The U.S. has been kicking government funding of electric vehicles and supporting infrastructure into high gear lately. From funding chargers to banning Chinese car tech to juicing parts suppliers, the moves have been quite clear. But there's something important to remember: Federal cash will eventually dry up. And in other countries, we're seeing what happens to the EV transition when it does.
Welcome back to Critical Materials, your daily roundup for all things EV and automotive tech. Today, we're chatting about countries considering ditching EV subsidies, Stellantis' supposed search for a new CEO, and Cruise firing its robotaxis backup (kind of). Let's jump in.
30%: EV Subsidies Could Be On The Chopping Block
Government subsidies have always been a polarizing topic. Just ask Tesla CEO Elon Musk, who called for the end of all subsidies across all industries—even those for the EVs that his company sells. He might just get his wish.
There's growing talk among governments across the globe about ending the subsidies that have been powering the EV industry for years. The chatter comes at a crucial time when EVs have just started to become mainstream, partly thanks to the very tax credit that many want to do away with. But here's the thing—ending EV subsidies now could mean throwing a considerable wrench into adoption before the cars reach cost-parity to their outgoing ICE siblings.
Here's what the MIT Technology Review has to say on the matter, starting in Europe:
One of the main reasons traces back to mid-December 2023, when the German government gave less than one week’s notice before ending its subsidy program for electric vehicles. The program had given drivers small grants (up to around €6,000) toward the purchase of new battery-electric and plug-in hybrid cars.
The end of the subsidy program isn’t the only factor contributing to Germany’s EV slowdown, but the abrupt axing certainly had an effect: While many countries across Europe saw steady or growing sales of new EVs in the past year, Germany’s sales fell.
The review points out that Germany isn't the only country that has officially scraped its credit. Sweden and New Zealand have also done away with their own EV subsidy programs, and—surprise—both countries started to see a slowdown or outright decline in EV sales. Europe's auto industry is in a fairly apocalyptic place right now, but the lack of people buying electric (especially from their own automakers) is making the entire continent nervous.
Unsurprisingly, the main driver behind the lack of EV adoption comes down to the almighty dollar.
"Cost is the main driver," confirmed Robbie Orvis, senior director at policy research firm Energy Innovation. And to Orvis' point, cost parity isn't there yet, meaning EVs are still significantly more expensive than their gas-powered counterparts. That could change as early as next year. However, it could inadvertently delay mass-market adoption and climate goals if government support is pulled at a crucial time.
In case we forgot, the whole point of subsidies is to help push people away from fossil fuels and towards something that won't set the planet on fire in a few generations. But there's also a hidden agenda to ensure that the automotive industry stays competitive.
Governments know that if they don't push for change and accept a stalemate, the manufacturing sector could suffer. Other countries are more than willing to pick up the slack to gain new market share. We're seeing it happen with cheaper Chinese EVs threatening automakers in Europe right now. You can't just fight change with tariffs, so that makes the choice for carmakers simple: innovate or die.
The U.S. doesn't seem to be at risk—yet. The Biden administration just announced plans to safeguard against a "flood" of EVs in China, in part by banning certain software with links to the country (something that could affect domestic automakers, too). It also announced a new billion-dollar round of funding to help automakers retool for the EV future.
It turns out that new car buyers make their buying decisions based on getting a good deal. Who knew? Naturally, incentivizing buyers also incentivizes automakers. For governments, that means dusting off the old checkbook and spending some taxpayer cash to help prop up the new propulsion tech.
So, is the EV market ready to fly solo? Maybe. But pulling these subsidies too soon can also sabotage many future manufacturing and climate goals. It's a tough call to say "enough is enough"—and one day, enough will be enough. It might not just be today.
60%: Stellantis Is On The Hunt For A New CEO
Big changes could be on Stellantis' horizon. But it's not a wave of new, unannounced cars or even the shuttering of brands. No—it's decisions happening behind the curtain at the top of the company's food chain. Word on the street is that the board is seeking a new CEO.
The company's chairman and Fiat heir, John Elkann, is reportedly putting feelers out for current CEO Carlos Tavares' replacement. Now, don't get it twisted; Tavares isn't out, at least not yet. His contract with the automaker runs until 2026, but if Elkann succeeds in finding a suitable successor, well, the company may have a new figurehead at the helm by then.
It turns out that the brands under the Stellantis umbrella aren't doing so hot. Sales across most of the company's 14 brands aren't doing so hot right now, especially those sold in North America.
Automotive News explains:
Pressure on Tavares is rising due to Stellantis' poor performance in markets including the U.S., its biggest single profit pool.
Elkann has no plans for an immediate leadership change and Tavares will be included in the search process, according to people familiar with the matter.
Still, Elkann is increasingly dissatisfied with the situation in North America, where sales have been slowing and several executives left the company, said the people, who asked not to be identified discussing internal matters.
Investors have been out for blood. Elkann, who is also the CEO of Stellantis' largest shareholder, Exor, appears to be no anomaly in that department. Some of the investors have even filed a lawsuit against the manufacturer alleging that the company kept its stock artificially inflated by concealing rising inventories and other weaknesses across its brands in North America.
Perhaps Tavares's comments from last year—like being "in the black" on EVs—weren't the most accurate representation of the parent company's standing, especially when none of its brands had sold any BEVs in North America at the time.
Meanwhile, Tavares has become increasingly outspoken about the tough battle that Stellantis—and the rest of the industry—will need to fight to make ambitious electrification goals a reality.
Other legacy automakers like Ford and GM have already begun their assault on the electrification sector. Stellantis is lagging, though it's hard to deny at least some of its brands are at least trying to embrace electrification. It's also not to say that Tavares hasn't had some good opinions about the future of EVs, but the lack of forward momentum for the automaker leaves Stellantis in a constant state of catch-up.
Tavares is fixated on duking it out with Chinese brands encroaching on the automaker's European presence. He's previously said that Stellantis expects to be "brutally challenged" by automakers that, according to Europe, receive "unfair subsidization" from the Chinese government. This has led to some extreme cost-cutting measures across the portfolio and has caused some critics to believe that Stellantis is starting to come apart.
The North American market has felt a bit neglected. There has been little progress on the consumer EV front, slumping sales, and a board that has it out for its CEO. Things aren't looking great. And who knows, maybe Tavares can work some magic that puts him back in the board's good graces. Whatever that magic is has to happen very soon, though.
In the meantime, at least we get the 2024 Dodge Charger Daytona EV!
90%: Cruise is Cruising Back To California
Not long ago, GM had to push that big red "pause" button on its self-driving subsidy, Cruise. The company was wreaking havoc across San Franciso, causing numerous traffic jams and even seriously injuring a pedestrian thrown into its path. California regulators finally put their foot down and yanked Cruise's permit.
Since then, the company has cleaned house. Its CEO? Gone. Co-founder? Quit. Nine hundred more folks working for the company? Axed. After some serious self-reflection (and a scathing report by law firm Quinn Emanuel that was hired to critique its response to the pedestrian incident), the automaker has been slowly working to build itself back up to the point where it can resume automated testing.
Earlier this year, the company resumed testing in Arizona, albeit with drivers behind the wheel instead of autonomous rides.
It plans to start slow. Five vehicles, each with drivers behind the wheel and not carrying any public passengers. Cruise says this is for research—for mapping—and to help get it ready to launch its driverless service again. But first, there are some major hurdles to overcome, like learning how to yield for fire trucks, staying out of wet concrete, and not rear-ending buses. You know, the usual.
Meanwhile, its permits remain suspended. In order to resume testing in California (even with human backup drivers behind the wheel), Cruise will need to apply to have the permits reinstated.
Cruise undoubtedly wants that to be ASAP. It's still burning money with nothing to show for it. This isn't about turning the key and riding off into the autonomous sunset. The company learned from its mistakes and is banking on being one of the first companies to solve the self-driving long game.
The bigger question is whether or not Cruise's high-stakes bet will pay off. And, of course, if it can avoid any crashes—software or otherwise. With months off the road, GM's self-driving arm has much catching up to do.
100%: When Should Governments End EV Subsidization?
We already talked about the highs and lows of subsidized EV purchases, plus taxpayer-funded infrastructure, and even government-sponsored uplifts for the auto manufacturing sector. I get it, there's a ton of money being poured into battery-electric cars right now. And we all know that money is eventually going to dry up.
The more important question that's on my mind is: when is it enough? When 25% of all new vehicle registrations are EVs? 50%? More? Or maybe it's based on infrastructure. Do we need to have more bolstered charging infrastructure to convince people that it's okay to buy an EV?
Obviously, there are a lot of variables in play here. So let me know in the comments what metrics governments should use to gauge when to stop shelling out subsidies.
