Auto File-Trump's pickup pipe dream

By Nick Carey, European Autos Correspondent

Greetings from London!

The European Union’s 2035 ban on fossil-fuel cars is up for review later this year and this week Mercedes MBGn.DE CEO Ola Kaellenius joined the chorus of those who wanted to see it overturned, saying the continent’s car industry could “collapse” if it goes ahead.

This is not the first time that Kaellenius, currently also serving as head of Europe’s car lobby group the ACEA, has warned of the possible consequences of the EU’s push toward electric vehicles. In 2021, for instance, he called for an “honest conversation” of the impact electrification would have on auto manufacturing jobs.

It is unclear as yet whether the car industry, backed by a group of centre-right European Parliament lawmakers seeking to challenge the ban, can succeed, as the EU has so far refused to budge.

But get ready for a steady drumbeat of dire warnings from auto executives and politicians opposed to ditching the internal combustion engine.

Which brings us to today’s Auto File…

• Tough roads for pickups

• Ford’s affordable EV bet

• GM, Hyundai team up for cheap cars

Rough markets for U.S. pickups

In his eternal tariff wars, U.S. President Donald Trump has frequently grumbled that Europe and Japan refuse to accept American-made vehicles.

But this has never been a question of access to markets.

You can see U.S. pickup trucks, especially outside urban areas. There is, for instance, a Ford Ranger, which often takes up two tiny British parking spots at my local supermarket . But European or Japanese car buyers have not embraced them en masse and are unlikely to do so.

As Reuters colleagues David Dolan, Maki Shiraki and Marie Mannes report, the vehicles Detroit’s automakers make for U.S. buyers are just too big and burn too much fuel for consumer tastes. You can read more about it here.

Pickup trucks are well suited for the great open spaces, big highways and huge parking spots of the United States. But less so for small, windy roads of Europe and Japan.

They are also easier to sell in an economy built on cheap fuel. I was in South Carolina last week and paid $2.69 for a gallon to fill up the Chevy Trailblazer I rented – which felt like an absolute steal. When I got home at the weekend I paid £1.34 per litre, or the equivalent of $6.81 per gallon. In Japan, the average price for gasoline is currently $4.47 per gallon.

If I still lived in the United States, a pickup truck with low fuel prices and easy parking could be a viable option.

But in Merry Olde England? Not so much.

Recommended reading:

• China rare earth exports slid in July

• More Trump tariffs kick in

• Tesla streamlines AI chip designing

Ford tries cheap EVs

Ford F.N is betting on a range of affordable EVs as it tries to compete against lower-cost Chinese rivals and overcome consumers’ reluctance to pay more for an electric car than the gas-guzzling models they are used to.

Chinese automakers are effectively shut out of the U.S. market – for now – by tariffs and a looming U.S. ban on Chinese software and hardware in vehicles. But as Reuters colleague Nora Eckert reports, Ford CEO Jim Farley said this week the Chinese have set a new standard that his company must work to match.

You can read more about it here.

Ford’s move sums up America’s current car conundrum. President Trump has bolstered the tariff wall around the U.S. market, while also slashing and burning the subsidies that support EV adoption.

But the Chinese cannot be kept out forever, which means to stay globally relevant Ford must develop new EVs that U.S. consumers will find even less appealing now that government incentives are going away.

GM, Hyundai’s cheap car play

General Motors GM.N and Hyundai 005380.KS are going to develop five lower-cost fossil-fuel and hybrid vehicles, most of which are aimed at Central and South America where competition from cheaper Chinese rivals is on the rise.

But as Reuters colleagues Hyunjoo Jin, Heejin Kim and Nora Eckert report, some analysts question whether they can compete against the Chinese on cost. You can read more about it here.

Auto industry experts have predicted that partnerships between traditional automakers will become increasingly common as they seek ways to cut costs and catch up with the Chinese.

And for emerging markets in South America and beyond where affordability is almost always the first priority, if you want to stay in the race then developing cheaper models is the best and only option.

Lyten’s Northvolt buy

In a surprise move, U.S. battery startup Lyten is buying most of bankrupt Swedish battery maker Northvolt, taking advantage of progress the defunct company had made in the production of high-quality battery cells before operations were halted.

Lyten, a Silicon Valley battery startup developing lithium-sulphur cells as a cleaner alternative to lithium-ion, is  backed  by Jeep-owner Stellantis STLAM.MI and U.S. package delivery services giant FedEx FDX.N.

Lyten CEO Dan Cook told Reuters the plan is “to pick up where the Northvolt team left off," including hiring some of its management team and will focus on winning back former customers. 

But the automakers that had signed contracts with Northvolt will need to see a viable product before any of them return.

Fast Laps

China's car sales growth slowed in July partly due to weaker demand for hybrids, as regulators in the world's biggest auto market crack down on a price war that has bruised the industry.

Ford said that U.S. tariffs on imported vehicles, steel and aluminium, will likely cost more than expected this year, with a full-year projected gross hit to pretax adjusted profit of $3 billion.

General Motors  will import EV batteries from Chinese giant CATL, a stopgap measure for a couple of years as the U.S. automaker works to manufacture its own lower-cost batteries, a source familiar with the matter told Reuters.

The U.S. National Highway Traffic Safety Administration has certified Amazon's AMZN.O self-driving unit Zoox vehicles for demonstration use and closed a probe into whether they complied with federal requirements.

Honda 7267.T reported a 50% drop in first-quarter operating profit as a stronger yen and U.S. tariffs took a toll, but the company raised its full-year earnings forecast.

Piero Landolfi, Tesla's TSLA.O director of service for the North American market, has left the EV maker after nearly nine years, joining an exodus of executives from the company as it grapples with a drop in sales.

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