 U.S. election campaign.

The president of the United States flew in Tuesday to show support for striking auto workers. The leading Republican candidate to take Joe Biden’s job will be in Michigan tonight. Everyone’s singing “Can’t forget the Motor City!”

We’ve got more, including a look under the hood of the dysfunctional U.S. electric vehicle (EV) market, and a big move by Toyota to seize ground in India.

One more thing: Reuters has a new newsletter I think you’d like. The Reuters One Essential Read will offer a daily recommendation on the best of our journalism, with news, photos, videos and graphics that you cannot find anywhere else. It’s coming in October and I’ve signed up. I hope you do too.

And now, on with the show.

Today –

• • The UAW gets a Presidential endorsement

  • Tesla’s U.S. rivals are fighting for scraps

  • Toyota triples down in India

U.S. President Joe Biden is sticking with the union. REUTERS/Evelyn Hockstein

United Auto Workers (UAW) President Shawn Fain’s campaign for record contracts with the Detroit Three hit a high point Tuesday when U.S. President Joe Biden joined a union picket line near Detroit. Biden – who wants but does not have the UAW’s official endorsement – declared through a bullhorn that auto workers deserve “a helluva lot more than what you’re getting paid now” and expressed support for the union’s push for a 40% raise.

Ford, the de facto lead company in the ongoing bargaining, replied that “Ford and the UAW are going to be the ones to solve this,” in a statement headlined: “Response to Politician Involvement in Negotiations.”

Needless to say, the Detroit automakers do not welcome “politician involvement” in the bargaining with the UAW. But they’re going to get it, with more to come from Donald Trump this evening.

Politicians claim a seat at the bargaining table on the grounds that they are authorizing billions in tax-funded subsidies for the EV transition. Plus, auto workers’ votes could decide the outcome of the 2024 presidential contest as well as races for Congress and other offices. Polls show more public support for the UAW than for the auto companies.

Meanwhile, Tesla CEO Elon Musk piped up to say that the UAW’s demands are a “sure way” to drive the Detroit Three “bankrupt in the fast lane.”

Musk has fought UAW efforts to organize Tesla factories, and now enjoys a roughly $15 per hour labor cost advantage over Ford, GM and Stellantis. And that’s before factoring in Tesla’s lead in labor-saving manufacturing automation.

Higher is not better. Charging capacity falls behind EVs on the road. Source: Alliance for Automotive Innovation 

Demand for EVs grew to nearly 9% of total U.S. vehicle sales during the first half of this year, but the U.S. EV market is still a shakeout waiting to happen, according to a Reuters analysis of new industry data.

New sales data show that the U.S. EV segment is a lopsided, unstable structure. Tesla is outselling the No. 2 EV brand, Chevrolet, by more than ten to one. Chevy’s one EV is the aging Bolt, soon to go out of production.

The Alliance for Automotive Innovation, an industry trade group, counts 103 electric and plug-in models available in the U.S. market.

Of those, only the Tesla Model 3 and Model Y are on track to sell more than 100,000 each this year – enough to support a full-size assembly plant, according to S&P Global data. Most of the rest are scrapping for tiny slices of the market that offer insufficient economies of scale.

The Alliance raises another challenge: The ratio of EVs on the road to public EV charging stations is going in the wrong direction. The group’s latest EV market report says 49 new EVs were put on the road for every new charging port activated during the second quarter. The Alliance sees seven EVs per charger as an ideal ratio. The U.S. is currently at 26 to 1 – worse in many heartland states.

Barring a surge in demand, and a significant loss of share by Tesla, scores of EV models will not sell enough to be profitable. That’s one reason among many why Ford is hitting the brakes on a plan to build a $3.5 billion battery plant in Michigan.

A Toyota SUV in New Delhi. REUTERS/Aditi Shah

Toyota plans to build a third assembly plant in India, boosting its capacity in the world’s most populous country by 30%, Reuters reports.

Toyota’s sales in India have grown thanks to a partnership with Japanese automaker Suzuki, long a strong presence in India. Toyota’s success in India is timely: The world’s largest automaker by sales is struggling in China, along with other foreign automakers.        

China’s commerce minister warned his EU counterparts to back off their threats to levy tariffs on Chinese-made EVs shipped to Europe, or risk broader damage to EU-China ties.

The comments made more explicit the risk of Chinese retaliation that concerns German automakers and some German government officials. Germany AG has plenty of concerns about China – including worries about intellectual property. But German automakers fear a European “decoupling” from China’s lucrative market.

Tesla is at risk of getting caught in the crossfire. A senior EU official told the Financial Times that Chinese-made Teslas and Chinese-made vehicles of other Western brands imported to Europe would also be investigated for unfair pricing.

Renault has ended its common purchasing partnerships with Nissan and Mitsubishi, another step in unwinding the Alliance among the three automakers.

Pendragon, a British auto retail group, is now the prize in a bidding war. AutoNation, one of the largest U.S. auto dealer groups, is offering $544 million, trying to outbid U.S. rival Penske Automotive Group and its partner Hedin Mobility Group.

French EV subsidies are propelling a venture by British EV supplier Bedeo to convert thousands of diesel vans to hybrid-electric powertrains.

Hyundai and Kia recalled 3.37 million vehicles in the United States to fix defects linked to 31 fires.

U.S. consumers bought more vehicles in September than a year ago, according to Cox Automotive, another sign that the economy is chugging along despite the Fed’s run of interest rate increases. Cox plussed up its forecast for the year, predicting U.S. auto sales will finish at 15.3 million to 15.4 million cars and light trucks, not 15 million as forecast earlier.

Fisker is accelerating deliveries of its Ocean electric SUVs to 300 vehicles a day later this year. The company said it has built 5,000 Oceans, but so far delivered just 900. Fisker shares popped in response to the release.

VW cut production of two of its lower-priced EVs in Europe blaming slow sales. The ID.3 and Seat Cupra models are among the European-assembled models under pressure from Tesla and Chinese EV imports.

Faraday Future shares plunged after the struggling EV startup said it will raise another $90 million through a stock offering. That’s nearly double the company’s current market cap.

An EV solar charging subsidy offered by a state-owned German bank was over-subscribed and shut down to new customers after just one day. The program offered 10,200 euros to customers who agreed to install solar charging systems for their EVs.

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