To our American readers: Welcome to a brand new week. You formally have a brand new president, and he is promised lots 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 might have on its backside line—and the common client’s pockets.
Welcome again to Crucial Supplies, your day by day roundup for all issues electrical and automotive tech. As we speak, we’re chatting in regards to the potential impact Trump’s tariffs might 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 might get even tighter. Let’s soar 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 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 top of Common Motors’ Canada division is now sounding the alarm. If Trump follows by means of together with his plan to push ahead with tariffs, many years of progress might be unraveled from the fragile North American auto business provide chain, inflicting automobile costs to spike. And which means the buyer 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 together with his threats of responsibility charges of as much as 25% for Canada and Mexico. And may any of these retaliatory tariffs be aimed toward vehicles and vans, properly, 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 through the Biden administration with the intention 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 do not forget 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 parts, powertrains, or total autos which are then imported into the U.S. This might imply tariffs entering 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 might 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 might in the end be costlier because of tariffs imposed on imported items. Canadian residents particularly may 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 mentioned that the U.S. would accumulate “large quantities” of earnings particularly from overseas commerce by means of a brand new company he wish to have created known as the “Exterior Income Service”—which means that the federal authorities would accumulate 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 experiences 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
In the event you thought Scout was all retro-rugged vibes and Southern allure, assume 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 is just not within the dealership mannequin. No franchises, no up-selling nitrogen-filled tires, and positively no vendor 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 strategy 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 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 will with the intention to maximize their likelihood at getting a chunk of the Scout pie.
First seen by our pals 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] is just not 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 comparable to Volkswagen and Audi. They are going to 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 vendor community is larger than only one model preventing 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 occasions. 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
Picture by: InsideEVs
Sizzling on the heels of a virtually $6 billion deal between the 2 manufacturers, Volkswagen CEO Oliver Blume hints that its partnership with Rivian might 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 enthusiastic about sharing modules and bundling buying volumes,” mentioned Blume in an interview with Spiegel. “The Volkswagen Group affords nice alternatives for a small model like Rivian.”
To Blume’s level, Rivian remains to be actually a small model. Final 12 months it delivered 51,579 autos in 2024—13,423 of which had been its industrial 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 will appear that Rivian might drastically profit from the amount wherein VW purchases sure parts for its autos. And with the cheaper R2 and R3 platforms due out very quickly, penny-pinching might be what actually shaves down the price of these platforms and makes Rivian attain a revenue sooner.
The partnership between the 2 firms (formally branded Rivian and VW Group Expertise, 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 largest benefit is definitely using a software program platform apart from the money-bleeding headache that’s CARIAD. This is able to permit the Germans to go from utilizing greater than 100 totally different management models in its fashionable autos to simply seven—the identical quantity utilized by Rivian’s zonal stack immediately.
Clearly, reducing prices is the primary goal right here. And if VW can do this with software program whereas additionally shaving just a few 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 Shopper 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 vendor blueprint, main firms like CarMax, Carvana, and Vroom to select up the slack with extra high-tech methods to promote you a used automobile.
And now most fashionable startups are joyful to promote you a automobile immediately and lower the vendor out of the equation—properly, so long as franchise legal guidelines have not made it unlawful to take action with no dealership, that’s.
How do you are 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 lower out? Does this modification in the case of servicing your automobile? Let me know your ideas within the feedback.
