Like it or not, electric vehicles are a major political football in America's 2024 election. And that ball is constantly in the air. On one side, you have the Biden Administration's taxpayer-funded support of EV production and sales, something that Vice President Kamala Harris and her own VP pick, Minnesota Gov. Tim Walz, are largely expected to continue. On the other side, you have former President Donald Trump, who has roundly denigrated EVs but is sort of coming around on them thanks to newfound support from Tesla CEO Elon Musk.
But there's an even bigger and more contentious question this country will have to address in the coming years: Does America allow China's auto industry—which has a very clear lead on EV technology—to build cars on our shores, or do we work to continue keeping them out?
That kicks off this midweek edition of Critical Materials, our morning tech and EV news roundup. Also on tap: famed former Nissan-Renault boss Carlos Ghosn has words for the new Nissan-Honda partnership, and Rivian gets serious about cost-cutting.
30%: What Happens If China's Automakers Build Here?
We've addressed that question before. As InsideEVs contributor Ed Niedermeyer wrote recently, affordable EVs don't just happen; perhaps there's a way for China and America to work together in ways that are both mutually beneficial and stabilizing.
After all, think of the jobs that manufacturers like Toyota, Hyundai and BMW have brought to America with their factory options. Could BYD do the same over here? In a best case scenario, that could lead to tie-ups where American automakers get some EV knowledge (much as China once did when ramping up its industry) and maybe even defuse some tensions between two major geopolitical rivals.
Also, it was Trump, of all people, who suggested China's automakers just come here. I did not have that development on my bingo card for 2024.
But we're too probably too divided to go for it, and that stretches across party lines in America. A recent article from Hong Kong's South China Morning Post illustrates the Chinese perspective on all of this. (I'd add that the Post has had its independence from the ruling party questioned in recent years, but I'm including it here with that caveat so you an read it and make up your own mind.)
Some highlights:
Amid already substantial tariffs on Chinese electric vehicles and batteries – and fiery rhetoric against Chinese investment – Trump’s invitation has the potential to change the course of the US transition to EVs as well as open doors to Chinese business in a segment that has so far appeared closed.
Though far from fully fleshed out, his pitch is in line with a growing recognition worldwide of China’s critical role to the development of the EV industry and suggests an emerging split within the Republican Party about the future of Chinese industrial investment on US soil.
But such plans triggered local opposition. At a roundtable last Friday, Representative John Moolenaar, a Michigan Republican who chairs the House select committee on China, focused on the ties between Chinese companies and the Chinese Communist Party in opposing any role for Gotion in America.
“I want to see this area have more jobs and investment but we must not welcome companies that are controlled by people who see us as the enemy,” Moolenaar said, addressing an audience in Michigan’s rural Green Charter Township, where one of the plants would be built.
And as I mentioned, this isn't even a partisan thing. Many industry groups and even Democrats say "hell no" to this plan as well:
Scott Paul, the head of the Alliance for American Manufacturing trade group, called it a “foolish” idea. “At a time when many new and established brands are just scaling up EV production, [a] Beijing-backed Chinese auto juggernaut could wipe them out.”
Democrats, too, have expressed scepticism about letting Chinese carmakers into the US, trying to strike a balance between embracing a green future and guarding against potential national security risks.
“The Biden administration worries that Chinese cars, given the number of sensors and cameras and other sorts of devices on them, are essentially, as Gina Raimondo has said, ‘spy cameras on wheels’,” said Peter Harrell, a fellow at the Carnegie Endowment for International Peace, referring to Biden’s Commerce secretary.
Or, as analyst Michael Dunne also suggests, America could just make these automakers enter into a joint venture with our companies. After all, China did that to everyone else:
“I want the jobs, bring the capital, bring the know-how, and we have to trust American ingenuity to be able to absorb that and run with it,” Michael Dunne, founder of the Dunne Insights consultancy, contended on The Global Lithium podcast.
Dunne, a former General Motors executive, said the US ought to take a page from China’s playbook from the 1980s: encourage joint ventures to build up its auto industry.
“We’ll own a majority share. You have minority, but you get access to our lucrative market. And over time we hope to be able to learn how you make batteries.”
Finally, one analyst actually thinks Trump is more likely to go for it than a Democratic president:
But if Trump sought to encourage such investment, analysts said, he might not need the support of Republican lawmakers. And compared to his Democratic counterparts, they say, the former president is less vulnerable to being seen as weak on China, giving him more flexibility to invite Chinese firms in.
“Trump can do a lot to influence his party on this type of policy because he doesn’t need Congress to approve foreign direct investment,” said Jack Zhang, an assistant professor of political science at the University of Kansas, adding that foreign auto plants have previously found receptive audiences in red states for the jobs they bring.
It's all fascinating. And certainly unlikely to be resolved anytime soon. There are also some gray areas here, like allowing more battery manufacturers in before we allow full-blown car factories.
But I do believe that the anti-China tariffs are a temporary situation at best. Those automakers will be selling EVs and hybrids in America someday; capitalism finds a way, even their flavor of it. America just needs to figure out what terms that's going to happen on.
60%: Ghosn Says Nissan Is At Risk If It Partners With Honda
We know that Japan's automakers are freaked out about their lateness in developing EV technology, and the rise of China is what has them especially spooked. We also know that they're circling the wagons and turning to joint ventures and team-ups to stay ahead.
The latest one is a deal between Honda and Nissan, but these days, the former is in a much stronger position in terms of profits and sales than the latter. So former Nissan-Renault-Mitsubishi megaboss Carlos Ghosn—speaking to Automotive News from self-imposed exile in Lebanon following his flight from Japanese authorities—worries that Nissan is just going to get eaten here:
"Signing an alliance is the easy part. Now, making the alliance work is a completely different story," Ghosn told Automotive News on Aug. 5 from Lebanon, where he lives as a fugitive from Japanese authorities after jumping bail in December 2019 and fleeing the country hidden in a box.
Indeed, many details of the Nissan-Honda deal, including funding and investment, are up in the air. Meanwhile, adding Mitsubishi to the mix brings another voice that could complicate discussions.
[...] "I can't imagine for one moment how it's going to work between Honda and Nissan unless it's a takeover, unless it's a disguised takeover by Honda of Nissan and Mitsubishi with Honda in the driver's seat," Ghosn said. "It's going to be a takeover, a disguised takeover."
Nissan and Honda haven't discussed capital cross-holdings between each other, Nissan CEO Makoto Uchida and Honda CEO Toshihiro Mibe said at their joint news conference.
But Mibe added that he isn't ruling it out.
The partners are considering many options, perhaps even setting up a new company, the Honda boss added. Honda took that approach in establishing a separate EV venture with electronics and tech giant Sony.
Ghosn is right about the culture clash. They may both be Japanese car companies, but they're very different ones. One is an engineering-led firm that's been largely independent and has had few tie-ups over the years, and the other is infamous for its bureaucracy, inconsistent decisions and utter chaos since the Ghosn scandal. And Nissan's ties to Renault are equally messy, with fewer obvious returns for either company.
Again, I do think this is the start of an era of consolidation for the Japanese auto industry, with Honda and Nissan on one side and Toyota, Subaru and Mazda on the other. But Nissan's not going into this one from a position of strength at all.
90%: Rivian Is In Cost-Cutting Mode
We didn't get a ton of new-news out of Rivian's Q2 earnings call last night. But as CNBC reports, it beat analyst expectations yet still lost $1.46 billion—up from $1.2 billion a year earlier. Rivian officials also said the comoany remains on track for a positive gross profit during the fourth quarter.
More from that report:
The second-quarter results come more than a month after Rivian held an investor day that focused on cost-cutting efforts, efficiency gains and in-house technologies and software. The event came days after Rivian announced plans for Volkswagen to invest up to $5 billion in the EV startup, starting with an initial investment of $1 billion.
Shares of Rivian are off 37% this year amid slower-than-expected demand for EVs as well as Rivian’s significant cash burn. The stock closed Tuesday at $14.80, up 1.3%.
Rivian, which is still losing thousands of dollars for every vehicle it makes, has been focused on reducing costs. Rivian CEO RJ Scaringe said in June that efficiencies earlier this year in products and manufacturing are expected to lead to 20% material cost reductions in its current vehicles, followed by 45% targeted reductions in its upcoming “R2” vehicles, which are projected to begin production in early 2026.
In other words, Rivian is learning, getting better and seems to be trending in the right direction. But it needs to keep the juice going until the R2 can make its debut, and 18 months (if not more) can feel like forever in the EV world.
100%: Yes Or No To Chinese Auto Factories In America?
They're already in Mexico and Europe too. You can't tell me it isn't a matter of time before they're here. So how does America play this one?
Contact the author: patrick.george@insideevs.com
