Automakers push back against the new Senate EV credit deal, China might sell six million EVs this year, Mercedes-Benz taps Unity for new infotainment system. All this and more in today’s issue of The Morning Dump.
Welcome to The Morning Dump, bite-sized stories corralled into a single article for your morning perusal. If your morning coffee’s working a little too well, pull up a throne and have a gander at the best of the rest of yesterday.
Carmakers Don’t Like The Senate’s New EV Credit Proposal
If the Senate’s new EV tax credit deal leaves a bad taste in your mouth, you’re not the only one. Reuters reports that a group representing major automakers has some serious concerns regarding the EV tax credit structure put forth by the Senate.
“Unfortunately, the EV tax credit requirements will make most vehicles immediately ineligible for the incentive,” said the Alliance for Automotive Innovation’s chief executive, John Bozzella, adding the bill “will also jeopardize our collective target of 40-50% electric vehicle sales by 2030.”
The group had warned Friday that most EV models would not qualify for a $7,500 tax credit for U.S. buyers under the bill.
To be eligible for the credit, vehicles must be assembled in North America, which would make some current EVs ineligible as soon as the bill takes effect.
The Senate bill imposes other restrictions to deter automakers from using Chinese-made materials by phasing in required percentages of North American-sourced battery components. After 2023, vehicles with batteries that have Chinese components could not receive the credit, while critical minerals also face limitations on sourcing.
I can see what automakers aren’t pleased with this new EV credit proposal. It all stinks a bit of “we’re not happy until you’re not happy.” The protectionist nature of requiring U.S.-sourced battery components seems anti-competitive and not great for consumers looking for an EV that fits their budget. If you’re looking to learn more about this new EV credit proposal, our own Mercedes Streeter has an awesome run-down on the new Senate deal that’s definitely worth checking out.
Markups Hurt Brand Loyalty: Report
It shouldn’t be a huge surprise that forcing markups upon customers is a great way to discourage repeat sales. Automotive News reports that Growth from Knowledge AutoMobility (is someone just randomizing buzzwords out here?) has been able to quantify exactly how markups are hurting brand loyalty.
“It’s been widely publicized in the industry that a lot of people are paying over MSRP. We know that prices have been escalating and continue to reach near record highs virtually every month,” said Julie Kenar, senior vice president at GfK AutoMobility. “This notion of paying sticker and even above sticker is absolutely something that’s come really over the past 18 months.”
In May and June, 80 percent of car buyers paid at or above the sticker price, the research showed. In addition, 31 percent of buyers who paid above sticker said they would tell others not to go to the dealership they used, and 27 percent said they would not return to the dealership for service.
Twenty-seven percent of respondents said they would not buy from the same brand if they were charged more than the sticker price, and 23 percent said it negatively impacted their opinion of the brand. As a result, automakers have had to manage the negative criticism they face because of dealerships’ prices, Kenar said.
It’s crazy how dealers can see repeat customers just by not being awful. It’s definitely possible to extract a lot of money from one customer through marking up a new car right now, but it’s very much a short-term gain that will bring long-term pain for greedy dealerships and the manufacturers they represent. Throwing away 27 percent of new service clients is huge and generally not a great business practice. Needless to say, it’ll be interesting watching the long-term effects of markup-happy dealerships both on the dealerships themselves and on manufacturers.
China Expected To Buy Six Million EVs This Year
We may be experiencing a global new vehicle shortage, but that doesn’t seem to be slowing down electric vehicle sales in China. Bloomberg reports that Chinese market sales are so strong that six million new EVs are expected to find homes in Chinese driveways this year.
The China Passenger Car Association raised its estimate from 5.5 million, after releasing data showing deliveries of new-energy vehicles more than doubled in July to around 486,000 units — accounting for 26.7% of the new auto market. Overall passenger vehicle sales rose 20% from a year earlier to 1.84 million units, the PCA said Tuesday.
The increased forecast represents a doubling from last year’s 2.99 million NEV sales, underscoring the dramatic growth in demand for cleaner cars in China, and the challenge for legacy automakers to adapt in a market that is rapidly going green.
The increased forecast of 6 million is still “relatively cautious,” the PCA in a statement, adding it could be further increased at the start of the fourth quarter.
Six million is a seriously impressive number and I’d be really interested in seeing sales broken down by segment. China has some really impressive entry-level EVs on offer that are price-competitive with combustion cars, albeit at the expense of range. The Wuling Hongguang Mini EV immediately comes to mind. Beyond infrastructure, I expect price to be the biggest driver of new EV sales as not everyone can afford to drop $40,000 on a compact EV crossover. GM’s aggressive pricing on the Bolt is a good start, but we still have a long ways to go for affordable EVs in America.
Mercedes Moves To Unity For Next-Gen Infotainment OS
Will Cuphead, Pokemon Go, Kerbal Space Program, and Mercedes-Benz soon have something in common? Fundamentally, yes. Automotive News reports that the German automaker will develop its next-generation infotainment system on the Unity engine, further blurring the lines between information and entertainment.
The infotainment domain is an essential component of the German automaker’s plan to broaden its digital offerings. Mercedes’ current infotainment platform, MBUX, was co-developed by Daimler and Luxoft, a unit of DXC Technology.
The new Mercedes-Benz Operating System, or MB.OS, will debut in 2024 model-year vehicles and enhance four central domains — infotainment, automated driving, body and comfort, and powertrain, the automaker said Monday.
“With our own operating system, we want to achieve three key things: to shape the user interface according to a luxury brand, to create a bidirectional communication with the customer and to integrate the digital lifestyle of the customer into the vehicle domain,” Magnus Östberg, chief software officer for Mercedes-Benz, told Automotive News in an email.
That may sound like marketing drivel, but don’t worry, I can explain most of it. Mercedes wants their new interface to be slick and fully-featured, let the owner talk to the system and vice-versa, and add more peripheral apps to its next-generation infotainment system. As for what that last desire could look like, picture how Teslas let owners play games or watch movies while charging their EVs. Future Mercedes customers will be spending a lot of time waiting around at charging stations, so stuff to do is always welcome. In any case, here’s to hoping that MB.OS is more intuitive than the current MBUX infotainment system.
Whelp, time to drop the lid on today’s edition of The Morning Dump. It’s an overcast Tuesday here in Toronto and I’ve been pondering a strange question. New cars are so easy to judge on merit because they all roll out of factories unravaged by deferred maintenance and parking lot knocks. However, used cars are much more difficult to judge because they’re all treated differently. Given the choice, would you rather have a terrible example of a great car or a great example of a terrible car?
Lead photo credit: Volkswagen