AD #4262 - Robotaxis Could Cut Car Sales by 30%; Honda Motorcycles Under Pressure from Chinese; EU Gas Spike Raises Used EV Interest

This is odd-aligned daily, the show dedicated to enthusiasts of the global automotive industry.

Rising gasoline prices caused by the war in Iran is ramping up used EV sales in Europe.

Since the conflict began, gas prices in the EU have risen 12 percent.

They now average about $7.40 per gallon, and in some northern countries, it's $9 a gallon.

Thanks to that, online platforms tell Reuters that more car buyers are searching for and choosing a used EV.

One French online used car dealer has seen used EV sales nearly double since the middle of February.

Similar retailers in Norway, Sweden and Denmark have also seen a jump in used EV sales since the war started.

But it's not just used EVs. According to the ACEA, sales of new EVs are up nearly 15 percent so far this year in Europe as well.

Japanese automakers are quickly losing market share to Chinese automakers in many markets, and for Honda, it's a double whammy, because it's also threatened by Chinese motorcycles.

With Honda's car business taking a massive 15.7 billion dollar right off of its EV investments,

it's the motorcycle side that's keeping the company financially afloat right now.

But the motorcycle business also has to go electric to keep up with the Chinese.

Bloomberg NEF estimates that 87 percent of all motorcycles so globally will be electric by 2040.

And Chinese motorcycle companies dominate the market for electric motorcycles and scooters.

Toyota's outgoing CEO Koji Sato warn suppliers they better boost their productivity or they're not going to survive.

Automotive news reports he specifically cited workstapages caused by recalls and equipment breakdowns.

He wants suppliers to do a better job of building quality into parts, but Toyota is also taking steps to help them.

For example, it wants to commonize components across its models, so suppliers need fewer tools and get greater economies of scale.

It wants to eliminate overly stringent specifications, such as rejecting parts for minor cosmetic flaws like wire harnesses that had slightly discolored plastic.

Toyota is calling this effort SSA or smart standard activity, and it's part of an effort at the company to create a crisis mode mentality.

Everywhere you turn today, Robotaxi services are popping up in cities all over the world, and it's just getting going.

The Boston Consulting Group says there could be as many as 700,000 to 3 million Robotaxies by 2035,

potentially generating $465 billion a year in revenue.

Boston Consulting says costs will drop to only $0.80 a mile in the US.

That's about the same cost of owning your own car based on numbers from the AAA, and it's much cheaper than taxis or ride hailing services.

McKinsey says Robotaxies could eliminate as much as 30% of private car sales by 2035, which would have a major impact on automakers, suppliers and car dealers.

And we've just reached an important milestone.

Pony AI in China says it posted a net profit of $23 million in the fourth quarter, about four years after it started offering driverless rides.

At CSP, we work with OEM engineers across the country on their journeys to lighter, safer and more eco-friendly vehicles.

Learn more at vcsp.com

Magna is trying to make up for the vehicles that used to contract manufacture in Austria by turning to Chinese automakers that want to avoid EU tariffs on Chinese-made EVs.

The plant lost models from BMW, Fisker, Jaguar and Toyota, but last year Magna signed deals with Japan and AI on, which is a brand under GAC.

It's already making three models for the two automakers, and now AI is adding another, the UT.

While they're still mostly assembled with parts from China, there's enough local content to avoid the EU tariffs.

We'll be interested to see how much these Chinese models fill out the plant.

It's big enough to make about 150,000 vehicles a year, but even when it had all those other brands in 2023, it still ran at roughly half capacity.

However, Shippong and AI on left the door open to add more models, and with the success of Chinese brands in Europe, there's a real possibility of that happening.

They sold nearly 811,000 vehicles in Europe last year, and are close to cracking double-digit market share.

The price war in China isn't just eating into automaker profits, it's also hurting car dealers.

According to the China Automobile Dealers Association, 56% of dealerships reported losses last year, up from 42% in 2024, and only 24% of dealers turned a profit, down from 39% the year before.

Because of the price war, 82% of dealerships said they had to sell new cars below wholesale prices.

And in addition to the price war, China's car market is also shrinking right now, with sales dropping 20% in the first two months of the year.

As a result, more than three-quarters of dealers expect sales to either contract or stay flat this year.

And due to that fierce competition in China, Czech automaker Skoda, which is owned by the Volkswagen Group, is dropping out of the market altogether.

The company announced it will stop selling vehicles in China by the middle of this year, because it wasn't able to keep up with the shift to EVs.

China was once Skoda's largest market, with sales peaking at more than 300,000 units between 2016 and 2018.

But last year, that plummeted to just 15,000 vehicles. Skoda says it will now focus on expanding in India and Southeast Asia.

But it's not all doom and gloom for automakers in China. Hyundai is planning to significantly grow sales.

CEO Jose Munoz announced it's aiming to sell half a million vehicles a year in the country in the medium term, which is double what it currently sells.

But it's not just China, Hyundai is also planning big growth in North America.

Munoz says the automaker will introduce 36 new models in the market by 2030, which includes variants of each model, like gas, hybrid, and pure electric.

The Easter Jeep Safari is coming up in Moab, Utah, and every year Jeep designers create a number of concepts to show off to their most hardcore customers.

And it will be interesting to see how people react to the front end of the Wrangler Anvil 715 concept, which is meant to be inspired by the SJ Series Jeeps of the 1960s.

But we bet the most popular is the Cherokee XJ Pioneer concept.

Designers tastefully modified a near-mint first gen 1984 donor vehicle, whose original and first owner took exceptional care of, even meticulously writing down each trip to the gas station.

On top of getting to work on these fun projects, Jeep designers also benefit from attending the Easter Jeep Safari.

For some of them, it's their first time off-roading, so they learn more of what the brand is really all about.

But it also helps retrain how they approach design.

Most designers want to make vehicles that are lower, longer, and wider, but that doesn't work for off-roading.

Even on SUVs, they want to push the belt line higher, but that's also bad for sight lines when you're trying to crawl over an obstacle.

So overall, Jeep designers aren't able to exaggerate proportions as much as some other brands.

And we've got a lot of great topics to dive into on today's auto line after hours, like the mad scramble to convert battery plants from EVs to data storage.

Uber potentially buying up to 50,000 robo-taxies from Rivian, and whether or not general motors should drop its joint venture with SEIC and go with a loan in China.

We'll have Gabrielle Coppola from Bloomberg and Stephanie Brindley from S&P Global.

So join John and Gary when the show goes live at 3 p.m. Eastern Time today.

And that's a wrap for this show. Thanks for watching.

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