In China, AI takes drivers’ jobs

Greetings from Germany, where I woke up this morning wondering how much EVs will have featured in Elon Musk’s interview with Donald Trump on X last night and thrown off my plans for this newsletter. (I am filling in this week while Nick Carey enjoys a much-deserved break.)

It seems, however, that the two men – once they got past the technical glitches and started talking – didn’t discuss cars much, other than a passing comment in which Trump told Musk he had an “incredible product” – but “that doesn’t mean everyone needs an electric car”.

Trump has railed against government funding to boost electrification, including the types of subsidies, loans and tax breaks which have been instrumental to Tesla’s growth.

Even as Musk has embraced Republican Party rhetoric and said getting rid of subsidies would “only help Tesla“, his company continues to lobby for U.S. and state benefits created and championed by the Democrats, from stricter vehicle emissions rules to banning the production of most new gasoline cars by 2035.

Days after Musk endorsed Trump in July, one user on X asked Musk if he would comment on Trump’s views on EVs. “It will be fine,” Musk responded.

Even if Musk thinks Tesla could do without government help, other EV makers are struggling to break ground in the United States, with new EVs and plug-in hybrids making up just 18% of new sales in the first quarter of this year – compared to 50% in China in July. We know Trump doesn’t like losing to China…  so, will he just bow out of the EV race if he becomes president? Whatever he chooses, it sounds like Musk will have his back.

Onto today’s Auto File…

Liu Yi, a 36-year-old ride hailing driver in Wuhan, China, is among the first workers globally to face the threat of job loss from artificial intelligence.

In his city of Wuhan, China, a firm called Apollo Go is one of a handful of firms to receive approval for testing robo-taxis without human-driver monitors and plans to deploy 1,000 vehicles by year end. “Everyone will go hungry,” he told reporters Sarah Wu and Ethan Wang, who investigated the story for Reuters.

Apollo Go, owned by tech giant Baidu, says it will create jobs in monitoring, testing, and analyzing data from its trials. But Chinese social media shows scores of users worried that driving jobs – often a last resort for lower-class workers lacking qualifications – will disappear, with hashtags like “Are driverless cars stealing taxi drivers’ livelihoods?” topping searches in July.

European Union flags fly outside the European Commission headquarters in Brussels, Belgium, REUTERS/Johanna Geron

Things are hotting up between China and Europe as negotiations continue over the European Commission’s proposed tariffs on EVs made in China.

The latest episode of the tit-for-tat happened last Friday, when China filed a dispute with the World Trade Organisation alleging that the EU’s temporary measures violated its rules – an ironic accusation considering this all started because the EU said China was the one distorting competition with its subsidies.

The European Commission responded, saying it was studying the filing but was confident that its investigation was WTO-compatible and remained on track.

These kinds of disputes are supposed to be resolved through negotiation, but if that’s not possible, members can request a panel to be formed to settle the matter. Still, those processes are complex, beset with hurdles and take a long time.

Symbolically, the exchange of the past week shows that tensions are running high. Xi Jinping’s economic model relies on exporting high-tech goods like electric cars, and with either U.S. presidential candidate unlikely to allow Chinese EVs (or many other high-tech Chinese products) in, Europe is China’s biggest hope for a profitable export market.

Tesla cars are seen parked at the construction site of the new Tesla Gigafactory for electric cars in Gruenheide, Germany, REUTERS/Hannibal Hanschke

Weak EV demand has been talk of the town for some time. What hasn’t been talked about enough is the role that leasing firms play in that story.

Europe’s auto market is driven by leasing firms. Around 60% of new cars of all fuel types are leased, rising to 80% of new EVs, according to data from market research firm Dataforce analyzed by environmental group Transport & Environment.

When leasing firms set their prices, they account for how much a vehicle will depreciate over the leasing period – typically three years – based on estimated resale prices, or ‘residual values’.

If that resale price ends up being lower than anticipated, leasing firms lose money. Unfortunately, that’s what’s happening with EVs. Second-hand prices are falling because customers are worried about everything from charging infrastructure and battery life.

Until those concerns are addressed, companies say any move by regulators to mandate electrifying more of their fleets would damage their business and push prices further up. Nick Carey has the story.

Indian automaker Mahindra & Mahindra and China’s Shaanxi Automobile Group have agreed to set up a $3 billion joint venture to build a car manufacturing plant in India and are awaiting New Delhi’s approval, according to sources. Mahindra has sought a government nod for the Chinese investment, the sources said.

South Korea’s land, industry and environment ministries will meet this week to discuss how to prevent fires involving electric vehicles, after a recent blaze caused by a Mercedes-Benz sedan with batteries by China’s Farasis damaged over 140 cars and hospitalized 23 people. EV safety worries are just one of many factors slowing down sales.

General Motors is recalling 21,469 electric SUVs in the United States over concerns of an unexpected activation of the anti-lock brake system and will remedy the issue through an over-the-air update.

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