The most likely outcome of tariffs is that consumers will, at least in the near term, see higher prices and fewer choices. It’s possible some magical combination of factors and deals changes that, just like it’s possible I’ll get tapped to replace Kyle Larson at the Indy 500 and end up chugging chocolate milk at the end of the race. Most automakers are targeting next month for the start of price increases, and that now includes Subaru.
The Morning Dump isn’t here to tell you what to buy or not to buy; that’s for other articles on the site. I will say that if you wanted to buy a Subaru, you might want to do that in the next two weeks. If you’re looking to buy a GM product, perhaps consider the GM credit card, which is getting a revamp this summer to make it more competitive.
These tariffs are disrupting a market that’s barely recovered from years of confusion. More political uncertainty, along with buying habits, are sending a signal to Honda that it might need to reduce its EV spend. Not far from Japan, Chinese companies exist in an entirely different universe, with both CATL and Pony AI showing strong results so far this year.
Subaru Won’t Say The Word Tariffs
A note reportedly went out to dealers this week informing them of price hikes to Subaru models, ranging from $750 to $2,055. In particular, the Subaru Forester will get hit with a price hike anywhere from $1,075 to $1,600, with the increase varying by trim.
Why is this happening? Reuters reports that Subaru won’t quite say:
Subaru said in a statement that the increases were made in response to “current market conditions,” without citing tariffs or specific price actions.
“The changes were made to offset increased costs while maintaining a solid value proposition for the customer. Subaru pricing is not based on the country of origin of its products,” the company said in a statement. Car company executives have recently shared with investors how much the levies will cost them this year, with some in Detroit saying they were expected to add up to $5 billion.
While there has been some relief on duties imposed on foreign auto parts, U.S. President Donald Trump has maintained a 25% tariff on the 8 million vehicles the U.S. imports annually.
Subaru produced about half of its vehicles it sold in the United States in the United States, which is a big number, but the other half were imported from Japan. The company recently said it expected about a $2.5 billion hit from tariffs this year, and it seems the best way it has to offset that in the short term is to raise prices.
Some companies seem fearful of upsetting the Trump administration, so perhaps merely saying “current market conditions” is the easiest way to get around explicitly saying what everyone assumes to be the real reason. More production will likely shift to Subaru’s Indiana facility, but it may not be the immediate boom some might be hoping for. One likely outcome is that Subaru will ship more cars to Canada from Japan to offset cars produced in the United States for this market.
GM’s New Credit Card Sounds Decent
I had one of the greatest grandfathers in the history of grandfathers. He left me no real money or inheritance to speak of after he passed away, but while he was alive, he provided me with an endless amount of attention and love. He and my grandmother also slipped me a lot of money, maybe $20 or $40 at a time, to take girls on dates.
One of his more curious financial decisions was getting a General Motors credit card. No one in our immediate family even had a GM product, except for a Subaru wagon (GM owned some Subaru at the time, so it was on the card, along with Saab). What was he going to get out of a GM credit card? There were also all sorts of weird limits on how it could be used, and I’m not sure any of his rewards were ever even cashed in.
Like all boring dads, I love talking about credit cards for some reason [Ed Note: This is so boring! You’re telling me this is going to become interesting now that I’m a dad? -DT], and I think the better deal is probably something with transferable points. The exception is if you have a specific airline route/hotel you tend to enjoy (for instance, if you have to fly from one Delta hub to another). I’ve never thought about car-specific credit cards, mostly because I can’t predict in advance what kind of car I’m going to want.
If you’re thinking about a GM product, the heavily revised card sounds like it’s fixed a lot of shortcomings with previous GM cards. For one, there’s now just one “GM Rewards” to cover all its brands, as opposed to having to join a bunch of specific brand rewards plans. Additionally, the new GM/Barclays Mastercard has no maximum point limits on redemptions and can be used on services like OnStar or Super Cruise.
The biggest thing for me? The points can be transferred to anyone who signs up for a free GM Rewards plan and can be used on any vehicle without restriction. [Ed Note: Zzzzzzzzzzzz. -DT], Maybe we should do a credit card.
Honda Cuts Back EV Spend By 30%
Honda’s Prologue EV has been a small hit for the automaker, even if the crossover is actually made by General Motors. This deal has allowed Honda to offer an EV without making a big investment. That lack of investment might continue, as CEO Toshihiro Mibe’s press conference early today said the company’s big EV strategy probably needs to be scaled back a bit.
In order to sustainably offer the joy and freedom of mobility, Honda has put the highest priority on its initiatives in the areas of the environment and safety, including an ambitious goal to “achieve carbon neutrality for all products and corporate activities” and “zero traffic collision fatalities” by 2050.
For small-size mobility products including passenger vehicles, Honda believes that electric vehicles (EVs) are the optimal solution for achieving carbon neutrality from a long-term perspective. Based on this belief, Honda made the strategic decision to make a major shift toward the popularization of EVs and has been making progress with various initiatives.
In the meantime, the environment surrounding the automobile industry is changing day by day. Uncertainty in the business environment is increasing, due particularly to the slowdown in the expansion of EV the market due to several factors, including changes in environmental regulations, which had been the premise for the widespread adoption of EVs, as well as changes in trade policies of various countries. In order to maintain its competitiveness in such a business environment and continue to help and inspire people through its mobility products and services, Honda must create new value not only through electrification but also with enhanced application of intelligent technologies, and then offer such value to a broader range of customers in more accessible and affordable ways.
What does this mean, practically?
Two big things:
- A focus on hybrid models as well as EV models.
- A cutback of about 30% on EV investments.
There are a lot of reasons for this. Honda will get hit hard by tariffs, like everyone else, and needs to make up that difference somewhere. At the same time, people aren’t quite as hungry for EVs as some in the industry expected. And, finally, the new administration is going to argue that the last administration exceeded its authority in setting fuel economy regulations. If regulations come down, that’ll make that planned investment less attractive.
Chinese Companies CATL And Pony AI Are Having A Good Week
The largest automotive battery maker in the world is China’s CATL, and the company isn’t content to just stay in China. CATL did a public listing on the Hong Kong Exchange earlier today in what’s now the biggest share offering of this year, according to Nikkei Asia:
CATL’s shares began trading at HK$296 per share, 12.5% higher than the offer price of HK$263, and closed 16.4% higher at HK$306.20. The closing price gave it a market capitalization of about $166 billion. The company is already listed on the Shenzhen Stock Exchange. Shares of CATL opened 1.7% higher in Shenzhen and ended the day up 1.2% on Tuesday.
CATL shares debuted at HK$296 on the Hong Kong Stock Exchange-12.5% above the offer price of HK$263-and closed 16.4% higher at HK$306.20.
“Listing on the Hong Kong stock market signifies our broader engagement in the global capital market,” remarked Robin Zeng Yuqun, CATL’s billionaire founder and chairman, during its listing ceremony on Tuesday. “The zero-carbon era belongs to everyone. When you purchase an electric vehicle, you are contributing to the zero-carbon era.”
The money raised is expected to go towards building out its operations in Europe. At the same time, China’s hot robotaxi company, Pony AI, said it tripled its revenue in the first quarter. From Bloomberg:
Revenue from its robotaxi services jumped 200% to $1.7 million during the first three months of the year. The firm is working with rideshare giant Uber Technologies Inc. for users to access robotaxi services on the platform, and is expected to launch services in the Middle East later this year. It’s also collaborating with Singapore’s ComfortDelGro Corp. on a joint robotaxi pilot programme.
Losses widened to $37.4 million over the quarter, stemming from higher investments in mass production for its newest autonomous driving system and higher employee wages to strengthen its technological capabilities, it added.
These last two news items really go to show the difference between China and the rest of the world. On one hand, you’ve got Japanese and American automakers cutting back on EV investments. On the other, you’ve got Chinese firms raising money to increase their outputs.
What I’m Listening To While Writing TMD
Chris Isaak’s “Wicked Game” is likely the hottest combination of song and video imaginable. I’m not even sure it’s SFW, even though they played this on VH1 basically nonstop growing up in an attempt to titillate the wine moms or whatever. What’s important to note here is that Helena Christensen has apparently only owned a Morris Minor, and it’s a car she still drives around.
The Big Question
If you were an automaker, would you push for more electrification or back off a bit?
I’ve had a GM Card since I turned 18. I decided to apply to that as my first card because at the time I was a GM fan and felt that I’d be buying their shit in perpetuity. That I could then roll the rewards into a new vehicle some day. I likely will never buy another GM vehicle at this point but here’s a fun tidbit about having that card. I’m now over 40 with a 800+ credit score. I’ve asked them TWICE to increase my limit from $600 and the best that they ever did was increase it to $1,000. I have another card that’s got a $25,000 limit(I do not charge that kind of money.). I only keep it open because I’ve had it so long and don’t want to ding my length metric on my score. I keep waiting for a letter telling me they cancelled it themselves since I’ve not used it in over 10 years but they keep sending me a new card.
I was all worked up about tariffs and how ridiculous it is that companies can’t even tell consumers why prices are going up for fear of retribution from Dear Leader. Then I got to Wicked Game and now I don’t care anymore.
If I were an automaker, I’d be investing in “battery swap stations” at all major gas stations — maybe Love’s, Pilot, and Buccee’s. Places that have some existing infrastructure (eg bays, technicians). Then I’d focus on how to finally make these skateboard platforms accept since, large battery packs from below. And by partnering with major retailers, I would try to get them to split the infrastructure costs with us, along with some kind of guarantee of future business just to keep us moving forward.
Then I’d build the vehicles, and all of them would be sold with “X number of free replacements” at those retailers to get people started, or to use in emergencies when they don’t have 20-40 minutes to charge.
China already has hundreds of these stations, and I’m a big believer in modularity for both speed and upgradeability.
If I were a manufacturer, I’d lean into EV, with a frunk that could hold an optional range extender. I’d also be working with a nationwide retailer (Walmart, U haul, gasoline vendor?) to set up rental availability for the range extenders, for those who don’t purchase one when they buy the car. (Over time, I see the range extender getting purchased less and less often, as people get comfortable with the pure EV range for their daily activities – but they’ll still want the security for long distance trips.)
I don’t know that I would be building it quite yet (battery tech is still a bit immature, as far as fast recharge goes), but I’d want the vehicle ready to go when the batteries get a little more advanced. Some kind of skateboard design, to provide flexibility on what the eventual cells need for packaging.
An interesting idea but one that comes with practical challenges. First you would need to do crash and safety testing with the range extender installed and missing. However, the connections are the more difficult thing to work out as they have to be foolproof and 100% reliable.
The electrical plug is easy. For gas you can have the tank connected to the generator – but then what do you do when someone overfills the tank and fills the frunk with gas? (possible spraying gas on a hot exhaust in the process). Then there is the exhaust. Legally it has to exit the vehicle behind the last passenger – so you have to have an exhaust pipe running the length of the vehicle and then a foolproof connection that will seal 100% of the time and keep exhaust gases from being pulled into the cabin and killing the occupants.
Combined with the need to go to a location to get a range extender fitted to the vehicle with a crane, I can’t really see the idea of renting a range extender for a trip really taking off or being cheap enough to be practical.
You could be right on all counts.
As for the need for a crane, I was thinking more like an engine hoist or a forklift, but yeah, I get your point. It likely wouldn’t be a simple lift & shove operation.
The connections would probably just snap into place as the unit was slid or lowered into place, including an exhaust extender to route that to the back of the vehicle. The physical and electrical interfaces should be an SAE standard, too.
As for getting gas in the frunk, I’m thinking some type of floor panel would with have to be removed or slid out of the way to expose the frunk to the elements, so spilled gas would drop out to the ground and air could get in to supply oxygen for the combustion. Perhaps the entire frunk liner would have to be removed (or optionally removable).
There may be better solutions for all of those things, too. That’s why I’d be researching and experimenting with it.
As for costs, like everything else, it is what it is and people would have to make their own decisions on whether the cost is worth it. As for the inconvenience, well, you’ve got that any time you want to rent a box van, or need to fill up a propane tank for the grill or camper. This wouldn’t be much different.
I’m a manufacturing engineer for an automaker and have owned fuel lines, DEF lines, and exhaust over the years. There are a bunch of different options out there – anything from old fashion clamps to various push to connect joints. The problem is doing it again and again, with 100% success, in an environment that is prone to damage.
I’ve sure it could be done with enough R&D, I just don’t see anyone taking on that kind of liability. It would also add a lot of cost vs just having the range extender permanently mounted.
You would know more than I about the manufacturing and cost issues, that’s for sure!
If I’m an automaker, I’m EV-ing all the small and large cars – with 225 miles range standard in the small car and 300 miles optional – 300 miles standard in the large car, and 400 miles range optional – with the 400kw charging standard, and 800kw charging optional across the lineup, and 1000kw charging optional in the large cars.
I’m also including dual AC chargers for my cars – one in front and one in the back – so you can plug into two regular AC outlets at the same time – doubling the speed of at-home charging without a wall-box (4-6 hours vs 8-12 hours)
I’m not doing SUVs – because my company is doing large cars that are the size/packaging of a 1952-1954 Ford – in hardtop coupe, sedan, wagon and convertible form. So you sit high and upright – with the capacity and clearance of medium SUVs in a wide range of bodystyles – plenty of space for batteries in the floor, and much better aerodynamics than a 54 Ford.
My small cars are the size/shape as a 1st Gen Saab 900/Volvo 240 – hatchback coupe, hatchback sedan and wagon. Same concept – Sit high and upright in a relatively tall and aerodynamic little-ish car, which eliminates the need for a separate SUV lineup.
Tariffs are the reason, whether directly or indirectly in the supply chain. They are the reason for price increases. It does not take a genius to figure that shit out.
MAGA aren’t geniuses.
But they’re not buying Subarus away.
So I don’t know why Subaru isn’t calling it out for what it is.
Subaru is not calling it out to keep from being bashed in public by the President of the United States. Amazon and Walmart are recent examples of companies that made that mistake.
A Venn Diagram of the MAGA crowd and the Subaru crowd are nearly two separate circles. There’s a wee bit of overlap with the weird fascist hippies/MAHA science deniers but that’s about it.
I don’t know. The vape cloud demographics seem pretty MAGAT-y these days.
You’re not wrong, but Subaru stopped catering to them years ago. I feel like they’re all fighting over CTR allocations at this point…
Come to think of it, you are right. It must have been months since I last saw a WRX.
To me Subarus should all be blue, with gold wheels and 555 livery.
As god intended! Anyway I’m considering a Forester hybrid in the next few years…lol
A few years ago I had to take my Impreza to the dealership and the guy behind me was all decked out in MAGA gear. The service tech who helped him goes, “so you like Trump?” I think he was being facetious but MAGAMan responds back enthusiastically, “Oh I just got some new shirts and a hat!” George Carlin nailed it when he said “Think of how stupid the average person is, and realize half of them are stupider than that.”
George Carlin was depressingly prophetic in many ways