BMW, Ford, Volkswagen, Honda, and Volvo Are Still With California On Emissions

Photo: Mario Tama (Getty Images)

Five automakers are rallying in support of California’s desire to set its own emissions requirements, used car prices are up but not quite as much as you’d probably think and a Chinese automotive giant believes it will soon make batteries for Tesla. It’s unclear if Tesla is aware. All that and more in The Morning Shift for Wednesday, June 8, 2022.

1st Gear: A Coalition for California

Five automakers — BMW, Ford, Honda, Volkswagen and Volvo — are backing California and the EPA’s ruling to allow the state to set its own emissions regulations, a ruling that a group of 17 Republican attorneys general is currently suing the EPA over. From Automotive News:

“Two years ago, after EPA relaxed federal greenhouse gas emission standards, Ford and four other automakers entered into settlement agreements with California to abide by GHG emission standards that were stricter than EPA’s then-relaxed standards,” Steven Croley, Ford’s chief policy officer, said in a press call Tuesday. “We believe that was right then, and we think so today.”

Among the big three, Ford is alone; Stellantis and General Motors haven’t intervened in the same way, though GM has publicly sided with California before.

General Motors, which aspires to have an all-electric portfolio by 2035, said it has not filed an intervention. The Alliance for Automotive Innovation, which represents the five automakers intervening in the suit as well as GM and other major automakers in the U.S., Innovation said it is not a party to the litigation. Stellantis declined to comment.

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The attorneys general’s argument is that giving California the autonomy to set its own standards violates the Constitution’s equal sovereignty doctrine — a doctrine I, for one, don’t tend to hear the GOP make a lot of noise about when the issue in question involves abortion or guns, where states’ rights are treated as sacred. This one’s different, though! Wonder why.

The GOP attorneys general, led by Ohio’s Dave Yost, allege the Clean Air Act waiver violates the Constitution’s equal sovereignty doctrine.

In addition to Yost, officials from Alabama, Arkansas, Georgia, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Oklahoma, South Carolina, Texas, Utah and West Virginia — as well as the American Fuel and Petrochemical Manufacturers Association and other biofuels groups — joined the lawsuit challenging the reinstatement.

A coalition of 20 other states, the District of Columbia and the cities of Los Angeles and New York, as well as environmental groups, joined the lawsuit last month in support of the EPA’s action.

The other facet of this lawsuit is that carmakers don’t want to keep changing their plans for emissions laws that vastly swing from progressive to regressive every alternating administration. They want to do one thing and stick with it, ideally for the entire planet, because manufacturing is easier and less expensive that way.

2nd Gear: Wholesale Used Car Prices Up, Just Slightly

Mannheim’s Used Vehicle Value Index, which charts the overall trend of used car prices regardless of individual vehicle discrepancies, recorded an uptick of 9.7 percent in May compared to the same month in 2021, Automotive News reports:

Wholesale prices were 9.7 percent higher in May than they were in the year-earlier period. Those numbers are adjusted for mix, mileage and seasonality. On a nonadjusted basis, prices rose 1.1 percent in May from April, with prices up 12 percent year over year.

The pace of retail used-vehicle sales remained relatively stable in May. Used-retail sales fell 1 percent from April, according to Cox Automotive, which made that estimate by leveraging a same-store set of dealerships selected from Dealertrack to represent the U.S.

Used-retail sales were down 7 percent year over year, the “best year-over-year performance so far” in 2022, according to Cox Automotive.

The going theory is that tax refunds may have had something to do with it:

Slower issuance of tax refunds influenced the spring selling season. About 74 percent of projected 2022 refunds had been issued as of May 20 — meaning there’s still a chunk of refund dollars left for consumers to possibly infuse into the used-retail market through June.

In contrast, nearly all tax refunds had been issued by the latter half of May 2019.

The silver lining is that we’re not still seeing the massive 40-to-50-percent price increases year-over-year that we initially did moving into 2021, but then that’s because the market probably couldn’t sustain it.

3rd Gear: Tesla Attacks California Fair Employment Department

Tesla has issued a complaint to the California Office of Administrative Law that the state’s Department of Fair Employment and Housing (DFEH) sued it without first conducting necessary investigations. From Reuters:

Tesla in a 10-page complaint told California’s Office of Administrative Law (OAL) that the state Department of Fair Employment and Housing (DFEH) has adopted “underground regulations” that flout requirements it must meet before suing employers.

DFEH in a February lawsuit claimed Tesla’s flagship Fremont, California, plant was a racially segregated workplace where Black workers were harassed and discriminated against in terms of job assignments, discipline and pay.

Tuesday’s complaint is an attempt to rein in DFEH’s authority to pursue discrimination cases by forcing the agency to take additional steps before suing, such as providing businesses with detailed explanations of alleged legal violations and making efforts to settle outside of court.

Tesla had called that February case, the largest discrimination lawsuit in state history, “misguided.” This week it’s claiming that the DFEH is operating under a pretense of “sham compliance,” and that the suit was politically motivated. The DFEH has argued that California law doesn’t require it to do what the automaker says it does. Perhaps Tesla will have better luck with that sort of argument in Texas.

4th Gear: Three Electric Cupra Models by 2025

Cupra, Volkswagen’s sporty all-electric Seat spinoff, will have three cars in its roster in the next four years, the automaker announced Tuesday. One of those will be made in its native Spain. From Reuters:

“In the mid-term, our aim is to deliver 500,000 cars per year and push forward with our international expansion into new markets as well as entering new segments,” CUPRA’s chief executive Wayne Griffiths said in a statement.

Since its creation in 2018, CUPRA has delivered about 200,000 cars and its turnover reached around 2.2 billion euros ($2.35 billion) in 2021.

These models will have fun names, like “Terramar,” “Tavascan” and — wait for it — “UrbanRebel.”

The Terramar model will be its first electrified sport-utility vehicle. It will be available in 2024 either with an internal combustion engine or as a plug-in hybrid. It will be produced at Audi’s Gyor plant in Hungary.

The Tavascan is an electric concept car expected to be launched in 2024. Its production details have not yet been announced.

In 2025, CUPRA will launch its UrbanRebel electric model. Production is planned at SEAT’s Martorell Barcelona plant, but is subject to the Spanish government approving Volkswagen’s request for public aid as part of its decision to build a battery cell plant in Spain.

We will probably never see any of these in the U.S., though given how many parts they’re likely to share with Volkswagen’s ID line, in all likelihood we won’t be missing much. Outside of a badge that says “UrbanRebel.”

5th Gear: BYD Says Tesla Will Use its Batteries ‘Very Soon’

It’s but a mere formality before the Chinese automaker, who’s acronym of a name stands for “Build Your Dreams,” will build batteries for Tesla. That’s according to the company’s Vice President. Via Reuters, once again:

We are now good friends with Elon Musk because we are preparing to supply batteries to Tesla very soon,” said Lian Yubo, BYD’s executive vice president in an interview with Kui Yingchun, an anchor with China’s state-owned broadcaster CGTN.

BYD and Tesla did not immediately reply to requests for comment.

BYD, the world’s biggest manufacturer of the fleet including electric vehicles and plug-in hybrids, has been working on to supply batteries to other automakers including Toyota.

BYD’s battery know-how is, after all, what endeared it to Toyota, and resulted in the two companies joining forces for an affordable, battery-electric small sedan intended for China. Tesla relies on CATL, LG and Panasonic for batteries at the moment, and Panasonic sold its massive stake in Tesla for a hefty $3.6 billion profit not so long ago in a larger move to diversify its automaker partnerships.

Reverse: Prototype No. 1

On this day 74 years ago…

Reverse: My Enjoyment of Formula 1 is Waning

There’s a good title fight going, peppered with classic Ferrari self-sabotage. And yet, I can’t put my finger on precisely why I’m lacking a desire to keep watching races. Personally, I’ve been busy pretty much every weekend, but I also think there really are too many races. Plus, I found myself caring less after Saudi Arabia and Miami, and that’s probably not a coincidence.