To our American readers: Welcome to a brand new week. You formally have a brand new president, and he is promised quite a lot of change over the subsequent 4 years. Lots of his insurance policies goal the U.S. auto trade, which is now sweating over the sheer uncertainty that President Donald Trump’s plan for tariffs might have on its backside line—and the typical shopper’s pockets.
Welcome again to Essential Supplies, your day by day roundup for all issues electrical and automotive tech. At this time, we’re chatting in regards to the potential impact Trump’s tariffs might have on the North American auto trade, plus, Scout points a stern warning to Volkswagen sellers seeking to get in on its gross sales, and Rivian’s partnership with the Germans might get even tighter. Let’s bounce in.
30%: GM’s Canadian Management Sounds The Alarm On Trump’s Tariffs
Picture by: Chevrolet
Nicely, people, it is official—Donald Trump has been sworn in as President of the USA as soon as once more. On this new period of Trump, the auto trade 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 top 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 could possibly be unraveled from the fragile North American auto trade provide chain, inflicting automobile costs to spike. And which means the patron will in the end 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, nicely, it might 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 as a way to be certain 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 international 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 complete autos which are then imported into the U.S. This might imply tariffs entering into and tariffs popping out. And, once more, a better price ticket on a automobile’s Monroney sticker.
It isn’t simply the U.S. that might face greater 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 might in the end be dearer as a result of tariffs imposed on imported items. Canadian residents particularly may also be affected, as an estimated 50% of the autos bought in Canada in 2023 have been imported from the U.S.
Throughout his inaugural deal with, Trump stated that the U.S. would acquire “huge quantities” of earnings particularly from international commerce by means of a brand new company he want to have created known 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 govt order on Trump’s first day, however stories from Reuters and different information companies sign that the President will direct federal companies to judge commerce relationships with Canada, Mexico and China in February.
60%: Scout Warns VW Sellers: Do not Tread On Us
Picture by: Scout Motors
Should you thought Scout was all retro-rugged vibes and Southern allure, 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 will not be within the dealership mannequin. No franchises, no up-selling nitrogen-filled tires, and definitely no seller markup. The resurrected model is not right here to play by the outdated 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 kind of manner—even perhaps threatened amid a seismic shift within the trade. That is why the Nationwide Auto Sellers Affiliation even known as the plan “salt within the wound” final 12 months.
Keogh has remained steadfast, although. And that has compelled Volkswagen’s sellers to take each angle they’ll as a way to maximize their probability at getting a bit of the Scout pie.
First seen by our mates 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 legal professionals as a response to a stop and desist letter drafted by the California New Automobile Sellers Affiliation (CNCDA). The declare is that Scout’s direct-to-consumer gross sales mannequin immediately competes with present dealerships that function beneath the present Volkswagen franchise settlement.
There’s only one downside: Scout Motors is not Volkswagen. That is the argument being made by Scout’s legal professionals, anyway:
“[Volkswagen Group of America] will not be licensed 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 akin to Volkswagen and Audi. They may 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 autos, nor do every other franchised sellers.”
Scout’s showdown with VW’s seller community is greater than only one model preventing the outdated guard. It is about the way forward for automobile gross sales, the continued rising pains of EV adoption, and forcing the auto trade to get with the occasions. For now, one factor is abundantly clear: Scout is not right here to play by the outdated guidelines, and it will not be bullied into submission.
90%: VW CEO Hints At Potential Expanded Rivian Partnership
Picture by: InsideEVs
Scorching on the heels of a virtually $6 billion deal between the 2 manufacturers, Volkswagen CEO Oliver Blume hints that its partnership with Rivian could possibly 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 might 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 presents nice alternatives for a small model like Rivian.”
To Blume’s level, Rivian continues to be actually a small model. Final 12 months it delivered 51,579 autos in 2024—13,423 of which have been its industrial EDVs (like those utilized by Amazon). Volkswagen delivered greater than 9 million vehicles worldwide, 744,800 of which have been EVs. In relation to quantity pricing, it might appear that Rivian might vastly profit from the quantity by which VW purchases sure elements for its autos. And with the cheaper R2 and R3 platforms due out very quickly, penny-pinching could possibly be what actually 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 Know-how, 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 sturdy zonal structure tech already championed by Rivian. For Volkswagen, the most important benefit is definitely using a software program platform aside from the money-bleeding headache that’s CARIAD. This may permit the Germans to go from utilizing greater than 100 totally different management models in its trendy autos to simply seven—the identical quantity utilized by Rivian’s zonal stack at this time.
Clearly, reducing prices is the principle goal right here. And if VW can do this with software program whereas additionally shaving a number of cents per half off for {hardware}, it might make sense to dig in even deeper. Volkswagen wants a win in America, and Scout’s independence means that it’s 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 Client Gross sales?
Yeah, yeah—we have all jokingly known as it the “stealership.” Many years of this mannequin led to customers distrusting the franchised seller blueprint, main corporations like CarMax, Carvana, and Vroom to select 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 immediately and reduce the seller out of the equation—nicely, 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 mandatory evil, or simply one other step within the shopping for course of that may be reduce out? Does this variation in the case of servicing your automobile? Let me know your ideas within the feedback.
