Car manufacturers have been a bit overly optimistic about the pace of EV adoption. This has led to a sliding scale of sales expectations so that automakers can be more flexible in adjusting rollout strategies to meet consumer demand more accurately. Volkswagen is taking full advantage of its flexible strategy and is now reportedly changing the planned model order to better fit the changing EV market.
Welcome back to Critical Materials, your daily roundup for all things EV and automotive tech. Today, we're chatting about VW's pushback of its flagship "Project Trinity" EV, Tesla's conflicting use of government subsidies, and battery fires in South Korea. Let's jump in.
30%: VW's Flagship "Trinity" EV May Be Delayed In Favor Of Electric Golf
Volkswagen has decided to once again delay its flagship "Project Trinity" EV. According to recent reports from German news outlet Handelsblatt, the automaker's decision comes as part of a priority reshuffling that could favor the early launch of a battery-electric Golf instead.
Reports indicate that the automaker has chosen to abandon its original timeline of 2026 so it can better recoup its investments into current-generation underpinnings. VW is now reportedly earmarking the release of the BEV sedan for 2032.
Automotive News explains the reasoning behind the significant delay:
The delay is part of a reallocation of product launch investments by VW Group CEO Oliver Blume. It would allow the group's existing EV platforms—MEB used by VW's ID cars and PPE used for the Porsche electric Macan and Audi Q6 E-tron—to be used for longer so that their investment costs can be better amortized.
The MEB platform is due to be upgraded to MEB+ in 2026 and the PPE platform will get a software upgrade within the next 36 months with help from VW Group's new partner Rivian, Handelsblatt said.
The postponement is also a reaction of the slowdown of the EV market and Blume's cost-cutting drive, sources told the paper.
The new product rollout will now reportedly prioritize a fully-electric Golf (codenamed "ID Golf") as the first vehicle to launch on the new SSP underpinnings in 2026, followed by a fully-electric Audi A4 in 2028. The report also claims that Volkswagen's ID.4 successor would be pushed back from 2028 until 2030 and a BEV crossover delayed from 2029 to 2031.
Originally announced in early 2021 under VW's former dieselgate-era CEO Herbert Diess, Project Trinity is set to be Volkswagen's flagship successor to the ID family of vehicles. Not only was Trinity planned to be the first car to ride on VW's Scalable Systems Platform (SSP)—the upcoming modular platform that is said to offer faster charging and up to 1,700 horsepower—but it is also poised to debut some Level 4 self-driving features.
Current VW CEO Oliver Blume has already delayed the EV once before in 2022. The first delay pushed it back from 2026 to 2030 over software concerns—a concern that is hopefully now moot with VW's new $5 billion Rivian partnership. The delay also solidifies the automaker's previous plans to extend its MEB platform until 2030.
60%: Charge, Baby, Charge: Tesla's Insatiable Appetite For Subsidies And Government Support
"Take away the subsidies," wrote Tesla CEO Elon Musk on his social media platform, X, just last month. "It will only help Tesla."
Musk was, of course, referring to the $7,500 EV tax credit which has helped to fuel the success of Tesla over the years, and will continue to do so for the foreseeable future as long as the automaker continues to build vehicles compliant with the program's requirements.
But Despite Musk's sentiment towards tax credits and government subsidies, Tesla has continued to show that its opinion vastly differs from that of its CEOs. And as noted in a recent report from Reuters, Tesla has established a clear pattern of lobbying in favor for regulation that directly opposes its CEO's public cry for less government-provided support.
From Reuters:
In February, for instance, Tesla in a filing with the U.S. Environmental Protection Agency, or EPA, urged the Biden administration to allow California to pursue stricter vehicle emissions rules than the rest of the country—an idea Trump opposes.
Months earlier, in a previous filing with the agency, Tesla lobbied the government for regulations that would ban the production of most new gasoline cars by 2035—the so-called "EV mandate" that Trump and others on the American right have criticized.
The disparity is hardly the first time that the billionaire entrepreneur—himself increasingly dismissive of subsidies—has sent mixed signals on business and politics.
Tesla has a history of gobbling up whatever taxpayer-sponsored subsidies that benefits it. As Reuters outlined above, Tesla's biggest sale as of late has been the sale of regulatory credits, which alone bolstered its bottom line by $890 million in the second quarter of 2024.
Tesla has also changed the way it does business in order to take advantage of government-sponsored funding. In Canada, for example, the automaker launched a compliance-spec Model 3 with just 94 miles of range, which, yes, people bought. And in France, Tesla offers the Model Y in a two-seater configuration in order to qualify for a tax break for business-to-business customers.
Reuters outlines other examples of Tesla's use—and push for—government support and subsidies through its previous actions:
[T]he public record clearly shows that Tesla, since its founding over two decades ago, has benefitted from government assistance, largely because of its role in moving the U.S. toward cleaner cars. Tesla's first major manufacturing facility, in Fremont, California, was developed with the help of a $465 million loan from the U.S. Department of Energy, repaid three years later.
More recently, Tesla has reaped almost $9 billion since 2018 by selling what are known as "regulatory credits, opens new tab," securities filings show. The credits, awarded in the U.S. by the federal and state governments to manufacturers who surpass increasingly strict emissions rules, can be sold to other carmakers who are unable to comply.
"There was no Tesla without California's regulatory bodies," California Governor Gavin Newsom said at a 2022 conference, citing the importance of the state's credits to the carmaker's finances.
A Reuters review of Congressional lobbying records—and Tesla's public comments to federal and state regulators—shows that the company has continued working to shape public policy in favor of such benefits.
Earlier this year, in a February filing with the U.S. Department of the Treasury, Tesla said that sustained government support, by accelerating the transition away from fossil fuels, would "mitigate greenhouse gas emissions, and protect the country's public health and welfare."
It's unclear if Musk's words are a strong marketing tactic to pursue more conservative buyers, or if the CEO's opinions vastly differs from the company's actions. In a recent interview with former president Donald Trump, Musk said that the world shouldn't "vilify the oil and gas industry" because the climate risk "is not as high" or immediate as some experts stress. Previously, Musk publicly supported carbon taxes in order to combat both pollution and offset subsidies which help make petroleum-based fuels less expensive.
In Tesla's defense, if the government is offering a discount or advantage for consumers to buy your product, it seems to be in the best fiduciary interest of the company to take advantage of it. However, on the other hand, its CEO calling to end those very programs because they are unnecessary to the organization's success feels like an unwise chess move.
90%: BMW, Mercedes Battery Makers Revealed After South Korea Urges Transparency Following Fires
The government of South Korea is urging automakers for more transparency—specifically, voluntary disclosure of the manufacturers of batteries used in their vehicles.
Officials are responding to "EV phobia" after lithium fires in battery-electric cars have sparked public concern across the country in recent weeks. In particular, Korean citizens are on edge after a Mercedes-Benz EQE burst into flames earlier this month and damaged 140 vehicles in an underground parking garage during the eight-hour blaze.
Following the fire, automakers have begun to publicly disclose the batteries used in their EVs—at least in the Korean market. Bloomberg called the disclosure "a rare move," noting that car makers typically keep this information confidential but appear to be willing to publish it as a means of transparency given current events.
Mercedes revealed cells supplied LG Energy Solution (LGES), CATL, SK, and Farasis Energy. BMW revealed that its cars use cells supplied by Samsung SDI and CATL. Hyundai, Kia, and Genesis use cells provided by LGES, SK, and CATL.
According to reports from local media, the EQE that caught fire in early August was using batteries from China's Farasis Energy, though there is no current correlation noted between a battery cell manufacturer and the risk of fire. Mercedes is currently offering free inspections of all of its EVs in Korea and has drawn up a fund of $3.3 million to help individuals affected by the fire. An investigation into the blaze is still ongoing.
"It’s difficult to tell at this point whether Farasis batteries are the problem, but there’s a general sentiment that the risk is higher with smaller battery makers than major producers like CATL or Korean makers," said Korean-based DS Asset Management Co. fund manager, Yoon Joonwon, in a statement to Bloomberg. "Until the issue is resolved, consumer sentiment toward EVs is expected to remain deteriorated for some time."
South Korea's Office for Government Policy Coordination says that it has discussed EV safety concerns with industry experts and related government departments. Officials will develop comprehensive safety measures in the coming months to address its concerns.
100%: Has The EV Tax Credit Helped You Decide On A Battery-Electric Car?
The EV tax credit is one of the most powerful tools that any car buyer considering an EV can leverage right now. It's far from being free money, but for many, it sure feels that way when they can simply eliminate $7,500 off the bottom line with the stroke of a pen.
When I was shopping around for an EV last year, it was one of my main concerns. In fact, I passed up on some of my more preferential EVs (like the Kia EV6 GT) because the cars didn't qualify for the EV tax credit. And I expect to set that same expectation for whatever EV I purchase next as well—assuming the credit is still around after November, that is.
Those of you who have purchased an EV (or are looking to purchase an EV): has the tax credit influenced your decisions? Let me know in the comments.
