To our American readers: Welcome to a brand new week. You formally have a brand new president, and he is promised a variety of change over the subsequent 4 years. A lot of his insurance policies goal the U.S. auto business, which is now sweating over the sheer uncertainty that President Donald Trump’s plan for tariffs may have on its backside line—and the common shopper’s pockets.
Welcome again to Essential Supplies, your every day roundup for all issues electrical and automotive tech. At the moment, we’re chatting in regards to the potential impact Trump’s tariffs may have on the North American auto business, plus, Scout points a stern warning to Volkswagen sellers trying to get in on its gross sales, and Rivian’s partnership with the Germans may get even tighter. Let’s bounce in.
30%: GM’s Canadian Management Sounds The Alarm On Trump’s Tariffs
Photograph by: Chevrolet
Properly, people, it is official—Donald Trump has been sworn in as President of the US as soon as once more. On this new period of Trump, the auto business is bracing for tariffs promised to be imposed on two of America’s closest buying and selling companions: Canada and Mexico.
With post-inauguration day actuality lastly setting in, the pinnacle of Normal Motors’ Canada division is now sounding the alarm. If Trump follows by means of along with his plan to push ahead with tariffs, many years of progress may very well be unraveled from the fragile North American auto business provide chain, inflicting automobile costs to spike. And which means the buyer will finally be the one who suffers.
“It’s a disruption that’s in nobody’s curiosity, particularly within the U.S.,” warned GM Canada President Kristian Aquilina throughout an interview with Bloomberg.
Aquilina’s warning is one echoed by Canadian officers who’ve threatened retaliatory tariffs on the U.S. ought to the president push ahead along with his threats of obligation charges of as much as 25% for Canada and Mexico. And will any of these retaliatory tariffs be aimed toward vehicles and vehicles, properly, it may spell catastrophe for any automobile assembled within the U.S., no matter model.
This could strike up warning indicators for producers who arrange store domestically throughout the Biden administration so as to make sure that upcoming fashions can qualify for the EV tax credit score, one thing which Trump additionally threatened to repeal when he took workplace. However remember in regards to the numerous different overseas and home producers who produce legacy gas-powered vehicles within the States, both.
Many of those manufacturers even have factories in Canada and Mexico which construct elements, powertrains, or total automobiles which can be then imported into the U.S. This might imply tariffs stepping into and tariffs popping out. And, once more, the next price ticket on a automobile’s Monroney sticker.
It isn’t simply the U.S. that would face larger automobile costs, both. If a automobile is assembled within the U.S. and exported to different markets (like 60% of the SUVs produced by BMW in South Carolina), it may finally be costlier because of tariffs imposed on imported items. Canadian residents particularly can even be affected, as an estimated 50% of the automobiles offered in Canada in 2023 have been imported from the U.S.
Throughout his inaugural handle, Trump stated that the U.S. would acquire “large quantities” of earnings particularly from overseas commerce by means of a brand new company he want to have created referred to as the “Exterior Income Service”—which means that the federal authorities would acquire taxes by imposing tariffs on items flowing out and in of the U.S.
No tariff reform was signed into workplace by means of government order on Trump’s first day, however reviews from Reuters and different information businesses sign that the President will direct federal businesses to guage commerce relationships with Canada, Mexico and China in February.
60%: Scout Warns VW Sellers: Do not Tread On Us
Photograph by: Scout Motors
In the event you thought Scout was all retro-rugged vibes and Southern appeal, assume once more. It seems that the model has grown some sharp tooth earlier than a automobile has even hit the streets. After being hit with a case and desist letter from Volkswagen’s U.S. sellers, Scout is metaphorically waving the Gadsden flag in a transparent response to sellers throwing a tantrum over the model’s direct gross sales mannequin.
See, CEO Scott Keogh has defined to Volkswagen’s sellers time and time once more: Scout Motors isn’t within the dealership mannequin. No franchises, no up-selling nitrogen-filled tires, and positively no seller markup. The resurrected model is not right here to play by the previous guidelines and its direct-to-consumer gross sales mannequin goes to be what modernizes the model together with different EV upstarts like Tesla and Rivian.
The direct gross sales method particularly has VW sellers feeling some sort of manner—maybe even threatened amid a seismic shift within the business. That is why the Nationwide Auto Sellers Affiliation even referred to as the plan “salt within the wound” final 12 months.
Keogh has remained steadfast, although. And that has pressured Volkswagen’s sellers to take each angle they will so as to maximize their probability at getting a chunk of the Scout pie.
First observed by our associates over at The Drive, Scout’s double-down on doing its personal factor got here within the type of a “gotcha!” letter drafted by its attorneys as a response to a stop and desist letter drafted by the California New Automotive Sellers Affiliation (CNCDA). The declare is that Scout’s direct-to-consumer gross sales mannequin instantly competes with present dealerships that function below the present Volkswagen franchise settlement.
There’s only one downside: Scout Motors is not Volkswagen. That is the argument being made by Scout’s attorneys, anyway:
“[Volkswagen Group of America] isn’t approved by Scout Motors to promote, and won’t be promoting or distributing, Scout-branded EVs in California or every other state. Scout Motors and the Scout model exist and function independently of VWGoA and its manufacturers reminiscent of Volkswagen and Audi. They’ll proceed to take action sooner or later,” writes Scout Motors’ basic counsel, Neil Sitron, in a strongly worded response to the CNCDA. He later continues:
“Volkswagen-brand sellers haven’t any proper to Scout-branded automobiles, nor do every other franchised sellers.”
Scout’s showdown with VW’s seller community is larger than only one model combating the previous guard. It is about the way forward for automobile gross sales, the continued rising pains of EV adoption, and forcing the auto business to get with the instances. For now, one factor is abundantly clear: Scout is not right here to play by the previous guidelines, and it will not be bullied into submission.
90%: VW CEO Hints At Potential Expanded Rivian Partnership
Photograph by: InsideEVs
Scorching on the heels of an almost $6 billion deal between the 2 manufacturers, Volkswagen CEO Oliver Blume hints that its partnership with Rivian may very well be simply the tip of the iceberg.
In an interview with German information outlet Der Spiegel, Blume talked about that Volkswagen is contemplating increasing the partnership. The specifics are nonetheless being mentioned, however Blume did point out the potential for {hardware} sharing and quantity buying alternatives—which may imply decrease prices for each manufacturers enabled by the Software program-Outlined Car platforms that VW will depend on the partnership for.
“We’re eager about sharing modules and bundling buying volumes,” stated Blume in an interview with Spiegel. “The Volkswagen Group provides nice alternatives for a small model like Rivian.”
To Blume’s level, Rivian continues to be really a small model. Final 12 months it delivered 51,579 automobiles in 2024—13,423 of which have been its business EDVs (like those utilized by Amazon). Volkswagen delivered greater than 9 million vehicles worldwide, 744,800 of which have been EVs. With regards to quantity pricing, it might appear that Rivian may enormously profit from the amount through which VW purchases sure elements for its automobiles. And with the cheaper R2 and R3 platforms due out very quickly, penny-pinching may very well be what really shaves down the price of these platforms and makes Rivian attain a revenue sooner.
The partnership between the 2 corporations (formally branded Rivian and VW Group Expertise, LLC—catchy, I do know), is targeted on constructing the software program in trendy Software program-Outlined Autos. It particularly permits each manufacturers to share the event prices of extra strong zonal structure tech already championed by Rivian. For Volkswagen, the most important benefit is definitely using a software program platform apart from the money-bleeding headache that’s CARIAD. This might permit the Germans to go from utilizing greater than 100 totally different management items in its trendy automobiles to only seven—the identical quantity utilized by Rivian’s zonal stack as we speak.
Clearly, slicing prices is the primary goal right here. And if VW can try this with software program whereas additionally shaving a number of cents per half off for {hardware}, it may make sense to dig in even deeper. Volkswagen wants a win in America, and Scout’s independence means that it is not going to be the group’s magic ticket—however maybe Rivian and VW can share some success the place they each can use it most.
100%: What’s The Vibe On Direct To Shopper Gross sales?
Yeah, yeah—we have all jokingly referred to as it the “stealership.” A long time of this mannequin led to customers distrusting the franchised seller blueprint, main corporations like CarMax, Carvana, and Vroom to choose up the slack with extra high-tech methods to promote you a used automobile.
And now most trendy startups are comfortable to promote you a automobile instantly and reduce the seller out of the equation—properly, so long as franchise legal guidelines have not made it unlawful to take action with out a dealership, that’s.
How do you’re feeling about dealerships versus direct-to-consumer automobile gross sales? Are sellers a essential evil, or simply one other step within the shopping for course of that may be reduce out? Does this alteration in terms of servicing your automobile? Let me know your ideas within the feedback.
