After years of post-recession stability in the auto industry, marked by broad shifts in product mix like a gradual pivot toward electric vehicles and the faltering hegemony of pickup trucks, the past several weeks have comparatively been absolute chaos. From the potential impacts of threatened tariffs to major swings in the tenuous alliances that define the business, carmakers have been especially volatile bets for investors.
Just in the past few weeks, auto tariffs in the neighborhood of 25% coming as soon as April 2 were floated by the president; merger negotiations between Nissan and Honda that would’ve created one of the largest automakers in the world collapsed; a hydrogen-powered vehicle company once worth more than Ford filed for bankruptcy; and Rivian managed to make a gross profit.
Not to mention that many gradual trends that investors have been monitoring have begun to hit key inflection points.
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Chinese automaker BYD has been on a tear when it comes to exports, and last week said its EVs are about three to five years ahead of rivals.
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EV sales hit a monthly record in the US in January, accounting for 9.1% of new vehicle sales in the month, even if the future of the EV tax credit is uncertain.
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GM, assessing the potential effects of tariffs, said it would have to weigh plant relocations and revealed that it’s already moving inventory across borders to try to get ahead of them. Ford’s CEO also said the tariffs would “blow a hole” in the US auto industry.
None of that is even touching the stainless steel elephant in the room. With CEO Elon Musk morphing into the right-hand man of the American president, Tesla has been a key beneficiary of that power but also a major subject of volatility, especially over the past 60 days. Sure, full self-driving is facing hurdles in China and sales are dropping around the world, but does that matter if the new administration can greenlight buying $400 million worth of armored Teslas with the stroke of a pen?
No wonder a Japanese group plans to pitch to Tesla that it should invest in Nissan, fresh on the rebound from the breakup of its Honda situationship, in exchange for American factories.
