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 may have on its backside line—and the typical shopper’s pockets.
Welcome again to Crucial Supplies, your each day roundup for all issues electrical and automotive tech. At present, we’re chatting concerning the potential impact Trump’s tariffs may 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 may get even tighter. Let’s bounce in.
30%: GM’s Canadian Management Sounds The Alarm On Trump’s Tariffs
Picture by: Chevrolet
Properly, people, it is official—Donald Trump has been sworn in as President of america 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 Basic Motors’ Canada division is now sounding the alarm. If Trump follows by means of along with his plan to push ahead with tariffs, a long time of progress could possibly be unraveled from the fragile North American auto trade provide chain, inflicting automobile costs to spike. And meaning 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 may any of these retaliatory tariffs be aimed toward vehicles and vehicles, nicely, 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 in the course of the Biden administration in an effort to be 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 concerning 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 whole autos 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 is not simply the U.S. that might face increased 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 dearer attributable to tariffs imposed on imported items. Canadian residents specifically will even be affected, as an estimated 50% of the autos bought in Canada in 2023 had been imported from the U.S.
Throughout his inaugural handle, Trump stated that the U.S. would acquire “large quantities” of revenue particularly from overseas 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 studies from Reuters and different information companies sign that the President will direct federal companies to guage commerce relationships with Canada, Mexico and China in February.
60%: Scout Warns VW Sellers: Do not Tread On Us
Picture by: Scout Motors
If you happen to thought Scout was all retro-rugged vibes and Southern allure, suppose once more. It seems that the model has grown some sharp enamel 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 supplier 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 specifically has VW sellers feeling some kind of manner—maybe even 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 pressured Volkswagen’s sellers to take each angle they’ll in an effort to maximize their likelihood at getting a bit of the Scout pie.
First observed 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 instantly competes with present dealerships that function below the prevailing Volkswagen franchise settlement.
There’s only one drawback: 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 equivalent 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 don’t have any proper to Scout-branded autos, nor do every other franchised sellers.”
Scout’s showdown with VW’s supplier community is larger than only one model preventing the outdated guard. It is about the way forward for automotive 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 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 occupied with 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 remains to be really a small model. Final 12 months it delivered 51,579 autos in 2024—13,423 of which had been its business EDVs (like those utilized by Amazon). Volkswagen delivered greater than 9 million vehicles worldwide, 744,800 of which had been EVs. In relation to quantity pricing, it might appear that Rivian may significantly profit from the amount wherein 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 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 Know-how, LLC—catchy, I do know), is targeted on constructing the software program in fashionable Software program-Outlined Automobiles. 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 enable the Germans to go from utilizing greater than 100 totally different management items in its fashionable 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 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 Client Gross sales?
Yeah, yeah—we have all jokingly known as it the “stealership.” A long time of this mannequin led to shoppers distrusting the franchised supplier blueprint, main corporations like CarMax, Carvana, and Vroom to select up the slack with extra high-tech methods to promote you a used automotive.
And now most fashionable startups are pleased to promote you a automotive instantly and minimize the supplier 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 automotive gross sales? Are sellers a mandatory evil, or simply one other step within the shopping for course of that may be minimize out? Does this alteration in relation to servicing your automotive? Let me know your ideas within the feedback.
