Auto File-Trump’s tariff whiplash

Feb 4 - By Nick Carey, European Autos Correspondent

Greetings from London!

The start to Trump 2.0 has been as busy for the auto industry as expected, perhaps even busier. But before we delve into the high stakes drama of the last few days, it is worth focusing briefly on events at Stellantis.

After Carlos Tavares was ousted as CEO in dramatic fashion in December, some analysts and investors feared that having the world’s No. 4 automaker run by committee would lead to paralysis and indecision at a time when it faces a plethora of challenges.

But chairman John Elkann has been busy focusing on changes throughout the organization while the search for a replacement for Tavares goes on.

On Monday, the company announced a series of executive moves, including naming North American boss Antonio Filosa as global head of quality and integrated software and engineering activities under Chief Engineering and Technology Officer Ned Curic.

Stellantis also said it was giving greater product planning and development powers to regional bosses, a departure from the top-down approach criticized by insiders.

Which brings us to today’s Auto File…

• Trump’s tariff carousel

• What next for EU on EVs?

• BYD’s Brazilian mess continues

Trump’s renewed tariff chaos

U.S. President Donald Trump has wasted little time reverting to form in his second term, sowing chaos by announcing 25% tariffs on Mexican and Canadian imports on Saturday that battered carmaker shares, then jerking the rug out from everyone on Monday by postponing them a month.

Setting aside political questions, not least of all why employ such a major blunt instrument ostensibly to stop the trade in illicit drugs, it leaves the auto industry trying to guess what next.

Legacy automakers have already been struggling with weak demand, a tough transition to electric vehicles and rising competition from the Chinese – who still face 10% tariffs, but a lot less than the 60% Trump promised after winning the U.S. election in November.

Now add Trump whiplash to automakers’ growing list of problems.

Faced with a consistent threat of tariffs, automakers might evaluate the feasibility of moving cheap production lines to the U.S. from Mexico.

But as former Aston Martin CEO Andy Palmer told Reuters, that is impossible when the policy can be changed tomorrow - or in this case before the tariffs even took effect.

Trump’s on-off tariff approach also comes after he has gone after the EV-friendly policies of the Biden administration.

So that leaves automakers faced with the question of what type of vehicle to build in the United States – combustion engine, hybrid or full EV? – where again policy could change as soon as someone else takes office.

This leaves them making decisions “based on hunches,” Palmer says, “which is always very dangerous.”

Recommended reading:

• Scania tries to save Northvolt

• U.S. tariffs on China hit crude

• Volvo teams with Waabi for driverless trucks

Under pressure, the EU talks EVs

The European Commission met with European automakers, unions and interest groups to figure out how to breathe fresh life into efforts to make the shift to electric and help the continent’s auto industry fend off competition from U.S. and Chinese rivals.

The talks came at a tough time for Europe’s car industry struggling with those challenges, which have spurred factory closures and job cuts, including 54,000 job losses among auto suppliers in 2024.

Europe’s car industry is laser focused on one issue: pushing ways for the EU to ditch or waive fines for failing to comply with tough new CO2 targets in 2025, that more than one in five cars they sell this year needs to be fully electric.

That is well above EVs’ 13.6% EU share of the new car market last year, which has led the industry to issue dire warnings that Europe’s automakers could face fines of up to 15 billion euros this year.

The European association representing EV makers, battery makers, charging companies and others that have been investing in readiness for an electric world issued research on Monday that says new lower-cost EVs will help the auto industry comply with the CO2 targets and that instead of waiving fines the EU beef up incentives to encourage consumers to buy EVs.

BYD’s tough contracts for workers in Brazil

BYD used contracts for workers from China to build a new car factory in Brazil including clauses that violate labor laws in both countries, according to an exclusive report from my Reuters colleagues Fabio Teixeira, Luciana Novaes Magalhaes and Lisandra Paraguassu. You can read it here.

The workers who traveled from China to northeast Brazil to build the factory earned roughly $70 per 10-hour shift, more than twice the Chinese hourly minimum wage in many regions. 

But the workers hired by BYD contractor Jinjiang in Brazil had to hand over their passports to their new employer, let most of their wages be sent directly to China, and hand over an almost $900 deposit that they could only get back after six months' work.

The contract also gave the firm the power to unilaterally extend the labor contract for six months and issue 200-yuan fines for conduct such as swearing, quarreling or walking around shirtless at the site or in their living quarters.

BYD says it had no knowledge of any violations until initial reports emerged in Brazilian media outlets in late November.

Nissan’s U.S. buyouts

Nissan is offering buyouts to workers and cutting back shifts at its three U.S. factories as the Japanese automaker pushes to slash $2.6 billion in costs globally.

Nissan will offer buyout packages to workers at its vehicle assembly plants in Smyrna, Tennessee, and Canton, Mississippi, and an engine plant in Decherd, Tennessee.

The automaker will cut one of two shifts making its Rogue sports utility vehicle in Smyrna starting in April, and for the Altima sedan in Canton from September.

This all comes after Nissan announced a plan in November to cut 9,000 jobs worldwide and reduce the maximum capacity of its 25 vehicle production lines as it wrestles with a sales slump in China and North America.

Fast Laps

Tesla’s fourth quarter results fell short of Wall Street expectations, but insisted it was on track to roll out new, cheaper EVs in the first half of 2025 and would start testing a paid autonomous car service in June.

General Motors is switching from its loss-making Cruise robotaxi unit to a future focused on its Super Cruise driver assistance technology similar to Tesla's Autopilot in the search for a profitable business model.

Toyota sold 10.8 million vehicles in 2024 and remained the world's top-selling automaker for the fifth consecutive year, despite a 3.7% drop in sales.

Porsche's supervisory board has started talks to end chief financial officer Lutz Meschke's and sales executive Detlev von Platen's contracts early as the German luxury carmaker struggles to boost flagging earnings and weak sales in China.

UVeye, a startup that uses AI-driven technology to inspect vehicles to avoid defects and target repairs, said it had raised $191 million in debt and equity to scale up production in North America and Europe.

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