Elon Musk Pitches EVs To Disinterested Republicans To Boost Sales

Good morning! It’s Tuesday, August 13, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

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Contents

1st Gear: Elon Musk Can’t Sell Donald Trump’s Vision

Tesla CEO Elon Musk is going all in on Michael Jordan’s “Republicans buy sneakers, too” strategy of selling electric vehicles by appealing to Donald Trump and his supporters. However, neither seem to be that into giving up their gas-burning vehicles.

During a livestream with the presidential hopeful on X on August 12, Trump minimized the threat of global warming and reiterated his support for oil and gas drilling. Musk took this opportunity to segue into a more Republican-friendly pitch for going electric. From Bloomberg:

Vilifying oil and gas is wrong because the economy would collapse without the industry, Musk said on the social media service formerly known as Twitter. At the same time, fossil fuel supply is finite and global warming does pose some risk, he said. That’s where Tesla comes in.

“When you look at our cars, we don’t believe that environmentalism, that caring about the environment, should mean that you have to suffer,” Musk said of Tesla. “So we make sure that our cars are beautiful, that they drive well, that they’re fast, they’re sexy, they’re cool.”

Musk’s pitch to Trump and his devotees comes as Tesla’s sales have been slumping in recent quarters, and as some of the US company’s peers have decried the politicization of plug-in cars. Ford Motor Co.’s Executive Chair Bill Ford, for example, has said that states where voters tend to vote Republican view EVs much like they do vaccines: as products the government is forcing on people.

The Inflation Reduction Act that Biden signed into law in August 2022 made Tesla and other car companies eligible for billions of dollars worth of battery manufacturing tax credits, and lined up billions more in EV purchase subsidies for consumers.

The Biden administration also toughened fuel-economy standards that were eased under Trump. Stricter efficiency targets are a boon to Tesla, which has generated more than $10 billion in revenue from selling regulatory credits to car companies that have needed help complying with emissions rules.

Trump is still very much an EV skeptic. However, he has begun to mix in some praise of both Tesla and Musk since the world’s richest man endorsed him in July:

“You know, Elon, remember, I love electric cars, I think your car is great, I love it, but it’s not for everybody,” Trump said last month at an event in Florida. “Some people love them and some people want them. But I think if you’re going to go long distances, it’s a little bit — you’re challenged. You’re challenged.”

While Musk seemed to be making a play on Monday for Republicans to get on board with Tesla’s mission to accelerate the transition to sustainable energy, he also downplayed the urgency of the undertaking.

“I think we want to just move over and if, I don’t know, 50 to 100 years from now we’re mostly sustainable, I think that’ll probably be OK,” he said. “It’s not like the house is on fire immediately.”

“People can still have a steak and they can still drive gasoline cars,” Musk added. “It’s OK.”

There is something deeply gross about these two teaming up. It just makes me feel icky.

Before forming this gruesome twosome, Trump and Musk had exchanged insults in the past. A few years ago, Musk tweeted that Trump would be too old to be president by the end of this term (he’s actually right), and Trump has said he could have made Musk “drop to his knees and beg.” Truly, these two guys deserve each other

2nd Gear: Global EV Sales Rose 21 Percent In July

Global sales of electric vehicles and plug-in hybrids rose 21 percent year over year in July. Unsurprisingly, a lot of that is thanks to China and not thanks to Europe (which has seen EV demand decrease.)

About 1.35 million fully electric vehicles and plug-in hybrids were sold worldwide in July. About 880,000 of those were in China alone, a 31 percent year-over-year increase in the country. PHEVs on their own were up 70 percent in the first seven months of 2024. In the U.S. and Canada, sales were up 7.1 percent in July. From Reuters:

BYD, China’s and the world’s biggest EV maker, reported in the same period increases of 13% and 44% in its global BEV and PHEV sales, respectively.

In Europe, monthly sales were down 7.8% in July, to year-to-date figures in line with 2023. In the seven months to July, they dropped by 12% in Germany, the EU’s biggest EV market.

[…]

“BYD continued to have record sales of plug-in hybrids again this month, which is a key contributor as they have a large volume of vehicles that they sell”, Lester told Reuters.

Range extender vehicles, battery-powered hybrid cars that recharge with an on-board generator, are also selling in large numbers, Lester said.

The European Union imposed in July provisional tariffs on imports of electric cars made in China. BYD faces duties of 17.4%, Geely 19.9% and SAIC 37.6%, the EU said.

The rest of the world has a very long way to go if it ever wants to catch up with China’s stellar pace of EV adoption.

3rd Gear: 21,000 Cadillac Lyriqs Recalled For Braking Issue

General Motors is recalling about 21,000 Cadillac Lyriq electric crossovers because of an issue with the Electronic Brake Control model on all-wheel-drive-equipped models. From GM Authority:

The problem: affected AWD-equipped Cadillac Lyriq units may have a condition where certain braking events on dry surfaces at speeds below 25 mph may cause the anti-lock braking system to activate when it shouldn’t. As such, if the ABS falsely activates and a specific sequence of wheel movements occurs, the crossover’s ABS will continue to release braking pressure in the vehicle’s service brake system.

The hazards: if this condition were to occur, under rare circumstances according to the automaker, the brakes may have reduced stopping performance or become inoperative, thus increasing the risk of a crash.

The fix: certified GM technicians will be instructed to inspect affected vehicles and update the Electronic Brake Control Module software. Notably, owners of affected vehicles will have the opportunity to accept these software changes using wireless over-the-air (OTA) technology, or may schedule to have the updates performed at a General Motors dealer. At the time of this writing, the software fix is not yet ready for 2023 Lyriq units. GM indicated that the remedy is already being performed on 2024 Lyriq units in dealer possession.

Number of affected vehicles: according to a GM spokesperson, less than 500 units of the 2023 model-year Lyriq are affected, while about 21,000 units of the 2024 model are involved in the recall. A total of 21,469 units are affected.

Cadillac will notify owners of affected Lyriqs and instruct them to make an appointment with their local Cadillac dealer, or it will perform an over-the-air update that will apparently take less than 30 minutes.

4th Gear: Nissan Dealership Profits Are Tanking

Nissan dealerships have a big profitability issue on their hands. In the first half of 2024, their profitability fell to its lowest level in nearly 15 years as the Japanese automaker continued to lose huge chunks of market share. From Automotive News:

About 38 percent of Nissan’s 1,071 dealerships across the country are losing money, a retailer with knowledge of the matter told Automotive News.

“Dealers are struggling more than they have in a long time,” said the person, echoing several others interviewed. “We need volume, and we need volume fast.”

According to Nissan financial data obtained by Automotive News, the dealership network’s return on sales — a key measure of profitability — slumped to 1 percent in the first half of the year, from 3.2 percent a year earlier.

The average net profit for a dealership in the first half cratered 70 percent to $262,582. The red ink has led to attrition, with Nissan losing eight franchised stores so far this year.

The pace and extent that store profitability has fallen is alarming, another dealer said. Five dealers interviewed for this story asked not to be identified for fear of retaliation.

“In many markets, Nissan dealers are, at best, selling half the volume that competing Honda, Toyota and Subaru and Hyundai stores are selling,” the person said. “If you’re not selling enough new cars, you’re not generating enough trade-ins, which feed profit centers such as finance, service and parts.”

Nissan’s share in the U.S. was 5.8 percent in the first half of 2024. That’s a 1.9 percent drop in just five years. At the same time, Hyundai’s share rose 1.2 percentage points to 5.1 percent, Toyota’s rose 0.9 to 12.9 percent and Honda’s fell 0.4 percentage points to 7.9 percent.

Additionally, Nissan dealers say the automaker’s sales volume can not sustain a retail market built for a share of 7 to 10 percent. There are simply too many Nissan dealerships in the country for the amount of business the automaker actually does.

In fact, it has 1,079 dealers in the U.S. That’s more than Honda (1,070), Hyundai (841), and Kia (788).