Porsche And Rimac Are Reportedly In A Battle Over Bugatti And It Looks Messy

Important institutions saddled with debt that are run by erratic leaders are all the rage these days, and I’m sure there’s one that’s been on your mind lately. I am, of course, talking about Franco-German hypercar producer Bugatti. The brand was briefly the jewel in the crown of Volkswagen’s previous regime, and then it was a drag, which was how it ended up with Croatia’s Rimac. Now both of the company’s owners reportedly want the automaker. Awkward!

The Morning Dump has been dominated by tariffs lately, because that’s been the biggest automotive news story since the pandemic. I’m not leading with it today, and I’m not even going to make it the second story. Instead, I want to take a bit of a longer look into Q1 sales to see what we can glean. My guess is there’s been a lot of pull-forward of sales, which makes sense given the tariffs.

Ok, let’s talk about the tariffs a bit. First of all, hilariously, the “90-day pause” announcement was timed to a lunch with a bunch of race car drivers. The photos are killing me. They also don’t seem to change the automotive imports issue, as a 25% fee on imported cars that are not USMCA-compliant is still being applied. Will that change?

Do I want to end on tariff news? I do not, so let’s talk about Moke.

Why Porsche And Rimac Are Butting Heads

I hate to be one to lean on cliché, but these TMDs have to get written every morning and sometimes sprawl to 3-4,000 words, which means shortcuts must be taken: The German playwright Bertolt Brecht once reimagined the story of King Solomon’s proposal to split a baby as the closing scene of his epic “The Caucasian Chalk Circle.” In this version, there’s a coup in a remote state, and the governor and governor’s wife carelessly abandon their child. The royal infant is found by a commoner, Grusha, who rescues the boy and raises him as her own.

Many years later, the governor returns to power, and it’s discovered that the boy in Grusha’s care is their son and heir. Both the governor’s wife and Grusha are brought before a wily judge, Azdak, who we see both getting beaten by the authorities and taking bribes before the trial. He draws a chalk circle on the ground and has the two moms fight to see who can pull the boy towards them, proclaiming that the stronger mom is the one who loves the boy most.

As in the story of Solomon’s judgment, Grusha cannot bear to see the boy hurt, and so she allows him to be pulled towards the mother. At this point, spoiler alert, Azdak says that this proves that Grusha is the one who is the true mother as she refuses to let harm come to him.

Because it’s Brecht, the whole thing ends with a cheery, didactic quote:

“You, you who have listened to the story of the Chalk Circle, take note of what men of old concluded: That what there is shall go to those who are good for it. Children to the motherly, that they prosper, carts to good drivers, that they be driven well, the valley to the waterers, that it yield fruit.”

The original creator of Bugatti was also caught between two forces, having been established in a then-German city by an Italian engineer and designer. After WWI, the border between Germany and France moved, leaving the company’s home of Molsheim on the French side. The Germans got the best of it, eventually, when VW boss Ferdinand Piëch resurrected the company to create the ultimate Bugatti Veyron.

Gargantuan prices aside, Bugatti never seemed like a good business, and with Piëch gone, VW boss Herbert Diess was looking for options to offload it so the company could spend more money on electrification. As it just so happened, Porsche AG and Mate Rimac’s Croatian EV company were working together, so a deal was done and Rimac Group ended up with 55% of the newly formed Bugatti Rimac. To make it a little more complicated, Porsche owns 21% of Rimac Group.

A quick peek at Volkswagen’s balance sheet shows a fun number buried in the filing: $156 million. That’s how much money Porsche said the Rimac Group was down for 2024. And Bugatti Rimac? Even worse at about a $170 million loss. Something had to give, and it was reported last week that Rimac was looking to buy out Porsche’s shares in Bugatti.

Today, we get a different view of this from Germany’s Manager Magazin, which reports that maybe it’s Porsche that wants full control of Bugatti again:

Porsche critics also complain that management isn’t yet working optimally. Mate Rimac’s decisions are sometimes too erratic, his organization doesn’t fit the Bugatti structure, and the CEO doesn’t pay enough attention to profitability. The financial situation has also been criticized: Too much cash is being burned. The result, according to people close to Porsche, was clear: There are only two options: exit completely or take over the leadership.

The Porsche board decided to buy. Since then, negotiations have been ongoing – and at other times, frustrated silence has been maintained. Meanwhile, the new CFO, Jochen Breckner (48), has taken up his duties in Zuffenhausen. Solutions involving additional investors are also being discussed. Rimac apparently has a financial player on its side who is looking for potential financiers for a deal.

Porsche and Rimac did not comment on the status of the talks. Mate Rimac confirmed to manager magazin in December that “talks about a possible transaction are ongoing”; the company is doing so well “that I would prefer to increase my Rimac stake myself.”

When these kinds of negotiations within a company play out in public, it’s rarely ever good.

Rimac clearly loves Bugatti and is investing a ton of money into it, whereas Porsche/Volkswagen has already tried to offload it once this decade. Who truly deserves to keep it in this situation?

I don’t think this is quite as cut-and-dry as Brecht’s case. The motivations here are sixteen varieties of interesting. Rimac ultimately seems to be in control, and if he wants to buy the rest of Bugatti to elevate his company, then he’s counterintuitively incentivized to drive up the expenditures as much as possible now so that the debt level of the company makes it harder for Porsche to justify a higher price for its shares. No one I’ve seen is suggesting this is happening, but I can’t escape the thought that Rimac played this extremely well by getting a famous brand on the cheap with borrowed money while his mostly unknown brand was valued to the sky.

What happens next is not clear. Rimac has reportedly rejected Porsche’s takeover, whereas Porsche hasn’t yet rejected Rimac’s counteroffer. Give the valley to the waterers, that it yield fruit, I suppose, though who the “waterers” are in this case is going to depend on whether you’re sitting in Zagreb or Zuffenhausen.

How Much Of March Sales Were Pull-Forward Sales?

The first quarter was mixed in terms of sales. It felt like there would be a slow start to the year, and then all of a sudden sales shot up. Why? Just like consumers interested in EVs jumped at the chance to buy a new EV before tax credits were removed in December, consumers afraid of tariff impacts in March bought cars.

These sales are called “pull-forward” or “pull-through” sales, and they typically net out at the end of the year as annual sales are indifferent to a car purchased in March or June. How much of Q1’s 4.4% increase was attributable to these kinds of sales? A lot, probably.

Here’s the analysis from Automotive News:

After the rush of March and early April, the outlook remains unclear, though risks of a downside are clearly growing. The longer U.S. tariffs remain in place, analysts say, production will slow, inventory will drop and prices will rise. Another wild card is consumer sentiment, which already had declined in recent months.

“Consumers are well aware of the risks that these tariffs pose in terms of future cost hikes, with price increases potentially moving from in the hundreds of dollars to the thousands,” said Rick Wainschel, vice president of data science and analytics at Cloud Theory. “Consumers, in anticipation of these higher prices, rushed to buy new vehicles in the current period. While this provided a boost in the short run, the ‘pull ahead’ effect of these accelerated sales runs the risk of leading to a hangover effect that depresses results going forward.”

New car and light-truck inventory and selection will be heavily scrutinized in the coming weeks and months.

My long-term view of the market this year is negative right now. Sure, there might be more sales in April, and the jobs market is only showing signs of minor softening at the moment.  Overall, I think fundamental recession fears remain, and I’m concerned about employment numbers going into the summer.

The Trade War Is Paused, Sort Of, Here Are Some Race Cars

Parked my Championship car outside the @WhiteHouse today. ???????? It was an honor to see President Trump again and celebrate our multiple @Team_Penske accomplishments together. ????????’s pic.twitter.com/YtFyGQfZpo

— Joey Logano (@joeylogano) April 10, 2025

I was at the race track yesterday morning working on a new format of car review. This conveniently pulled me out of the news cycle for a few hours (thanks to Thomas for filling in here yesterday). When I got back in the Corolla GR I have this week, I had Bloomberg Radio already cued up, so I decided to listen to the updated news. Stocks were up. How?

What I heard was an impromptu press conference from President Trump where he talked about bonds, a little, and kept referring to Roger and cars. It was confusing for a few minutes until I realized that Roger Penske and the Penske racing team must be doing an event with the President, and the disruption in the bond market just so happened to time with the pre-planned photo op.

What happened? There’s now a 90-day tariff pause, sort of, though there’s still a 10% tariff on anything coming into the country, and cars are still at 25%. Many outlets are reporting that President Trump “blinked” when he saw the bond markets freaking out. Republican lawmakers are saying this is just President Trump’s “genius” negotiating tactics. Your view of this is going to be colored by politics.

What matters to us, here, right now, is that cars aren’t getting a break.

Per Reuters:

The Detroit Regional Chamber and MichiganAuto called on Trump to protect the automotive industry’s complex international supply chain framework from harmful fragmentation that weakens its global competitiveness.

“Michigan’s signature industry and the supply chains and employees that sustain it will continue to endure the uncertainty and disruption of these fluctuating trade policies,” they said in a statement after last month warning the tariffs would result in significant pain for autoworkers.

The groups noted that Trump was also leaving in place 25% tariffs on aluminum and steel that are also impacting automakers.

I don’t think that yesterday made anything easier for anyone, especially in the auto industry. If there’s some small glimmer of hope, it’s the idea that this administration will eventually pull its hand off the stove.

Moke Opens Its Wholly Owned Production Facility In The UK

Did you know that Leamington Spa is considered the “heart of the UK’s automotive valley”? That’s fun, though I’m going to wait for someone to say the name of the town out loud in case it’s actually pronounced something like “Lurmeneen Spur” for English reasons.

Moke, longtime maker of cute little cars for resorts and the like, now has its own production facility in the United Kingdom. From the press release:

MOKE International, the iconic British car manufacturer, has officially opened its new, wholly owned manufacturing facility in Leamington Spa, UK, marking a significant milestone in the company’s 60th year. The new facility will boost production efficiency, improve product quality, and strengthen MOKE’s ability to meet the growing global demand for its Electric MOKE. With production targets exceeding 500 units this year for markets including the USA and the Mediterranean, MOKE continues to contribute to the UK economy as a net exporter.

Earlier this month, MOKE International hosted an exclusive reveal event, attended by retail partners from Europe, Middle East and the USA, along with Labour MP for Warwick and Leamington, Matt Western, Chair of the APPG on Electric Vehicles. The event celebrated British engineering and MOKE’s growing international presence.

The new Leamington Spa facility reflects the company’s commitment to British engineering and innovation in the EV sector. The company has created dozens of new clean-tech jobs as part of the expansion, and has tripled its workforce.

At the open day, MOKE unveiled a range of new colourway options for body, Bimini, and wheels, expanding the range of choices for customers. These updates reinforce the company’s focus on sustainability, style and innovation.

Hell yeah! Moke is awesome.

What I’m Listening To While Writing TMD

My favorite version of the murder ballad “Mack The Knife” is the Louis Armstrong take, which aggressively shouts out Lotte Lenya. If you don’t know who she was, the German singer was the wife of Kurt Weill, who wrote the song originally for The Threepenny Opera, which was created with Bertolt Brecht. Man, I love the way he hits “Lenya” in this recording.

The Big Question

Who deserves Bugatti? If you don’t care, what would you do with a Moke?

Top Photo: Bugatti/VW