Ford slows its EV roll

Greetings from London!

The auto industry’s summer of trade barriers continues, as Canada joined the club this week with a 100% tariff on imported Chinese-made electric vehicles, similar to one announced next door by the Biden administration.

In the short term the tariffs will mostly affect Tesla’s imports into Canada, but they also send a clear message to Chinese automakers like BYD, which wants to enter that market.

Meanwhile, Chinese organizations and automakers alike are piling pressure on the European Union over its much lower tariffs on Chinese EVs, while China’s government continues to threaten higher tariffs on large gasoline engines – which would disproportionately hurt German producers – and expanding its own anti-subsidy probes.

As EU members are set to vote on its tariffs in October, expect much more of the same in the weeks ahead.

Which brings us to today’s Auto File…

Ford became the latest legacy automaker to back off bold promises for EVs, killing a three-row electric SUV that only last year it unveiled with the boast that it was a “personal bullet train,” as my colleague Nora Eckert reports here.

Now the bullet is a dud, and America’s No. 2 automaker has also pushed back a new electric version of its top-selling F-150 pickup truck. Like its rivals, Ford is merely bowing to the reality that EVs are a tough sell right now, while hybrids are in as an easier shift for consumers who want lower-emission vehicles but are put off by the cost and the charging logistics of full EVs.

Toyota, for instance, is moving to convert most, and possibly eventually all, of its gasoline-powered cars to hybrid-only  models.

Ford, which faces EV losses of up to $5.5 billion this year, insists it is still working full speed on affordable EVs, though these are still more than two years away.

The move to kill an EV it had such hopes for illustrates the challenges facing legacy automakers as they look to invest in new EVs amid tepid demand.

Meanwhile, Chinese rivals continue to roll out better, more affordable options, a problem Ford faces in China and Europe, though not yet in its crucial home market thanks to the Biden administration’s 100%-plus tariffs.

BYD Song Pro. Just for Mexico, honest. REUTERS/Toya Sarno Jordan

Chinese EV maker BYD has whittled its short list down to three states to host its car assembly plant in Mexico and is currently looking to see which one will offer the best incentive package.

Competition for car factories and the well-paid manufacturing jobs they bring is always fierce.

While Mexico’s federal government has bowed to U.S. pressure and dropped incentives for Chinese automakers, state governments are still eager to land those jobs.

BYD’s Mexico boss Jorge Vallejo says the three states have offered up a variety of sweeteners including money, land and preferential pricing incentives.

The Chinese automaker insists that the plant, which should eventually make 500,000 cars annually, will only serve the Mexican market and there are no plans to enter the U.S. market.

Yet Mexico’s new car market is only a little north of 1 million units a year. Even with opportunities for growth in Latin America, BYD is widely expected to change its tune once its Mexican plant is up and running and target the large, lucrative market from a production base free of pesky tariffs.

Remains of Aug 1 South Korean EV fire —  Yonhap/via REUTERS 

After a series of fires involving EVs, South Korea’s government is going ahead with a battery certification program earlier than planned to tackle growing public safety concerns. Read the story from my Reuters colleague Ju-min Park here.

As well as starting the program in October, the government will require automakers to identify the batteries used in their EVs.

This comes after the government urged automakers to voluntarily disclose this information after an Aug. 1 EV fire damaged hundreds of vehicles and caused public panic.

EV battery fires are intense and a sensitive topic for both governments and the auto industry, though data suggests that EVs catch fire at much lower rates than either gasoline-powered models or hybrids.

Fires at auto plants or elsewhere involving EVs are far more likely to earn headlines than fires involving fossil-fuel models, with a fire on Sunday in the parking lot at Rivian’s EV plant in Illinois just the latest example.

Fair or not, the South Korean government’s move is an acknowledgment that public fears over EV fires are real and need to be tackled head on if the electric transition is to succeed.

Stellantis CEO Carlos Tavares spent three days in the U.S. market last week to work on a strategy to get its most profitable market back on track, as my colleagues Giulio Piovaccari, Gilles Guillaume and Nora Eckert report here.

After years of chugging happily along, pumping out the high-margin Jeeps and pickup trucks that have generated most of Stellantis’ margins – and FCA before it – investors were less than happy to see a weak first half where the automaker was bedeviled by high car inventories, production problems and a lack of “sophistication” in the world’s most lucrative autos market.

With shares down nearly 50% from March, Tavares’ visit was designed to show he is in charge of developing a new approach to get back in investors’ good books. According to one source that spoke to Reuters, that new strategy was expected to be ready by the end of last week.

The Biden-Harris administration is expected to finalize plans for steep tariff increases including on EVs, but manufacturers have been lobbying for the higher tariff rates to be reduced, delayed or abandoned, and for potential exemptions to be greatly expanded.

Truckmaker Volvo AB has picked Monterrey in northern Mexico as the site for its new $700 million heavy-duty truck factory to supply Volvo Trucks and Mack Trucks in the United States and Canada as well as Mack Trucks for Mexico and Latin America.

After coming to dominate the EV industry, Chinese robot makers are now chasing after Tesla in the race to build battery-powered humanoids expected to replace human workers building EVs on assembly lines.

Don’t worry, if you thought Volkswagen’s goal of building 200 gigawatt hours of EV battery capacity by 2030 was a firm commitment, the company’s batteries chief tells German newspaper FAS that this is not “set in stone” and the automaker will monitor how demand for electric cars evolves.

A U.S. federal appeals court has revived a lawsuit in which Tesla has challenged Louisiana’s ban on direct vehicle sales to consumers.

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