Auto File-The trade war rollercoaster returns

By Victoria Waldersee, Autos Correspondent, Berlin

Greetings from Berlin!

It seems the rollercoaster ride of tariff announcements and about-turns has returned.

Coming back to my inbox after a three-day news reprieve from Friday to Sunday, I found a flurry of e-mails and expressions of panic at the possibility of a 50% tariff on Europe’s exports to the United States, followed by a flurry of takebacks after the U.S. President reversed course on Sunday night, citing a “very nice” call with European Commission President von der Leyen.

The lesson? If you plan your news detox perfectly to coincide with a reversal, you may end up not missing a thing.

Still, sources tell us Brussels and industry officials are knuckling down to get a deal done before July 9. The European Commission has asked European companies to share details on planned U.S. investments, the latest attempt to hammer home to the U.S. administration of Donald Trump how intertwined their economies already are, with the auto industry at the heart of the relationship.

Which brings us to today’s Auto File…

• Tesla continues Europe sales slump

• China summons industry over ‘used’ car sales

• Tariff crossfire hits Japan’s autos suppliers

Tesla's Europe sales are still down, despite new Model Y

Any hopes that U.S. EV maker Tesla's revamped Model Y would revive sales in Europe were dashed by April's sales data. For the fourth straight month, the brand's sales fell - this time by 49%, halving its market share in April across the region to just 0.7% from 1.3% a year ago.

Analysts had speculated whether the steep drop in the U.S. EV maker's sales was down to backlash against CEO Elon Musk's political views, or simply due to its ageing lineup. But with the Model Y out since March, Tesla's poor performance last month indicates that the problem is not just politics: its new car doesn't seem to be winning back Tesla fans either.

Meanwhile, EV demand in Europe for cars from other brands continues to rise, with battery-electric vehicle sales up 27.8% from the prior year. For the number crunchers keen to dive deeper into the data, here's the full story by Jesus Calero. 

ESSENTIAL READING

• Europe’s defence industry scrambles for workers

• India and Pakistan in drone arms race

• TSMC to open chip design centre in Germany

China's regulator summons automakers over 'used' car sales 

A method to inflate sales numbers in the Chinese auto market has caught the eye of the country's commerce ministry: selling registered cars with zero mileage in the second-hand market as 'used' cars. This means the same car could be marked more than once as a sale, helping carmakers hit aggressive sales targets.
Industry bodies and automakers including BYD and Dongfeng Motor are due to meet with government officials on Tuesday to discuss the practice, sources told our correspondents in Shanghai. 

Last week, Wei Jianjun, chairman of Chinese carmaker Great Wall Motor, told Chinese media outlet Sina Finance that at least 3,000-4,000 vendors on Chinese used car platforms were selling registered cars which had never been driven as 'secondhand. '

Tariff crossfire hits Toyota, Nissan, Ford suppliers in Japan

For decades, Japan's auto supply network of thousands of small manufacturers has pursued a production strategy of incremental improvement and assembly-line efficiency, based on methods developed by Toyota, to make Japan into an industrial juggernaut.

Trump's tariffs are so sweeping that they threaten to derail this careful approach mastered over decades by Japan's auto suppliers, some of whom were already making careful pivots into other industries to protect themselves from the rise of EVs.

Our reporters Maki Shiraki and Daniel Leussink took a deep dive into Kyowa Industrial, an auto component maker which started developing neurosurgery instruments in 2016 when its owner Hiroko Suzuki, 65, realised EVs would eventually hammer demand for engine components. The firm began selling the instruments in the U.S. last year. Now, it faces tariffs on both automobiles and medical devices.

Japan's officials say the industry may need to use the opportunity to work hard on its competitiveness in an EV age.

FAST LAPS

Volvo Cars will cut 3,000 mostly white-collar jobs, about 15% of its office staff, as part of a restructuring announced last month as it grapples with high costs, a slowdown in electric vehicle demand and trade uncertainty. 

Tesla is set to begin a test of its long-promised robotaxi service on schedule in Austin, Texas, by the end of June, Chief Executive Elon Musk said, even as the company faces safety questions from a U.S. regulator over how the cars will perform in poor weather. 

China’s BYD  announced over the weekend a fresh round of subsidies and incentives for more than 20 models, reducing the starting price of its cheapest model, the pure battery-powered Seagull hatchback, to 55,800 yuan ($7,765), sending shares in Chinese automakers tumbling on the realisation that the years-long EV price war was only intensifying.

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