I’ve talked about it before, but no first-mover advantage in the automotive industry lasts forever. Whether it’s fuel-injection or lithium-ion batteries, the competition catches on quickly. The one moat that’s harder to clear is scale. When automakers get to a certain size, they’re able to squeeze the competition on price.
Even that is only a mid-term solution. Both Tesla and BYD have engaged in a massive price war as they’ve tried to undercut would-be rivals. It hasn’t entirely worked. Sure, some companies, like Fisker and Byton, have failed, but many traditional automakers have faltered, and even they are slowly coming back.
This issue is most acute in China, where BYD slashed prices again as it tries to keep/gain market share. While exports are up, this feels to me like the last gasp of this current era of Chinese EV companies. Some will die. Many will merge. Everyone left is going to catch up. The same is already happening in Europe, as the big story continues to be the rise of competitors to Tesla, especially those with diverse powertrains.
The other big story in Europe is tariffs, which were set to maybe go up to 50%, and now, I guess, are not. That might be good for Volvo, or maybe not? Trade is complicated. The one winner in all of this might be the United Kingdom, which is getting even more production, while places like South Carolina could lose out in the near term.
BYD Accelerates The Death Of China’s Regional Car Industry
I highly recommend listening to the Odd Lots podcast episode “Why the World Keeps Getting Shocked by China’s Technological Progress.” What the guest helpfully gets into is this idea of how China is able to move itself in one direction so quickly. The short version is that, more than just pure authoritarianism, promotion within the one-party state is highly dependent on getting with the program.
If you’re some mid-level bureaucrat in Guangzhou, and the Premier gives a speech saying that electric cars are the big thing, then you’re going to start making electric cars in your city/province. You’ll start greenlighting those projects, clearing regulatory hurdles, and sending money that way. If you want to move up in your career as a chemist, you’re suddenly interested in battery chemistry.
America does this, too, or at least it does in a crisis. In WWII, the United States transformed most of its automotive industry into the Arsenal of Democracy. Outside of an urgent situation, it’s a little harder to get everyone to do the same thing, merely by the nature of our government.
The Chinese approach is successful and, at the same time, highly inefficient. Imagine if every state in the US had its own car company! Actually, imagine ten automakers for every state, because at its peak, China had around 500 different brands selling/planning to sell electric cars. That number is probably under 100 now, but it’s still a lot of brands.
One upside of a scattershot approach is that eventually you find a winner. The United States invested in a bunch of EV automakers with loans around the turn of the century, and we got Tesla. It took China way more attempts, but it got BYD and CATL.
Barring any surprising upset, BYD will be the biggest EV automaker in the world this year. A lot of this is because of its technology, smart planning, and first-mover advantage. Some of it is that BYD is willing to be leveraged to the hilt and will happily cut prices to the bone.
As mentioned last week, Geely managed to outsell BYD in China with its own cheap take on BYD’s Seagull. The response? BYD cut the price of the already sub-$10,000 Seagull to under $8,000. This echoes when BYD saw a threat from driving tech put forward by Tesla and Xiaomi and decided to make its advanced driving system free.
You can look at these cheap Chinese cars as a sign that China is way more advanced than the West when it comes to EV production, but the other way to look at it is that companies like BYD have massive overcapacity issues that they can only overcome through increased exports or decreased prices. Exports are coming, slowly, so that just leaves price cuts.
Even in China, no company is making a lot of money on an $8,000 car, and so it’s getting nasty on Chinese social media as reported by Nikkei Asia:
But the low prices have renewed concerns over a race to the bottom in the industry, sending the stock prices of BYD and other Chinese EV makers plunging. BYD shares dropped over 8% on Monday, and continued to decline on Tuesday, sliding as much as 4.2% in morning trading.
Wei Jianjun, chairman of Great Wall Motor, told Chinese media recently that “the Evergrande of the automotive industry already exists; it just hasn’t collapsed yet,” referring to the Chinese property developer that imploded under heavy debt. He did not name any carmaker, but social media users speculated that Wei was talking about BYD, whose asset-liability ratio stood at about 70.7% at the end of March.
In an apparent, cryptic response without naming names, Li Yunfei, general manager of BYD’s brand and public relations division, posted on social media on Sunday: “A dog can bite a person! But a person cannot bite a dog!” Many interpreted this as him likening the rival to a dog — a common putdown in China — while BYD is a more sophisticated human that need not fuss with animals.
Both GWM and BYD are likely to survive as they are big enough. Other companies? It’s a little dicier. Like, is Neta really going to make it? Dongfeng and Changan, for instance, are reportedly merging to make it through the price war. Even Geely is talking about de-listing its Zeekr brand in the United States as it tries to focus on its core brands.
The Brands Doing Well In Europe Have Hybrids And EVs
Last week we got a preview of Europe’s April car sales, and the likely outcome was that Tesla was going to have another crap month. The official numbers are in and, yeah, Tesla had a crap April, down more than 50% year-over-year in a market that’s been mostly flat (though EV, hybrid, and PHEV sales are all up this year).
Which brands aren’t suffering? From January to April, one of the biggest winners is Volkswagen’s Cupra brand, which offers attractive and somewhat affordable hybrids, PHEVs, and electric cars. Over the same time period, its sales have grown by about as much as Tesla’s sales have shrunk. SAIC Motor’s brands also grew by more than half in the last year, with MG offering a lot of affordable hybrids and EVs.
The EV-only brand Smart? Down by 67.6% in the first four months of 2025. There are some quirks, of course. Alfa Romeo was up by more than 35% this year, although a lot of that is due to the introduction of the Alfa Romeo Junior, which is available as both a hybrid and EV.
Europe’s biggest winner over this period was actually Alpine, more than doubling to 2,769 cars thanks to the introduction of the EV A290 to join the pure-gas Alpine A110 sports car.
Europe Avoids Worse Tariffs For Now As Volvo Plans Layoffs
The threat of a shock 50% tariff on European Union products has been delayed, at least, as the two sides come back to the table after President Trump claimed the EU wasn’t moving quickly enough to make concessions.
“I received a call today from Ursula von der Leyen, President of the European Commission, requesting an extension on the June 1st deadline on the 50% Tariff with respect to Trade and the European Union,” Trump wrote on Truth Social.
“I agreed to the extension — July 9, 2025 — It was my privilege to do so,” he added.
Trump’s post came after Von der Leyen said that she had a “good call” with Trump, but needed until July 9 to “reach a good deal.”
What’s interesting to me here is that the EU may have the ultimate trump card in GLP-1 drugs. Those are largely made in Europe right now, and raising the price on those would make Americans quite unhappy.
All of this reprieve may not be enough for Volvo right now, as the Geely-owned automaker considers big cuts. The Associated Press is reporting that the company may need to slash as many as 3,000 jobs to remain competitive.
The company said Monday that around 1,200 of the job reductions would come among workers in Sweden, with another 1,000 positions currently filled by consultants, mostly in Sweden, also slated for elimination.
The rest of the job losses would be in other global markets. Most of the jobs being cut are office positions.
“The actions announced today have been difficult decisions, but they are important steps as we build a stronger and even more resilient Volvo Cars,” said Håkan Samuelsson, Volvo Cars president and CEO.
Volvo is in a unique position when it comes to tariffs. Many of its cars are produced in China, but many are also made in South Carolina. Volvo had planned to join BMW in producing cars in South Carolina for sale in China, which is harder to do if the country is in the middle of a trade war with China.
Toyota Will Build The Corolla GR In The UK For Export To The United States
I continue to stand by my belief that the biggest winner in the current trade war talks is the United Kingdom, whose car industry seemed in trouble recently. This is a bit of a reversal from what I said two years ago, when Brexit threatened the existence of local manufacturing.
President Trump’s trade war is helping in multiple ways. Most obviously, it sounds like the UK is going to get a relatively low tariff on exports to cover most of the country’s current exports. While prices might go up in total for exported cars, they’ll be a lot lower than in other countries.
Additionally, Britain has cozied up to both China and the United States and gets to benefit from cheaper Chinese cars as well as relatively cheaper exports to the United States. Toyota seems ready to take advantage of this, according to Reuters:
By shifting some production from Japan, Toyota aims to use excess capacity in Britain to help it cut delivery wait times for the car, said the people, who spoke on condition of anonymity. The move was not in reaction to U.S. President Donald Trump’s tariffs on automobile imports, they said.
The Trump administration agreed this month to a framework deal to reduce tariffs on auto imports from Britain to 10 percent on up to 100,000 vehicles a year. Japan is seeking to have repealed the 25 percent tariffs that the U.S. has imposed on all auto imports.
For global automakers, the tariffs mean an additional challenge on top of differing emissions standards, and customer demands, across major markets
It’s possible the person who spoke on the condition of anonymity is correct, and this has nothing to do with tariffs. The reality is, every car built going forward is built in this new trade paradigm. There is no vacuum. It might not be the main reason, but if Britain were facing 50% tariffs, it wouldn’t make sense for Toyota to shift production.
The Corolla GR rules, so whatever has to be done to get them here faster and cheaper, I highly support.
What I’m Listening To While Writing TMD
I’m digging Blondshell’s new album, and “What’s Fair” is a great song, but damn. Hug your kids so they don’t turn into indie music stars who write songs about you.
The Big Question
If your state or province had its own car company, what would that car company make? What would the homegrown automaker from, like, Delaware be like?
Lead Photo: Neta
“What’s interesting to me here is that the EU may have the ultimate trump card in GLP-1 drugs. Those are largely made in Europe right now, and raising the price on those would make Americans quite unhappy.”
I’m not convinced that Dear Leader gives a flying rat’s booty whether “Americans” are happy or not. He’s convinced himself that he’s playing 3D chess on trade, when everyone else thinks he’s playing Go Fish.
I read that they’re trying to prevent him from eating the checkers. Both work.
MMmmm, I could eat some Checkers for lunch. I guess I should go ahead and take a pepcid.
All I know is that made me want a Checker cab again. Well, off to look for Checkers for sale and read more about them…
Ooh! I hadn’t heard Blondeshell before, and that song is great! Yay new music!
As for my state car, I live in the PNW, so a Subaru with a second row devoted to dog transport and a bumper sticker related to a product purchased at REI.
Either that or a Tesla.
Yeah, but we’re all ashamed of ever having supported Musk now, so we don’t talk about the Swasticar with the same pride anymore.
I think we’d all prefer to return to the days of the Prius being the smug environmentalists’ car of choice.
Does that mean we should really build an appliance-like AWD EREV wagon with a second row devoted to dog transport and REI co-branding?
Shit. I would legit buy that.
I see plenty of folks driving around in their swasticars giving zero shits about the optics because they’re closet fascists.
Being in Florida, the car they would make already exists. It’s called the Altima.
Underrated comment.
I don’t mind Blondshell but some of her stuff is just so personal and depressing that my reaction is sort of “hey I think therapy would probably be easier than writing entire albums about your trauma”. Don’t get me wrong-I love me some depressing music. The Cure are one of my favorite bands (I’m so sorry Adrian)…but the way Smith writes about stuff leaves enough ambiguity that you can kind of project your own personal challenges onto it and it feels relatable.
To me that makes for really good sad songwriting. Some other examples are Radiohead’s darker stuff, Joy Division, etc. When I listen to Blondshell it’s like “hey you write really eloquently and that’s great but this is so personal that I can’t really relate to it”.
If this wasn’t Morning Dump I’d swear Jason made this name up: “Ursula von der Leyen” that’s just an awesome name, and I can’t take any quote from her seriously.
NC does have a Vinfast factory, production still pending, but don’t think people think poorly made Vietnamese electric SUVs when they think of NC. Probably squatted trucks and Donks. I actually still see Donks around which still boggles my mind but with no inspections if the car is over 30 years old, and no inspections at all just over the line in SC, who’s to stop them?
If a truck is squatted from the factory that’s legal right?
Every truck squats is you put enough weight in the back.
In Washington state we’d make an AWD, lifted diesel PHEV SUV so you can cruise under electric power in the western half of the state, but still roll coal on the eastern side.
Does Semi’s count as a car company? Because my local company was Brockway, making just about anything OTR, including school buses, dump trucks, and of course various Semi’s.
Sadly, Mack closed them down in the late 70’s so like Daimler/Mercedes with Chrysler, Mack is dead to me lol
Automotive history buffs know it was the Ford-Chevy price war once the Korean War supply rations ended that set up a death spiral for the independents. The only reason American Motors survived long enough to buy Jeep was that those rations forced their hand to position the initial Nash Rambler as an upmarket convertible, station wagon and hardtop coupe rather than the basic 2-door sedan they’d developed at the same time but didn’t build until 1954-5.
That in turn allowed it to survive until the late ’50s recession when it was the only alternative to a parade-float dreamboat for those many customers not yet ready to buy an import.
Personally I would say the UK is a loser in tariff negotiations. The USA has a trade surplus with the UK and we still hit them with an extra 10% tariff for no logical reason.
The Corolla GR is going to the UK because it has extra capacity and more importantly Europe is the primary market for hot hatches.
Vermont; a cross between a Prius and a Subaru Crosstrek. And a full-size pickup.
Well I live in Indiana so we had Studebaker in the past and it sounds like the Slates are going to build in Warsaw Indiana. So a homegrown would be some weird EV reincarnation of Studebaker.
A car company in Delaware would not actually make any cars, but Delaware would claim every other car company as their own since they will all be incorporated there for tax purposes.
the Montana of car registrations
Florida, so a flashy convertible with powerful air conditioning and no blinkers.
Born and raised in Utah, so I’ll claim that one. We have Vanderhall, a weird 3 wheel company that I was incredibly enamored with, until I drove one. Now I hate them and don’t get why anyone would want them. It’s 100% a novelty vehicle, not something that can be drive hard and enjoyed. Many questionable decisions were made for that and yeah, could be worse, I still love the look, but I could never drive one.
Some guy near me was selling a bright blue Vanderhall Venice in his front yard, which is already unusual to see, even before you notice the crazy three-wheeler. It looked interesting, but he was asking basically MSRP for it after 2+ years.
I mistakenly though it was a Morgan until I googled it.
They wish they could be as cool as Morgan. But FWD, auto only, and incredibly highly boosted power steering mean it’s fun in looks only.
Yeah prices on them are crazy, it’s been interesting though, tons have been auctioned recently on BaT and C&B both, and they are frequently trading hands there for around $20k or less. Still no interest from me, but that price is far more appealing than the MSRP
Not to mention they seem to all have so few miles on them, which only reinforces your point on them not being that great of a drive. Most of them are in the 3-5 year range in age and sub-7k miles, and those are usually Carmels with the roof to at least cut down on the sun. I just don’t see any reason to buy one of them over a traditional sports car, or even a Slingshot.
Looks. That’s it. I don’t love the look of the slingshot, but I’d rather have it than the Vandy every time. RWD, manual, and not a terrible electronic PS system. I’m really not that hard to please am I? Ok yes, yes I definitely am but that’s not the point.
Alabama would need to decide on a single vehicle that meets the needs of everyone here, but also leverages all of the existing carmaking expertise already in state.
So basically what I’m saying is it’ll be a Mercedes GLS 63, but the third row is axed and it becomes a pickup truck.
We already make the Ridgeline, but they’re shockingly rare. Maybe not shockingly.
Western NY: a big lift gate 4WD electric vehicle (cheap hydro) with a giant screen, cooler full of Genesee (or Molson depending on exactly where) and full cooking setup ready to swing out for a tailgate at a moments notice. Trash bags to contain the empties since that’s money towards the next 30 rack. Also lots of red Solo cups (yes, European readers, they very much exist outside of movies), ping pong balls and a sturdy table that’s easily fixed. The fancier ones will have removable stadium seats and swap the cooler for a fridge. Either way, the vehicle will come with a mandatory Bills Mafia sticker with different designs of red and blue paint. The wild children can get a factory Zubaz wrap. No mistaking what part of NY the vehicle was built in! None of this Tarrytown Hudson Valley nonsense.
As a Virginia resident, probably the Mitsubishi Mirage, or something of similar double-digit power levels, double-digit 0-60 times, and double digit top speeds, because no state has speeding laws/enforcement as oppressive as VA.
How about adaptive cruise control that looks for those speed-monitoring aircraft? (those signs are in a lot of places, but VA wins the prize)
I hear that all the time, but man it does not seem accurate in my part of the state. Must be a NOVA and western thing, SE VA people speed all over the place. 10 over is the standard
Enforcement on I-81 is particularly frustrating, cops in the median or hiding behind overpasses every few miles, happy to get you for 6-over, but ignoring left-lane camping Semis and tailgaters. My dad got stuck with a defensive driving class and a reckless ticket for daring to do 82 in a 70 at 3am in a rental car when he passed the only other soul on the road and forgot to check his speed a half mile down the road.
I know they have since revised the law to be 15-over instead of an 80mph and up = Reckless regardless of speed limit, but it’s still pretty rough. By my part of the state, troopers threshold for tickets is genuinely 3mph over, as I have been told directly by cops.
I’ve driven the entire length of 81 quite a few times. As I remember, with the exception of a few mountainous stretches near Blacksburg and Roanoke, it’s one of the easier highways for fast driving in the eastern US. The artificially low speed limits just make things frustrating (not practically speaking, it’s not that much time difference…just the mental dullness of going slow)
Funny you say that, I may be biased since the majority of the mileage I cover on 81 is between Blacksburg and Roanoke. It has certainly fueled by distaste for Semis in the left lane. The 2-lane high grade/oscillations of 81 are truly agonizing. college student traffic only adds to the chaos. I’d still take it every single day over the madness I’ve witnessed in Florida, and it isn’t even close.
PREACH.
The holiday weekend was a bad one for the I-77/I-81 interchange a bit south of BBurg.
Florida has no excuse except boredom or insanity, they don’t even have much topography to deal with.
Another PITA for me regularly is I-20 between Birmingham (where I live) and Atlanta, where it’s full of trucks and also has a lot of short, steep mountain passes. 2 lanes and the semis often drop to 25mph on the uphills, then up to 90 on the downhills. It’s maddening. In defense of the Western mountains, at least most of those climbs are long and sustained. In Appalachia it’s a lot of up and down with no consistency.
Damn. No thanks! I will have to keep that in mind next time I’m headed that direction.
To get to the Virginia DUNCAN IMPORTS for a look at Japanese hearses (and a mandatory free jesus book) I have to pass a Volvo/Mack truck plant. So I say big rig for me…which makes sense as the plant is visible from I-81.
I always forget about the Dublin volvo mack plant, VW of north American is headquartered in Herndon too.
Unfortunately, with respect to driving Virginia is a police state, same thing with the ABC, which seems to have zero oversight of their ridiculous
gestapoagents. I love the state, and much of its inhabitants, but gosh darn it can be tough on minor infractions.They don’t even let the local cops off and often times send the rookies to nova and they have chased fire trucks and ambulances down for dumb reasons then then try to arrest the driver. Only for all the local cops come because they put out a distress and the rookie state cop get put in a holding cell for his co to come up from wherever he is to get him out. It happens at least yearly.
Just a reminder that the primary reason for the tariff roller-coaster is so that the administration and their preferred insiders can trade on the news. The degree to which it impacts anything else is largely immaterial.
I wonder if Honda will move Civic hatchback production back to the UK. Did they close down their plant in Swindon?
Why the hell would you need a thousand consultants to do office work? Is it just to avoid paying for benefits for admins and accountants?
People who work in offices at OEMs: engineers, project managers, analysts, design, marketing, planning, loads of other jobs that aren’t just admin and accountants.
Sure, but they all still sound like permanent positions, so the question still stands.
I suspect that is a translation mix up and those “consultants” are contract employees. The EU has rather strong worker protections making it rather hard to fire permanent workers. Many companies hire people for contract work to reduce their permanent staff.
Happens here in the USA as well. I started working for my current employer as a contractor before transitioning to a permanent employee. We have a many has 20% of the engineering staff as contractors in boom years and in the 10 years I’ve been employed I’ve seen all the contractors let go twice in down years.
Precisely this.
You can fire a load of “permanent” employees with a redundancy process in 90 days. But you then can’t rehire those roles for a certain period, and there is a minimum payout you have to make to those workers based on salary, age and length of service.
I’ve seen contractors/consultants let go a month before the end of the financial year just to make a company’s figures look better, then rehire them at the start of the next month. You pay them more, but they have fewer rights.
Parts from Japan to Britain face little to no tariffs. Parts from Japan to the US face 24% tariffs. Cars from Britain to the US face a 10% tariff.
Lower tariffs on British-built cars than on North American-built… so Toyota decides to build the GR in Britain rather than the US.
America first!
Interested to see how sustainable China’s low car prices are, or if they are losing money to grab market share, or being heavily subsidized by the CCP, or some combination of the two. I suppose time will tell.
Both. China heavily subsidizes companies in industrial segments they find are key for their industrial policy. Then they narrow that down to the strongest companies. The Chinese auto industry is in the winnowing phase.
This also isnt a secret. The Chinese lay out 5 years plans and a couple plans ago they said they would make it national policy to dominate key future technology including: EVs, lithium batteries, robotics, AI, and renewable energy (solar and wind). AI is the only one on that list that is really up for debate
Having slave labor for manufacturing doesn’t hurt margins either.
It certainly helps, but labor typically accounts for <10% of the cost of any given vehicle. Not nothing, probably still a greater percentage than the profit margin for most cars, but we can't act like other manufacturers haven't sought out low costs of labor in countries like Mexico. Pricing wars and tough competition point to Chinese domestics sacrificing or forgoing profits for the sake of gaining market share. For this to work they need to muscle out and outlast their foreign competition and with backing from the state they could definitely pull it off.
Chinese labor has gotten relatively expensive – Mexico is half or less for unskilled / semi-skilled labor. What China does have lots of are engineers and machinists that are plentiful and very competitive cost-wise with most of the rest of the world. It sometimes bogles the mind how quickly they can turn around designs, DFM, and tooling. China is a leader in injection molded tooling – which should not have a lot of labor in it – the CNC machine does most of the work (o.k. the polishing is usually manual) but Chinese suppliers can turn around tooling twice as fast and for a fraction of the cost of U.S. suppliers.
Pre-rusted Silverado’s with 4 mismatched tires, all bald. Missing tailgate, plastic back window and brush painted panels of differing colors. Options include a toolbox with a lid that doesn’t close, random milk crates in the bed, and some crushed Coors lite cans.
Now we get to guess the state: Wisconsin?
Good guess, I’m going with Michigan. We don’t inspect shit over here.
NC
The Coors cans tells you it’s not WI; those would be Miller lite cans. Otherwise sounds pretty close.
Delaware: A big, cheap car with no sales tax and plenty of cargo space for unmarked, nonsequential bills and 0% financing for 72 months. They could just call it the Liechtenstein.
Bad for automakers but good for the customers
US automakers left a hole for them by leaving the cheaper price segment.
Ford abandoned the cheap segment but GM didnt.
The Trax is one of the cheapest vehicles for sale in the USA and the Trailblazer is only a few thousand more. Time will tell if tariffs force them to abandon the segment.
well over 20k LOL
Nobody has a car under 20k, let alone 10k. Cars that cheap exist elsewhere but not the US 🙁
No more Mirage, no more Versa, no more Spark, etc.
GM has some cool inexpensive cars they sell in Mexico and of course China.
Ford stopped making the Figo.
$20K is a cheap car in 2025.
If you notice another of today’s articles that $10K car sold in China becomes a $23K car when sold in the EU at a minimum spec that is acceptable there – and still would not be acceptable for the US market. (It is basically the equivalent of my old Spark EV but without the fun of 400 lb-ft of torque)
The Mirage, Versa and Spark were all axed because they did not sell in high enough volumes to bother making them anymore. Chevy is selling 200K Trax per year vs an average of 30K a year for the cheaper Spark.
The Mirage average 19K sales per year and the Versa fell from a peak of 144K a years to only 29K sales last year.